2020 Georgia Code
Title 14 - Corporations, Partnerships, and Associations
Chapter 2 - Business Corporations
Article 13 - Dissenters' Rights
Part 2 - Procedure for Exercise of Dissenters' Rights
§ 14-2-1327. Procedure if Shareholder Dissatisfied With Payment or Offer

1. A dissenter may notify the corporation in writing of his own estimate of the fair value of his shares and amount of interest due, and demand payment of his estimate of the fair value of his shares and interest due, if:
   1. The dissenter believes that the amount offered under Code Section 14-2-1325 is less than the fair value of his shares or that the interest due is incorrectly calculated; or
   2. The corporation, having failed to take the proposed action, does not return the deposited certificates or release the transfer restrictions imposed on uncertificated shares within 60 days after the date set for demanding payment.
2. A dissenter waives his or her right to demand payment under this Code section and is deemed to have accepted the corporation's offer unless he or she notifies the corporation of his or her demand in writing under subsection (a) of this Code section within 30 days after the corporation offered payment for his or her shares, as provided in Code Section 14-2-1325.
3. If the corporation does not offer payment within the time set forth in subsection (a) of Code Section 14-2-1325:
   1. The shareholder may demand the information required under subsection (b) of Code Section 14-2-1325, and the corporation shall provide the information to the shareholder within ten days after receipt of a written demand for the information; and
   2. The shareholder may at any time, subject to the limitations period of Code Section 14-2-1332, notify the corporation of his own estimate of the fair value of his shares and the amount of interest due and demand payment of his estimate of the fair value of his shares and interest due.

(Code 1981, §14-2-1327, enacted by Ga. L. 1988, p. 1070, § 1; Ga. L. 1989, p. 946, § 60; Ga. L. 1990, p. 257, § 21; Ga. L. 1993, p. 1231, § 19.)

- For annual survey of cases discussing business associations, see 57 Mercer L. Rev. 49 (2005). For article, "Business Associations," see 63 Mercer L. Rev. 83 (2011).

Source: Model Act, § 13.28. (Section14-2-1327 of the Model Act was deleted entirely by the Code.) This replaces former § 14-2-251(e) & (g), and departs significantly from former law.

Under subsection (a), the dissenter who is not content with the corporations's offer must state in writing the amount he is willing to accept. A dissenter cannot, by remaining silent, force the corporation into the expense and delay of a judicial appraisal. Furthermore, if his demand is unreasonable, he runs the risk of being assessed litigation expenses under Section14-2-1331. These provisions are designed to encourage settlement without a judicial proceeding. Former law did not require the dissenter to communicate the amount the dissenter would accept at any time prior to initiation of judicial proceedings. See former § 14-2-251(g).

Under subsection (b), a dissenter who has been offered payment must make his supplemental demand within 30 days after receipt of the offer of payment in order to permit the corporation to make an early decision on initiating appraisal proceedings. If he fails to do so, he loses the right to demand additional payment beyond that offered by the corporation.

If the corporation, having failed to take the corporate action and to make payment, also fails to return the certificates previously deposited or release the restrictions on transfer of uncertificated securities within 60 days, the shareholder may treat the shares as purchased by the corporation and demand payment of the full amount claimed under this section. See Section14-2-1330(a). This provision creates no hardship for the corporation since, if it cannot complete the transaction within 60 days, it may return the certificates (or release the restrictions on uncertified shares) and start the process over again at any time. Former law contained no comparable provisions where the corporate action was not completed; § 14-2-251(e) merely contemplated that the corporation could make its offer conditional upon completion of the transaction.

Note to 1989 Amendment The 1989 amendment added subsection (c). Where the corporation has failed to observe the procedures required by this part, subsection (c)(1) provides that the shareholder may demand the information that should have been provided by the corporation under Code Section 14-2-1325(b). Subsection (a) provides a procedure for a shareholder who disagrees with the amount offered by the corporation pursuant to section 1325; subsection (c)(2) provides a parallel procedure where the corporation has failed to make such an offer. This demand for payment has the same effect as one made under subsection (a). Thus, under Section 14-2-1330(a), if the corporation does not settle or commence an appraisal proceeding within 60 days after receiving a payment demand, the amount demanded becomes an absolute obligation of the corporation.

