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Call Now: 904-383-7448Every corporation has perpetual duration and succession in its corporate name, unless its articles of incorporation adopted on or after April 1, 1969, or an amendment thereto adopted on or after April 1, 1969, provides otherwise.Unless its articles of incorporation provide otherwise, every corporation has the same powers as an individual to do all things necessary or convenient to carry out its business and affairs, including without limitation power:
(Code 1981, §14-2-302, enacted by Ga. L. 1988, p. 1070, § 1; Ga. L. 1989, p. 946, § 11; Ga. L. 1990, p. 257, § 3.)
- For article analyzing legal basis for corporate contributions to private educational institutions, see 5 Mercer L. Rev. 249 (1954). For article discussing issuance of debt securities under the Georgia Business Corporation Code, see 3 Ga. L. Rev. 11 (1968). For article summarizing law relating to jurisdiction and venue over domestic and foreign corporations in Georgia, and service thereon, see 21 Mercer L. Rev. 457 (1970). For article, "Use of Limited Partnership to Invest in Depreciable Realty," see 21 Mercer L. Rev. 481 (1970). For article, "Foreign Corporations in Georgia," see 10 Ga. St. B. J. 243 (1973). For article discussing establishment and transaction of business in Georgia by a foreign corporation, see 27 Mercer L. Rev. 629 (1976). For article on the limit of corporate social responsibility, see 33 Mercer L. Rev. 519 (1982). For note on statutory restrictions upon corporate ownership of real property, see 13 Mercer L. Rev. 410 (1962). For note, "Ultra Vires in Georgia," see 16 Mercer L. Rev. 320 (1964).
Source: Model Act, § 14-2-302. The enumerated powers are similar but not identical to those found in the former law, § 14-2-21.
The law of corporations has always proceeded on the fundamental assumption that corporations are creations with limited power; such an assumption was articulated by the United States Supreme Court as early as 1804, Head & Armory v. Providence Insurance Co., 6 U.S. (2 Cranch) 127, 169 (1804), and appears never to have been seriously questioned as a judicial matter. It is clear that narrow and limited power clauses are undesirable: they encourage litigation by bringing into question reasonable transactions that further the business and interests of the corporation and to the extent transactions are unauthorized, may defeat valid and reasonable expectations. Modern corporation law tends to view the corporation as a creature of contract, rather than as a creature of a state that zealously guards its powers through narrow grants to corporate entities.
The general philosophy of Section 14-2-302 is thus that corporations formed under the Code provisions should be automatically authorized to engage in all acts and have all powers that an individual may have.
The powers of a corporation under the Code exist independently of whether a corporation has a broad or narrow purpose clause.
Corporate powers to act as fiduciaries are limited by Code Section 7-1-242 to specific financial institutions and certain other corporations under limited circumstances.
Note to 1989 Amendment The 1989 amendments added a new subsection (15) and renumbered former subsection (15) as subsection (16). Subsection (15) restored a specifically enumerated corporate power contained in former O.C.G.A. § 14-2-21(15) (1982). The language was expanded, following N.C. Gen. Stat. § 55-17(b)(4), to cover matters other than life insurance, and to specifically create insurable interests in corporations. The Model Act did not contain such language in its powers clause, and it was thought necessary to restore this language in view of the negative implications that might otherwise flow from the omission. Georgia common law creates doubts about the extent of the insurable interests of employers. Turner v. Davidson, 171 Ga. 736, 4 S.E.2d 814 (1939). While provisions in the Insurance Code attempt to create an insurable interest, they do so only for 'publicly owned' corporations, a term defined in neither the corporate nor insurance codes. See O.C.G.A. §§ 33-24-3(c) and33-42-6(a)(4) (Supp. 1988).
Note to 1990 Amendment The 1990 amendment clarifies that all corporations, including those formed before the adoption of the 1969 Corporate Code, have perpetual existence unless their articles (or an amendment thereto adopted after April 1, 1969) specify otherwise. The old Code, at Section 14-2-21(a), provided that each corporation existing on the date of adoption of the old Code (April 1, 1969) had perpetual duration unless its articles of incorporation were affirmatively amended after adoption of the 1969 Code to provide for a limited period of duration. Because old Section 14-2-21(a)(2) was arguably repealed by the new Code, the question arose whether the repeal of the 1969 Code's automatic grant of perpetual duration, when read with new Section 14-2-302, required a corporation formed prior to April 1, 1969 with a limited duration to refer to its pre-1969 articles of incorporation to determine its legal duration. Since such corporations may have passed the limit of their legal existence, the new 14-2-302 was amended to specify that any corporation existing on April 1, 1969 has perpetual duration unless its articles were subsequently amended to provide otherwise.
Cross-References Bylaws, see §§ 14-2-206,14-2-207,14-2-1020,14-2-1021,14-2-1113 and14-2-1133. Compensation of directors, see § 14-2-811. "Employee" defined, see § 14-2-140. "Entity" defined, see § 14-2-140. Fiduciary powers of corporations, see § 7-1-242. Foreign corporations, see § 14-2-1505. Indemnification, see § 14-2-850 et seq. Sale of assets, see Article 12. "State" defined, see § 14-2-140. Ultra vires, see § 14-2-304.
