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O.C.G.A. tit. 14, ch. 3, art. 7A

O.C.G.A. tit. 14, ch. 3, art. 7A
in effect

O.C.G.A. § 14-3-740 Definitions.

14-3-740. Definitions. As used in this article, the term 'derivative proceeding' means a civil suit in the right of a domestic corporation or, to the extent provided in Code Section 14-3-747, in the right of a foreign corporation. (Code 1981, § 14-3-740, enacted by Ga. L. 1991, p. 465, § 1.) (Amended by Ga. L. 2023, Act 260 (SB 148), eff. July 1, 2023.)

O.C.G.A. § 14-3-741 Standing.

14-3-741. Standing. (a) A derivative proceeding may be brought by: (1) Any director; (2) Any member or members having 5 percent or more of the voting power; or (3) Fifty or more members, regardless of voting power. (b) A member may not commence or maintain a derivative proceeding unless the member: (1) Was a member of the corporation at the time of the act or omission complained of or became a member through transfer by operation of law from one who was a member at that time; and (2) Fairly and adequately represents the interests of the corporation in enforcing the right of the corporation. (Code 1981, § 14-3-741, enacted by Ga. L. 1991, p. 465, § 1.) (Amended by Ga. L. 2023, Act 260 (SB 148), eff. July 1, 2023; Ga. L. 2024, Act 701 (SB 448), eff. July 1, 2024.)

O.C.G.A. § 14-3-742 Demand for suitable action by corporation required.

14-3-742. Demand for suitable action by corporation required. (a) No derivative proceeding may be commenced until: (1) A written demand has been made upon the corporation to take suitable action; and (2) Ninety days have expired from the date the demand was made unless the complainant has earlier been notified that the demand has been rejected by the corporation or unless irreparable injury to the corporation would result by waiting for the expiration of the 90 day period. (b) In the case of charitable corporations, the complainant shall deliver a copy of the demand to the Attorney General within ten days of making the demand on the corporation. (Code 1981, § 14-3-742, enacted by Ga. L. 1991, p. 465, § 1.) (Amended by Ga. L. 2023, Act 260 (SB 148), eff. July 1, 2023.)

O.C.G.A. § 14-3-743 Stay of proceeding.

14-3-743. Stay of proceeding. If the corporation commences an inquiry into the allegations made in the demand or complaint, the court may stay any derivative proceeding for such period as the court deems appropriate. (Code 1981, § 14-3-743, enacted by Ga. L. 1991, p. 465, § 1.) (Amended by Ga. L. 2023, Act 260 (SB 148), eff. July 1, 2023.)

O.C.G.A. § 14-3-744 Dismissal of proceeding.

14-3-744. Dismissal of proceeding. (a) The court may dismiss a derivative proceeding if, on motion by the corporation, the court finds that one of the groups specified in subsection (b) of this Code section has made a determination in good faith after conducting a reasonable investigation upon which its conclusions are based that the maintenance of the derivative suit is not in the best interests of the corporation. The corporation shall have the burden of proving the independence and good faith of the group making the determination and the reasonableness of the investigation. (b) The determination in subsection (a) of this Code section shall be made by: (1) A majority vote of independent directors present at a meeting of the board of directors if the independent directors constitute a quorum; (2) A majority vote of a committee consisting of two or more independent directors appointed by a majority vote of independent directors present at a meeting of the board of directors, whether or not such independent directors constitute a quorum; or (3) A panel of one or more independent persons appointed by the court upon motion by the corporation. (c) None of the following shall by itself cause a director to be considered not independent for purposes of subsection (b) of this Code section: (1) The nomination or election of the director by directors who are not independent; (2) The naming of the director as a defendant in the derivative proceeding; or (3) The fact that the director approved the action being challenged in the derivative proceeding so long as the director did not receive a personal benefit as a result of the action. (Code 1981, § 14-3-744, enacted by Ga. L. 1991, p. 465, § 1.) (Amended by Ga. L. 2023, Act 260 (SB 148), eff. July 1, 2023.)

O.C.G.A. § 14-3-745 Discontinuance or settlement of proceeding prohibited without court approval.

14-3-745. Discontinuance or settlement of proceeding prohibited without court approval. A derivative proceeding may not be discontinued or settled without the court's approval. If the court determines that a proposed discontinuance or settlement will substantially affect the interests of the corporation's members or a class of members, the court shall direct that notice be given to the members affected. (Code 1981, § 14-3-745, enacted by Ga. L. 1991, p. 465, § 1.) (Amended by Ga. L. 2023, Act 260 (SB 148), eff. July 1, 2023.)

O.C.G.A. § 14-3-746 Payment of expenses of proceeding.

14-3-746. Payment of expenses of proceeding. On termination of the derivative proceeding the court may: (1) Order the corporation to pay the plaintiff's reasonable expenses (including attorney's fees) incurred in the proceeding if it finds that the proceeding has resulted in a substantial benefit to the corporation; or (2) Order the plaintiff to pay any defendant's reasonable expenses (including attorney's fees) incurred in defending the proceeding if it finds that the proceeding was commenced or maintained without reasonable cause or for an improper purpose. (Code 1981, § 14-3-746, enacted by Ga. L. 1991, p. 465, § 1.) (Amended by Ga. L. 2023, Act 260 (SB 148), eff. July 1, 2023.)

O.C.G.A. § 14-3-747 Applicability to foreign corporations.

14-3-747. Applicability to foreign corporations. In any derivative proceeding in the right of a foreign corporation, the matters covered by this article shall be governed by the laws of the jurisdiction of incorporation of the foreign corporation except for Code Sections 14-3-743 and 14-3-745 and paragraph (2) of Code Section 14-3-746. (Code 1981, § 14-3-747, enacted by Ga. L. 1991, p. 465, § 1.) (Amended by Ga. L. 2023, Act 260 (SB 148), eff. July 1, 2023.)
Source: Official Code of Georgia (Legislative Counsel's copy via Public.Resource.Org) + acts (legis.ga.gov)URL: https://www.legis.ga.gov/api/legislation/document/20232024/219037Fetched: 10/24/2026

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