Note to 1990 Amendment Under § 14-2-1325, a corporation must offer to pay its estimate of the fair value of the shares held by a dissenting shareholder who has complied with the terms of the dissenters' rights provisions. Unlike the Model Act, the corporation is not required to pay out, but only to offer, its estimate of the fair value of the shares. Thus, the procedure outlined in § 14-2-1327 is triggered only if a shareholder is dissatisfied with a corporation's offer of payment. Therefore, the words "made or" in subsection (b) were considered extraneous and were deleted by the 1990 amendment.

Note to 1993 Amendment The 1993 amendment added the phrase "and is deemed to have accepted the corporation's offer" to clarify the effect of a dissenter's failure to respond within the applicable period.

Cross-References "Deliver" includes mail, see § 14-2-140. "Dissenter" defined, see § 14-2-1301. Dissenters' rights as exclusive remedy, see § 14-2-1302. Effective date of notice, see § 14-2-141. "Fair value" defined, see § 14-2-1301. "Interest" defined, see § 14-2-1301. "Judicial appraisal" see § 14-2-1330. Limitation of actions, see § 14-2-1332. "Notice" defined, see § 14-2-141. Offer of payment for shares, see § 14-2-1325.

JUDICIAL DECISIONS

Applicability.

- Trial court erred by granting partial summary judgment to a doctor in a declaratory judgment action against the former clinic the doctor had worked for and was a shareholder of, because the trial court erroneously interpreted the professional corporation's bylaws as a restrictive covenant in restraint of trade when, in fact, the bylaws were not part of the doctor's employment contract and did not provide for a noncompetition penalty or forfeiture provision upon the doctor's departure. Albany Bone & Joint Clinic, P.C. v. Hajek, 272 Ga. App. 464, 612 S.E.2d 509 (2005).

Cited in Riddle-Bradley, Inc. v. Riddle, 217 Ga. App. 725, 459 S.E.2d 576 (1995).

RESEARCH REFERENCES

Am. Jur. 2d.

- 19 Am. Jur. 2d, Corporations, § 2192 et seq.

- Construction and effect of provision for payment of dissenting stockholders in statutes relating to merger, consolidation, or reorganization of banks or other corporations, 162 A.L.R. 1237; 174 A.L.R. 960.

Timeliness and sufficiency of dissenting stockholder's notice of his objection to consolidation or merger and of his demand for payment for his shares, 40 A.L.R.3d 260.

PART 3 JUDICIAL APPRAISAL OF SHARES

14-2-1330. Court action.

1. If a demand for payment under Code Section 14-2-1327 remains unsettled, the corporation shall commence a proceeding within 60 days after receiving the payment demand and petition the court to determine the fair value of the shares and accrued interest. If the corporation does not commence the proceeding within the 60 day period, it shall pay each dissenter whose demand remains unsettled the amount demanded.
2. The corporation shall commence the proceeding, which shall be a nonjury equitable valuation proceeding, in the superior court of the county where a corporation's registered office is located. If the surviving corporation is a foreign corporation without a registered office in this state, it shall commence the proceeding in the county in this state where the registered office of the domestic corporation merged with or whose shares were acquired by the foreign corporation was located.
3. The corporation shall make all dissenters, whether or not residents of this state, whose demands remain unsettled parties to the proceeding, which shall have the effect of an action quasi in rem against their shares.The corporation shall serve a copy of the petition in the proceeding upon each dissenting shareholder who is a resident of this state in the manner provided by law for the service of a summons and complaint, and upon each nonresident dissenting shareholder either by registered or certified mail or statutory overnight delivery or by publication, or in any other manner permitted by law.
4. The jurisdiction of the court in which the proceeding is commenced under subsection (b) of this Code section is plenary and exclusive. The court may appoint one or more persons as appraisers to receive evidence and recommend decision on the question of fair value. The appraisers have the powers described in the order appointing them or in any amendment to it. Except as otherwise provided in this chapter, Chapter 11 of Title 9, known as the "Georgia Civil Practice Act," applies to any proceeding with respect to dissenters' rights under this chapter.
5. Each dissenter made a party to the proceeding is entitled to judgment for the amount which the court finds to be the fair value of his shares, plus interest to the date of judgment.

(Code 1981, §14-2-1330, enacted by Ga. L. 1988, p. 1070, § 1; Ga. L. 1989, p. 946, § 61; Ga. L. 1993, p. 1231, § 20; Ga. L. 2000, p. 1589, § 3.)

- Ga. L. 2000, p. 1589, § 16, not codified by the General Assembly, provides that the amendment to this Code section is applicable with respect to notices delivered on or after July 1, 2000.

