Why Share Valuation Disputes Arise
When an entrepreneurial society is transformed — by merger, amalgamation, division or change of form — a partner who voted against the transformation at the general meeting is entitled by law to have the share bought out. A dispute arises when the partner does not agree with the buyout price offered for the share: in that case the determination of the fair price is taken over by the court, on the basis of an independent valuation. Georgian legislation regulates this procedure in detail — through terms, the content of the application and the criteria by which the court determines the price. For both sides, managing the timeline is decisive: the right to apply exists only for a short statutory term, and a defect at any stage leads to rejection of the application.
Applying to Court — the 30-Day Term and the Content of the Application
A partner who does not agree with the offered buyout price may, within 30 days of receiving the notice about the buyout price, apply to court with an application demanding determination of the fair price. The statute regulates eight mandatory elements of the application: the name of the court; the names of the applicant and of the entrepreneurial society, their personal numbers, addresses, actual places of residence, e-mail addresses and contact telephone numbers or other data; the substantiation of the existence of the preconditions for applying to court; data on the person to be appointed as independent expert; an indication that the term has been observed; the demand; references to the attached evidence; and the signature of an authorized person. The application must be accompanied by evidence confirming the factual circumstances and the receipt for the state fee.
The Admissibility Check and the Appointment of the Expert
Within 3 days of receiving the application, the court checks its admissibility. Where the requirements are breached, a ruling refusing to accept the application is issued, against which a private complaint may be filed. Otherwise the court notifies the society of the partner’s demand and, within 7 days of receipt of the application, appoints an independent expert or a brokerage company. The expert or brokerage company prepares a buyout report indicating the documented circumstances, the method used to determine the fair price and the price determined on that basis; its costs are reimbursed by the buyer. In selecting the expert, the court may consider the parties’ views, the parties may propose candidates, and they may seek the recusal of the expert on the grounds established by law.