Below is an excerpt from ISS’ recently released report titled The Discharge of Directors from Liability: Implications in Different Jurisdictions. The full report is available to institutional subscribers by logging into ProxyExchange then selecting the Knowledge Center and its Library tab and to corporate subscribers by logging into Compass then selecting Governance and the Governance Library or Governance Exchange tab.
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Some Annual General Meeting (AGM) proxy cards include resolutions to discharge directors from liability for the year under review—a practice with significant implications for shareholders, companies, and boards.
Discharge resolutions seek shareholder approval to release directors from liability, carrying important legal and governance consequences. Their interpretation varies widely: in some jurisdictions, approval waives shareholders’ rights to pursue legal claims, while in others it serves as a symbolic vote of confidence. These votes raise fundamental questions about directors’ responsibilities and whether they should be assessed on legal compliance, ethical standards, or overall performance. Although most discharge resolutions are routine and receive strong support, their wording and scope can have material implications, making transparency and context essential. Globally, these resolutions are concentrated in continental Europe and parts of the MENA region, while largely absent in common law markets such as the United Kingdom and the United States.
This paper examines the circumstances and consequences of discharge resolutions worldwide, with a particular focus on Europe, where they play a prominent role in many AGMs. It also explores their absence in common law jurisdictions such as the U.K. and U.S. While prior research has largely centered on civil law systems, our goal is to spark discussion on why these resolutions appear in certain countries and not in others.
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By: Morten Buus, Selim Kizilay
