2021 Georgia Code
Title 10 - Commerce and Trade
Chapter 5 - Georgia Uniform Securities

- Ga. L. 2008, p. 381, § 1/SB 358, effective July 1, 2009, repealed the Code sections formerly codified at this chapter and enacted the current chapter. The former chapter consisted of Code Sections10-5-1 through10-5-23.1, and10-5-24, and was based on Code 1933, §§ 97-101 - 97-113, 97-114, 97-115 - 97-121, 97-9901, enacted by Ga. L. 1973, p. 1202, §§ 1-22; Code 1933, § 97-114.1, enacted by Ga. L. 1974, p. 284, § 17; Ga. L. 1974, p. 284, §§ 1-16, 18, 19; Ga. L. 1975, p. 928, §§ 1-27; Ga. L. 1979, p. 1296, §§ 1-10; Ga. L. 1981, p. 840, § 1; Ga. L. 1981, p. 1583, § 1; Ga. L. 1982, p. 3, § 10; Ga. L. 1982, p. 1178, § 1; Ga. L. 1983, p. 781, § 1; Ga. L. 1984, p. 22, § 10; Ga. L. 1984, p. 529, §§ 2-5; Ga. L. 1985, p. 149, § 10; Ga. L. 1986, p. 1559, §§ 1-8; Ga. L. 1987, p. 3, § 10; Ga. L. 1987, p. 191, § 9; Ga. L. 1987, p. 439, § 1; Code 1981, § 10-5-23, enacted by Ga. L. 1987, p. 984, § 1; Ga. L. 1988, p. 1290, §§ 1-10; Code 1981, § 10-5-23.1, enacted by Ga. L. 1988, p. 1290, § 11; Ga. L. 1989, p. 14, § 10; Ga. L. 1990, p. 1332, §§ 1-5; Ga. L. 1990, p. 1534, §§ 1-16; Ga. L. 1992, p. 6, § 10; Ga. L. 1994, p. 860, §§ 1, 2; Ga. L. 1997, p. 143, § 10; Ga. L. 1998, p. 1617, §§ 1-9; Ga. L. 1999, p. 329, § 1; Ga. L. 2000, p. 1589, § 3; Ga. L. 2002, p. 792, §§ 1-4.

- Applicability to chapter of laws pertaining to sales of business opportunities, § 10-1-417.

Provisions regarding status of investment securities as negotiable instruments, § 11-8-101 et seq.

Contracts of sale for future delivery of cotton, grain, stocks, or other commodities, § 13-9-1 et seq.

Creation, classification, and issuance of shares of corporations, § 14-2-601 et seq.

Uniform transfer on death security registration, § 53-5-60 et seq.

- General Provisions, Official Compilation of the Rules and Regulations of the State of Georgia, Office of Secretary of State, Cemeteries, Commissioner of Securities, Chapter 590-4-1.

Exemptions, Official Compilation of the Rules and Regulations of the State of Georgia, Office of Secretary of State, Commissioner of Securities, Chapter 590-4-2.

Registration of Securities, Official Compilation of the Rules and Regulations of the State of Georgia, Office of Secretary of State, Commissioner of Securities, Chapter 590-4-3.

Investment Advisors and Representatives, Official Compilation of the Rules and Regulations of the State of Georgia, Office of Secretary of State, Commissioner of Securities, Chapter 590-4-4.

Brokers-Dealers and Agents, Official Compilation of the Rules and Regulations of the State of Georgia, Office of Secretary of State, Commissioner of Securities, Chapter 590-4-5.

Administrative Hearings, Official Compilation of the Rules and Regulations of the State of Georgia, Office of Secretary of State, Commissioner of Securities, Chapter 590-4-6.

