O.C.G.A. § 14-2-843 (2019)

Annotations

Law reviews. - For article, ‘‘The Dynamics Among Shareholders, Directors, and Officers in Corporate Organizations Under Georgia Law,’’ see 37 Mercer L. Rev. 79 (1985).

COMMENT Source: 1984 Model Act §§ 8.43 (a), (b) amended and 8.43(c) added, proposed, 54 Bus. Law. 1233 (1999), adopted, 55 Bus. Law. 1247 (2000). Note to 2016 Amendment This Note to 2016 Amendment supersedes and replaces the Comment to Code Section 14-2-843, the Note to 1996 Amendments, and Note to 2004 Amendment. The 2016 amendments to Code Section 14-2-843 contain revisions adopted for purposes of conformity with the Model Act, simplifying and modernizing the statutory text, and for purposes of conformity with the definitions of ‘‘sign,’’ ‘‘deliver,’’ and ‘‘electronic transmission’’ set forth in Code Sections 14-2-140(29), (5), and (9), respectively that were amended or adopted in 2004. Subsection (a) is declarative of former law, although no comparable language was found in former Georgia law, which only recognized that officers could resign, under former § 14-2-150(d). The Code also recognizes that, with the consent of the board of directors, they may resign effective at a later date, and that the board of directors may fill a future vacancy to become effective as of the effective date of the resignation. The last sentence of subsection (a) of the Model Act, generally to this effect, was deleted as superfluous and confusing. Subsection (a) also permits, but does not require, a resigning corporate officer to file a copy of the notice of resignation with the Secretary of State. Corporations are not required to amend annual registrations to reflect changes in their officers until the next annual registration. In the case of corporations that fail to file an annual registration, no notice of a resignation will be reflected in the records of the Secretary of State. Subsection (a) permits, but does not require, the Secretary of State to amend its records to reflect such resignations. In part because of the unlimited power of removal, confirmed by subsection (b), a board of directors may grant an officer an employment contract that extends beyond the term of the board of directors. If a later board of directors refuses to reappoint that person as an officer, he has the right to sue for damages but not for specific performance of his employment contract. Subsection (b) is also declarative of former law under § 14-2-151(a). The tenure of all corporate officers is subject to the will of the board of directors and in certain instances, by other officers. It provides the corporation with the flexibility to determine when, if ever, an officer will be permitted to remove another officer. To the extent that the corporation wishes to permit an officer, other than the appointing officer, to remove another officer, the bylaws or a board resolution should set forth clearly the persons having removal authority. If the board of directors loses confidence in a corporate officer, that officer may be removed irrespective to contract rights or the presence or absence of ‘‘cause’’ in a legal sense. Section 14-2-844 provides that removal of an officer who has contract rights is without prejudice to whatever rights the former officer may assert in a suit for damages for breach of contract. Cross-References Contract rights of officers, see § 14-2-844. ‘‘Deliver’’ includes mail, see § 14-2-140. Effective date of notice, see § 14-2-141. Notice to the corporation, see § 14-2-141.

CORPORATIONS & PARTNERSHIPS

JUDICIAL DECISIONS Editor’s notes. - In light of the similarity of the statutory provisions, decisions under former Code 1933, § 22-712 and former Code Section 14-2-151, which were repealed by Ga. L. 1988, p. 1070, § 1, effective July 1, 1989, are included in the annotations for this Code section. Contract rights of officer. - Although, in electing an attorney to the position of general counsel, the board expressly reserved the right to remove the attorney at any time, this was not necessarily inconsistent with the existence of long-term contractual rights on the attorney’s part. Henson v. American Family Corp., 171 Ga. App. 724, 321 S.E.2d 205 (1984) (decided under former § 14-2-151). Ratification of illegal firing of an

officer does not operate to deprive him of his salary from the date of the illegal firing to the time of ratification. McCreery v. RSA Mgt., Inc., 249 Ga. 43, 287 S.E.2d 203 (1982) (decided under former Code 1933, § 22-712). Wrongful removal of director. - Director of a medical practice wrongfully terminated the only other director without authority, based on statutory authority as well as the bylaws of the practice, which only allowed the board of directors to remove the other director. Ga. Dermatologic Surgery Ctrs., P.C. v. Pharis, 323 Ga. App. 181, 746 S.E.2d 678 (2013). Cited in J.M. Clayton Co. v. Martin, 177 Ga. App. 228, 339 S.E.2d 280 (1985).

RESEARCH REFERENCES Am. Jur. 2d. - 18B Am. Jur. 2d, Corporations, §§ 1208 et seq., 1216 et seq. C.J.S. - 19 C.J.S., Corporations, § 537 et seq. ALR. - When resignation of officer of private corporation becomes effective, 20 ALR 367; 153 ALR 1112. Power of directors of private corporation

to remove officers or fellow directors, 63 ALR 776. Removal by court of director or officer of private corporation, 124 ALR 364. Right of corporate officer to recover compensation for time period between original improper discharge and a subsequent legal discharge, 82 ALR2d 965.