COMMENT

Source: Model Act, § 1.30. This continues the authority granted by former law, in § 14-2-390.

Cross-References Administrative dissolution, see § 14-2-1420. Judicial dissolution, see § 14-2-1430. Revocation of certificate of authority of foreign corporation, see § 14-2-1530. Secretary of state's filing duty, see § 14-2-125.

PART 4 D EFINITIONS

14-2-140. Definitions.

As used in this chapter, the term:

1. "Articles of incorporation" include amended and restated articles of incorporation and articles of merger.
2. "Authorized shares" means the shares of all classes a domestic or foreign corporation is authorized to issue.
3. "Conspicuous" or "conspicuously" means so written that a reasonable person against whom the writing is to operate should have noticed it. For example, printing in italics or boldface or contrasting color or typing in capitals or underlined is conspicuous.
4. "Corporation" or "domestic corporation" means a corporation for profit, which is not a foreign corporation, incorporated under or subject to the provisions of this chapter.
5. "Deliver" includes delivery by hand, mail, private carrier, and electronic transmission.
6. "Distribution" means a direct or indirect transfer of money or other property except its own shares or rights to acquire its own shares or incurrence of indebtedness by a corporation to or for the benefit of its shareholders in respect of any of its shares. A distribution may be in the form of a declaration or payment of a dividend; a purchase, redemption, or other acquisition of shares; a distribution of indebtedness; or otherwise.
7. "Effective date of notice" is defined in Code Section 14-2-141.
8. "Electronic network" means any medium for sending, receiving, and viewing electronic transmissions among persons.
9. "Electronic transmission" or "electronically transmitted" means any form of communication not directly involving the physical transmission of paper that creates a record that may be retained, retrieved, and reviewed by a recipient thereof and that may be directly reproduced in paper form by such a recipient through an automated process. Electronic transmissions include, but are not limited to, telegraphs, telegrams, cablegrams, teletypes, e-mail, and facsimile transmissions.
10. "Employee" includes an officer but not a director. A director may accept duties that make him or her also an employee.
11. "Entity" includes corporation and foreign corporation; nonprofit corporation and foreign nonprofit corporation; profit and nonprofit unincorporated association; business trust, estate, general partnership, limited partnership, trust, two or more persons having a joint or common economic interest; limited liability company and foreign limited liability company; limited liability partnership and foreign limited liability partnership; and state, United States, and foreign government.
12. "First class" includes, when used with a reference to postage or mail, any class of postage or mail that is the equivalent of or better than first class under the then prevailing mail classifications.
13. "Foreign corporation" means a corporation for profit incorporated under a law other than the law of this state.

    (13.1) "Foreign limited liability company" means a limited liability company formed under the laws of a jurisdiction other than this state.

14. "Governmental subdivision" includes authority, county, district, and municipality.
15. "Includes" denotes a partial definition.
16. "Individual" includes the estate of an incompetent or deceased individual.

    (16.1) "Limited liability company" means any limited liability company formed under Chapter 11 of this title.

17. "Mail" means the United States mail.
18. "Means" denotes an exhaustive definition.
19. "National securities exchange" means any securities exchange or securities quotation system if the securities listed on that exchange or system are exempt from the registration requirements of Chapter 5 of Title 10, known as the "Georgia Uniform Securities Act of 2008," pursuant to Code Section 10-5-10 or any successor provision.
20. "Notice" is defined in Code Section 14-2-141.
21. "Person" includes an individual and an entity.
22. "Principal office" means the office in or out of this state so designated in the annual registration where the principal executive offices of a domestic or foreign corporation are located.
23. "Proceeding" includes civil suit and criminal, administrative, and investigatory action.
24. "Record date" means the date established under Article 6 or 7 of this chapter on which a corporation determines the identity of its shareholders and their shareholdings for purposes of this chapter. The determinations shall be made as of the close of business on the record date unless another time for doing so is specified when the record date is fixed.
25. "Secretary" means the corporate officer to whom the board of directors has delegated responsibility under subsection (c) of Code Section 14-2-840 for custody of the minutes of the meetings of the board of directors and of the shareholders and for authenticating records of the corporation.
26. "Share exchange" means a plan of exchange of all of the outstanding shares of one or more classes or series of shares in accordance with Code Section 14-2-1102.
27. "Shareholder" means the person in whose name shares are registered in the records of a corporation or the beneficial owner of shares to the extent of the rights granted by a nominee certificate on file with a corporation.
28. "Shares" means the units into which the proprietary interests in a corporation are divided.
29. "Sign" or "signature" includes any manual, facsimile, conformed, or electronic signature.
30. "State," when referring to a part of the United States, includes a state and commonwealth and their agencies and governmental subdivisions and a territory and insular possession and their agencies and governmental subdivisions of the United States.
31. "Subscriber" means a person who subscribes for shares in a corporation, whether before or after incorporation.
32. "Treasury shares" means shares of a corporation which have been issued and which subsequently have been acquired by the corporation if the articles of incorporation of such corporation provide that shares so acquired become treasury shares. Treasury shares shall be deemed to be issued shares but not outstanding shares.
33. "United States" includes district, authority, bureau, commission, department, and any other agency of the United States.
34. "Voting group" means all shares of one or more classes or series that under the articles of incorporation or this chapter are entitled to vote and be counted together collectively on a matter at a meeting of shareholders. All shares entitled by the articles of incorporation or this chapter to vote generally on the matter are for that purpose a single voting group.

