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"Basics of Joint-Stock Company Law" Volume II

New legal demands emerged in Georgia parallel to the process of transition from a communist economy to the capitalist system. It was very difficult to meet these demands, as there were few relevant materials in Georgian legal literature.

To comply with emerging developments in the legal system, in 2009 TSU Professor Irakli Burduli began working on a publication entitled the Basics of Joint-Stock Company Law. In 2010 he published the first volume and on November 29, 2013, TSU hosted the presentation of the second volume published by Meridian Editions. The author plans to publish the next volume by 2015. Although there is some Georgian literature on the joint-stockcompany law and capitalist society law, this monograph is the first of its sort, considering the scope of the research.

According to Dr. Burduli, the monograph fills gaps in Georgian literature on corporate law. Along with the issues of the organizational structure of joint-stock companies, the monograph discusses the principles of modern corporate management. Furthermore, by providing thorough research on German law and its comparison with Georgian law, Georgian readers can become acquainted with the modern organizational structure of the joint-stock company and its fundamentals. The Basics of Joint-Stock Company Law is mainly intended for practitioners or students in the legal field and focuses on the description of fundamental legal models that shape the Georgian legal system, to help Georgian readers understand various corporate law institutions.

The first volume discusses the history of joint-stock company law and the principles of its status, capital and property. It also addresses capitalization in general and property relations in joint-stock companies, while the second volume discusses the very real, common structural elements of the joint-stock company.  Joint-stock companies and corporate law deal mainly with specifying duties and responsibilities of shareholders, boards of directors, etc.

The second volume of the publication consists of four parts that explain various institutions of joint-stock company law and focuses on the structural-organizational features of these institutions, and the characteristics of stockholder duties and responsibilities. It explores the structural bodies of the joint-stockcompany, including the stockholder General Assembly, the Board of Directors, the Supervisory Board, policy and legal issues concerning  their establishment and functioning, their tasks, duties and responsibilities. All of these structures are discussed in a comparative legal context.

The first section discusses the duties and responsibilities of the stockholders. The entire structure of joint-stock company law is based on the stockholders and the representation of their rational interests. Joint-stock company law is a unity ensuring the equal protection of all parties’ interests, thus it is not surprising that the first part of the book deals entirely with exploring partners’ legal rights and duties.  In the end, this will show the readers a possible course of action for the future.

The second part of Volume II deals with the supreme organ of the joint-stockcompany, the General Assembly of stockholders where they implement their rights. This part discusses legal, written and unwritten issues of the stockholders’ General Assembly, which has an immense importance in the corporate legal system. 

According to the reforms of March 14, 2008, Georgian corporate legislation relinquished the two-stage, dualistic legislation system characteristic of German speaking countries, and adopted a mixed system which provides the principle of freedom of choice, with some exceptions directly stipulated by law. The third part of the book targets the gravitationalepicenter of corporate management--its management and representative organ, the Board.

Modern corporate law maintains that it is impossible to manage a corporation successfully without a Board of Directors composed of highly qualified company representativeswith professional management skills. Accordingly, the third part of the book studies modern Boards of Directors as compulsory, traditional organs of a company, without which the existence of the joint-stock company would be disrupted. Exploring the concept of the Board of Directors is not feasible without studying the corporate-legal perspectives of its tasks, objectives, rights and responsibilities. This part of the book discusses issues of corporate-legal and contractual legal relations between the Board of Directors and the company. The logical connection/relation between the board and other organs of the corporation are represented in a economic-legal prism.

No highly professional manager is safe from failure. This implies that it is not likely to completely neutralize the non-profitability of a company; however modern corporate law and the modern principles of corporate management provide a number of recommendations on how to make the management system more flexible, oriented towards rational decision making and representing the best interests of the corporation. This mission will be accomplished when there is a proper controlling/supervisory system established. Since the book concentrates mainly on the study of German legislation compared to Georgian, the last part targets the independent controlling body of the corporation, the Supervisory Council.

n the highly structured German corporate system the Supervisory Council has a decisive significance as a compulsory organ with authority over the Board of Directors. This body has been in the center of discussion since the 90s, and many important steps have been taken to modify its supervisory function. Accordingly, this volume exposes the dogmatic principles of the dualistic model, including the studies of the tasks, functions and composition of the Supervisory Council, as well as co-participation of workers/employees in Council matters, etc. The fourth part of the book also discusses cooperation issues between the Supervisory Council and other bodies of the joint-stock company.

Dr. Burduli finalized the book in the summer of 2013 at the Ludwig-Maximilians-UniversitätMünchen (Germany).According to the academic society’s evaluation, Basics of Joint-Stock Company Law will prove useful for practicing lawyers, students and readers of joint-stockcompany law in general.