Application of Part

  1. Law
  2. Georgia Code
  3. Corporations, Partnerships, and Associations
  4. Business Corporations
  5. Directors and Officers
  6. Indemnification
  7. Application of Part

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  1. A corporation may, by a provision in its articles of incorporation or bylaws or in a resolution adopted or a contract approved by its board of directors or shareholders, obligate itself in advance of the act or omission giving rise to a proceeding to provide indemnification or advance funds to pay for or reimburse expenses consistent with this part. Any such obligatory provision shall be deemed to satisfy the requirements for authorization referred to in subsection (c) of Code Section 14-2-853 or subsection (c) of Code Section 14-2-855.
  2. Any provision pursuant to subsection (a) of this Code section shall not obligate the corporation to indemnify or advance expenses to a director of a predecessor of the corporation, pertaining to conduct with respect to the predecessor, unless otherwise specifically provided. Any provision for indemnification or advance for expenses in the articles of incorporation, bylaws, or a resolution of the board of directors or shareholders, partners, or, in the case of limited liability companies, members or managers of a predecessor of the corporation or other entity in a merger or in a contract to which the predecessor is a party, existing at the time the merger takes effect, shall be governed by paragraph (3) of subsection (a) of Code Section 14-2-1106.
  3. A corporation may, by a provision in its articles of incorporation, limit any of the rights to indemnification or advance for expenses created by or pursuant to this part.
  4. This part shall not limit a corporation's power to pay or reimburse expenses incurred by a director or an officer in connection with his or her appearance as a witness in a proceeding at a time when he or she is not a party.
  5. Except as expressly provided in Code Section 14-2-857, this part shall not limit a corporation's power to indemnify, advance expenses to, or provide or maintain insurance on behalf of an employee or agent.
  6. Any provision in a corporation's articles of incorporation or bylaws or in a resolution adopted or contract approved by its board of directors or shareholders that obligates the corporation to provide indemnification to the fullest extent permitted by law shall, unless such provision or another provision in the corporation's articles of incorporation or bylaws or in a resolution adopted or a contract approved by its board of directors or shareholders expressly provides otherwise, be deemed to obligate the corporation:
    1. To advance funds to pay for or reimburse expenses in accordance with Code Section 14-2-853 or subsection (c) of Code Section 14-2-856 to the fullest extent permitted by law; and
    2. To indemnify directors to the fullest extent permitted in Code Section 14-2-856, provided that such provision is duly authorized as required in subsection (a) of Code Section 14-2-856, and to indemnify officers to the fullest extent permitted in paragraph (2) of subsection (a) and subsection (b) of Code Section 14-2-857.

(Code 1981, §14-2-859, enacted by Ga. L. 1988, p. 1070, § 1; Ga. L. 1996, p. 1203, § 5; Ga. L. 2006, p. 825, § 5/SB 469; Ga. L. 2016, p. 225, § 1-10/SB 128.)

The 2016 amendment, effective July 1, 2016, inserted "or subsection (c) of Code Section 14-2-856" in paragraph (f)(1).

RESEARCH REFERENCES

Am. Jur. 2d.

- 18B Am. Jur. 2d, Corporations, § 1624 et seq.

PART 6 CONFLICTING INTEREST TRANSACTIONS

JUDICIAL DECISIONS

Editor's notes.

- In light of the similarity of the statutory provisions, decisions under former Code 1933, § 22-716 and former Code Section 14-2-155, which were repealed by Ga. L. 1988, p. 1070, § 1, effective July 1, 1989, are included in the annotations for this part.

Corporate board of directors may ratify act of officer which it could have authorized originally. Horne v. Drachman, 247 Ga. 802, 280 S.E.2d 338 (1981) (decided under former Code 1933, § 22-716).

Cited in Crowder v. Electro-Kinetics Corp., 228 Ga. 610, 187 S.E.2d 249 (1972); Comolli v. Comolli, 241 Ga. 471, 246 S.E.2d 278 (1978); Henson v. American Family Corp., 171 Ga. App. 724, 321 S.E.2d 205 (1984).

RESEARCH REFERENCES

ALR.

- Duty of director to disclose existence of lien or claim against property on which corporation or association lends money, 3 A.L.R. 1058.

Motive as affecting personal liability of directors in voting for acts not in themselves illegal, 4 A.L.R. 166.

Laches as affecting right of corporation or its stockholders to relief against directors for violation of trust, 10 A.L.R. 370.

Assignability of claim against officers or directors of corporation for breach of duty, 80 A.L.R. 875.

Validity, construction, and effect of clause in obligation of corporation that it is issued without recourse against officers or directors, 97 A.L.R. 1157.

Sole actor doctrine where officer or agent of corporation acting adversely to it is its sole representative in the transaction, 111 A.L.R. 665.

Construction and application of statutes making corporate officers or directors liable in respect of loans or advances to stockholders or officers, 129 A.L.R. 1258.

Transaction between corporate trustee, administrator, executor, or guardian, and affiliated corporation as violation of rule against self-dealing, 151 A.L.R. 905.

Accountability of corporate directors or officers for profit from activities beyond the corporate powers, but involving the use of information and opportunities available to them by reason of their position in the corporation, 153 A.L.R. 663.

Liability of corporate officer or director for commission or compensation received from third person in connection with that person's transaction with corporation, 47 A.L.R.3d 373.

What business opportunities are in "line of business" of corporation for purposes of determining whether a corporate opportunity was presented, 77 A.L.R.3d 961.

Propriety of attorney who has represented corporation acting for corporation in controversy with officer, director, or stockholder, 1 A.L.R.4th 1124.

Financial inability of corporation to take advantage of business opportunity as affecting determination whether "corporate opportunity" was presented, 16 A.L.R.4th 185.

Purchase of shares of corporation by director or officer as usurpation of "corporate opportunity,", 16 A.L.R.4th 784.

Fairness to corporation where "corporate opportunity" is allegedly usurped by director or officer, 17 A.L.R.4th 479.


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