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Corporation Law: Georgia
A director who votes for or assents to an improper distribution is
personally liable to the corporation for the amount that exceeds what
could have been lawfully distributed (Ga. Code Ann. § 14-2-832(a)).
Any director found liable for approving an improper distribution
is entitled to contribution from every other director who could be
held liable and from each shareholder who accepted the unlawful
distribution with knowledge that the distribution was unlawful (Ga.
Code Ann. § 14-2-832(b)).
BOARD OF DIRECTORS
14. Please describe any minimum requirements to serve as
corporate director. What are the requirements for or limits on
the size of the board of directors?
A corporate director must be at least 18 years old. Unless provided for
either:
Residents of Georgia.
Shareholders of the corporation.
requirements. (Ga. Code Ann. § 14-2-802.)
A board of directors must consist of at least one individual. The
bylaws. Shareholders or directors can establish a variable range
for the size of the board of directors, if provided for in the articles
of incorporation or bylaws. (Ga. Code Ann. § 14-2-803.) Terms of
directors generally expire at the next annual shareholders' meeting
following their election unless their terms are staggered. Directors
continue to serve past the expiration of their terms until successors
are elected and qualify, or until there is a decrease in the number of
directors. (Ga. Code Ann. § 14-2-805.)
Corporations having cumulative voting may amend the minimum
number of directors only through adoption by shareholders (Ga. Code
Ann. § 14-2-803(c)).
Directors may resign at any time by delivering notice in writing or by
electronic transmission to either:
The board of directors.
The chairperson of the board of directors.
The corporation.
A resignation is effective when the notice is delivered, unless a later
effective date is specified. (Ga. Code Ann. § 14-2-807(a),(b).)
Shareholders may remove one or more directors with or without
However, directors with staggered terms can only be removed for
cause. (Ga. Code Ann. § 14-2-808(a),(d).)
If a director is elected by a voting group of shareholders, only the
shareholders of that voting group may participate in the vote to
remove him. If cumulative voting is authorized, a director may not
be removed if the number of votes sufficient to elect him under
cumulative voting is voted against his removal. If cumulative voting
is not authorized, a director may be removed only by a majority of the
votes entitled to be cast. (Ga. Code Ann. § 14-2-808(b),(c).)
A director may be removed only at a meeting called for the purpose
of removing him, and the meeting notice must state removal as a
purpose (Ga. Code Ann. § 14-2-808).
15. Please summarize the board of directors' ability to
designate committees and subcommittees. Are there any
limitations on the board of directors' ability to delegate
authority to those committees?
board of directors may create committees and appoint one or more
directors to serve on them.Sections 14-2-820to14-2-824 of the
Georgia Code Annotated, which govern meetings, action without
meetings, notice and waiver of notice, and quorum and voting
requirements of the board of directors also apply to committees
and their members. Each committee may exercise the authority of
the board of directors to the extent specified by the board or in the
However, committees may not:
Approve or propose to shareholders any action requiring share-
holder approval.
Fill vacancies on the board of directors or any of its committees.
preferences, limitations and relative rights of shares; or
increase or decrease the number of shares contained in a series of
shares established under Section 14-2-602 of the Georgia Code
Annotated, but not below the number of shares then issued.
Adopt, amend or repeal bylaws.
Approve a plan of merger not requiring shareholder approval.
(Ga. Code Ann. § 14-2-825(d).)
INDEMNIFICATION
16. Please describe the corporation's ability, and any
requirements or limits on that ability, to indemnify its directors
and officers in your jurisdiction.
A corporation may indemnify an individual who is a party to a
proceeding because that individual is or was a director against liability
incurred in the proceeding if the individual:
Conducted himself in good faith.
Reasonably believed that the conduct:
was in the best interests of the corporation, in the case of conduct
in the director's official capacity; or
was at least not opposed to the best interests of the corporation,
in all other cases.
Had no reasonable cause to believe his conduct was unlawful, in
the case of any criminal proceeding.
(Ga. Code Ann. § 14-3-851(a).)
However, a corporation may not indemnify a director underSection
14-2-851 of the Georgia Code Annotated unless a determination
has been made for a specific proceeding that indemnification of the
director is permissible in the circumstances because he has met the
relevant standard of conduct (Ga. Code Ann. § 14-2-855(a)).