Actions Against Directors and Officers

  1. Law
  2. Georgia Code
  3. Banking and Finance
  4. Financial Institutions
  5. Banks and Trust Companies
  6. Management
  7. Actions Against Directors and Officers

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  1. An action may be brought by any of the persons named in subsection (b) of this Code section against one or more directors or officers of a bank or trust company to procure for the benefit of the bank or trust company a judgment for the following relief:
    1. To compel the defendant to account for his or her official conduct, or to decree any other relief called for by his or her official conduct, in the following cases:
      1. The neglect of, failure to perform, or other violation of his or her duties in the management of the bank or trust company or in the disposition of corporate assets committed to his or her charge;
      2. The acquisition by himself or herself, transfer to others, loss, or waste of corporate assets due to any neglect of, failure to perform, or other violation of his or her duties;
      3. The appropriation, in violation of his or her duties, of any business opportunity of the bank or trust company;
    2. To enjoin a proposed unlawful conveyance, assignment, or transfer of corporate assets or other unlawful corporate transaction, where there is sufficient evidence that it will be made;
    3. To set aside an unlawful conveyance, assignment, or transfer of corporate assets, where the transferee knew of its unlawfulness and is made a party to the action.
  2. An action may be brought for the relief provided in this Code section and in Code Section 7-1-494, relating to the liability of directors in certain cases, by the bank or trust company, or by a receiver, trustee in bankruptcy, officer, director, or judgment creditor thereof, or by a shareholder in accordance with Code Sections 7-1-440 and 7-1-441, relating to derivative actions.
  3. No action shall be brought for the relief provided in this Code section more than four years from the time the cause of action accrued.
  4. This Code section shall not limit any liability otherwise imposed by law upon any director or officer or any third party, provided that after April 1, 1975, Code Section 14-4-65, relating to improper dividends and liability of officers, shall no longer be applicable to officers or directors of banks or trust companies.
  5. Notwithstanding the foregoing, a bank or trust company may provide in its articles of incorporation for the elimination or limitation of the personal liability of a director to the bank or trust company or its shareholders to the same extent as a business corporation incorporated under the provisions of Chapter 2 of Title 14.

(Code 1933, § 41A-2214, enacted by Ga. L. 1974, p. 705, § 1; Ga. L. 1975, p. 445, § 29; Ga. L. 1987, p. 1586, § 8; Ga. L. 1993, p. 917, § 4; Ga. L. 2018, p. 214, § 9/HB 780.)

The 2018 amendment, effective May 3, 2018, inserted "or her" throughout subsection (a); inserted "or herself" in subparagraph (a)(1)(B); and substituted the present provisions of subsection (e) for the former provisions, which read: "Notwithstanding the foregoing, a bank or trust company may provide through an amendment to its articles of incorporation for the elimination or limitation of the personal liability of a director to the shareholders of the bank or trust company to the same extent as a business corporation incorporated under the provisions of Chapter 2 of Title 14, provided that such an amendment to the articles of incorporation must be adopted by the affirmative vote of two-thirds of the total shares outstanding." See Editor's notes for applicability.

Editor's notes.

- Ga. L. 2018, p. 214, § 26(b)/HB 780, not codified by the General Assembly, provides that: "It is not the intent of the General Assembly to affect the law applicable to litigation pending as of March 9, 2018."

Law reviews.

- For article, "Statutes of Limitation: Counterproductive Complexities," see 37 Mercer L. Rev. 1 (1985).

RESEARCH REFERENCES

Am. Jur. 2d.

- 10 Am. Jur. 2d, Banks and Financial Institutions, §§ 402 et seq., 416.

C.J.S.

- 9 C.J.S., Banks and Banking, §§ 510, 511.

ALR.

- Constitutionality of statutes relating to personal liability of officers or directors of bank, 57 A.L.R. 888.

False representation by officers or directors of bank or building and loan association that impairment of capital has been made good, as basis of action against them, 144 A.L.R. 1498.

Liability, under National Banking Act (12 USCS § 93), of national bank directors for retaliation against officer or employee who discloses or refuses to commit banking irregularity, 101 A.L.R. Fed. 377.

Standard of liability applicable to action against directors or officers of failed depository institution pursuant to 12 USCS § 1821(k), 125 A.L.R. Fed. 435.


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