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2018 Georgia Code 14-2-902 | Car Wreck Lawyer

Link to State of Georgia Official Statute 2018 Georgia Code Annotated (sourced from legal.resource.org)
O.C.G.A. 14-2-902 Case Law from Google Scholar Amendments to OCGA 14-2-902

TITLE 14 CORPORATIONS, PARTNERSHIPS, AND ASSOCIATIONS

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

ARTICLE 9 CLOSE CORPORATIONS

14-2-902. Definition and election of statutory close corporation status.

  1. A statutory close corporation is a corporation whose articles of incorporation contain a statement that the corporation is a statutory close corporation.
  2. A corporation having 50 or fewer shareholders may become a statutory close corporation by amending its articles of incorporation to include the statement required by subsection (a) of this Code section. The amendment must be approved by the holders of at least two-thirds of the votes of each class or series of shares of the corporation, voting as separate voting groups, whether or not otherwise entitled to vote on amendments. If the amendment is adopted, a shareholder who voted against the amendment is entitled to assert dissenters' rights under Article 13 of this chapter.

(Code 1981, §14-2-902, enacted by Ga. L. 1988, p. 1070, § 1.)

COMMENT

Source: Model Statutory Close Corporation Supplement, § 3. There was no counterpart in former Georgia law. Special provisions validating shareholders' agreements appeared in former § 14-2-120(b), and applied only to corporations with shares not listed on a national securities exchange or generally traded in the markets maintained by securities dealers or brokers. See Section14-2-731 for comparable provisions for corporations not electing statutory close corporation status.

This article is designed to be entirely elective. Those corporations choosing to be governed by its provisions, in whole or in part, must elect close corporation status in their articles of incorporation. This article has no effect on corporations not electing statutory close corporation status, and its provisions do not limit the authority of such corporations to vary their form by provisions in their articles of incorporation, bylaws, or agreements among shareholders. The provisions of this article are designed to provide a standard set of provisions suitable for most closely held corporations. They, too, are subject to variation by agreement among the contracting parties.

All corporations, except those with more than 50 shareholders at the time of the election, are eligible to elect statutory close corporation status under this article. The election is made by including in the articles of incorporation a statement that the corporation is a statutory close corporation. An electing corporation continues to be governed by this article unless the shareholders revoke the election. A new corporation may elect this status, regardless of the number of subscribers for shares. Thereafter, regardless of the number of shareholders, it may continue to act as a statutory close corporation.

Subsection (b), in addition to limiting election of this status by existing corporations to those with 50 or fewer shareholders, imposes special voting rules for amending the articles of incorporation for this election. The amendment must be approved by holders of at least two thirds of the votes of each class or series, voting as a separate voting group. All classes and series are entitled to vote on this amendment, in contrast to the rules provided in Section 14-2-1004 of the Code for voting on other amendments. Holders of shares voted against the amendment are expressly granted dissenters' rights under Article 13, provided they comply with the conditions of that article.

Cross-References Amendment of articles of incorporation, see Article 10, Part 1. Application to existing corporations, see § 14-2-950. Articles of incorporation, see § 14-2-202. Dissenter's rights, see Article 13. Filing fees, see § 14-2-122. Number of shareholders, see § 14-2-142. Voting by voting groups: amendment of articles of incorporation, see § 14-2-1004; generally, see § 14-2-726. "Voting group" defined, see § 14-2-140.

JUDICIAL DECISIONS

Direct action.

- Trial court did not err in denying the plaintiffs' motion for a new trial or, alternatively, judgment notwithstanding the verdict, pursuant to O.C.G.A. § 5-5-25 and O.C.G.A. § 9-11-50, after a jury verdict was rendered in favor of the defendant in a shareholder dispute arising from an agreement for purchase of the defendant's shares, as the direct action by defendant on a counterclaim for breach of fiduciary duty/usurpation of corporate opportunity was properly brought under Thomas because there were exceptional circumstances, despite the fact that the corporation did not fit the definition of a statutory close corporation under O.C.G.A. § 14-2-902. Telcom Cost Consulting, Inc. v. Warren, 275 Ga. App. 830, 621 S.E.2d 864 (2005).

Cited in Jamal v. Pirani, 227 Ga. App. 713, 490 S.E.2d 140 (1997).

RESEARCH REFERENCES

Am. Jur. 2d.

- 18 Am. Jur. 2d, Corporations, § 38.

ALR.

- When is corporation close, or closely-held, corporation under common or statutory law, 111 A.L.R.5th 207.

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