TITLE 14 CORPORATIONS, PARTNERSHIPS, AND ASSOCIATIONS

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

ARTICLE 7 MEETINGS

14-3-740. Definitions.

As used in this part, the term:

1. "Derivative proceeding" means a civil suit in the right of a domestic corporation or, to the extent provided in Code Section 14-3-747, in the right of a foreign corporation.
2. "Member" includes those who are members under Code Section 14-3-140, as well as any person who is entitled to some portion of the corporation's property upon dissolution, and any person or class of persons specifically designated in the corporation's bylaws or articles of incorporation as having standing to bring a derivative proceeding.

(Code 1981, §14-3-740, enacted by Ga. L. 1991, p. 465, § 1.)

COMMENT

Part 4 of article 7 of the Code is based on the Model Act and on its counterpart in the Business Code. Prior law did not address the issue of derivative actions involving nonprofit corporations. The Model Act, which was approved prior to amendments to the Revised Model Business Corporation Act concerning derivative actions, contains a single section authorizing derivative actions. This part adopts the approach taken by the Revised Model Business Corporation Act and by the Business Code, with refinements to reflect the different constituencies.

"Member" is specially defined for purposes of this part to include persons whose special interest in the corporation should give them standing to bring a derivative proceeding. Those persons include anyone entitled to some portion of the corporation's property upon dissolution and anyone specifically designated in the corporation's articles or bylaws as having standing to bring a derivative proceeding. Remote contingent interests in a corporation's property are insufficient to qualify a person as a "member" for purposes of this part.