(Code 1981, §14-2-1022, enacted by Ga. L. 1988, p. 1070, § 1.)
Law reviews.- For article, "Some Distinctive Features of the Georgia Business Corporation Code," 28 Ga. St. B. J. 101 (1991).
COMMENT
Source: Model Act, Section 10.22. This replaces former §§ 14-2-146 &14-2-176.
Supermajority provisions relating to the board of directors may appear in the bylaws of the corporation without specific authorization in the articles of incorporation. See Section 14-2-824(a) and (c). Like other bylaw provisions, they may be adopted either by the board of directors or by the shareholders. See Section 14-2-1020. Such provisions, further, may be amended or repealed by the board of directors or shareholders as provided in this section.
Subsection (a) of the Model Act was amended to provide for higher voting requirements than originally specified. Subsection (a)(1) provides that a bylaw providing for board action may be adopted or amended by the shareholders, but only by affirmative vote of a majority of all votes entitled to be cast, or such higher vote as is required by the articles of incorporation or bylaws. The Model Act did not require such a high vote for shareholder action.
Subsection (a)(2) states that where supermajority voting for the board is approved or altered by the board, it must be by a majority of the entire board, rather than by a simple majority of a quorum, as would otherwise be permitted by Section 14-2-824(c), or by such higher vote as is required by the articles of incorporation or bylaws.
Subsection (b) provides that where shareholders adopt a bylaw concerning quorum and voting requirements for the board of directors, they may prescribe the conditions under which it may be amended.
Subparagraph (c) of the Model Act was deleted as superfluous because of the changes made in subsection (a).
Prior law was not so explicit about the procedures for adopting and amending bylaws governing supermajority requirements, reflecting the lesser interest in voting rules at the time of adoption. Section 14-2-146(a) simply provided for simple majority quorums "unless the articles of incorporation or the bylaws shall provide that a different number shall constitute a quorum. . . ." Section 14-2-146(b) provided that a majority of a quorum might act, unless a greater vote was required by articles, bylaws or this article. There were no statutory limitations on amendments to the bylaws concerning these provisions. Thus they were governed by Section 14-2-176(c), which required approval of all bylaws by the same vote - a majority of all voting shares, or a majority of all directors in office.
Cross-References Bylaws: amendment, see § 14-2-1020; generally, see § 14-2-206. Quorum and voting of directors, see § 14-2-824. Quorum and voting of shareholders: normal, see §§ 14-2-725 &14-2-726. Supermajority requirements, see § 14-2-727.
RESEARCH REFERENCES
ALR.
- Validity, construction, and effect of provision in charter or bylaw requiring supermajority vote, 80 A.L.R.4th 667.
ARTICLE 11 MERGER AND SHARE EXCHANGE
Law reviews.
- For article, "Comparison of Features of Old and New Business Corporation Laws Relating to Domestic Corporations," see 5 Ga. St. B. J. 13 (1968). For article, "Foreign Corporations in Georgia," see 10 Ga. St. B.J. 243 (1973). For article, "Hospital Mergers, Market Concentration and the Herfindahl-Hirschman Index," see 33 Emory L.J. 869 (1985). For article, "Georgia's New Business Corporation Code," see 24 Ga. St. B. J. 158 (1988). For article, "Changes in Corporate Practice under Georgia's New Business Corporation Code," see 40 Mercer L. Rev. 655 (1989).
JUDICIAL DECISIONS
Editor's notes.
- Editor's notes. - In light of the similarity of the statutory provisions, a decision under former Code 1933, §§ 22-1001 and 22-1002 and former Article 11A of former Chapter 2, which was repealed by Ga. L. 1988, p. 1070, § 1, effective July 1, 1989, is included in the annotations for this Code section.
Constitutionality- Former Article 11A enjoyed a presumption of validity under the supremacy and interstate commerce clauses, when it could not be established with the required degree of legal certainty that the statute denied hostile tender offers for Georgia corporations a meaningful opportunity to succeed. West Point-Pepperell, Inc. v. Farley, Inc., 711 F. Supp. 1096 (N.D. Ga. 1989) (decided under former Article 11A).
Definitions.- A consolidation is the union of two or more corporations into one corporate body, after which the constituent corporations cease to exist; a merger is the absorption of one corporation into another; and an amalgamation is merely the English term used to designate a consolidation or merger. Kemos, Inc. v. Bader, 545 F.2d 913 (5th Cir. 1977) (decided under former Code 1933, §§ 22-1001 and 22-1002).
OPINIONS OF THE ATTORNEY GENERAL
Editor's notes.
- In light of the similarity of the statutory provisions, an opinion under former Code 1933, § 22-1001 and former Article 11A of former Chapter 2, which were repealed by Ga. L. 1988, p. 1070, § 1, effective July 1, 1989, is included in the annotations for this Code section.
Disclosure and approval requirements for bank mergers are generally more difficult than for nonbank corporations. 1981 Op. Att'y Gen. No. 81-103 (decided under former Code 1933, § 22-1001).
RESEARCH REFERENCESControlling Stockholder's Breach of Duty to Investigate Motive and Intent of Purchaser Before Selling Stock, 9 POF2d 261.
De Facto Merger of Two Corporations, 20 POF2d 609.
ALR.- Duty of corporate directors to exercise "informed" judgment in recommending responses to merger or tender offers, 46 A.L.R.4th 887.
Liability of successor corporation for injury or damage caused by product issued by predecessor, based on merger or consolidation of transferor and transferee, 109 A.L.R.5th 301.
Application of Clayton Act to Mergers and Acquisitions of Hospitals and Healthcare Systems (15 U.S.C. §§ 12 to 27), 13 A.L.R. Fed. 3d 7.
PART 1 MERGER AND SHARE EXCHANGE
RESEARCH REFERENCES
Am. Jur. 2d.- 19 Am. Jur. 2d, Corporations, § 2227 et seq.
C.J.S.- 19 C.J.S., Corporations, § 885 et seq.
ALR.
- Power to require nonassenting creditors or bondholders to accept securities of, or shares in, new or reorganized corporation, 88 A.L.R. 1238.
Construction and effect of provision for payment of dissenting stockholders in statutes relating to merger, consolidation, or reorganization of banks or other corporations, 162 A.L.R. 1237; 174 A.L.R. 960.
Merger or consolidation of corporate lessee as breach of covenant against assignment or sublease, 24 A.L.R.2d 695.
Change in name, location, composition, or structure of obligor commercial enterprise subsequent to execution of guaranty or surety agreement as affecting liability of guarantor or surety to the obligee, 69 A.L.R.3d 567.
Merger or consolidation of corporate lessee as breach of clause in lease prohibiting, conditioning, or restricting assignment or sublease, 39 A.L.R.4th 879.