Release of Directors

Release is the general assembly’s resolution approving the management of board members or managers for a given financial year and accepting that the company will not bring liability claims against them. It is on the agenda of the ordinary general assembly every year.

Scope

A release resolution is effective only for facts disclosed at the general assembly or apparent from the financial statements (TCC Art. 558). Liability for concealed or undisclosed facts continues. A release ends the company’s claims, but:

• Shareholders who did not vote in favour may sue on the company’s behalf within six months of the resolution,
• Company creditors’ rights of action in the company’s bankruptcy are not removed by the release,
• Actions by shareholders and creditors for loss caused directly to them are not affected.

Voting Ban

Board members who are shareholders and persons involved in the company’s management cannot vote on general assembly resolutions concerning their own release (TCC Art. 436/2). How the release resolution is to be adopted in companies where the sole shareholder is also a board member is therefore debated in practice.

Refusal of Release

Refusing release is not a sanction in itself, but it often signals that a liability action will be brought against the managers. The general assembly may also resolve to bring a liability action instead of granting release. Where the company’s financial statements are subject to independent audit, adopting a release resolution on unaudited statements creates further problems.