The individual action4 is entitled to any
shareholder or third party of the company,
acting in their individual capacity,
considering that the director’s actions have
affected them directly, therefore causing
damages during the performance of their
duties to personal interests of the formers.
Unlike the current applicable individual
action, the interests of the corporation are
excluded by means of this new version
of the direct action. Also, any attempt of
trying to seek damages must be pursued
through the derivative action.
The social action6 is granted exclusively
to the shareholders, not third parties, who
want to bear the directors liable, according
to article 16 of the Bill Project, for their
actions if they were detrimental or caused
harm to the company.
7 Considering that the
social action belongs to the shareholders,
its authorization needs to be approved by
the majority of the shareholders of the corporation in the form of a general assembly
decision. Whenever no special majority is
established in the company’s bylaws, the
default rule for this kind of corporate decisions is 50 percent plus one vote.
Besides the attempt to fix the numerous
practical problems of the current social and
individual actions, the innovative proposal
of the Bill Project is the importation to the
different existing alternatives from the U.S.
legal system, of the well-known derivative
8 This is incorporated as a residual
option (the social action could not have
been initiated) to protect those minority
shareholders that cannot obtain the
majority approval required to activate the
social action, but still considering that the
directors have damaged the corporation,
thus, filing the lawsuit on its behalf.
The derivative action could only be
filed by a person who was a shareholder
of the corporation at the time the acts or
omissions where executed by the alleged
9 or by a person who
acquired that capacity according to the
exceptions authorized by law.
the derivative action has a special feature
not contemplated in the other two actions,
which is that the claim can be used by an
individual shareholder, on behalf of the
corporation, to prevent the detrimental
conduct of the director with the purpose of
avoiding the “occurrence of an imminent
damage to the company.”
Notwithstanding, in order to restrain
the minority shareholders’ misconduct,
reckless or wrong use of this new legal
instrument, they will be held liable for the
director’s legal fees, litigations costs and
any other damages caused to the them or
the corporation if their derivative suit is
frivolous, they use it to holdup the company
or for any other detrimental purposes.
Finally, the Colombian government
withdrew the Bill Project No. 70 of 2015
so that it could be amended and adjusted.
However, we are expecting that the new
text maintains intact the scope of the
actions we have discussed.
1 Prof. Brian Broughman, Corporations Class, Maurer School
of Law, Indiana University Fall 2015.
2 Dennis J. Block, Nancy E. Barton and Stephen A. Radin,
The Business Judgment Rule: Fiduciary Duties of Corporate
Directors, FIFTH. ED. VOLUME II, 1380 (1998) (quoting
Kamen v. Kemper Fin. Servs., Inc., 500 U.S. 90, 95 (1991),
and Hawes v. City of Oakland, 104 U.S. 450, 453 (1881)).
3 AC T 222 OF 1995. ARTICLE 25. SOCIAL LIABILITY
4 Also known in comparative legal systems as direct action.
5 BILL PROJECT NO. 70 OF 2015. ARTICLE 32.
INDIVIDUAL LIABILITY AC TION. In those cases in
which it is aimed to correct the damages directly suffered
by an shareholders, partner or a third party by reason of
the manager’s actions, the affected persons may demand
their personal liability pursuant to article 16 of this law,
through an individual action, provided that said damages
do not correspond to those that can be requested through
the derived action.
6 Also referred to as social or corporate action.
7 BILL PROJECT NO. 70 OF 2015. ARTICLE 26.
COLLEC TIVE ACTION. In case of correcting the
harm suffered by the company as a consequence of the
managers’ actions, the company may demand, through
a collective action, their responsibility pursuant to the
provisions of article 16 of this law. In order to initiate the
collective action of responsibility, the authorization of
the general assembly of shareholders or partners shall be
8 BILL PROJECT NO. 70 OF 2015. ARTICLE 27.
DERIVATIVE AC TION. Provided that the collective
action of responsibility has not been initiated, any
associate may petition for the derived action in order
to correct the damages suffered by the company as a
consequence of the managers’ actions. In these cases,
the action will be filed by the plaintiff in the name of the
9 BILL PROJECT NO. 70 OF 2015. ARTICLE 28.
LEGITIMAC Y FOR FILING THE DERIVATIVE
AC TION. The plaintiff must have had the capacity as
associate when the facts or omissions that give rise to the
liability occurred or must have acquired said capacity
subsequently, by operation of the law, (…).
10 An example of these exemptions are: divorces, bequests,
inheritances, devise, legacy, among others.
11 BILL PROJECT NO. 70 OF 2015. ARTICLE 27.
DERIVATIVE AC TION. (…) The associates may file
the same action in case of avoiding the occurrence of an
imminent damage to the company.
12 BILL PROJECT NO. 70 OF 2015. ARTICLE 30.
LITIGATION COS TS IN DERIVATIVE ACTIONS.