- For article discussing the Georgia Securities Act of 1957, see 9 Mercer L. Rev. 332 (1958). For article advocating uniformity in securities regulation within the states and adoption of the Uniform Act in Georgia, see 22 Ga. B. J. 437 (1960). For article advocating revision of former Georgia Securities Act, see 4 Ga. L. Rev. 341 (1970). For article, "The Regulation of Franchising Under the Securities Laws," see 6 Ga. St. B. J. 357 (1970). For article, "A Survey of the Georgia Securities Act of 1973," see 10 Ga. St. B. J. 219 (1973). For article surveying the Georgia Securities Act of 1973 and the 1974 amendments thereto, see 25 Mercer L. Rev. 601 (1974). For article, "The Georgia Securities Act of 1974: A Survey of the 1974 Amendments," see 10 Ga. St. B. J. 547 (1974). For article, "Real Estate Syndications As Securities in Georgia - A Review and Comments on the Recent Opinion of the Attorney General," see 11 Ga. St. B. J. 80 (1974). For article discussing 1975 amendments to this chapter, see 27 Mercer L. Rev. 299 (1975). For article, "A Response: Real Estate Syndications as Securities in Georgia," see 11 Ga. St. B. J. 153 (1975). For article discussing provisions pertaining to the regulation of time-shared interests in property ownership, see 12 Ga. St. B. J. 75 (1975). For article discussing regulation in this state of oil and gas offerings exempt under Regulation B of the Federal Securities and Exchange Commission, and offering proposals for regulations to meet problems posed thereby, see 12 Ga. St. B. J. 149 (1976). For article discussing developments in Georgia securities law in 1977, see 29 Mercer L. Rev. 31 (1977). For article surveying Georgia cases in the area of business associations from June 1977 through May 1978, see 30 Mercer L. Rev. 1 (1978). For article discussing recent judicial and legislative developments in Georgia Corporations Law, see 31 Mercer L. Rev. 43 (1979). For article surveying Georgia cases in the area of business associations from June 1979 through May 1980, see 32 Mercer L. Rev. 1 (1980). For article, "Securities Investigations Under the Georgia Securities Act," see 17 Ga. St. B. J. 14 (1980). For article, "Securities," see 32 Mercer L. Rev. 1125 (1981). For article discussing utility of the central securities broker-dealer registration system (CRD), see 18 Ga. St. B. J. 47 (1981). For survey article on business associations, see 34 Mercer L. Rev. 13 (1982). For survey of 1986 Eleventh Circuit cases on securities regulation, see 38 Mercer L. Rev. 1341 (1987). For annual survey of cases concerning business associations, see 39 Mercer L. Rev. 53 (1987). For annual survey of securities regulation law, see 41 Mercer L. Rev. 343 (1989). For survey article on business associations, see 42 Mercer L. Rev. 71 (1990). For annual eleventh circuit survey of securities regulation, see 42 Mercer L. Rev. 1519 (1991). For annual survey of law of business associations, see 43 Mercer L. Rev. 85 (1991). For article, "Rereading Section 16(b) of the Securities Exchange Act," see 27 Ga. L. Rev. 183 (1992). For annual survey article on business associations, see 45 Mercer L. Rev. 53 (1993). For annual survey article on business associations, see 50 Mercer L. Rev. 171 (1998). For survey article discussing developments in law of business associations for the period from June 1, 1999 through May 31, 2000, see 52 Mercer L. Rev. 95 (2000). For annual survey article discussing developments in commercial law, see 52 Mercer L. Rev. 143 (2000). For survey article on cases in the areas of corporate, securities, partnership, and banking law for the period from June 1, 2002 through May 31, 2003, see 55 Mercer L. Rev. 55 (2003). For note discussing preincorporation and postincorporation securities transactions exempt from regulation, see 26 Ga. B. J. 461 (1964). For note discussing the need for revision of director and officer liability under Blue Sky Laws, see 5 Ga. L. Rev. 128 (1971). For comment, "Insider Trading, the Contemporaneous Trader, and the Corporate Acquirer: Entitlement to Profits Disgorged by the SEC," see 40 Emory L.J. 537 (1991).

JUDICIAL DECISIONS

Editor's notes.

- In light of the similarity of the statutory provisions, decisions under former Ga. L. 1920, p. 250, Ga. L. 1957, p. 134, and Ga. L. 1973, p. 1202, as amended, which were subsequently repealed but were succeeded by provisions in this chapter, are included in the annotations for this chapter.

- Criminal provisions of the former chapter were not vague, ambiguous, or contradictory, and an indictment thereunder was not void. Curtis v. State, 99 Ga. App. 732, 109 S.E.2d 868 (1959) (decided under former Ga. L. 1957, p. 134).

- Criminal provisions were not intended by the legislature to be exclusive, as the provisions would ordinarily be, but only cumulative. Cohen v. State, 101 Ga. App. 23, 112 S.E.2d 672 (1960) (decided under former Ga. L. 1957, p. 134, as amended).

