TITLE 14 CORPORATIONS, PARTNERSHIPS, AND ASSOCIATIONS

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

ARTICLE 17 TRANSITION PROVISIONS

14-2-1701. Application of chapter.

Subject to the limitations of subsection (b) of this Code section, this chapter shall apply:
1. To all corporations for profit, existing on or formed after July 1, 1989, including corporations for profit organized under or subject to any prior general corporation law of this state;
2. To all corporations for profit created by special Act of the General Assembly as to which power has been reserved to withdraw the franchise;
3. To any corporation, organization, professional association, or association, to the extent that the former general corporation law of this state or any of its provisions or this chapter or any of its provisions specifically have been or shall be made applicable to the corporation, organization, professional association, or association; and
4. To any corporation organized under any statute of this state or if it were originally created by special Act of the General Assembly without reservation of power to withdraw the franchise, if under any prior general corporation law of this state the corporation either has amended its charter or has been a party to a merger or a consolidation, and also to any corporation which after July 1, 1989, in an amendment to its articles of incorporation or restatement of its articles of incorporation or in a merger, elects to be subject to this chapter. Any corporation to which this chapter applies by reason of this paragraph shall have all the rights, privileges, franchises, immunities, and powers and shall be subject to all the duties, liabilities, and disabilities of a corporation to which this chapter applies as well as of the statute or special Act by which the corporation was originally created; but in the event of a conflict between the statute or special Act and this chapter, the statute or special Act shall govern.
This chapter shall not apply:
1. To corporations organized under a statute of this state other than either this chapter or any prior general corporation law, except to the extent that the former general corporation law or any of its provisions or this chapter or any of its provisions specifically have been or shall be made applicable to those corporations;
2. To any corporation originally created by special Act of the General Assembly as to which power has not been reserved to withdraw the franchise, except as otherwise provided in subsection (a) of this Code section;
3. To any corporation originally created by an Act of the General Assembly as to which power has been reserved to withdraw the franchise, if the purpose of the corporation would require its organization to take place under a statute other than this chapter if it were being organized after July 1, 1989, except to the extent that the former general corporation law of this state or any of its provisions or this chapter or any of its provisions specifically have been or shall be made applicable to corporations organized for that purpose;
4. To any public authority created by an Act of the General Assembly, except to the extent that the former general corporation law of this state or any of its provisions or this chapter or any of its provisions specifically have been or shall be made applicable to the public authority; or
5. To corporations of any class, to the extent that the class is specifically exempted from this chapter or any of its provisions.
This chapter shall not impair the existence of any corporation existing on July 1, 1989. Any existing corporation to which this chapter is applicable and its shareholders, directors, and officers shall have the same rights and be subject to the same limitations, restrictions, liabilities, and penalties as a corporation formed under this chapter and its shareholders, directors, and officers.
If the articles of incorporation, charter, or bylaws of a corporation in existence on July 1, 1989, contain any provisions that were not authorized or permitted by the prior general corporation law of this state but which are authorized or permitted by this chapter, the provisions of the articles of incorporation, charter, or bylaws shall be valid on and from that date, and action may be taken on and from that date in reliance on those provisions.If the articles of incorporation, charter, or bylaws of a corporation in existence on July 1, 1989, contain any provisions that were authorized or permitted by the prior general corporation law of this state, that were validly adopted under the law in effect at the time of their adoption, and that are authorized or permitted by this chapter, the provisions of the articles of incorporation, charter, or bylaws shall continue to be valid on and from that date, whether or not this chapter imposes requirements for the adoption of such provisions that are different from those in effect at the time the provisions were adopted.
This chapter shall apply to commerce with foreign nations and among the several states only insofar as the application may be permitted under the Constitution and laws of the United States.

(Code 1981, §14-2-1701, enacted by Ga. L. 1988, p. 1070, § 1; Ga. L. 1993, p. 1231, § 26.)

Law reviews.

- For article, "Comparison of Features of Old and New Business Corporation Laws Relating to Domestic Corporations," see 5 Ga. St. B. J. 13 (1968). For article discussing the consolidation of laws dealing with various types of financial organizations into the Financial Institutions Code of Georgia (Title 7), see 11 Ga. St. B. J. 225 (1975).

