O.C.G.A. § 14-2-1327 (2019)

Annotations

Law reviews. - For annual survey of cases discussing business associations, see 57 Mercer L. Rev. 49 (2005). For arti-

cle, ‘‘Business Associations,’’ see 63 Mercer L. Rev. 83 (2011).

COMMENT Source: Model Act, § 13.28. (Section 14-2-1327 of the Model Act was deleted entirely by the Code.) This replaces former § 14-2-251(e) & (g), and departs significantly from former law. Under subsection (a), the dissenter who is not content with the corporations’s offer must state in writing the amount he is willing to accept. A dissenter cannot, by remaining silent, force the corporation into the expense and delay of a judicial appraisal. Furthermore, if his demand is unreasonable, he runs the risk of being assessed litigation expenses under Section 14-2-1331. These provisions are designed to encourage settlement without a judicial proceeding. Former law did not require the dissenter to communicate the amount the dissenter would accept at any time prior to initiation of judicial proceedings. See former § 14-2-251(g). Under subsection (b), a dissenter who has been offered payment must make his supplemental demand within 30 days after receipt of the offer of payment in order to permit the corporation to make an early decision on initiating appraisal proceedings. If he fails to do so, he loses the right to demand additional payment beyond that offered by the corporation. If the corporation, having failed to take the corporate action and to make payment, also fails to return the certificates previously deposited or release the restrictions on transfer of uncertificated securities within 60 days, the shareholder may treat the shares as purchased by the corporation and demand payment of the full amount claimed under this section. See Section 14-2-1330(a). This provision creates no hardship for the corporation since, if it cannot complete the transaction within 60 days, it may return the certificates (or release the restrictions on uncertified shares) and start the process over again at any time. Former law contained no comparable provisions where the corporate action was not completed; § 14-2-251(e) merely contemplated that the corporation could make its offer conditional upon completion of the transaction. Note to 1989 Amendment The 1989 amendment added subsection (c). Where the corporation has failed to observe the procedures required by this part, subsection (c)(1) provides that the shareholder may demand the information that should have been provided by the corporation under Code Section 14-2-1325(b). Subsection (a) provides a procedure

CORPORATIONS & PARTNERSHIPS

for a shareholder who disagrees with the amount offered by the corporation pursuant to section 1325; subsection (c)(2) provides a parallel procedure where the corporation has failed to make such an offer. This demand for payment has the same effect as one made under subsection (a). Thus, under Section 14-2-1330(a), if the corporation does not settle or commence an appraisal proceeding within 60 days after receiving a payment demand, the amount demanded becomes an absolute obligation of the corporation. Note to 1990 Amendment Under § 14-2-1325, a corporation must offer to pay its estimate of the fair value of the shares held by a dissenting shareholder who has complied with the terms of the dissenters’ rights provisions. Unlike the Model Act, the corporation is not required to pay out, but only to offer, its estimate of the fair value of the shares. Thus, the procedure outlined in § 14-2-1327 is triggered only if a shareholder is dissatisfied with a corporation’s offer of payment. Therefore, the words ‘‘made or’’ in subsection (b) were considered extraneous and were deleted by the 1990 amendment. Note to 1993 Amendment The 1993 amendment added the phrase ‘‘and is deemed to have accepted the corporation’s offer’’ to clarify the effect of a dissenter’s failure to respond within the applicable period. Cross-References ‘‘Deliver’’ includes mail, see § 14-2-140. ‘‘Dissenter’’ defined, see § 14-2-1301. Dissenters’ rights as exclusive remedy, see § 14-2-1302. Effective date of notice, see § 14-2-141. ‘‘Fair value’’ defined, see § 14-2-1301. ‘‘Interest’’ defined, see § 14-2-1301. ‘‘Judicial appraisal’’ see § 14-2-1330. Limitation of actions, see § 14-2-1332. ‘‘Notice’’ defined, see § 14-2-141. Offer of payment for shares, see § 14-2-1325. JUDICIAL DECISIONS Applicability. - Trial court erred by granting partial summary judgment to a doctor in a declaratory judgment action against the former clinic the doctor had worked for and was a shareholder of, because the trial court erroneously interpreted the professional corporation’s bylaws as a restrictive covenant in restraint of trade when, in fact, the bylaws were not

part of the doctor’s employment contract and did not provide for a noncompetition penalty or forfeiture provision upon the doctor’s departure. Albany Bone & Joint Clinic, P.C. v. Hajek, 272 Ga. App. 464, 612 S.E.2d 509 (2005). Cited in Riddle-Bradley, Inc. v. Riddle, 217 Ga. App. 725, 459 S.E.2d 576 (1995).

RESEARCH REFERENCES Am. Jur. 2d. - 19 Am. Jur. 2d, Corporations, § 2192 et seq. ALR. - Construction and effect of provision for payment of dissenting stockholders in statutes relating to merger, consolidation, or reorganization of banks

or other corporations, 162 ALR 1237; 174 ALR 960. 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 ALR3d 260.

T.14, C.2, A.13, P.3

PART 3 JUDICIAL APPRAISAL OF SHARES