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Staggered Terms for Directors

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The articles of incorporation or a bylaw adopted by the shareholders may provide for staggering the terms of directors by dividing the total number of directors into two or three groups. In that event, the terms of directors in the first group expire at the first annual shareholders' meeting after their election, the terms of the second group expire at the second annual shareholders' meeting after their election, and the terms of the third group, if any, expire at the third annual shareholders' meeting after their election. At each annual shareholders' meeting held thereafter, directors shall be chosen for a term of two years or three years, as the case may be, to succeed those whose terms expire.
When the number of directors is increased and any newly created directorships are filled by the board, the terms of the additional directors shall expire at the next annual election of directors by the shareholders.

(Code 1981, §14-2-806, enacted by Ga. L. 1988, p. 1070, § 1; Ga. L. 2016, p. 225, § 1-3/SB 128.)

The 2016 amendment, effective July 1, 2016, in subsection (a), in the first sentence, deleted "the" following "terms of", and deleted ", with each group containing one half or one third of the total, as near as may be" following "three groups"; in subsection (b), deleted the introductory language which read: "If directors have staggered terms and the number of directors is thereafter changed:"; deleted paragraph (b)(1), which read: "Any increase or decrease in the number of directors shall be so apportioned among the classes as to make all classes as nearly equal in number as possible; and"; and deleted the paragraph (b)(2) designation.

Law reviews.

- For article, "Some Distinctive Features of the Georgia Business Corporation Code," 28 Ga. St. B.J. 101 (1991).

COMMENT

Source: 1984 Model Act § 8.06, amendment proposed, 54 Bus. Law. 1233 (1999), adopted, 55 Bus. Law. 1247 (2000); Del. Code Ann. tit. 8, § 141(d); and former O.C.G.A. § 14-2-143.

Note to 2016 Amendment This Note to 2016 Amendment supersedes and replaces the Comment to Code Section 14-2-806. The 2016 amendments to Subsection (a) of Code Section 14-2-806 deleted the requirement that each group of staggered directors contain one-half or one-third, as near as may be, of the total number of directors. The 2016 amendments to Subsection (b) of Code Section 14-2-806 deleted the requirement that if the number of directors on a staggered board is changed, any increase or decrease in the number of directors must be apportioned among the classes as to make all classes as nearly equal in number as possible.

Section 14-2-806 recognizes the practice of "classifying" the board or "staggering" the terms of directors so that directors are elected for two- or three-year terms rather than one-year terms.

Section 14-2-806 permits staggered boards without regard to size. Subsection (a) is drawn from Del. Code Ann. tit. 8, § 141(d), and provides maximum flexibility in the use of staggered boards.

Subsection (b) preserves prior Georgia law providing that when the number of directors is increased and any newly created directorships are filled by the board, the terms of the additional directors shall expire at the next annual election of directors by the shareholders.

Cross-References Annual shareholders' meeting, see § 14-2-701. Cumulative voting, see § 14-2-728. Election of directors generally, see § 14-2-728. Number of directors, see § 14-2-803. Removal, see § 14-2-808. Resignation, see § 14-2-807. Terms of directors generally, see § 14-2-805. Vacancies, see § 14-2-810.

RESEARCH REFERENCES

Am. Jur. 2d.

- 18B Am. Jur. 2d, Corporations, § 1186 et seq.

C.J.S.

- 19 C.J.S., Corporations, §§ 518 et seq., 535.

ALR.

- Construction and effect of corporate bylaws or articles relating to change in number of directors, 3 A.L.R.3d 623.

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