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2018 Georgia Code 14-2-728 | Car Wreck Lawyer

Link to State of Georgia Official Statute 2018 Georgia Code Annotated (sourced from legal.resource.org)
O.C.G.A. 14-2-728 Case Law from Google Scholar Amendments to OCGA 14-2-728

TITLE 14 CORPORATIONS, PARTNERSHIPS, AND ASSOCIATIONS

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

ARTICLE 7 SHAREHOLDERS

14-2-728. Voting for directors; cumulative voting.

  1. Unless otherwise provided in:
    1. The articles of incorporation; or
    2. A bylaw that fixes a greater voting requirement for the election of directors and that is adopted by the board of directors of a corporation having shares listed on a national securities exchange or regularly traded in a market maintained by one or more members of a national or affiliated securities association,

      directors are elected by a plurality of the votes cast by the shares entitled to vote in the election. Action to elect directors may be taken at a meeting only if a quorum is present.

  2. Shareholders do not have a right to cumulate their votes for directors unless the articles of incorporation so provide.
  3. A statement included in the articles of incorporation that all or a designated voting group of shareholders are entitled to cumulate their votes for directors (or words of similar import) means that the shareholders designated are entitled to multiply the number of votes they are entitled to cast by the number of directors for whom they are entitled to vote and cast the product for a single candidate or distribute the product among two or more candidates.
  4. Shares otherwise entitled to vote cumulatively may not be voted cumulatively at a particular meeting unless:
    1. The meeting notice or proxy statement accompanying the notice states that cumulative voting will be in effect; or
    2. A shareholder who has the right to cumulate his votes gives notice to the corporation not less than 48 hours before the time set for the meeting of his intent to cumulate his votes during the meeting, and if one shareholder gives this notice all other shareholders in the same voting group participating in the election are entitled to cumulate their votes without giving further notice.

(Code 1981, §14-2-728, enacted by Ga. L. 1988, p. 1070, § 1; Ga. L. 2008, p. 253, § 2/SB 436.)

Law reviews.

- For article, "Some Distinctive Features of the Georgia Business Corporation Code," 28 Ga. St. B. J. 101 (1991). For survey article on business associations, see 60 Mercer L. Rev. 35 (2008).

COMMENT

Source: Model Act, § 7.28. This replaces former §§ 14-2-117 &14-2-119.

Subsection (a) provides that directors are elected by a plurality of the votes cast, where former law was silent on the subject.

Subsection (b) makes the default rule no cumulative voting, unless provided in the articles of incorporation, which is consistent with former Georgia law in § 14-2-117(d). Subsection (b) provides basically for an "opt in" election. Under subsection (c) this election may be made simply by inserting a statement that "all directors are elected by cumulative voting" or "holders of class A shares are entitled to cumulate their votes," or words of similar import. The effect of such a statement is to make applicable automatically the detailed provisions of subsections (c) and (d) describing the cumulative right to vote at elections of directors by the voting group or groups specified.

Subsection (c) provides that if the articles provide for cumulative voting, whether by all shareholders or by a designated voting group, they may cumulate their votes. Former law did not provide for cumulative voting by a voting group. Subsection (c) of the Model Act was amended by the addition of the word "or" and inclusion of both possibilities. The quotation marks in the Model Act provision were eliminated to eliminate any inference that specific words had to be used in order to comply with the statute.

Subsection (d) attempts to prevent surprise where cumulative voting is permitted by requiring (1) notice of that cumulative voting is in effect in the notice of meeting or proxy statement or (2) 48 hours' advance notice to the corporation of a shareholder's intent to vote cumulatively. Subsection (d)(1) of the Model Act was amended by deleting the words "is authorized" and replacing them with "will be in effect." Complying with federal proxy rules requiring the disclosure of the authorization of cumulative voting in a corporate charter should not trigger the right of shareholders to vote cumulatively without notice from the shareholders, unless the corporation deliberately decides to announce that cumulative voting will be "in effect" for the upcoming election. The word "conspicuously" was deleted from the Model Act because it might create needless conflicts with federal proxy rules.

Cross-References Articles of incorporation: amendment, see Article 10, Part 1; content, see § 14-2-202. "Deliver" includes mail, see § 14-2-140. Notice of meeting, see § 14-2-705. "Notice" to the corporation, see § 14-2-141. Proxies, see § 14-2-722. Quorum of shareholders, see § 14-2-725. Voting for directors by voting group, see § 14-2-804. "Voting group" defined, see § 14-2-140.

Note to 2008 Amendment The 2008 amendment to subsection (a) of Code Section 14-2-728 provides that the statutory default plurality rule may be altered in the articles of incorporation of any corporation or in a bylaw adopted by the board of directors of a publicly traded corporation. In light of the holdover rule in subsection (e) of Code Section 14-2-805, a corporation that adopts a variation from the statutory default plurality rule may wish to consider using advance conditional resignations as permitted by Code Section 14-2-807, such as a resignation conditioned upon acceptance by the board if the director fails to receive the requisite vote.

RESEARCH REFERENCES

Am. Jur. 2d.

- 18B Am. Jur. 2d, Corporations, § 1179 et seq.

C.J.S.

- 19 C.J.S., Corporations, § 518 et seq.

ALR.

- Corporations: right to reconsider vote in stockholders' or directors' meeting, 13 A.L.R. 131.

Voting power of corporation stock as confined to issued and outstanding stock to exclusion of authorized unissued stock or stock which has been reacquired by the corporation, 90 A.L.R. 315.

Powers of voting trustees, 159 A.L.R. 1067.

Construction, application, and effect of constitutional provisions or statutes relating to cumulative voting of stock for corporate directors, 43 A.L.R.2d 1322.

Corporations: validity of charter provision for nonvoting common stock, 52 A.L.R.3d 1131.

Validity of variations from one share-one vote rule under modern corporate law, 3 A.L.R.4th 1204.

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