Decharge

Discharge is a resolution of the general meeting by which the directors are released from liability towards the company in respect of their management during a closed financial year. This resolution is typically adopted in conjunction with the approval of the annual accounts and constitutes a standard item on the agenda of the annual shareholders’ meeting.

Discharge is relevant in that it affords directors protection against future claims by the company or its shareholders relating to their past conduct. In the absence of discharge, the company retains the right to hold directors liable for alleged errors or omissions.

In practice, discharge is frequently granted, yet it does not afford absolute protection against claims by third parties or in cases of intent or gross negligence. It is therefore customary to record the grant of discharge explicitly in the minutes of the meeting.