Issuance of Shares

O.C.G.A. tit. 14, ch. 2, art. 6, pt. 2

in effect

O.C.G.A. § 14-2-620 Subscription for shares before incorporation.

14-2-620. Subscription for shares before incorporation. (a) A written subscription for shares entered into before incorporation is irrevocable for six months unless the subscription agreement provides a longer or shorter period or all the subscribers agree to revocation. (b) The board of directors may determine the payment terms of subscriptions for shares that were entered into before incorporation, unless the subscription agreement specifies them. A call for payment by the board of directors must be uniform so far as practicable as to all shares of the same class or series, unless the subscription agreement specifies otherwise. (c) Shares issued pursuant to subscriptions entered into before incorporation are fully paid and nonassessable when the corporation receives the consideration specified in the subscription agreement. (d) If a subscriber defaults in payment of money or property under a subscription agreement entered into before incorporation, the corporation may collect the amount owed as any other debt. Alternatively, unless the subscription agreement provides otherwise, the corporation may rescind the agreement and may sell the shares if the debt remains unpaid more than 20 days after the corporation sends written demand for payment to the subscriber. (e) A subscription agreement entered into after incorporation is a contract between the subscriber and the corporation subject to Code Section 14-2-621. (Code 1981, § 14-2-620, enacted by Ga. L. 1988, p. 1070, § 1.)

O.C.G.A. § 14-2-621 Issuance of shares.

14-2-621. Issuance of shares. (a) The powers granted in this Code section to the board of directors may be reserved to the shareholders by the articles of incorporation. (b) The board of directors may authorize shares to be issued for consideration consisting of any tangible or intangible property or benefit to the corporation, including cash, promissory notes, services performed, contracts for services to be performed, or other securities of the corporation. (c) Before the corporation issues shares, the board of directors must determine that the consideration received or to be received for shares to be issued is adequate. That determination by the board of directors is conclusive insofar as the adequacy of consideration for the issuance of shares relates to whether the shares are validly issued, fully paid, and nonassessable, and the authorization by the board of directors of the issuance of shares constitutes such determination. (d) When the corporation receives the consideration for which the board of directors authorized the issuance of shares, the shares issued therefor are fully paid and nonassessable. (e) The corporation may place in escrow shares issued for a contract for future services or benefits or a promissory note, or make other arrangements to restrict the transfer of the shares, and may credit distributions in respect of the shares against their purchase price, until the services are performed, the note is paid, or the benefits received. If the services are not performed, the note is not paid, or the benefits are not received, the shares escrowed or restricted and the distributions credited may be canceled in whole or in part. (Code 1981, § 14-2-621, enacted by Ga. L. 1988, p. 1070, § 1; Ga. L. 1993, p. 1231, § 4.)

O.C.G.A. § 14-2-622 Liability of shareholders.

14-2-622. Liability of shareholders. (a) A purchaser from a corporation of its own shares is not liable to the corporation or its creditors with respect to the shares except to pay the consideration for which the shares were authorized to be issued (Code Section 14-2-621) or specified in the subscription agreement (Code Section 14-2-620). (b) Unless otherwise provided in the articles of incorporation, a shareholder of a corporation is not personally liable for the acts or debt of the corporation except that he may become personally liable by reason of his own acts or conduct. (Code 1981, § 14-2-622, enacted by Ga. L. 1988, p. 1070, § 1.)

O.C.G.A. § 14-2-623 Share dividends.

14-2-623. Share dividends. (a) Unless the articles of incorporation provide otherwise, shares may be issued pro rata and without consideration to the corporation's shareholders or to the shareholders of one or more classes or series. An issuance of shares under this subsection is a share dividend. (b) Shares of one class or series may not be issued as a share dividend in respect of shares of another class or series unless: (1) The articles of incorporation so authorize; (2) A majority of the votes entitled to be cast by the class or series to be issued approve the issue; or (3) There are no outstanding shares of the class or series to be issued. (c) If the board of directors does not fix the record date for determining shareholders entitled to a share dividend, it is the date the board of directors authorizes the share dividend. (d) If a corporation which has treasury shares declares a share dividend, such dividend shall not be deemed to include a dividend on treasury shares unless the resolution declaring the dividend expressly so provides. (Code 1981, § 14-2-623, enacted by Ga. L. 1988, p. 1070, § 1; Ga. L. 1997, p. 1165, § 2.)

O.C.G.A. § 14-2-624 Share options.