Purpose and intent was to prohibit organizers and promoters, whether foreign or domestic, who organize and promote the sale of what is commonly known as "blue sky stock," from doing business without complying with the statutory provisions, and to guard and protect an unsuspecting and trusting public from what are commonly known as "wild cat" organizers and promoters and their agents. Ratliffe v. Hartsfield Co., 181 Ga. 663, 184 S.E. 324 (1935) (decided under former Ga. L. 1920, p. 250, as amended).

- Since the former provisions were remedial in nature, it was to be construed broadly to effectuate its aim - protection of investors. Fortier v. Ramsey, 136 Ga. App. 203, 220 S.E.2d 753 (1975) (construing former Ga. L. 1957, p. 134, as amended); Jaciewicki v. Gordarl Assocs., 132 Ga. App. 888, 209 S.E.2d 693 (1974); Blau v. Redmond, 143 Ga. App. 897, 240 S.E.2d 273 (1977); Novatex Sales, Inc. v. Prince, 159 Ga. App. 559, 284 S.E.2d 65 (1981) (decided under Ga. L. 1973, p. 1202).

- Exemptions from the securities laws are to be strictly construed, and one who claims the exemption bears the burden of proving the exemption's availability. Blau v. Redmond, 143 Ga. App. 897, 240 S.E.2d 273 (1977) (decided under Ga. L. 1973, p. 1202).

Law was intended for protection of investors and was designed to disclose relevant and material facts to the investor, any exception to a disclosure requirement was to be narrowly construed. Novatex Sales, Inc. v. Prince, 159 Ga. App. 559, 284 S.E.2d 65 (1981) (decided under Ga. L. 1973, p. 1202).

- Due to the preclusive and preemptive operation of the federal commodities laws, investor in stock index futures had no claim against broker and account executive under the federal or state securities laws. Mallen v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 605 F. Supp. 1105 (N.D. Ga. 1985) (decided under former O.C.G.A. Ch. 5, T. 10).

Cited in Boddy v. Theiling, 129 Ga. App. 273, 199 S.E.2d 379 (1973); Vohs v. Dickson, 495 F.2d 607 (5th Cir. 1974); Lane v. Pardue, 147 Ga. App. 877, 250 S.E.2d 574 (1978); McNeal v. Paine, Webber, Jackson & Curtis, Inc., 598 F.2d 888 (5th Cir. 1979); Hamilton Bank & Trust Co. v. Holliday, 469 F. Supp. 1229 (N.D. Ga. 1979); Southeastern Waste Treatment, Inc. v. Chem-Nuclear Sys., 506 F. Supp. 944 (N.D. Ga. 1980).

OPINIONS OF THE ATTORNEY GENERAL

Editor's notes.

- In light of the similarity of the statutory provisions, opinions under former Ga. L. 1957, p. 134 and Ga. L. 1973, p. 1202, as amended, which were subsequently repealed but were succeeded by provisions in this chapter, are included in the annotations for this chapter.

Law was concerned with substance, rather than with form. 1970 Op. Att'y Gen. No. U70-25 (decided under former Ga. L. 1957, p. 134, as amended).

In determining the applicability of the former chapter, it was the substance and not the form of the offering which was determinative. 1973 Op. Att'y Gen. No. 73-187 (decided under former Ga. L. 1957, p. 134).

- Bonds which are filed in connection with registrations under Georgia Securities Act of 1957, Ga. L. 1957, p. 134, continue to be governed by the 1957 Act, and bonds filed in connection with a registration or renewal after the effective date of Ga. L. 1973, p. 1202, April 1, 1974, must comply with and will be governed by the latter statute. 1973 Op. Att'y Gen. No. 73-159 (decided under Ga. L. 1973, p. 1202).

- Georgia courts would probably hold that the securities registration provisions do not apply to transactions involving a Georgia issuer where no sale or offer to sell occurs within Georgia. 1970 Op. Att'y Gen. No. U70-88 (decided under former Ga. L. 1957, p. 134, as amended).

- If certain activities, as to registration of dealers and salesperson, are carried on in Georgia, this could bring transactions involving a Georgia issuer under the law of this state. 1970 Op. Att'y Gen. No. U70-88 (decided under former Ga. L. 1957, p. 134, as amended).

- Unless exempted or involved in an exempt transaction, securities offered for sale must be registered. 1969 Op. Att'y Gen. No. 69-328 (decided under Ga. L. 1957, p. 134, as amended).

