Syfert Injury Law Firm

Your Trusted Partner in Personal Injury & Workers' Compensation

Call Now: 904-383-7448

2018 Georgia Code 14-3-1302 | Car Wreck Lawyer

Link to State of Georgia Official Statute 2018 Georgia Code Annotated (sourced from legal.resource.org)
O.C.G.A. 14-3-1302 Case Law from Google Scholar Amendments to OCGA 14-3-1302

TITLE 14 CORPORATIONS, PARTNERSHIPS, AND ASSOCIATIONS

Section 3. Nonprofit Corporations, 14-3-101 through 14-3-1703.

ARTICLE 13 DISTRIBUTIONS

14-3-1302. Exceptions to prohibition against distributions.

  1. A corporation may make distributions to the following:
    1. Organizations whether or not incorporated that are organized and operated for the same or similar purposes as the distributing corporation;
    2. Organizations whether or not incorporated that are organized and operated exclusively for religious, charitable, scientific, testing for public safety, literary, or educational purposes, or to foster national or international sports competition, or for the prevention of cruelty to children or animals, no part of the net earnings of which inures to the benefit of any private shareholder, member, or individual; or
    3. A state or possession of the United States, or any political subdivision of any of the foregoing, or the United States or the District of Columbia.
  2. Except for corporations described in paragraph (2) of subsection (a) of this Code section, a corporation may repurchase a membership for the consideration that the member paid for his or her membership if, after the purchase is completed:
    1. The corporation would be able to pay its debts as they become due in the normal course of business; and
    2. The corporation's total assets would at least equal the sum of its liabilities.

(Code 1981, §14-3-1302, enacted by Ga. L. 1991, p. 465, § 1; Ga. L. 2004, p. 508, § 54.)

COMMENT

This section has no counterpart in the Business Code or the Model Act. It authorizes two types of "distributions": those that are deemed to be consistent with the corporation's purposes and the public interest (authorized by subsection (a)) and those necessary to repurchase memberships (authorized by subsection (b)).

Subsection (a) authorizes three types of distributions. First, a corporation may make a distribution to an organization organized and operated for the same or similar purposes as the distributing corporation. For example, a corporation organized and operated to provide shelter for the homeless may make distributions to another organization operated for the purpose of providing food or shelter to the homeless.

Subsection (a)(2) permits distributions to specified organizations, which are the same as those described in section 501(c)(3) of the Internal Revenue Code of 1986. This subsection plays a significant role in this Code. Corporations described in this subsection are subject to special regulation to ensure that their charitable purposes are not violated. See, for example, section 14-3-170 (granting special supervisory and investigative authority to the Attorney General), section 14-3-1041 (imposing restrictions on conversion to for-profit status), section 14-3-1102 (imposing restrictions on mergers), section 14-3-1202(g) (imposing notice requirements for sale or disposition of substantially all assets), and section 14-3-1403(c) (imposing restrictions on distribution of assets in dissolution).

Subsection (a)(3) permits distributions to governmental entities, which are the same as those described in section 170(c)(1) of the Internal Revenue Code.

Subsection (b) authorizes distributions to repurchase memberships, subject to several limitations. First, the consideration paid by the corporation may not exceed what the member paid for it. This restriction is designed to prevent indirect "dividend"-type distributions via payment of unreasonably large sums for repurchase of memberships. The other two restrictions are designed to protect the corporation's creditors and are identical to the restrictions imposed by section 14-2-640 on distributions of business corporations(except for omission of language pertaining to preferential rights of shareholders). See the comment to section 14-2-640 for a description of these restrictions.

No results found for Georgia Code 14-3-1302.