14-2-624. Share options. (a) A corporation may issue rights, options, or warrants with respect to the shares of the corporation whether or not in connection with the issuance and sale of any of its shares or other securities. The board of directors shall determine the terms upon which the rights, options, or warrants are issued, their form and content, the consideration for which they are to be issued, and the terms and conditions relating to their exercise, including the time or times, the conditions precedent, and the prices at which and the holders by whom the rights, options, or warrants may be exercised. (b) If at the time the corporation issues rights, the corporation does not have authorized and unissued shares sufficient to satisfy the rights if and when exercised, the granting of the rights is not invalid solely by reason of the lack of sufficient authorized but unissued shares to honor the exercise of the rights. (c) The terms of the rights, options, or warrants, including the time or times, the conditions precedent, and the prices at which and the holders by whom the rights, options, or warrants may be exercised, as well as their duration, (1) may preclude or limit the exercise, transfer, or receipt of such rights, options, or warrants or invalidate or void any rights, options, or warrants and (2) may be made dependent upon facts ascertainable outside the documents evidencing the rights, or the resolution providing for the issue of the rights, options, or warrants adopted by the board of directors, if the manner in which the facts shall operate upon the exercise of rights is clearly and expressly set forth in the document evidencing the rights or in the resolution. Such terms and conditions need not be set forth in the articles of incorporation. As used in this Code section, the term "facts" includes, but is not limited to, the occurrence of any event, including a determination or action by any person or body, including the corporation. (d) The terms and conditions of rights, options, or warrants issuable pursuant to this Code section may include provisions that: (1) Preclude or limit the exercise, transfer, or receipt of such rights, options, or warrants by, or invalidate or void any such rights, options, or warrants held by, any person that is a beneficial owner of a specified amount of the outstanding equity securities or percentage of the outstanding voting power of the corporation, or by any transferee of such person, except that such provisions shall not affect any person whose beneficial ownership at the date of adoption of any such provision exceeds such specified amount or percentage, unless the amount of outstanding equity securities beneficially owned by such person is subsequently increased; and (2) Limit, restrict, or condition the power of a future director to vote for the redemption, modification, or termination of the rights, options, or warrants for a period not to exceed 180 days from the initial election of the director, provided that such 180 day time limitation shall not apply to any such limitation, restriction, or condition that is based solely on a director's current or former status as an employee or officer of the corporation; as a director, officer, employee, affiliate, or associate of any interested shareholder or person seeking to become an interested shareholder; or as a director, officer, or employee of an affiliate of an interested shareholder or person seeking to become an interested shareholder. (e) The provisions of subsection (d) of this Code section shall be applied as follows: (1) The definition of "beneficial owner" contained in Code Section 14-2-1110 shall be applicable to this Code section, except (A) any exclusion from such definition shall be permitted, and (B) that the effective date of this paragraph shall be December 31, 2000, insofar as it may be deemed to apply to any right, option, or warrant issued or issuable at the date of enactment of this paragraph; (2) The definition of "affiliate," "associate," and "interested shareholder" contained in Code Section 14-2-1110 shall be applicable to this Code section; provided, however, that the inclusion of a person as a nominee for election as a director of the corporation by an interested shareholder or person seeking to become an interested shareholder shall not create an implication that such nominee is an affiliate of an interested shareholder or person seeking to become an interested shareholder; and (3) Any rights, options, or warrants issued or issuable pursuant to this Code section that contain a provision otherwise permitted by paragraph (2) of subsection (d) of this Code section but which do not purport to comply with the 180 day time limitation specified therein shall not be rendered invalid, but any such provision shall be deemed to be effective only to the extent permitted by paragraph (2) of subsection (d) of this Code section. (f) The board of directors may, by a resolution adopted by the board, authorize one or more officers of the corporation to do one or both of the following: (1) Designate officers and employees of the corporation or of any of its subsidiaries to be recipients of rights, options, or warrants to be issued by the corporation; or (2) Determine the number of rights, options, or warrants to be received by such officers and employees; provided, however, that the resolution authorizing such officer or officers shall specify the total number of rights, options, or warrants such authorized officer or officers may award. The board of directors may not authorize an officer to designate himself or herself as a recipient of any rights, options, or warrants. (Code 1981, § 14-2-624, enacted by Ga. L. 1988, p. 1070, § 1; Ga. L. 1989, p. 946, § 16; Ga. L. 2000, p. 1567, § 3; Ga. L. 2001, p. 4, § 14; Ga. L. 2003, p. 897, § 4; Ga. L. 2004, p. 508, § 5.)

O.C.G.A. § 14-2-625 Form and content of certificates.

