TITLE 14 CORPORATIONS, PARTNERSHIPS, AND ASSOCIATIONS

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

ARTICLE 9 CLOSE CORPORATIONS

14-2-930. Merger, share exchange, and sale of assets.

1. A plan of merger or share exchange:
   1. That if effected would terminate statutory close corporation status must be approved by the holders of at least two-thirds of the votes of each class or series of shares of the statutory close corporation, voting as separate voting groups, whether or not the holders are otherwise entitled to vote on the plan; or
   2. That if effected would create the surviving corporation as a statutory close corporation must be approved by the holders of at least two-thirds of the votes of each class or series of shares of the surviving corporation, voting as separate voting groups, whether or not the holders are otherwise entitled to vote on the plan.
2. A sale, lease, exchange, or other disposition of all or substantially all of the property (with or without the good will) of a statutory close corporation that requires approval of the shareholders pursuant to Code Section 14-2-1202 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 the holders are otherwise entitled to vote on the transaction.

(Code 1981, §14-2-930, enacted by Ga. L. 1988, p. 1070, § 1.)

COMMENT

Source: Model Statutory Close Corporation Supplement, § 30. There were no comparable provisions in former law.

Section 14-2-931 requires a minimum two-thirds vote of every class or series of shares whether or not otherwise entitled to vote to terminate close corporation status. Each class or series is entitled to vote as a separate voting group. Section 14-2-930 imposes the same voting requirement in transactions that have the effect of terminating a corporation's status as a statutory close corporation. Like other amendments to the articles, the voting rules may be set higher by the articles themselves, as provided in Section 14-2-1003(e).

In addition, under subsection (a)(2), the shareholders of a corporation that will become a statutory close corporation in a merger or share exchange must approve the transaction by the same minimum two-thirds vote. This is consistent with Section 14-2-902(b), which requires that an amendment to the articles of incorporation to elect statutory close corporation status must also be approved by a two-thirds vote.

The exceptions to shareholder approval of mergers or share exchanges for subsidiary mergers and some other types of transactions (in Article 11) do not apply to statutory close corporations since a shareholder vote is required in all circumstances where statutory close corporation status is elected or terminated.

Subsection (b) requires that a sale of all or substantially all the assets of a corporation that requires a shareholder vote under Section 14-2-1202 must be approved by a two-thirds vote of all classes or series of shares, voting as separate voting groups, whether or not they are otherwise entitled to vote.

Cross-References Merger or share exchange, see Article 11. Sale of assets, see Article 12. Voting by voting groups: generally, see §§ 14-2-725 &14-2-726; merger or share exchange, see § 14-2-1103. "Voting group" defined, see § 14-2-140.