The Scope of Piercing the Corporate Veil of Shareholders in a Limited Company in Georgia: A Comparative Analysis of German and Georgian Law

Abstract

Under the Association Agreement, Georgia undertook the obligation to harmonize its legislation with EU legal standards. This commitment is reflected in the Law of Georgia "On Entrepreneurs", adopted in 2022. The new law offers regulation on corporate veil piercing, but, due to its novelty, Georgian judicial practice and doctrinal interpretations are still very scarce for establishing a legal standard. The article examines the legal framework of piercing the corporate veil in Georgian law through a comparative analysis with German law. Although the corporate veil traditionally protects shareholders from personal liability, both the Georgian and German legal systems recognize exceptions in which this protection may be disregarded. Georgian law establishes two cumulative preconditions for piercing the corporate veil: abuse of the legal form and the company’s inability to satisfy creditors. The Supreme Court of Georgia has identified indicators of such abuse, including the “alter ego” doctrine, commingling of assets, and undercapitalization. At the same time, the article examines the relationship between tort and corporate liability, addressing the potential competition of legal remedies available to creditors when imposing personal liability on shareholders. The research aims to contribute to the development of Georgian judicial practice by analyzing the doctrine of piercing the corporate veil and its role in strengthening creditor protection and corporate accountability.