2020 Georgia Code
Title 14 - Corporations, Partnerships, and Associations
Chapter 2 - Business Corporations
Article 6 - Shares and Distributions
Part 2 - Issuance of Shares
§ 14-2-625. Form and Content of Certificates

1. 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.
2. 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.
3. 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.
4. 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.

5. 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.
6. 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.)

- For article discussing requirements governing the issuance of share certificates, see 3 Ga. L. Rev. 11 (1968). For article discussing rights granted owners of unpaid and partly paid shares under the Georgia Business Corporation Code, see 3 Ga. L. Rev. 11 (1968).

Source: Model Act, § 6.25. This replaces former § 14-2-87.

Certificateless shares are permitted under subsection (a) upon compliance with Section 14-2-626. There was no comparable provision in former Georgia law. There are no differences in the rights and obligations of shareholders, whether or not their shares are represented by certificates, other than mechanical differences. If share transfer restrictions are imposed, conspicuous references must appear on the certificate if they are to be binding on third persons without knowledge of the restrictions. See Section 14-2-627.

Subsection (a) of the Model Act was amended by replacing the phrase "the rights and obligations of shareholders are identical" with "there shall be no differences in the rights and obligations of shareholders based on" to eliminate any implication that all shareholders' rights are identical, regardless of class or series. Consistent with changes in § 14-2-601, no implication is intended that all holders of shares of the same class will have the same rights, regardless of whether conditions are different with respect to different holders.

Subsection (b) sets forth the minimum requirements for share certificates.

Subsection (c) of the Model Act required detailed descriptions of the relative rights and preferences of each class and series on the certificate, or a statement that the corporation would furnish this information without charge. This is similar to former § 14-2-87(d), requiring that, where there is more than one class or series of shares, the certificate must set forth or summarize such rights or contain a statement offering to furnish them. The Code eliminates this requirement as impracticable and unnecessary, by providing that a reference to the state of incorporation is sufficient, because it places a holder on notice of the location of the provisions governing his rights. Under Section14-2-1602, a shareholder is entitled to inspect and copy the articles of incorporation and all amendments. A complete description of the relative rights and preferences of various classes and securities on a certificate is generally impossible, and a notice that this information can be obtained from the corporation is redundant. All investors in shares are charged with notice that their rights are determined by the articles of incorporation. The Model Act requirements remain a permissible alternative.

Special rules govern disclosure of restrictions on transfer of shares, under Section 14-2-627, and disclosure of statutory close corporation status, under Section 14-2-910. A reference to the state of incorporation is not sufficient notice of these special facts relating to share ownership.

Subsection (d) provides only that certificates must be signed by two officers designated in the bylaws or by the board, a simplification of former law, § 14-2-87(b), which required the signature of specified officials.

Under subsection (d) of the Model Act, all signatures on a share certificate may be facsimiles. This change gives recognition to the fact that a purchaser of publicly traded shares will hardly ever be in a position to determine whether a manual signature on a stock certificate is in fact the authorized signature of an officer of the transfer agent or registrar. From the standpoint of the issuing corporation of publicly traded securities, if a share certificate requiring a manual signature is stolen and the signature thereafter forged, the corporation may defend on lack of genuineness under section 8-202(3) of the Uniform Commercial Code. But this defense is not effective against a bona fide purchaser when the forged signature has been placed on the certificate by an employee of the issuer or registrar or transfer agent entrusted with handling the certificates (UCC § 8-205). Comparable provisions relating to bonds, that preserve the authorization of former law, § 14-2-87(f), are found in Section14-2-150 of the Code.

Subsection (f) is taken from § 14-2-87(e) & (h) of former Georgia law, and is clarifying.

Note to 1989 Amendment The 1989 amendment changed subsection (d) to provide expressly that all signatures on a share certificate may be facsimiles, as the Model Act permits. This eliminated any ambiguity in the prior Georgia law. Comparable provisions relating to bonds, that preserve the authorization of former law, § 14-2-87(f), in Section14-2-150, were also amended in 1989.

Cross-References Certificateless shares, see § 14-2-626. Classes of shares, see §§ 14-2-601 &14-2-602. Close corporations, see § 14-2-910. "Conspicuously" defined, see § 14-2-140. Descriptions of classes, see § 14-2-601. Facsimile signatures on bonds and debentures, see § 14-2-150. Officers, see § 14-2-840. Series of shares, see § 14-2-602. Share transfer restrictions, see § 14-2-627. Signatures, see § 14-2-150.

JUDICIAL DECISIONS

Editor's notes.

- In light of the similarity of the statutory provisions, a decision under former Code Section 14-2-87, which was repealed by Ga. L. 1988, p. 1070, § 1, effective July 1, 1989, is included in the annotations for this Code section.

- A share certificate does not comprise conclusive, irrebuttable evidence of ownership rights. In re Delk Rd. Assocs., 37 Bankr. 354 (Bankr. N.D. Ga. 1984) (decided under former § 14-2-87).

RESEARCH REFERENCES

Am. Jur. 2d.

- 18A Am. Jur. 2d, Corporations, § 400.

- 18 C.J.S., Corporations, §§ 235, 237, 238.

- Corporate stock without par value, 36 A.L.R. 791; 45 A.L.R. 1501; 65 A.L.R. 1347.

Refusal of corporation to issue, convert, or transfer stock as conversion, 54 A.L.R. 1157.

Constitutionality, construction, and application of statute relating to lost, destroyed, or stolen certificate of corporate stock, 125 A.L.R. 997.

Necessity of delivery of stock certificate to complete valid gift of stock, 23 A.L.R.2d 1171.

Corporation's delivery of stock certificate to stockholder as prerequisite of its issuance to him, 16 A.L.R.3d 1015.