Law reviews.

- For article, "Some Distinctive Features of the Georgia Business Corporation Code," 28 Ga. St. B. J. 101 (1991). For survey article on business associations, see 60 Mercer L. Rev. 35 (2008). For note on 2000 amendment of O.C.G.A. § 14-2-1020, see 17 Ga. St. U. L. Rev. 46 (2000).

COMMENT

Source: Model Act, Section 10.20.

In the absence of a provision in the articles of incorporation, the power to amend or repeal bylaws is shared by the board of directors and shareholders as set out in subsection (b). This is consistent with former Georgia law, in § 14-2-176. The powers of directors are limited by clauses (1) and (2) of subsection (a) while the plenary powers of shareholders are only subject to limitations contained elsewhere in the act, or in the articles of incorporation.

Subsection (a)(1) provides that the power to amend or repeal bylaws may be reserved exclusively to the shareholders by an appropriate provision in the articles of incorporation, which is consistent with former § 14-2-176(b).

Subsection (a)(2) permits the shareholders to adopt or amend a bylaw and reserve exclusively to themselves the power to amend or repeal it later. This reservation must be expressed in the action by the shareholders adopting or amending the bylaw.

Subsection (c) is new. Section 14-2-801 permits bylaw limitations on the authority of the board and Section 14-2-806 permits a bylaw approved by shareholders to stagger the board. In both cases, the Model Act limited such provisions to the articles of incorporation, which require shareholder approval for amendment. In order to achieve the same protection for such provisions when placed in the bylaws, it was necessary to "lock in" these provisions against board amendment.

One major change from prior law involves the number of shares required to be voted in favor of an amendment of bylaws. The Code relies on the general rules concerning shareholder voting, which require approval by a plurality of those shares voting when a quorum is present, under Section14-2-725, while former § 14-2-1976(c) required the affirmative vote of a majority of all shares entitled to elect directors.

These limitations of Sections 14-2-1021 and 14-2-1022 are themselves qualified by the special provisions of Parts 2 and 3 of Article 11 of the Code, governing voting rules for business combinations with interested shareholders.

Note to 1993 Amendment The 1993 amendment adds a new subparagraph (d) which provides that an amendment of bylaws which otherwise may require shareholder approval may be effected by the incorporators or by the board of directors if made prior to the issuance of any of the corporation's shares.

Note to 2000 Amendment Former Code Section 14-2-1020(c) is divided into two subsections (c) and (d). Subsection (d) clarifies that, consistent with new Code Section 14-2-732 and revised Code Section 14-2-801(b), a bylaw limiting the authority of the board of directors must be approved by all shareholders and is not effective once the corporation's shares are publicly traded. Former subsection (d) has been redesignated as subsection (e).

Note to 2008 Amendment The 2008 amendment to subsection (a) of Code Section 14-2-728 allows the statutory default plurality rule for the election of directors to be altered by the board of directors of a publicly traded corporation in the bylaws. The 2008 amendment to subsection (b) of Code Section 14-2-1020 provides that, unless the articles of incorporation provide otherwise, the shareholders may not amend a bylaw adopted pursuant to subsection (a) of Code Section 14-2-728 or adopt a bylaw changing the plurality standard for the election of directors set forth in such subsection. The shareholders retain the power to repeal such a bylaw.

Cross-References Action by: board of directors, see § 14-2-820 et seq.; shareholders, see § 14-2-701 et seq. Articles of incorporation, see § 14-2-202 and Article 10, Part 1. Business Combination with interested shareholder, see § 14-2-1110 et seq. and § 14-2-1131 et seq. Bylaws, see §§ 14-2-206 &14-2-207. Bylaws increasing quorum or voting requirements, see § 14-2-727. Bylaws limiting authority of board, see § 14-2-801. Bylaws providing staggered terms for directors, see § 14-2-806. Close corporations, see Article 9. Shareholders agreement, see § 14-2-732. Supermajority requirements, see §§ 14-2-727,14-2-824,14-2-1021 &14-2-1022.

RESEARCH REFERENCES