TITLE 14 CORPORATIONS, PARTNERSHIPS, AND ASSOCIATIONS

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

ARTICLE 9 CLOSE CORPORATIONS

14-2-941. Ordinary relief.

If the court finds that one or more of the grounds for relief described in subsection (a) of Code Section 14-2-940 exist, it may order one or more of the following types of relief:
1. The performance, prohibition, alteration, or setting aside of any action of the corporation or of its shareholders, directors, or officers or of any other party to the proceeding;
2. The cancellation or alteration of any provision in the corporation's articles of incorporation, bylaws, or agreement among the shareholders;
3. The removal from office of any director or officer;
4. The appointment of any individual as a director or officer;
5. An accounting with respect to any matter in dispute;
6. The appointment of a custodian to manage the business and affairs of the corporation;
7. The appointment of a provisional director (who has all the rights, powers, and duties of a duly elected director) to serve for the term and under the conditions prescribed by the court;
8. The payment of dividends;
9. The award of damages to any aggrieved party.
If the court finds that a party to the proceeding acted arbitrarily, vexatiously, or otherwise not in good faith, it may award one or more other parties their reasonable expenses, including attorneys' fees and the expenses of appraisers or other experts, incurred in the proceeding.

(Code 1981, §14-2-941, enacted by Ga. L. 1988, p. 1070, § 1; Ga. L. 1990, p. 257, § 12.)

COMMENT

Source: Model Statutory Close Corporation Supplement, § 41. Former Section 14-2-142 provided for appointment of a provisional director under specified conditions. See Comment to Section 14-2-940.

The purpose of listing the types of relief available, in this section and in Sections14-2-942 and 943, is to overcome the reluctance some courts have shown in the past to ordering anything other than dissolution, or possibly a buy-out. See, e.g., Gruenberg v. Goldmine Plantation, Inc., 360 So.2d 884 (La. Ct. App. 1978); Harkey v. Mobley, 552 S.W.2d 79 (Mo. Ct. App. 1977); White v. Perkins, 213 Va. 129, 189 S.E.2d 315 (1972). A court should have broad discretion to fashion the most appropriate remedy to resolve the dispute. What works in one case may not work in another. Detailed standards are not provided since they might encourage litigation and also unduly restrict the court's discretion. Existing cases applying principles of equity, are, of course, precedents for the exercise of a judge's discretion under this section.

Note to 1990 Amendment The 1990 amendment specifically authorizes a court to cancel or amend a provision of an agreement among shareholders in addition to a corporation's articles of incorporation or bylaws.

Cross-References Custodianship, see § 14-2-1432. Directors generally, see § 14-2-801 et seq. Dividends, see § 14-2-640. Officers generally, see § 14-2-840 et seq.

JUDICIAL DECISIONS

Fraud not required.

- President's motion for a directed verdict was properly denied as fraud was not required in an O.C.G.A. § 14-2-940 suit; the president acted in an illegal, oppressive, and unfairly prejudicial manner, in falsely telling a shareholder that the president had had sex with an employee and that the employee was threatening to sue the corporation for sexual harassment, which forced the shareholder to agree to the transfer of sole control of the corporation to the president. Gallagher v. McKinnon, 273 Ga. App. 727, 615 S.E.2d 746 (2005).

There is no requirement under O.C.G.A. § 14-2-940 and O.C.G.A. § 14-2-941 that all elements of fraud must exist before relief can be granted; O.C.G.A. § 14-2-940 explicitly states that relief may be sought if a corporate director has acted in a manner that is illegal, oppressive, fraudulent, or unfairly prejudicial. Gallagher v. McKinnon, 273 Ga. App. 727, 615 S.E.2d 746 (2005).

President's claim that a finding that the president fraudulently concealed information from a shareholder was improper was rejected as a finding of fraud was not required to rescind the issuance of shares to the president under O.C.G.A. § 14-2-940 and O.C.G.A. § 14-2-941. Gallagher v. McKinnon, 273 Ga. App. 727, 615 S.E.2d 746 (2005).

Fraud not established.

- Trial court erred in denying a corporation's motion for summary judgment on an employee's claim seeking the removal of directors and officers pursuant to O.C.G.A. § 14-2-941 because the employee failed to carry the burden on summary judgment of coming forward with rebuttal evidence to demonstrate the existence of a genuine issue of fact on the employee's claim of fraud; the employee did not point to specific evidence showing that the corporation falsely reported income and did so with knowledge that the report was false. VanRan Communs. Servs. v. Vanderford, 313 Ga. App. 497, 722 S.E.2d 110 (2012).

Cited in Gallagher v. McKinnon, 273 Ga. App. 727, 615 S.E.2d 746 (2005).

Cases Citing Georgia Code 14-2-941 From Courtlistener.com
Total Results: 1
Grace Bros. v. Farley Industries, Inc.
Court: Supreme Court of Georgia | Date Filed: 1994-10-31
Citation: 264 Ga. 817, 450 S.E.2d 814, 94 Fulton County D. Rep. 3576, 1994 Ga. LEXIS 869
Snippet: of the corporation.” OCGA §§ 14-2-940 (a) (1); 14-2-941 (a). See generally Comolli v. Comolli, 241

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