COMMENT

Note to 1997 Amendments This section was added in 1997. Subsection (a) requires publicly held corporations meeting the definition of having shares listed on a national securities exchange to appoint inspectors to act at shareholders meetings, and to make a written report of the determinations made pursuant to subsection (b). The requirement of a written report is to facilitate judicial review of determinations made by inspectors.

Subsection (b) specifies the duties of inspectors of election. Normally, in making these determinations, the only facts before the inspectors should be appointment forms and electronic transmissions (or written evidence thereof), envelopes submitted with appointment forms, ballots and the regular books and records of the corporation, including lists of holders obtained from depositories. However, inspectors may consider other reliable information for the limited purpose of reconciling appointment forms, electronic transmissions, and ballots submitted by or on behalf of banks, brokers, their nominees, and similar persons which represent more votes than the holder of a proxy is authorized by the record owner to cast or more votes than the shareholder holds of record.

Cross-References "National Securities Exchange" defined, see § 14-2-140. Officer, see § 14-2-840.

PART 3 V OTING TRUSTS AND AGREEMENTS

14-2-730. Voting trusts.

1. One or more shareholders may create a voting trust, conferring on a trustee the right to vote or otherwise act for them, by signing an agreement setting out the provisions of the trust (which may include anything consistent with its purpose) and transferring their shares to the trustee. When a voting trust agreement is signed, the trustee shall prepare a list of the names and addresses of all owners of beneficial interests in the trust, together with the number and class of shares each transferred to the trust, and deliver a copy of the list and agreement to the corporation's principal office.
2. A voting trust becomes effective on the date the first shares subject to the trust are registered in the trustee's name. A voting trust is valid for not more than ten years after its effective date unless extended under subsection (c) of this Code section.
3. All or some of the parties to a voting trust may extend it for additional terms of not more than ten years each by signing an extension agreement and obtaining the voting trustee's written consent to the extension. An extension is valid for ten years from the date the first shareholder signs the extension agreement. The voting trustee must deliver copies of the extension agreement and list of beneficial owners to the corporation's principal office. An extension agreement binds only those parties signing it.

(Code 1981, §14-2-730, enacted by Ga. L. 1988, p. 1070, § 1; Ga. L. 1989, p. 946, § 27.)

COMMENT

Source: Model Act, § 7.30. There are no substantial changes from former law, § 14-2-121.

Subsection (a) provides a simple and direct procedure for the creation of an enforceable voting trust. This simple disclosure requirement eliminates the possibility that the voting trust may be used to create "secret, uncontrolled combinations of stockholders to acquire control of the corporation to the possible detriment of non-participating shareholders." Lehrman v. Cohen, 222 A.2d 800, 807 (Del. 1966).

The purpose of Section 14-2-730 is not to impose narrow or technical requirements on voting trusts. For example, a voting trust that by its terms extends beyond the 10-year maximum should be treated as being valid for the maximum permissible term of 10 years.

Following the long established pattern of earlier versions of the Model Act and the statutes of many states, a voting trust under subsection (b) is valid for a maximum of 10 years after its effective date.

Subsection (c) permits a voting trust to be extended for successive terms of 10 years commencing with the date the first shareholder signs the extension agreement. Shareholders who do not agree to an extension are entitled to the return of their shares upon the expiration of the original term.

Note to 1989 Amendment Subsection (a) was amended to change "copies" to "a copy."

Cross-References "Deliver" includes mail, see § 14-2-140. Delivery to corporation, see § 14-2-141. Inspection of shareholder lists, see § 14-2-720, Article 16, Part 1. "Principal office": defined, see § 14-2-140; designated in annual registration, see § 14-2-1622. "Shareholder" defined, see § 14-2-140. Shares held by nominees, see § 14-2-723. Voting agreements, see § 14-2-731.

RESEARCH REFERENCES