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2018 Georgia Code 14-7-5 | Car Wreck Lawyer

Link to State of Georgia Official Statute 2018 Georgia Code Annotated (sourced from legal.resource.org)
O.C.G.A. 14-7-5 Case Law from Google Scholar Amendments to OCGA 14-7-5

TITLE 14 CORPORATIONS, PARTNERSHIPS, AND ASSOCIATIONS

Section 7. Professional Corporations, 14-7-1 through 14-7-7.

ARTICLE 3 CORPORATIONS ORGANIZED FOR RELIGIOUS, FRATERNAL, OR EDUCATIONAL PURPOSES

14-7-5. Stock.

  1. Shares in a professional corporation may only be issued to, held by, or transferred to a person who is licensed to practice the profession for which the corporation is organized and who, unless disabled, is actively engaged in such practice as an active practicing member of the issuing corporation, except as otherwise permitted under this Code section. Each stock certificate shall be appropriately endorsed disclosing this restriction and stating that shares standing in the name of a disqualified or retired person, or in the name of the personal representative of a deceased person, except during the holding period provided in this Code section, are void.
  2. Shares in a professional corporation shall be voted by the holder of record or by another shareholder in the same corporation in accordance with a proxy or an agreement providing for the voting of the shares.
  3. Shares in a professional corporation held by a deceased or retired shareholder shall, within six months after the date of death or retirement of such shareholder, be either redeemed or canceled by the corporation or transferred to a person or persons authorized to hold the shares unless transferred under a written agreement to an authorized shareholder pursuant to subsection (d) of this Code section. The shares held by a shareholder who becomes legally disqualified from practicing the profession for which the corporation is organized or who is disqualified as a shareholder under subsection (a) of this Code section shall be so redeemed, canceled, or transferred within 90 days after the disqualification becomes final. In the absence of an article or bylaw provision or an agreement providing for the redemption or transfer of such shares or, if the shares are not redeemed or transferred pursuant to such a provision or agreement within the required period of time, the corporation is authorized to and shall cancel the shares on its books at the termination of the required period. If valuation and payment terms are not fixed under such an existing provision or agreement and are not agreed upon either prior to or at any time after the termination of the required period, the fair value of the redeemed or canceled shares shall be determined and paid in the same manner as if the personal representative of the deceased shareholder, or the retired or disqualified shareholder, were a shareholder entitled to valuation and payment for his shares under Code Section 14-2-1327. The personal representative of the deceased shareholder, or the retired or disqualified shareholder, shall not be authorized at any time to participate in or vote on any matter concerning the rendering of professional services by the corporation. Upon the actual transfer or redemption or termination of the required holding period, whichever first occurs, the personal representative of the deceased shareholder, or the retired or disqualified shareholder, shall cease to be a holder of record for all purposes and shall deliver the share certificates to the purchaser or to the corporation with any required endorsement.
  4. Shares held in a professional corporation and owned by a shareholder may be transferred under a written agreement to an authorized shareholder which allows the shares to remain outstanding provided that the shares are collateral under a security agreement for the purchase price of the shares. In the event that the purchase price is not paid and the shares held as collateral are returned to the selling shareholder, the selling shareholder shall have a reasonable period of time, not to exceed one year after the return of the shares, to transfer the shares to an authorized shareholder. During that period the shareholder, if an active or inactive member of his profession, may vote the shares.
  5. If a professional corporation at any time ceases to have a shareholder licensed or otherwise authorized to practice and actually practicing, the profession for which the corporation is organized, or if a professional corporation does not redeem, cancel, or transfer the shares of a disqualified, retired, or deceased person in accordance with this Code section, the corporation shall cease to be a professional corporation and shall operate as a corporation for profit organized under Chapter 2 of this title for the sole purpose of liquidation. The corporation may at any time after it ceases to be a professional corporation change its purpose by amending its articles.

(Ga. L. 1970, p. 243, § 5; Ga. L. 1988, p. 1369, § 1; Ga. L. 1989, p. 946, § 107.)

Law reviews.

- For survey article on business associations, see 34 Mercer L. Rev. 13 (1982). For annual survey of cases discussing business associations, see 57 Mercer L. Rev. 49 (2005).

JUDICIAL DECISIONS

Nonphysician as shareholder in medical professional corporation.

- Nonphysician cannot be shareholder in medical professional corporation, except under limited circumstances prescribed by law. Sherrer v. Hale, 248 Ga. 793, 285 S.E.2d 714 (1982).

Interpretation of professional corporation's bylaws.

- Trial court erred by granting partial summary judgment to a doctor in a declaratory judgment action against the former clinic the doctor had worked for and was a shareholder of, because the trial court erroneously interpreted the professional corporation's bylaws as a restrictive covenant in restraint of trade when, in fact, the bylaws were not part of the doctor's employment contract and did not provide for a noncompetition penalty or forfeiture provision upon the doctor's departure. Albany Bone & Joint Clinic, P.C. v. Hajek, 272 Ga. App. 464, 612 S.E.2d 509 (2005).

Cited in Broome v. Ginsberg, 159 Ga. App. 202, 283 S.E.2d 1 (1980); Dougherty, McKinnon & Luby v. Greenwald, 225 Ga. App. 762, 484 S.E.2d 722 (1997); Davis v. VCP South, LLC, 297 Ga. 616, 774 S.E.2d 606 (2015).

OPINIONS OF THE ATTORNEY GENERAL

Issuance of professional corporation shares to employee stock ownership plan trustees.

