Grounds for a Liability Claim Against a Director
Where an entrepreneurial society has suffered damage through the act or omission of a managerial person — a director — the law regulates several routes to its compensation. Article 50 of the Law of Georgia on Entrepreneurs establishes the general ground: the managerial person answers to the society for damage caused by the culpable non-performance of the duty of good faith. On this page we explain the procedural side of this claim: who may bring the suit, how release from liability is constrained, within which time limits the claim falls, and how the shareholder-derivative-suit institution operates.
The substantive analysis of the ground — the standard of the duty of care, the prohibitions on competition and corporate opportunity — is a separate subject; the emphasis here is precisely on how the breach turns into a court claim and which procedural steps are decisive in terms of time.
Who Initiates Liability
Article 50 itself names the holders of the claim: the right to demand compensation for damage caused to the society by a managerial person belongs to the management organ, another managerial person and the supervisory board, and, in cases provided by law and by the established procedure, to each partner. The charter may additionally define another person holding this right.
For a joint stock company, Article 221 regulates the competence precisely: the general meeting, the supervisory board of the JSC and the management organ may, within their own competence, demand compensation for damage caused to the society by members of those organs. By decision of the general meeting, the supervisory board or the management organ may be charged with demanding compensation from officials. Such a decision must be executed within 6 months of its adoption, and the meeting may appoint a special representative for its execution.
Joint Liability and the Limits of Release
Article 55 governs the situation where an obligation is non-performed through the act or omission of several managerial persons — in that case they answer to the society jointly and severally. Joint liability gives the claimant a practical advantage: the claim may be brought in full against any one of them.
Release, however, is strictly constrained. The general meeting may decide to waive the damage claim or to settle with the wrongdoer, but the decision stands only if it is not opposed by partners owning at least 10 percent of the votes. A minority group of partners can thus block the release of the wrongdoer. The managerial person is likewise released from the obligation if, by the action, the person was executing a decision of the general meeting; and a managerial person whose own release is being considered is barred from voting on that question. Finally, liability for damage caused by intentional non-performance cannot be excluded either by the charter or by the employment contract.