- In light of the similarity of the statutory provisions, decisions under former Code 1872, § 1678, former Code 1882, § 1678, former Civil Code 1895, § 1851, former Civil Code 1910, § 2283, Ga. L. 1937-38, Ex. Sess., p. 214, § 10, former Code 1933, § 22-202 and Code Section 14-2-21, which were repealed by Ga. L. 1988, p. 1070, § 1, effective July 1, 1989, are included in the annotations for this section.
- Although the rule of ejusdem generis is accepted by Georgia courts, there appears to be no Georgia case applying this rule in the context of former Code 1933, § 22-202. Schnorbach v. Fuqua, 70 F.R.D. 424 (S.D. Ga. 1975) (decided under former Code 1933, § 22-202).
- The powers of a corporation are limited to those which are common to all corporations, except such additional valid powers as may be specifically conferred by the authority creating it. Clement A. Evans & Co. v. Waggoner, 197 Ga. 857, 30 S.E.2d 915 (1944) (decided under Ga. L. 1937-38, Ex. Sess., p. 214, § 10).
- Judicial construction has not confined the meaning of the term "direct interest" to the participants alone, but has extended it to include others upon whom the determination of the subject matter may have a secondary effect, so long as the effect, as to them, is not merely contingent, uncertain or conjectural. Choctaw Lumber Co. v. Atlanta Band Mill, Inc., 88 Ga. App. 701, 77 S.E.2d 333, cert. denied, 210 Ga. 166, 78 S.E.2d 515 (1953) (decided under Ga. L. 1937-38, Ex. Sess., p. 214, § 10).
- Corporation is not debarred from entering upon a specific joint undertaking, provided the nature of the enterprise comes within the scope of its ordinary and legitimate powers. Clement A. Evans & Co. v. Waggoner, 197 Ga. 857, 30 S.E.2d 915 (1944) (decided under Ga. L. 1937-38, Ex. Sess., p. 214, § 10).
- No corporation, whether public or private, organized under the laws of this state can, in absence of express charter authority so to do, lend its credit for mere accommodation of third persons. Nalley Land & Inv. Co. v. Merchants' & Planters' Bank, 178 Ga. 818, 174 S.E. 618 (1934), later appeal, 187 Ga. 142, 199 S.E. 815 (1938) (decided under former Civil Code 1910, § 2283).
National bank in negotiating its paper can bind itself for the payment thereof by its endorsement thereon; but it cannot guarantee the payment of the paper of others, or become surety thereon, solely for the benefit of the latter. Nalley Land & Inv. Co. v. Merchants' & Planters' Bank, 178 Ga. 818, 174 S.E. 618 (1934), later appeal, 187 Ga. 142, 199 S.E. 815 (1938) (decided under former Civil Code 1910, § 2283).
- Authority to make an accommodation endorsement of commercial paper will not be implied from the power to lend or borrow money on such paper and generally to exercise the powers usually incident to corporations under the laws of this state. Nalley Land & Inv. Co. v. Merchants' & Planters' Bank, 178 Ga. 818, 174 S.E. 618 (1934), later appeal, 187 Ga. 142, 199 S.E. 815 (1938) (decided under former Civil Code 1910, § 2283).
- A credit union, like any other corporation organized under the laws of this state, is authorized to receive a security deed from its debtors. Cole v. Georgia Cent. Credit Union, 243 Ga. 60, 252 S.E.2d 485 (1979) (decided under former Code 1933, § 22-202).
- The object of incorporation is to create an artificial being with perpetual life, or life for a term of years, and it does not cease to be such, although all of the natural persons who were first members of the organization die, sell their interest, or otherwise cease to be stockholders. Mathis v. Morgan, 72 Ga. 517, 53 Am. R. 847 (1884) (decided under former Code 1882, § 1678).
- The bankruptcy of a corporation does not put an end to the corporate existence, nor vacate the office of its directors. Holland v. Heyman & Bro., 60 Ga. 174 (1878); National Sur. Co. v. Medlock, 2 Ga. App. 665, 58 S.E. 1131 (1907) (decided under former Code 1872, § 1678, and former Civil Code 1895, § 1851).
- 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).
Cited in Knickerbocker Tax Sys. v. Texaco, Inc., 130 Ga. App. 383, 203 S.E.2d 290 (1973); Freeman v. Allstate Bus. Sys., 166 Ga. App. 249, 304 S.E.2d 97 (1983).
- 18 Am. Jur. 2d, Corporations, §§ 45 et seq., 65 et seq. 18A Am. Jur. 2d, Corporations, § 222 et seq. 18B Am. Jur. 2d, Corporations, §§ 1264 et seq., 1291 et seq.
- 18 C.J.S., Corporations, §§ 67, 143 et seq. 19 C.J.S., Corporations, §§ 518 et seq., 651 et seq.
