TITLE 14 CORPORATIONS, PARTNERSHIPS, AND ASSOCIATIONS

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

ARTICLE 14 DISSOLUTION

14-2-1431. Procedure for judicial dissolution.

Venue for a proceeding by the Attorney General to dissolve a corporation and for a proceeding brought by any other party named in Code Section 14-2-1430 lies in the county where a corporation's registered office is or was last located.
It is not necessary to make shareholders or directors parties to a proceeding to dissolve a corporation unless relief is sought against them individually.
A court in a proceeding brought to dissolve a corporation may issue injunctions, appoint a receiver or custodian pendente lite with all powers and duties the court directs, take other action required to preserve the corporate assets wherever located, and carry on the business of the corporation until a full hearing can be held.

(Code 1981, §14-2-1431, enacted by Ga. L. 1988, p. 1070, § 1.)

COMMENT

Source: Model Act, § 14.31. This replaces provisions previously found in §§ 14-2-284 & 285.

Sections 14-2-1430 and 14-2-1431 designate the attorney general as the officer to bring suits for involuntary dissolution by the state. Section 14-2-1430(1) specifies the grounds for such actions.

Subsection (a) requires that suits brought for judicial dissolution must be brought where the corporation's registered office is located or, if not located in this state, where its registered office is or was last located. These preserve the venue requirements of former §§ 14-2-284(c) and 285(b).

Subsection (b) provides that directors and shareholders are not necessary parties to a dissolution action, which follows former § 14-2-285(c).

Subsection (c) is similar to former § 14-2-286(a), in setting out the general powers of courts in dissolution proceedings. This confirms the general powers of a court of equity to protect the legal rights of interested parties.

Cross-References Custodian, see § 14-2-1432. "Principal office": defined, see § 14-2-140; designated in annual registration, see § 14-2-1622. "Proceeding" defined, see § 14-2-140. Receiver, see § 14-2-1432. Registered office: designated in annual registration, see § 14-2-1622; required, see §§ 14-2-202 &14-2-501.

JUDICIAL DECISIONS

Action against court-appointed receiver.

- If a trial court appoints a receiver under O.C.G.A. § 14-2-1431(c), not under O.C.G.A. § 9-8-8, nothing precludes an intervening party from suing the receiver, particularly when the harm at issue cannot be resolved by the receiver's removal. Vautrot v. West, 272 Ga. App. 715, 613 S.E.2d 19 (2005).

Trial court erred by awarding attorney fees to a receiver appointed under O.C.G.A. § 14-2-1431(c) for the receiver's defense of a shareholder's claim of breach of fiduciary duty; because the shareholder brought the complaint on the shareholder's own behalf and not on behalf of the corporation, any legal fees that the shareholder incurred or that were assessed were the shareholder's individual responsibility and did not constitute corporate obligations or debts to be paid as part of the receiver's fees. Vautrot v. West, 272 Ga. App. 715, 613 S.E.2d 19 (2005).

Expansion of receiver's powers to effectuate court ordered duties.

- Trial court properly entered an order expanding the powers of a receiver who was appointed to oversee the operation of a limited liability company (LLC) during the pendency of a judicial dissolution of the LLC where the order was based on an affidavit the receiver submitted that indicated the receiver was unable to fulfill the receiver's duties due to the actions of one of the 50% owners of the LLC. Ga. Rehab. Ctr., Inc. v. Newnan Hosp., 284 Ga. 68, 663 S.E.2d 204 (2008).

Cited in 350 Marietta, Inc. v. Reardon, 246 Ga. App. 812, 542 S.E.2d 552 (2000).

RESEARCH REFERENCES

Am. Jur. 2d.

- 19 Am. Jur. 2d, Corporations, § 2361 et seq.

C.J.S.

- 19 C.J.S., Corporations, § 938 et seq.

ALR.

- Construction and application of limited liability company acts - issues relating to dissolution and winding up of affairs of limited liability company, 49 A.L.R.6th 1.

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