(Code 1981, §14-2-140, enacted by Ga. L. 1988, p. 1070, § 1; Ga. L. 1989, p. 946, § 5; Ga. L. 1990, p. 257, § 1; Ga. L. 1993, p. 1231, § 1; Ga. L. 1995, p. 482, § 1; Ga. L. 1996, p. 1203, § 2; Ga. L. 1999, p. 405, § 3; Ga. L. 2004, p. 508, § 1; Ga. L. 2005, p. 60, § 14/HB 95; Ga. L. 2008, p. 381, § 7/SB 358; Ga. L. 2016, p. 225, § 2-1/SB 128.)

The 2016 amendment, effective July 1, 2016, added paragraphs (13.1) and (16.1).

COMMENT

Source: Model Act, § 1.40. The former law was § 14-2-2.

Section 14-2-140 collects in a single section definitions of terms used throughout the Code. Articles and Parts of the Code in a few instances contain specialized definitions applicable only to those articles or parts.

Most of the definitions of section14-2-140 are drawn directly from earlier versions of the Model Act and the Georgia Code and are reasonably self-explanatory. See § 14-2-2. The principal change in the definitions relates to elimination of legal capital concepts, such as stated capital, capital surplus, and earned surplus.

The term "distribution" defined in subsection (6) is a fundamental element of the financial provisions of the Model Act as amended in 1980. Section 14-2-640 sets forth a single, unitary test for the validity of any "distribution." Section 14-2-140(6) in turn defines "distribution" to include all transfers of money or other property made by a corporation to a shareholder in respect of the corporation's shares, except mere changes in the unit of interest such as share dividends and share splits. Thus, a "distribution" includes the declaration or payment of a dividend, a purchase by a corporation of its own shares, a distribution of evidences of indebtedness or promissory notes of the corporation, and a distribution in voluntary or involuntary liquidation. If a corporation incurs indebtedness in connection with a distribution (as in the case of a distribution of a debt instrument or an installment purchase of shares), the creation, incurrence, or distribution of the indebtedness is the event which constitutes the distribution rather than the subsequent payment of the debt by the corporation.

The term "indirect" in the definition of "distribution" is intended to include transactions like the repurchase of parent company shares by a subsidiary whose actions are controlled by the parent. It also is intended to include any other transaction in which the substance is clearly the same as a typical dividend or share repurchase, no matter how structured or labeled.

The definition of "national securities exchange" in section 14-2-140(16) is defined by reference to the Georgia Securities Act, which authorizes the Georgia Securities Commissioner to determine which exchanges qualify as national securities exchanges for purposes of exemption from registration under that Act.

The definition of "shareholder" in section 14-2-140(25) includes a beneficial owner of shares named in a nominee certificate under section 14-2-723, but only to the extent of the rights granted the beneficial owner in the certificate for example, the right to receive notice of, and vote at, shareholders' meeting.

Subsection (29) defines "voting group" for purposes of the Code as a matter of convenient reference. A "voting group" consists of all shares of one or more classes or series that under the articles of incorporation or the Code are entitled to vote and be counted together collectively on a matter. Shares entitled to vote "generally" on a matter under the articles of incorporation or this Code are for that purpose a single voting group. The word "generally" signifies all shares entitled to vote on the matter by the articles of incorporation or this Code that do not expressly have the right to be counted or tabulated separately. "Voting groups" are thus the basic unit of collective voting at shareholders' meeting, and voting by voting groups may provide essential protection to one or more classes or series of shares against actions that are detrimental to the rights or interests of that class or series.

Note to 1990 Amendment The 1990 amendment expands the definition of "national securities exchange" to include the National Association of Securities Dealers, Inc.'s automated national quotation system. This amendment effectively eliminates the right of shareholders to dissent from mergers or share exchanges involving the issuance of NASDAQ-listed securities and so conforms the statutory dissent rights to the exemption from registration provided under § 10-5-8(8.1) of the Georgia Securities Act of 1973.

Note to 1993 Amendment The 1993 amendment added a new definition of Treasury shares, recognizing that a corporation retains the option pursuant to Section 14-2-631 of retaining reacquired shares rather than cancelling such shares and having them revert to authorized but unissued shares.

Note to 1996 Amendment The definition of "distribution" in subsection (6) was amended to add to the exception rights to acquire shares of the corporation. Thus, neither the issuance of its own shares nor rights to acquire them will constitute a distribution.

