O.C.G.A. § 14-2-1405 (2019)

Annotations

COMMENT Source: Model Act, § 14.21. This replaces provisions previously found in § 14-2-283. Many failures to comply with statutory requirements that may give rise to administrative dissolution under Section 14-2-1420 occur because of oversight or

CORPORATIONS & PARTNERSHIPS

inadvertence by responsible corporate officers of corporations that are continuing in business. Such failures are usually corrected promptly when brought to the corporation’s attention. Sections 14-2-1421(a) and (b) therefore provide a mandatory notice by the Secretary of State to each corporation subject to administrative dissolution and a 60-day grace period following the notice before the certificate of administrative dissolution may be filed. This follows prior law, § 14-2-283(b). The Model Act provision called for notice in accordance with Section 14-2-504 of the Code, which calls for service on the registered agent, or if there is none, service by registered or certified mail to the secretary of the corporation at its principal office. The Code preserves the more flexible approach of prior law, § 14-2-283(b), by permitting, in the alternative, notice by regular mail to the principal office of the corporation. In most instances, the issue whether the corporation is subject to administrative dissolution will not be controverted. If a corporation is administratively dissolved, it may petition the Secretary of State for reinstatement under Section 14-2-1422 and, if this is denied, it may appeal to the courts under Section 14-2-1423. Subsection (c) provides that the corporate existence continues for purposes of winding up pursuant to Section 14-2-1405. This protects officers and directors engaged in winding up from personal liability for corporate debts. Previously § 14-2-283(g) provided that shareholders were not rendered personally liable for debts incurred subsequent to dissolution, but left directors and officers in a very different position, providing that directors, officers and agents would be liable only if they had actual notice of the dissolution. This raised questions about whether an officer could safely engage in winding up activities once notified of involuntary dissolution, although the statute permitted ratification of the officers’ and agents’ acts once the corporation was reinstated. Note to 1990 Amendment The 1990 amendment clarifies that administratively dissolved corporations may provide notice to known and unknown claimants pursuant to the notice provisions of § 14-2-1406 and § 14-2-1407, respectively. Cross-References Appeal from denial of reinstatement, see § 14-2-1423. Claims, see §§ 14-2-1406 & 14-2-1407. Deposit with Department of Administrative Services, see § 14-2-1440. Effective date of service, see § 14-2-504. Reinstatement following administrative dissolution, see § 14-2-1422. Winding up, see § 14-2-1405. JUDICIAL DECISIONS A corporation continued to exist as a corporate entity even after administrative dissolution and, therefore, personal liability of the president of the corporation to a seller of goods could not be based on the traditional theory that the president was acting for a nonexistent principal; this was true regardless of whether the corporation applied for reinstatement and was ultimately restored to its status prior to dissolution. Fulton Paper Co. v. Reeves, 212 Ga. App. 341, 441 S.E.2d 881 (1994).

The general powers of a corporation exist independently of the purpose for continued existence stated in the provision for administrative dissolution. Fulton Paper Co. v. Reeves, 212 Ga. App. 341, 441 S.E.2d 881 (1994). Effect of dissolution. - An administratively dissolved corporation lacked the capacity to bring a federal antitrust action because the two-year limitation period for reinstatement and for the initiation of any action by a dissolved corporation had expired. Gas Pump, Inc. v. General Cinema

Beverages of N. Fla., Inc., 263 Ga. 583, 436 S.E.2d 207 (1993). Federal antitrust claim barred. - A corporation that is administratively dissolved pursuant to O.C.G.A. § 14-2-1421 has no capacity to bring a federal antitrust claim. Gas Pump, Inc. v. General Cinema Beverages of N. Fla., Inc., 12 F.3d 181 (11th Cir. 1994). Malpractice action dismissed. - After a corporation was administratively dissolved subsequent to its filing of a legal malpractice action, dismissal of the corporation’s claims was proper since the lawsuit was not necessary to wind up the corporation’s business affairs. Exclusive Properties, Inc. v. Jones, 218 Ga. App. 229, 460 S.E.2d 562 (1995). Shareholders not substituted as parties. - The court did not err in failing to allow the corporation - which had been administratively dissolved subsequent to its filing of a legal malpractice action - to substitute its shareholders as real parties in interest in the case, since the lawsuit was not a corporate asset to which the shareholders became entitled upon the dissolution of the corporation. Exclusive Properties, Inc. v. Jones, 218 Ga. App. 229, 460 S.E.2d 562 (1995).

Prosecuting an action. - Because a dissolved corporation would retain capacity under Tennessee law to prosecute an action to wind up its affairs, the trial court correctly held that the Tennessee corporation had the capacity to bring a renewal action in Georgia. Tillett Bros. Constr. Co. v. DOT, 210 Ga. App. 84, 435 S.E.2d 241 (1993). Dissolution did not prohibit an accounting firm from continuing a lawsuit to reclaim possession of certain corporate assets alleged to have been misappropriated. Crews v. Wahl, 238 Ga. App. 892, 520 S.E.2d 727 (1999). Trial court erred in denying the seller’s motion to dismiss the dissolved corporation’s renewal action, as that action was filed more than two years after the dissolved corporation was dissolved and applicable statutory law only gave the dissolved corporation two years from the time of dissolution to file suit, regardless of whether that suit was an original action or was a renewal action filed after the original action had been voluntarily dismissed. Deere & Co. v. JPS Dev., Inc., 264 Ga. App. 672, 592 S.E.2d 175 (2003).