TITLE 14 CORPORATIONS, PARTNERSHIPS, AND ASSOCIATIONS

Section 2. Business Corporations, 14-2-101 through 14-2-1703.

ARTICLE 11 MERGER AND SHARE EXCHANGE

14-2-1107. Merger or share exchange with foreign corporation.

One or more foreign corporations may merge or enter into a share exchange with one or more domestic corporations if:
1. In a merger, the merger is permitted by the law of the state or country under whose law each foreign corporation is incorporated and each foreign corporation complies with that law in effecting the merger;
2. In a share exchange, the corporation whose shares will be acquired is a domestic corporation, whether or not a share exchange is permitted by the law of the state or country under whose law the acquiring corporation is incorporated;
3. The foreign corporation complies with Code Section 14-2-1105 if it is the surviving corporation of the merger or acquiring corporation of the share exchange; and
4. Each domestic corporation complies with the applicable provisions of Code Sections 14-2-1101 through 14-2-1104 and, if it is the surviving corporation of the merger or acquiring corporation of the share exchange, with Code Section 14-2-1105.
Upon the merger or share exchange taking effect, the surviving foreign corporation of a merger and the acquiring foreign corporation of a share exchange is deemed:
1. To appoint the Secretary of State as its agent for service of process in a proceeding to enforce any obligation or the rights of dissenting shareholders of each domestic corporation party to the merger or share exchange; and
2. To agree that it will promptly pay to the dissenting shareholders of each domestic corporation party to the merger or share exchange the amount, if any, to which they are entitled under Article 13 of this chapter.
This Code section does not limit the power of a foreign corporation to acquire all or part of the shares of one or more classes or series of a domestic corporation through a voluntary exchange or otherwise.

(Code 1981, §14-2-1107, enacted by Ga. L. 1988, p. 1070, § 1.)

COMMENT

Source: Model Act, section 11.07. This replaces former § 14-2-217.

Section 14-2-1107 permits mergers or share exchanges between domestic and foreign corporations.

In connection with a plan of merger, the plan must be permitted under the law of the state or country of incorporation of the foreign corporation as well as under the law of Georgia. The surviving corporation, if it is a foreign corporation, must file articles of merger or a certificate of merger to accomplish the disappearance of the domestic corporation or corporations, and thereby irrevocably appoints the Secretary of State as agent for service of process and agrees to pay dissenters in accordance with Article 13.

A plan of share exchange, unlike a plan of merger, need not be authorized by the state or country of incorporation of the acquiring foreign corporation. If the domestic law authorizes a compulsory share exchange to acquire a class or series of shares of a domestic corporation, it makes no difference whether the acquiring corporation is foreign or domestic. This kind of transaction does not affect the separate corporate existence of, or impose the liabilities of the disappearing corporation on, the acquiring foreign corporation.

As observed in the Comments to Section 14-2-1104 the provisions governing so-called short form mergers between a parent and subsidiary corporation are intended to be covered by the provisions of Section 14-2-1107.

Changes from prior law are minor. Subsection (a)(3) requires the foreign corporation to file articles of merger or a certificate of merger if it is the surviving corporation, while former § 14-2-217(b)(2) required the domestic corporation to file such articles of merger. Previously § 14-2-217(c) provided a specific cross reference to short form mergers between a Georgia corporation and a foreign corporation. This language did not appear in the 1969 version of the Model Act, nor in the 1984 edition. Its omission, as indicated previously, is not intended to imply a lack of power to engage in such mergers.

Cross-References Articles of merger or share exchange, see § 14-2-1105. Authority to transact business in this state, see Article 15. Certificate of merger or share exchange, see § 14-2-1105. "Deliver" includes mail, see § 14-2-140. Dissenters' rights, see Article 13. Effective time and date of filing, see § 14-2-123. Fee for service of process on Secretary of State, see § 14-2-122. Filing fees, see § 14-2-122. Filing requirements, see § 14-2-120. Publication of notice of merger or share exchange, see § 14-2-1105.1.

OPINIONS OF THE ATTORNEY GENERAL

Editor's notes.

- In light of the similarity of the statutory provisions, an opinion under former Code 1933, § 22-1008 and former Code Section 14-2-217, which were repealed by Ga. L. 1988, p. 1070, § 1, effective July 1, 1989, is included in the annotations for this Code section.

Implied approval of Commissioner upon merger of insurer.

- Former Code 1933, § 22-1008 (see now O.C.G.A. § 14-2-1107), considered along with former Code 1933, § 56-205 (see now O.C.G.A. § 33-14-5), compels the conclusion that the Insurance Commissioner is required to exercise approval authority with respect to the merger of a domestic stock insurer into a foreign stock insurer even when the surviving corporation will be domiciled outside this state. 1972 Op. Att'y Gen. No. 72-152 (decided under former Code 1933, § 22-1008).

RESEARCH REFERENCES

Am. Jur. 2d.

- 19 Am. Jur. 2d, Corporations, § 2255 et seq.

C.J.S.

- 19 C.J.S., Corporations, § 1016.

ALR.

- Timeliness and sufficiency of dissenting stockholder's notice of his objection to consolidation or merger and of his demand for payment for his shares, 40 A.L.R.3d 260.

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