Note to 1999 Amendment Source: Model Act § 1.40(7A). The definition of "electronic transmission" or "electronically transmitted" includes both communication systems which in the normal course produce paper, such as telegrams and facsimiles, as well as communication systems which transmit and permit the retention of data which is then subject to subsequent retrieval and reproduction in written form. Electronic transmission is intended to be broadly construed and include the evolving methods of electronic delivery, including electronic transmissions between computers via modem, as well as data stored and delivered on magnetic tapes or computer diskettes.

Note to 2004 Amendment Current Georgia law provides that certain types of mailings to shareholders are to be mailed by "first class." Transfer agents often use a class of mail which is the equivalent of or better than first class but under different postal service classifications. The amendment of Code Section 14-2-140 to incorporate a definition of "First Class" clarifies that mailings with similar classifications are effective as such.

The 2004 Amendments further revise the definitions of "Deliver", "Electronic Transmission", and "Sign" or "Signature", to provide additional specificity with regard to the modes of permissible paperless communication. The 2004 Amendments further include a definition of "Electronic network", which is used in Code Section 14-2-720 in the context of the inspection of a shareholders' list.

Cross-References Annual registration, see § 14-2-1622. Nominee certificate, see § 14-2-723. Special definitions: "Affiliate," see § 14-2-1110. "Announcement date," see § 14-2-1110. "Associate," see § 14-2-1110. "Beneficial owner," see §§ 14-2-1110 &14-2-1131. "Beneficial shareholder," see § 14-2-1301. "Business combination," see §§ 14-2-1110 &14-2-1131. "Call," see § 14-2-641. "Claim," see § 14-2-1407. "Conflicting interest," see § 14-2-860. "Continuing director," see § 14-2-1110. "Control," see §§ 14-2-1110 & 1131. "Corporation," see §§ 14-2-850, 14-2-1110 &14-2-1301. "Derivative proceeding," see § 14-2-740. "Determination date," see § 14-2-1110. "Director," see § 14-2-850. "Director's conflicting interest transaction," see § 14-2-860. "Dissenter," see § 14-2-1301. "Dissenters' notice," see § 14-2-1322. "Expenses," see § 14-2-850. "Fair value," see § 14-2-1301. "Insolvent," see § 14-2-1201. "Interest," see § 14-2-1301. "Interested shareholder," see § 14-2-1110. "Joint-stock association," see § 14-2-1109. "Liability," see § 14-2-850. "Limited partnership," see § 14-2-1109. "Net assets," see § 14-2-1110. "Officer," see § 14-2-864. "Officer's conflicting interest transaction," see § 14-2-864. "Outstanding shares," see § 14-2-603. "Parent," see § 14-2-1104. "Participating shares," see § 14-2-1103. "Party," see § 14-2-850. "Proceeding," see § 14-2-850. "Professional corporation," see Georgia Professional Corporation Act O.C.G.A. Ch. 7, T. 14. "Qualified shares," see § 14-2-863. "Record shareholder," see § 14-2-1301. "Redemption," see § 14-2-641. "Registered holder," see § 14-2-641. "Related person," see § 14-2-860. "Required disclosure," see § 14-2-860. "Resident domestic corporation," see § 14-2-1131. "Shares," see §§ 14-2-627,14-2-630 & 14-2-1109. "Shareholder," see §§ 14-2-740, 14-2-1109 & 14-2-1301. "Statutory close corporation," see O.C.G.A. Art. 9, T. 14. "Subsidiary," see § 14-2-1104. "Time of commitment," see § 14-2-860. "Voting shares," see §§ 14-2-1103 & 14-2-1110.

JUDICIAL DECISIONS

General Consideration

Company

Term "company" imports a corporation until the contrary is shown. Caroline Realty Inv., Inc. v. Kuniansky, 127 Ga. App. 478, 194 S.E.2d 291 (1972), (decided under former Code 1933, § 22-101).

Corporation

Corporation is an artificial being, an entity. Simmons v. Georgia Iron & Coal Co., 117 Ga. 305, 43 S.E. 780, 61 L.R.A. 739 (1903); Garmany v. Lawton, 124 Ga. 876, 53 S.E. 669, 110 Am. St. R. 207 (1906) (decided under former Civil Code 1895, § 1831).

Corporations Engaged In Any Business

Phrase "corporations engaged in any business" in Ga. L. 1970, p. 196, § 1 (see now O.C.G.A. § 34-9-4) included only those corporations governed by the Georgia Business Corporation Code (see now O.C.G.A. § 14-2-101). Hospital authorities are not governed by the Georgia Business Corporation Code, but are expressly exempted therefrom. Fulton-DeKalb Hosp. Auth. v. Gaither, 241 Ga. 572, 247 S.E.2d 89 (1978), (decided under former Code 1933, § 22-102).

OPINIONS OF THE ATTORNEY GENERAL

RESEARCH REFERENCES