TITLE 14
CORPORATIONS, PARTNERSHIPS, AND ASSOCIATIONS
ARTICLE 8
DIRECTORS AND OFFICERS
14-3-825. Committees.
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Unless the articles or bylaws provide otherwise, a board of directors may create one or more committees of the board and appoint members of the board to serve on them. Each committee shall have one or more directors, who serve at the pleasure of the board.
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If authorized by the articles or bylaws, the board or, if there are members entitled to elect directors, the members may appoint individuals who are not currently members of the board, but who formerly were members of the board of the corporation, as voting members of committees of the board. All provisions of this article applicable to directors shall apply equally to such individuals.
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Code Sections 14-3-820 through 14-3-824, which govern meetings, action without meetings, notice and waiver of notice, and quorum and voting requirements of the board, apply to committees and their members as well.
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To the extent specified by the board of directors or in the articles or bylaws, each committee of the board may exercise the board's authority under Code Section 14-3-801.
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A committee may not, however:
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Authorize distributions;
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Approve or recommend to members dissolution, merger, or the sale, pledge, or transfer of all or substantially all of the corporation's assets;
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Elect, appoint, or remove directors or fill vacancies on the board or on any of its committees; or
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Adopt, amend, or repeal the articles or bylaws.
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The creation of, delegation of authority to, or action by a committee does not alone constitute compliance by a director with the standards of conduct described in Code Section 14-3-830.
(Code 1981, §14-3-825, enacted by Ga. L. 1991, p. 465, § 1.)
This section is based both on the Model Act and on its Business Code counterpart, but subsection (b) is original.
It is intended to authorize the practice of some nonprofit corporations of appointing former board members as voting members of director committees.
Such individuals are subject to all the rules pertaining to directors contained in article 8 of the Code.
Unlike the Business Code, this section prohibits a committee of the board from authorizing distributions.
See section 14-3-1301 and 14-3-1302 concerning distributions.
RESEARCH REFERENCES
Am. Jur. 2d.
- 18B Am. Jur. 2d, Corporations,
§
1285 et seq.
C.J.S.
- 19 C.J.S., Corporations,
§§
557, 558.
14-3-830. Standards of conduct for directors.
Unless a different standard is prescribed by law:
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A director shall discharge his or her duties as a director, including his or her duties as a member of a committee:
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In a manner the director believes in good faith to be in the best interests of the corporation; and
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With the care an ordinarily prudent person in a like position would exercise under similar circumstances;
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In discharging his or her duties, a director is entitled to rely on information, opinions, reports, or statements, including financial statements and other financial data, if prepared or presented by:
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One or more officers or employees of the corporation whom the director reasonably believes to be reliable and competent in the matters presented;
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Legal counsel, public accountants, or other persons as to matters the director reasonably believes are within the person's professional or expert competence;
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A committee of the board of which the director is not a member, as to matters within its jurisdiction, if the director reasonably believes the committee merits confidence; or
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Religious authorities, ministers, priests, rabbis, or other persons whose positions or duties in the corporation the director believes justify reliance and confidence and whom the director believes to be reliable and competent in the matters presented;
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In the instances described in paragraph (2) of this Code section, a director is not entitled to rely if he has knowledge concerning the matter in question that makes reliance otherwise permitted by paragraph (2) of this Code section unwarranted;
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A director is not liable to the corporation, any member, or any other person for any action taken or not taken as a director if the director acted in compliance with this Code section; and
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A director shall not be deemed to be a trustee with respect to the corporation or with respect to any property held or administered by the corporation, including, without limit, property that may be subject to restrictions imposed by the donor or transferor of such property.
(Code 1981, §14-3-830, enacted by Ga. L. 1991, p. 465, § 1.)
This section is based both on the Model Act and on its Business Code counterpart.
Unlike either, however, it contains an introductory proviso intended to acknowledge the existence of other laws that may establish different standards with respect to some activities engaged in by directors, such as investment of corporate funds.
Subsection (1) departs from the Model Act and follows the Business Code formulation of standards verbatim. Subsections 2(D) and (5) are taken from the Model Act.
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For article, "What Duty of Care Does a Homeowner Association Owe Its Members?," see 22 Ga. St. Bar J. 19 (Dec. 2016).