14-2-625. Form and content of certificates. (a) Shares may but need not be represented by certificates. Unless this chapter or another statute expressly provides otherwise, there shall be no differences in the rights and obligations of shareholders based on whether or not their shares are represented by certificates. (b) At a minimum each share certificate must state on its face: (1) The name of the issuing corporation and that it is organized under the law of this state; (2) The name of the person to whom issued; and (3) The number and class of shares and the designation of the series, if any, the certificate represents. (c) If the issuing corporation is authorized to issue different classes of shares or different series within a class, a reference on the certificate to the state of incorporation shall be deemed to be a reference to the articles of incorporation and its provisions governing the designations, relative rights, preferences, and limitations applicable to each class and the variations in rights, preferences, and limitations determined for each series (and the authority of the board of directors to determine variations for future series). Alternatively, each certificate may describe the designations, relative rights, preferences, and limitations, or may state conspicuously on its front or back that the corporation will furnish the shareholder this information on request in writing and without charge. (d) Each share certificate: (1) Must be signed, either manually or in facsimile, by one or more officers designated in the bylaws or by the board of directors; and (2) May bear the corporate seal or its facsimile. If the certificate is signed in facsimile, then it must be countersigned by a transfer agent or registered by a registrar other than the corporation itself or an employee of the corporation. The transfer agent or registrar may sign either manually or by facsimile. (e) If the person who signed a share certificate, either manually or in facsimile, no longer holds office when the certificate is issued, the certificate is nevertheless valid. (f) No certificate valid when issued shall cease to be valid by reason of any changes in the information required or permitted to be stated on the certificate and, in the event of a change in the capital structure of a corporation, it shall not be necessary to recall any previously issued share certificate for revision of the information placed thereon pursuant to this Code section. (Code 1981, § 14-2-625, enacted by Ga. L. 1988, p. 1070, § 1; Ga. L. 1989, p. 946, § 17.)

O.C.G.A. § 14-2-626 Shares without certificates.

14-2-626. Shares without certificates. (a) Unless the articles of incorporation or bylaws provide otherwise, the board of directors of a corporation may authorize the issue of some or all of the shares of any or all of its classes or series without certificates. The authorization does not affect shares already represented by certificates until they are surrendered to the corporation. (b) Within a reasonable time after the issue or transfer of shares without certificates, the corporation shall send the shareholder a written statement of the information required on certificates by subsection (b) of Code Section 14-2-625 and, if applicable, Code Section 14-2-627. (Code 1981, § 14-2-626, enacted by Ga. L. 1988, p. 1070, § 1.)

O.C.G.A. § 14-2-627 Restriction on transfer of shares and other securities.

14-2-627. Restriction on transfer of shares and other securities. (a) The articles of incorporation, bylaws, an agreement among shareholders, or an agreement between shareholders and the corporation may impose restrictions on the transfer or registration of transfer of shares of the corporation. A restriction does not affect shares issued before the restriction was adopted unless the holders of the shares are parties to the restriction agreement or voted in favor of the restriction. (b) A restriction on the transfer or registration of transfer of shares is valid and enforceable against the holder or a transferee of the holder if the restriction is authorized by this Code section and its existence is noted conspicuously on the front or back of the certificate or is contained in the information statement required by subsection (b) of Code Section 14-2-626. Unless so noted, a restriction is not enforceable against a person without knowledge of the restriction. A restriction authorized under this Code section, whether or not so noted, is enforceable against a person with knowledge of the restriction. (c) A restriction on the transfer or registration of transfer of shares is authorized: (1) To maintain the corporation's status when it is dependent on the number or identity of its shareholders; (2) To preserve exemptions under federal or state securities law; (3) For any other reasonable purpose. (d) A restriction on the transfer or registration of transfer of shares may: (1) Obligate the shareholder first to offer the corporation or other persons (separately, consecutively, or simultaneously) an opportunity to acquire the restricted shares; (2) Obligate the corporation or other persons (separately, consecutively, or simultaneously) to acquire the restricted shares; (3) Require the corporation, the holders of any class of its shares, or another person to approve the transfer of the restricted shares, if the requirement is not manifestly unreasonable; (4) Prohibit the transfer of the restricted shares to designated persons or classes of persons, if the prohibition is not manifestly unreasonable. (e) For purposes of this Code section, the term "shares" includes a security convertible into or carrying a right to subscribe for or acquire shares. (Code 1981, § 14-2-627, enacted by Ga. L. 1988, p. 1070, § 1; Ga. L. 1989, p. 946, § 18.)

O.C.G.A. § 14-2-628 Expense of issue.

14-2-628. Expense of issue. A corporation may pay the expenses of selling or underwriting its shares and of organizing or reorganizing the corporation from the consideration received for shares. (Code 1981, § 14-2-628, enacted by Ga. L. 1988, p. 1070, § 1.)

Source: Official Code of Georgia (Legislative Counsel's copy via Public.Resource.Org) + acts (legis.ga.gov)URL: https://archive.org/download/gov.ga.ocga.2024/T14%20%28V12%29%202017.txtFetched: 10/24/2026