GEORGIA Law and Practice Contributed by: Tamar Jikia and Archil Giorgadze, Andersen in Georgia
directors may refuse such instructions if they do not benefit the company’s interests. 5.3 Shareholder Meetings Shareholder meetings are required unless a unanimous written decision is taken by all share - holders. For the rules that govern the holding and conduct of such meetings, see 3.3 Deci- sion-Making Processes . 5.4 Shareholder Claims Shareholders may have several claims against the company or its directors, as follows. • Breach of duty – Directors must act with diligence and good faith. Shareholders can claim for damages if directors fail to fulfil their duties. • Conflict of interest – Directors must disclose any conflicts of interest and obtain approval for related transactions. Shareholders can claim for damages if these rules are violated. • Material transactions – Consent from the supervisory board or general meeting is required for transactions involving 25% or more of the company’s assets. Sharehold - ers can void transactions if procedures are violated. • Abuse of dominant influence – Dominant shareholders abusing their influence can be held liable for damages to the company or other shareholders. • Right to information – Shareholders can request company information and inspect documents. If refused, they can appeal to a court. • Redemption of shares – Shareholders can require the company to redeem their shares at a fair price if a decision substantially impairs their rights or involves reorganisation.
If a director breaches any of the fiduciary duties, a shareholder may launch a derivative suit on behalf of the company and seek from the direc - tor reimbursement of damages to the company. 5.5 Disclosure by Shareholders in Publicly Traded Companies There are no direct disclosure obligations on shareholders in publicly traded companies. However, in regulated entities any acquisition or transfer of shares may be subject to regulatory approval. Moreover, ultimate beneficial owner - ship information shall be supplied to commercial banks and insurance providers. 6. Corporate Reporting and Other Disclosures 6.1 Financial Reporting In accordance with Georgian legislation, com - panies must prepare and submit reports to the regulatory authorities annually, by October 1st of the year following the reporting period. The financial statements include the following forms: • balance; • report about income and material losses; • explanations on the movement of funds in the accounts of the organisation; • annual results of the economic activity of the company; • current financial position; and • explanatory note. 6.2 Disclosure of Corporate Governance Arrangements Disclosures on corporate governance arrange - ments in financial reports usually follow the reporting standards. Georgia uses International
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