- Right of business corporation to use its funds or property for humanitarian purposes, 3 A.L.R. 443.
Liability of corporation on contracts of promoters, 17 A.L.R. 452; 49 A.L.R. 673; 123 A.L.R. 726.
Conclusiveness of decision of corporate officers or directors that property is of sufficient value to warrant a loan under the powers of the corporation, 18 A.L.R. 645.
Personal liability of directors as affected by terms of contract or form of signature, 33 A.L.R. 1353; 51 A.L.R. 319.
Power of corporation to pass title to real property which it holds in excess of its powers, 37 A.L.R. 204; 62 A.L.R. 494.
Corporation's payment of bonus to officers or employees, 40 A.L.R. 1423; 88 A.L.R. 751; 164 A.L.R. 1125.
Right of corporation to sue on contract made by promoters before its organization, 66 A.L.R. 1425.
Insurance on life of officer for benefit of private corporation, 75 A.L.R. 1362; 143 A.L.R. 293.
Right of officer or director of private corporation to purchase in his own interest at a judicial or other public sale of the corporate property, 76 A.L.R. 439.
Personal liability on contract made by "trustees" or others in closing affairs of dissolved corporation, 76 A.L.R. 1478.
Lien of mortgage securing corporate bonds as affected by exchange of bonds for those of reorganized or new corporations, 81 A.L.R. 139.
Statutory added liability of stockholders of bank or other corporation as affected by sale of, or other transaction in relation to, assets, 100 A.L.R. 1276.
Construction, application, and effect of statutory provision that directors or corporation may remove officer, agent, or employee at pleasure, 111 A.L.R. 894.
Validity of contract between corporations as affected by directors or officers in common, 114 A.L.R. 299; 33 A.L.R.2d 1060.
Power of corporation to change obligations to stockholders, 117 A.L.R. 1290.
Power of corporation to enforce a contract made after taking the steps necessary to put its corporate existence beyond collateral attack, as affected by limited amount of capital subscribed or paid in, 128 A.L.R. 874.
Computation of fund to be provided by private employer for payment of pension or retirement allowance to employees, 153 A.L.R. 818.
Competency of stockholder as a witness where corporation is a party to a suit prosecuted by or against the personal representative of a decedent, 163 A.L.R. 1215.
Applicability of statutes regulating sale of assets or property of corporation as affected by purpose or character of corporation, 9 A.L.R.2d 1306.
Conditions accompanying or following dissolution of lessee corporation, as breach of covenant against assignment or sublease, 12 A.L.R.2d 179.
Requisites as to definiteness of agreement to pay employee share of profits, 18 A.L.R.2d 211.
Validity of security for contemporaneous loan to corporation by officer, director, or stockholder, 31 A.L.R.2d 663.
Power of a business corporation to donate to a charitable or similar institution, 39 A.L.R.2d 1192.
Construction of "net profits," "earnings," or the like, in provision for profit-sharing bonus for corporate officers or employees, 49 A.L.R.2d 1129.
Power of a particular officer or agent of business corporation to bind it by a donation to a charity or similar institution, 50 A.L.R.2d 447.
Expenses incurred by competing factions within corporation in soliciting proxies as charge against corporation, 51 A.L.R.2d 873.
Leasing of real estate by foreign corporation, as lessor or lessee, as doing business within state within statutes prescribing conditions of right to do business, 59 A.L.R.2d 1131.
Corporation's power to enter into partnership or joint venture, 60 A.L.R.2d 917.
Power of secretary or treasurer of corporation to institute litigation for it, 64 A.L.R.2d 900.
Criminal liability of corporate officer who issues worthless checks in corporate name, 68 A.L.R.2d 1269.
Rights and liabilities as between employer and employee with respect to general bonus or profit-sharing plan, 81 A.L.R.2d 1066.
Rights and liabilities as between employer and employee with respect to employee stock options, 96 A.L.R.2d 176.
Power and authority of president of business corporation to execute commercial paper, 96 A.L.R.2d 549.
Liability of corporation for torts of subsidiary, 7 A.L.R.3d 1343.
Failure to issue stock as factor in disregard of corporate entity, 8 A.L.R.3d 1122.
Liability of corporation for contracts of subsidiary, 38 A.L.R.3d 1102.
Foreign corporation's leasing of personal property as doing business within statutes prescribing conditions of right to do business, 50 A.L.R.3d 1020.
Private pension plans: statements in literature distributed to employees as controlling over provisions of general plan, 50 A.L.R.3d 1270.
Construction and operation of private pension plan provision for distribution of pension funds upon termination of plan, 55 A.L.R.3d 767.
Charitable contributions by public utility as part of operating expense, 59 A.L.R.3d 941.
Power of corporation to make political contribution or expenditure under state law, 79 A.L.R.3d 491.
Validity, construction, and effect of statutory provisions concerning capital requisites of state incorporation of bank, 79 A.L.R.3d 1190.
Right of corporation to discharge employee who asserts rights as stockholder, 84 A.L.R.3d 1107.
No results found for Georgia Code 14-2-302.