Derivative Actions by Members

  1. Law
  2. Georgia Code
  3. Public Utilities and Public Transportation
  4. Electrical Service
  5. Electric Membership Corporations and Foreign Electric Cooperatives
  6. Members
  7. Derivative Actions by Members

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  1. A derivative action may be brought by a member in the right of the electric membership corporation to procure a judgment in its favor against directors, officers, or other representatives of the electric membership corporation or members or third parties, or any combination thereof, whenever the electric membership corporation has a claim or cause of action which the representatives of the electric membership corporation, in violation of their duties, have failed to enforce, including a claim or cause of action against such representatives for their failure in this respect. However, a derivative action may not be brought until the expiration of 30 days after a member has delivered written demand upon the directors, officers, or other representatives of the electric membership corporation who are alleged to have failed to enforce such cause of action, setting forth the claim or cause of action which is sought to be enforced and the basis therefor.
  2. In a derivative action brought by one or more members in the right of an electric membership corporation to procure a judgment in favor of the electric membership corporation, the complaint shall be verified and shall allege that the plaintiff is a member at the time of bringing the action. It shall further allege that the plaintiff was a member at the time of the transaction of which he complained and that the demand required by subsection (a) of this Code section has been properly made.
  3. Such action shall not be discontinued, compromised, or settled without the approval of the court having jurisdiction of the action. If the court determines that the interest of the members will be substantially affected by such discontinuance, compromise, or settlement, the court shall direct that notice, by publication or otherwise, of the action and the proposed discontinuance, compromise, or settlement thereof be given to the members. If notice is directed to be given, the court may determine which one or more of the parties to the action shall bear the expense of giving the same in such amount as the court shall determine and find to be reasonable in the circumstances.
  4. If such action is successful in whole or in part or if anything is received by the plaintiff or plaintiffs as the result of the judgment, compromise, or settlement thereof, the court may award the plaintiff or plaintiffs reasonable expenses, including reasonable fees of attorneys, and shall direct him or them to account to the electric membership corporation for the remainder of the proceeds so received by him or them.
  5. In any such action instituted after July 1, 1981, the court having jurisdiction, upon final judgment and the finding that the action was brought without reasonable cause, may require the plaintiff or plaintiffs to pay the parties named as defendants the reasonable expenses, including fees of attorneys, incurred by them in defense of such action.

(Code 1933, § 34C-512, enacted by Ga. L. 1981, p. 1587, § 1.)

RESEARCH REFERENCES

Am. Jur. 2d.

- 19 Am. Jur. 2d, Corporations, §§ 2243, 2244, 2250-2252, 2259-2262, 2272, 2326.

C.J.S.

- 1A C.J.S., Actions, § 58.

PART 6 DIRECTORS AND OFFICERS

46-3-290. Management of business and affairs of electric membership corporation by board of directors; knowledge of limitations on directors' authority required; qualifications; compensation and reimbursement for expenses.

  1. Subject to the provisions of the articles of incorporation or the bylaws, the business and affairs of an electric membership corporation shall be managed by a board of directors.
  2. No limitation upon the authority which the directors would have in the absence of such limitation, whether contained in the articles of incorporation, bylaws, or otherwise, shall be effective against persons, other than members and directors, who are without actual knowledge of such limitation.
  3. Directors shall be natural persons of the age of 18 years or over. The articles of incorporation or bylaws may prescribe additional qualifications for directors.
  4. The compensation, if any, of directors for their services as such shall be on a per diem basis and, unless otherwise provided in the bylaws, shall be fixed by the board of directors. Directors also shall be entitled to reimbursement of expenses actually and necessarily incurred by them in the performance of their duties.

(Ga. L. 1937, p. 644, § 11; Ga. L. 1950, p. 233, § 1; Ga. L. 1975, p. 783, § 1; Code 1933, § 34C-601, enacted by Ga. L. 1981, p. 1587, § 1.)

RESEARCH REFERENCES

Am. Jur. 2d.

- 19 Am. Jur. 2d, Corporations, §§ 1341-1346, 1349-1364, 1381, 1395-1407, 1409-1412, 1414-1420, 1422-1425, 1427-1430, 1432-1440, 1443, 1444, 1475.

C.J.S.

- 19 C.J.S., Corporations, §§ 460-467. 29 C.J.S., Electricity, § 10.

JUDICIAL DECISIONS

Mandamus unavailable for nominee seeking to serve on electric membership corporation.

- Trial court erred by granting a nominee's writ of mandamus because under O.C.G.A. § 9-6-23, mandamus did not lie to enforce purely private contract rights and the nominee's efforts to be qualified as a person to sit on the board of an electric membership corporation was a private right as board members were not public officers within the meaning of O.C.G.A. § 9-6-20. Rigby v. Boatright, 294 Ga. 253, 751 S.E.2d 851 (2013).


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