Law reviews.

- For article, "Some Distinctive Features of the Georgia Business Corporation Code," 28 Ga. St. B. J. 101 (1991).

COMMENT

Source: Model Act, § 7.27, and former §§ 14-2-116(a) and14-2-118(b).

Subsection (a) permits the articles of incorporation to increase the quorum or voting requirements for approval of an action by shareholders up to any desired amount including unanimity.

As it appeared in the Model Act, subsection (a), permitting upward variances in quorums from simple majority, eliminated the explicit provision of former § 14-2-116(a), which permitted reduction of a quorum to not less than one-third of the shares entitled to vote. The policy of existing Georgia law was preserved by adding the words "or lesser", and restoring the one-third limit. The Model Act provision, which permitted such voting variations only in the articles, was amended to continue Georgia's rule of also permitting such variations in the bylaws, in former § 14-2-116(a). Article 11, Part 2 of this Chapter preserves the ability of the board to amend the bylaws to require supermajority votes for business combinations with interested shareholders. See also Section14-2-1133.

Subsection (b) of the Model Act requires any amendment of the articles of incorporation that adds, modifies, or repeals any supermajority provision to be approved by the greater of the proposed quorum and vote requirement or by the quorum and vote required by the articles before their amendment. This approach was rejected in the Code, which permits adoption of supermajority voting requirements by the voting rules then in effect. The Model Act approach reflected a mistrust of shareholder voting not shared by Georgia. On the other hand, in large publicly held corporations normal shareholder apathy at annual meetings could make adoption of supermajority requirements difficult if not impossible, even though obtaining the supermajority would be feasible for a vote on an event that generated considerable shareholder interest, such as a merger or share exchange. Subsection (b) of the Model Act was amended to follow the language of former law, § 14-2-118(b). This protects supermajority provisions from being repealed by lower votes, but does not require adoption of a supermajority voting requirement to receive more than the usual vote for approval.

Cross-References Amendment of articles of incorporation, see Article 10, Part 1. Bylaw provisions changing quorum and voting requirements, see §§ 14-2-1021 &14-2-1022. Quorum and voting requirements in general, see § 14-2-725. Quorum and voting requirements for directors' conflicting interest transactions, see § 14-2-863. Voting by voting group, see § 14-2-726. "Voting group" defined, see § 14-2-140.

RESEARCH REFERENCES