It does not necessarily follow that a scheme which constitutes a "security" must always be registered with the commissioner of securities; if a scheme falls within any of the exemptions provided by law or if the sale of such a scheme fits any of the exempt transactions, the registration requirements would not apply. 1973 Op. Att'y Gen. No. 73-100 (decided under former Ga. L. 1957, p. 134, as amended).

- A person who engages in the business of selling mortgage securities to the public is required to register as a dealer, and the individuals who work for such a dealer are required to register as sales people unless the individuals qualify for one of the exemptions enumerated in Ga. L. 1973, p. 1202, § 3 (see now O.C.G.A. § 10-5-3). 1974 Op. Att'y Gen. No. 74-153 (decided under Ga. L. 1973, p. 1202).

Sale of scotch whiskey investments in Georgia would be a transaction subject to this chapter, and both the investment and the sellers must be registered pursuant to this chapter unless they qualify for some exemption from registration. 1973 Op. Att'y Gen. No. 73-187 (decided under former Ga. L. 1957, p. 134, as amended).

Sale of time-sharing units in a condominium, when coupled with a rental pool or other profit-sharing arrangement, constitutes a "security" within the definition of former Code 1933, § 97-102 (see former O.C.G.A. § 10-5-2(a)(16)) and, unless exempt, must be registered pursuant to Ga. L. 1973, p. 1202 (see former O.C.G.A. Ch. 5, T. 10); any person offering for sale or selling such securities that are subject to registration must register as a dealer, limited dealer, salesperson, or limited salesperson under Ga. L. 1973, p. 1202 (see former O.C.G.A. Ch. 5, T. 10) unless such a person is a real estate broker or salesperson licensed to sell real estate in Georgia. 1976 Op. Att'y Gen. No. 76-75 (decided under former Ga. L. 1973, p. 1202).

- Registration as a dealer does not exempt a foreign corporation from needing a certificate of authority. 1975 Op. Att'y Gen. No. 75-38 (decided under former Ga. L. 1973, p. 1202).

- Any person who sells mortgage securities is required to fully and truthfully disclose all material facts concerning the value and risks of the investment. 1974 Op. Att'y Gen. No. 74-153 (decided under former Ga. L. 1973, p. 1202).

- Fees collected by the Secretary of State as the commissioner of securities must be paid to the Fiscal Division of the Department of Administrative Services (now the Office of Treasury and Fiscal Services), and such fees may not be retained by the Office of Secretary of State as reimbursements for the expenses of that office. 1969 Op. Att'y Gen. No. 69-13 (decided under former Ga. L. 1957, p. 134, as amended).

Fraudulent Representations Inducing the Purchase of a Small Business, 30 POF3d 1.

Broker-Dealer Fraud: Churning, 36 Am. Jur. Trials 1.

- Right of broker to repledge customer's securities, 24 A.L.R. 452.

Rights inter se of customers whose securities have been repledged by broker, 24 A.L.R. 479; 48 A.L.R. 803; 76 A.L.R. 794.

Section 20a of Interstate Commerce Act (in relation to issuance of securities by carriers) as limitation on powers of state, 57 A.L.R. 671.

Measure of damages for broker's breach of contract with customer as to sales and purchases of stocks on the exchange, 63 A.L.R. 305.

Blue Sky Laws, 87 A.L.R. 42.

Legal aspects of transactions in securities "when issued" or "when, as and if" issued, 88 A.L.R. 311.

What constitutes stock, securities, or investment contracts within contemplation of state and federal statutes regulating sale of securities, 163 A.L.R. 1050.

Awarding damages for delay, in addition to specific performance, of contract for sale of corporate stock, 28 A.L.R.3d 1401.

What amounts to participation by corporate officer or agent in illegal issuance of security, in order to impose liability upon him under state securities regulations, 44 A.L.R.3d 588.

Commodities broker's state-law duties to customers, 55 A.L.R.4th 394.

Lockup option defense to hostile corporate takeover, 66 A.L.R.4th 180.

Construction and application of preemption exemption, under Employee Retirement Income Security Act (29 USCS §§ 1001, et seq.), for state laws regulating insurance, banking, or securities (29 USCS § 1144(b)(2)), 87 A.L.R. Fed. 797.

Attorney's liability for nondisclosure or misrepresentation to third-party nonclients in private civil actions under Federal Securities Laws, 112 A.L.R. Fed. 141.