- Professional corporations may issue shares to persons who are trustees of an employees' stock ownership plan so long as all trustees and all beneficiaries are persons licensed by the state to practice the profession for which the corporation was organized. 1975 Op. Att'y Gen. No. 75-61.

A professional corporation is prohibited by state law from issuing stock to an employee stock ownership plan, established as a trust, if some of the beneficiaries of the trust are not licensed in the profession of the corporation. 1995 Op. Att'y Gen. No. U95-4.

RESEARCH REFERENCES

ALR.

- Issues pertaining to ownership of professional corporation as affected by resignation from corporate practice by active shareholder, 32 A.L.R.4th 921.

Cases Citing Georgia Code 14-7-5 From Courtlistener.com

Total Results: 7

KAMAL NAYANI v. AMINA HASSANALI

Court: Ga. Ct. App. | Date Filed: 2024-01-30T00:00:00-08:00

Snippet: 13-6-11. Following a hearing, the court entered the August 18, 2023 order denying Nayani’s motion for reconsideration and awarding 1 See Nayani v. Hassanali, 362 Ga. App. 313, 315 (1), (2) (868 SE2d 465) (2022). See also OCGA § 14-7-5 (a) (“Shares in a professional corporation may only be issued to, held by, or transferred to a person who is licensed to practice the profession for which the corporation is organized and who, unless disabled, is actively engaged in such practice

KAMAL NAYANI v. AMINA HASSANALI

Court: Ga. Ct. App. | Date Filed: 2022-01-20T00:00:00-08:00

Snippet: disabled, is actively engaged in such practice as an active practicing member of the issuing corporation. . . .” OCGA § 14- 7-5 (a). So the agreement at issue — which was founded on a promise to transfer shares in Amina Medical Consultant, a professional corporation for the practice of medicine, to Nayani, who is not licensed to practice medicine — violates OCGA § 14-7-5 (a). [W]here a statute provides that persons proposing to engage in a certain business shall procure

Davis v. Vcp South, LLC

Court: Ga. | Date Filed: 2015-06-29T00:00:00-07:00

Citation: 297 Ga. 616, 774 S.E.2d 606, 2015 Ga. LEXIS 488

Snippet: Division 3, supra. Finally, cross-appellants claim the trial court erred in allowing the Davis Estate to maintain an ownership interest in VCP South through September 30, 2011 in light of Georgia’s law governing professional corporations. See OCGA § 14-7-5 (a) (“Shares in a professional corporation may only be issued to, held by, or transferred to a person who is licensed to practice the profession for which the corporation is organized... except as otherwise permitted under this Code section. . .

Rakusin v. Radiology Associates of Atlanta, P.C.

Court: Ga. Ct. App. | Date Filed: 2010-07-13T00:00:00-07:00

Citation: 699 S.E.2d 384, 305 Ga. App. 175, 2010 Fulton County D. Rep. 2423

Snippet: forth in OCGA § 14-7-5(c) of the Georgia Professional Corporation Act. Under that subsection, if the corporation and the personal representative of the deceased shareholder have not reached agreement on the terms of valuation and payment for the decedent's shares, the fair value of the . . . shares shall be determined and paid in the same manner as if the personal representative [was] a shareholder entitled to valuation and payment for his shares under Code Section 14-2-1327. OCGA § 14-7-5(c). OCGA §

Albany Bone & Joint Clinic, P.C. v. Hajek

Court: Ga. Ct. App. | Date Filed: 2005-03-11T00:00:00-08:00

Citation: 272 Ga. App. 464, 612 S.E.2d 509, 2005 Fulton County D. Rep. 827

Snippet: shareholder’s stock was void as an impermissibly broad restrictive covenant in restraint of trade. Hajek argued he should be treated as a dissenting shareholder entitled to the fair value of his stock in the corporation pursuant to OCGA §§ 14-2-1327 and 14-7-5. The superior court agreed and granted partial summary judgment to Hajek. The Clinic appeals, challenging the court’s characterization of the valuation provisions of the bylaws as a restrictive covenant in restraint of trade. Article III of the Clinic’s

Keeley v. Cardiovascular Surgical Associates, P.C.

Court: Ga. Ct. App. | Date Filed: 1999-01-12T00:00:00-08:00

Citation: 510 S.E.2d 880, 236 Ga. App. 26, 14 I.E.R. Cas. (BNA) 1266

Snippet: and filed a declaratory judgment action to have the covenant declared unenforceable. CSA counterclaimed to enjoin Keeley from violating the covenant. The court agreed with CSA and enjoined Keeley accordingly through January 2000. 1. Citing OCGA § 14-7-5(e), Keeley first argues that after Roberts' death, CSA failed for over six months to redeem, cancel or transfer his shares, thereby causing the corporation to cease to be a professional corporation and rendering it unable to engage in a medical practice

Dougherty, McKinnon & Luby, P.C. v. Greenwald

Court: Ga. Ct. App. | Date Filed: 1997-03-13T00:00:00-08:00

Citation: 484 S.E.2d 722, 225 Ga. App. 762, 97 Fulton County D. Rep. 1466

Snippet: further evident in light of the provisions of OCGA § 14-7-5, which set forth the parameters as to who can hold stock in a professional corporation. Under OCGA § 14-7-5(a), only those individuals "licensed to practice the profession for which the corporation is organized and who [are] actively engaged in such practice as an active practicing member of the issuing corporation" may hold shares in the professional corporation. And while OCGA § 14-7-5(c) expressly provides for a holding period during which