COMMENT

Source: Present § 14-2-3(a), (b), (c), (d), & (f). The language of present Georgia law was preserved in its entirety, in place of the Model Act provision, § 17.01.

The fundamental principle underlying Section 14-2-1701 is that the Code should ultimately be made fully applicable to all existing business corporations as well as to all new business corporations formed after the effective date of the new statute. It is undesirable to "grandfather" existing corporations under earlier statutes since that results in the permanent coexistence of two different and overlapping systems of corporation law, with resulting confusion. This is particularly true of the Code, which builds directly on the experience of many years with existing corporation statutes and contains few major substantive changes.

Section 14-2-1701 applies this basic principle in its broadest sense by making the Code applicable as of its "effective date" (prescribed in Section 14-2-1706) to all domestic corporations formed under general statutes for corporations for profit. This includes all prior general business corporation acts, but not statutes providing for not-for-profit corporations or associations, or corporations formed for the purpose of engaging in a business for which the state has provided a separate incorporation procedure.

Subsection (b) preserves the language of prior law, recognizing that the Code cannot constitutionally apply to certain corporations. Article III, Sec. VII, Para. XVII of the Georgia Constitution of 1945, which provision was ratified in substantially its present form in 1982, permitted charters to banking, trust, insurance, railroad, canal, navigation, express and telegraph companies to be granted only by the Secretary of State. Accordingly, in this state the incorporation procedures for the special-purpose or so-called "Secretary of State" corporations are separate and distinct from the incorporation procedures for general business corporations, with the various "Secretary of State" corporations being organized under, and in varying degrees governed by, special statutes applicable only to corporations of a particular class. This Code does not, and indeed could not, without a constitutional amendment, alter this established pattern. Instead, it seeks merely to clarify the existing law, and to set forth, with a minimum of ambiguity, the full range of this exception to the Code. It should be noted that it does not exempt these corporations to the extent that this Code or a former general corporation law has been or shall be made applicable to any of those corporations. This flexibility will allow corporations of those special classes to consider whether they wish to secure special legislative action to permit this Code to apply to them.

Subsection (a)(4) recognizes that Secretary of State and other corporations may be permitted voluntarily to become subject to this Code. Where the provisions of the special law governing a class of "Secretary of State" corporations do not prohibit the joint application of this Code through a charter amendment, the Code provides a rule for resolving potential conflicts between special Acts and the Code: the provisions of the special Act shall govern.

Section 14-2-1701 applies the Code to all corporations to which that application is constitutionally permissible. In view of the adoption of a "reservation of power" clause in 1863, there are very few active business corporations to which this Code will not be applicable under this section.

Subsection (e) makes clear that the exercise of the General Assembly's power is intended to extend only as far as is constitutionally permissible, both in terms of interstate commerce and the contracts clause.

Note to 1993 Amendment The 1993 amendment added the second sentence of subparagraph (d) to include a general savings provision to the effect that any provision in a corporation's articles of incorporation or bylaws which was valid and properly adopted under the prior Georgia corporate law and which is permissible under current law remains valid even if current law requires a different manner of adoption.

Cross-References Application to previously qualified foreign corporations, see § 14-2-1702. Banks, see Title 7. Canal & navigation companies, see Title 52. Credit unions, see Title 7. Express companies, see Title 46. Foreign corporations, generally see Article 15 of this title. Insurance companies, see Title 33. Railroads, see Title 46. Reservation of power to amend or repeal Code, see § 14-2-102. Secretary of State corporations, see Ch. 4 of this title. Telegraph companies, see Title 46.

JUDICIAL DECISIONS

Editor's notes.

- In light of the similarity of the statutory provisions, decisions under former Code 1933, § 22-103 and former Code Section 14-2-3, which were repealed by Ga. L. 1988, p. 1070, § 1, effective July 1, 1989, are included in the annotations for this Code section.

Phrase "corporations engaged in any business" in former Code 1933, § 114-101 (see now O.C.G.A. § 34-9-1) included only those corporations governed by the Georgia Business Corporation Code, former Code 1933, § 22-2101 et seq. Hospital authorities are not governed by 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, § 22-103).

Cited in Short v. State, 235 Ga. 394, 219 S.E.2d 728 (1975).

RESEARCH REFERENCES

ALR.

- Power of corporation after expiration or forfeiture of its charter, 47 A.L.R. 1288; 97 A.L.R. 477.

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