Source: Model Act, § 13.30. Section14-2-1330 retains the concept of judicial appraisal as the ultimate means of determining fair value. It thus follows the basic pattern of former § 14-2-251(g).

Subsection (a) requires the proceeding to be commenced by the corporation within 60 days after receiving a demand for payment under Section14-2-1327. Subsection (a) makes this time period critical; if the proceeding is not commenced within this period the corporation must pay the additional amounts demanded by the shareholders under Section14-2-1327. See the Comment to that section. Former law merely provided that dissenters may begin an action if the corporation failed to do so. See former § 14-2-251(g)(2). Each shareholder may sue directly for this amount, if necessary, and in an appropriate case may be entitled to charge the corporation with the costs of suit. See Section14-2-1331.

Subsections (b) and (c) provide that all demands for payment made under Section14-2-1327 are to be resolved in a single proceeding brought in the county where the corporation's registered office is located. All shareholders making Section14-2-1327 demands must be made parties, with service by publication authorized if necessary. Subsection (b) of the Model Act was amended to add the word "surviving" before "corporation" in the second sentence. This is intended to clarify the application of the dissenters' rights article - that it applies only to shareholders of Georgia corporations, but that their rights may be claims against a surviving corporation which is a foreign corporation. Subsection (c) was amended to restore language from former § 14-2-251(g)(3), which expressly provided that the action was quasi in rem against the shares.

Subsection (d) provides that appraisers may be appointed within the discretion of the court.

Subsection (e) provides that the final judgment establishes not only the fair value of the shares in the abstract but also determines how much each shareholder who made a Section 14-2-1327 demand should actually receive. The Model Act provision was amended to conform to previous Code changes in the Model Act, that eliminated a payment by the corporation before agreement is reached on the amount, and eliminated dissenters' rights for holders of after acquired shares.

Note to 1989 Amendment The 1989 amendment to subsection (b) added the phrase "which shall be a non-jury equitable valuation proceeding," to clarify the nature of the proceeding. Appraisal proceedings have traditionally been proceedings in equity, with appraisers appointed to assist the court in determining fair value.

Note to 1993 Amendment The 1993 amendment changed the notice by publication to be optional rather than mandatory, so that the corporation may choose to serve non-resident dissenting shareholders either by registered or certified mail or by publication, and no longer requires both methods.

Cross-References "Dissenter" defined, see § 14-2-1301. "Fair value" defined, see § 14-2-1301. "Interest" defined, see § 14-2-1301. "Person" defined, see § 14-2-140. "Principal office": defined, see § 14-2-140; designated in annual registration, see § 14-2-1622. "Proceeding" defined, see § 14-2-140. Registered office: designated in annual registration, see § 14-2-1622; required, see §§ 14-2-202 &14-2-501.

JUDICIAL DECISIONS

Failure to timely commence proceeding.

- Because the time for filing a petition for judicial appraisal is set by O.C.G.A. § 14-2-1330(a) and O.C.G.A. § 9-11-6(b) did not apply to permit a trial court to grant an extension of time before the commencement of such a legal action; thus, a corporation's failure to commence the proceeding within the statutory 60-day period prevented the court from having subject matter jurisdiction to reach the merits of the petition. Riddle-Bradley, Inc. v. Riddle, 217 Ga. App. 725, 459 S.E.2d 576 (1995).

- Dissenter was in compliance with the requirements establishing dissenter's rights, even though the dissenter did not tender the stock certificate within the dissenters' rights time period. Just as O.C.G.A. § 14-2-1323 provides that a dissenter may waive the right to dissent by failing to comply, O.C.G.A. § 14-2-1330 provides that the corporation may waive its right to contest the dissenter's evaluation by not timely filing suit. VSI Enters., Inc. v. Edwards, 238 Ga. App. 369, 518 S.E.2d 765 (1999).

- Because the action was not brought under this O.C.G.A. §§ 14-2-1330 and14-2-1331 were not applicable and the court erred in awarding attorney fees, attorney expenses, and expert witness fees and expenses to the dissenter. VSI Enters., Inc. v. Edwards, 238 Ga. App. 369, 518 S.E.2d 765 (1999).

RESEARCH REFERENCES

ALR.

- Conclusiveness of statement or decision of accountant or similar third person under contract between others requiring property to be valued by him, 50 A.L.R.2d 1268.

Valuation of stock of dissenting stockholders in case of consolidation or merger of corporation, sale of its assets, or the like, 48 A.L.R.3d 430.