O.C.G.A. § 14-2-913 (2019)
Attempted share transfer in breach of prohibition
(a) An attempt to transfer shares in a statutory close corporation in violation of a prohibition against transfer binding on the transferee is ineffective.
(b) An attempt to transfer shares in a statutory close corporation in violation of a prohibition against transfer that is not binding on the transferee, either because the notice required by Code Section 14-2-910 was not given or because the prohibition is held unenforceable by a court, gives the corporation an option to purchase the shares from the transferee for the same price and on the same terms that he purchased them; provided, however, that in the case of a gift, the purchase shall be at a price and upon terms which are agreed upon by the parties, or if no agreement is reached, then at the fair value of the shares and upon terms as determined by a court in accordance with standards set forth in Code Section 14-2-942. To exercise its option, the corporation must give the transferee written notice within 30 days after they are presented for registration in the transferee’s name. The corporation may specifically enforce the transferee’s sale obligation upon exercise of its purchase option.
History
(Code 1981, § 14-2-913, enacted by Ga. L. 1988, p. 1070, § 1.)
Annotations
COMMENT Source: Model Statutory Close Corporation Supplement, § 13. Subsection (b) is patterned on Del. Code Ann. tit. 8, § 349. There was no counterpart in former Georgia law. This section provides additional protection for the effectiveness of the transfer restrictions applicable to the shares of a statutory close corporation. If the required notice of the restrictions has not been given (see Section 14-2-910) and the transferee does not have actual notice of the restrictions, the corporation is given a 30-day option to purchase the shares. If the corporation exercises its option, the proposed transferee may pursue a breach of warranty claim or any other appropriate remedy against the proposed transferor.
CORPORATIONS & PARTNERSHIPS
This section also gives the corporation an option to purchase shares attempted to be transferred in violation of a transfer restriction that has been held unenforceable by a court. The Model Close Corporation Supplement approach, that required payment of the same price that the transferee paid, was amended to add a ‘‘fair value’’ approach where shares are transferred without consideration. The ‘‘fair value’’ approach is in use in Delaware, Del. Code Ann. tit. 8, § 349, Illinois, Ill. Rev. Stat. ch. 32, § 1210, and Kansas, Kans. Stat. Ann. §§ 17-7207 & 7209. Cross-References Acquisition of shares by a corporation, see §§ 14-2-631 & 14-2-640. Delivery includes mail, see § 14-2-140. Effective date of notice, see § 14-2-141. ‘‘Notice’’ defined, see § 14-2-141. Share transfer restrictions: generally, see § 14-2-627; statutory close corporations, see §§ 14-2-911 & 14-2-912. RESEARCH REFERENCES ALR. - Use of marketability discount in valuing closely held corporation or its stock, 16 ALR6th 693.