2021 Georgia Code
Title 14 - Corporations, Partnerships, and Associations
Chapter 2 - Business Corporations
Article 8 - Directors and Officers
Part 3 - Standards of Conduct
§ 14-2-830. General Standards for Directors; Presumption of Good Faith and Ordinary Care

1. A director shall perform his or her duties as a director in good faith and with the degree of care an ordinarily prudent person in a like position would exercise under similar circumstances.
2. In performing his or her duties a director may rely upon:
   1. Other officers, employees, or agents of the corporation whom the director reasonably believed to be reliable and competent in the functions performed; and
   2. Information, data, opinions, reports, or statements provided by officers, employees, agents of the corporation, legal counsel, public accountants, investment bankers, or other persons as to matters involving the skills, expertise, or knowledge reasonably believed to be reliable and within such person's professional or expert competence.
3. There shall be a presumption that the process a director followed in arriving at decisions was done in good faith and that such director has exercised ordinary care; provided, however, that this presumption may be rebutted by evidence that such process constitutes gross negligence by being a gross deviation of the standard of care of a director in a like position under similar circumstances.
4. Nothing contained in this Code section shall:
   1. In any instance when fairness is at issue, such as consideration of the fairness of a transaction to the corporation as evaluated under paragraph (3) of subsection (b) of Code Section 14-2-861, alter the burden of proving the fact or lack of fairness otherwise applicable;
   2. Alter the fact or lack of liability of a director under the Official Code of Georgia Annotated, including the governance of the consequences of an unlawful distribution under Code Section 14-2-832 or a conflicting interest transaction under Code Section 14-2-861;
   3. Affect any rights to which the corporation or its shareholders may be entitled under another law of this state or of the United States; or
   4. Deprive a director of the applicability, effect, or protection of the business judgment rule.

(Code 1981, §14-2-830, enacted by Ga. L. 1988, p. 1070, § 1; Ga. L. 2017, p. 693, § 2/HB 192.)

The 2017 amendment, effective July 1, 2017, rewrote this Code section. See Editor's notes for applicability.

- Duty of board of directors in protecting insureds, creditors and the general public regarding investments, § 33-11-54.

- Ga. L. 2017, p. 693, § 4/HB 192, not codified by the General Assembly, provides that: "This Act shall apply only to causes of action arising on or after July 1, 2017."

- For article discussing corporation director's liability for improper payments to shareholders, see 3 Ga. L. Rev. 11 (1968). For article discussing liability of corporate directors, officers, and shareholders under the Georgia Business Corporation Code, and as affected by provisions of the Georgia Civil Practice Act, see 7 Ga. St. B. J. 277 (1971). For article, "Corporate Governance in the Aftermath of the Insurance Crisis," see 39 Emory L.J. 1155 (1990). For article, "Some Distinctive Features of the Georgia Business Corporation Code," 28 Ga. St. B. J. 101 (1991). For survey article on trial practice and procedure, see 59 Mercer L. Rev. 423 (2007). For annual review of Georgia Corporation and Business Organization Law, see 15 (No. 7) Ga. St. B. J. 20 (2010). For annual survey of law on business associations, see 62 Mercer L. Rev. 41 (2010). For article, "2013 Georgia Corporation and Business Organization Case Law Developments," see 19 Ga. St. B. J. 28 (April 2014). For article, "Excessive Corporate Risk-Taking and the Decline of Personal Blame," see 65 Emory L.J. 533 (2015). For article, "2014 Georgia Corporation and Business Organization Case Law Developments," see 20 Ga. St. B. J. 26 (April 2015). For article on the 2017 amendment of this Code section, see 34 Ga. St. U.L. Rev. 1 (2017). For annual survey on trial practice and procedure, see 69 Mercer L. Rev. 321 (2017). For annual survey on business associations, see 70 Mercer L. Rev. 19 (2018). For comment, "Poison Pills: Are Dead Hand Pills Dead in Georgia?," see 50 Mercer L. Rev. 809 (1999).

RESEARCH REFERENCES

Am. Jur. 2d.

- 18B Am. Jur. 2d, Corporations, §§ 1426 et seq., 1431 et seq.

- 19 C.J.S., Corporations, §§ 558 et seq., 575, 576.

- Motive as affecting personal liability of directors in voting for acts not in themselves illegal, 4 A.L.R. 166.

Power of directors to sell property of corporation without consent of stockholders, 5 A.L.R. 930; 60 A.L.R. 1210.

Liability of public corporation for money received by it for unlawfully issued instrument of indebtedness, 7 A.L.R. 353.

Laches as affecting right of corporation or its stockholders to relief against directors for violations of trust, 10 A.L.R. 370.

Personal liability of directors as affected by terms of contract or form of signature, 33 A.L.R. 1353; 51 A.L.R. 319.

Provision of constitution or statute making directors or officers of corporation liable for money embezzled or misappropriated, 46 A.L.R. 1164.

Right of creditor of corporation to maintain personal action against directors or officers for mismanagement, 50 A.L.R. 462.

Personal liability on contract made by "trustees" or others in closing affairs of dissolved corporation, 76 A.L.R. 1478.

Assignability of claim against officers or directors of corporation for breach of duty, 80 A.L.R. 875.

Validity, construction, and effect of clause in obligation of corporation that it is issued without recourse against officers or directors, 97 A.L.R. 1157.

Personal liability of directors to holders of corporate securities because of false statements therein, 99 A.L.R. 852.

Recovery against corporate directors or officers for fraud or mismanagement as affected by releases, ratification, waiver, or consent by some, but not all, of the stockholders, 120 A.L.R. 238.

Construction and application of statutes making corporate officers or directors liable in respect of loans or advances to stockholders or officers, 129 A.L.R. 1258.

Personal liability of corporate directors or officers under statute imposing liability in respect of excessive indebtedness, as affected by payment by the corporation (or its receiver, assignee in insolvency, or trustee in bankruptcy) of all or part of the excessive indebtedness, 130 A.L.R. 824.

Personal liability of corporate directors or officers to third persons for restitution, or for damages for conversion, under circumstances rendering the corporation itself liable, 152 A.L.R. 696.

Accountability of corporate directors or officers for profit from activities beyond the corporate powers, but involving the use of information or opportunities available to them by reason of their position in the corporation, 153 A.L.R. 663.

Criminal liability of corporate officer who issues worthless checks in corporate name, 68 A.L.R.2d 1269.

Duty and liability of closely held corporation, its directors, officers, or majority stockholders, in acquiring stock of minority shareholder, 7 A.L.R.3d 500.

Liability of corporate directors for negligence in permitting mismanagement or defalcations by officers or employees, 25 A.L.R.3d 941.

Liability of corporate directors or officers for negligence in permitting conversion of property of third persons by corporation, 29 A.L.R.3d 660.

Liability of corporate officer or director for commission or compensation received from third person in connection with that person's transaction with corporation, 47 A.L.R.3d 373.

Personal liability of officers or directors of corporation on corporate checks issued against insufficient funds, 47 A.L.R.3d 1250.

Personal civil liability of officer or director of corporation for negligence of subordinate corporate employee causing personal injury or death of third person, 90 A.L.R.3d 916.

Negligence, nonfeasance, or ratification of wrongdoing as excusing demand on directors as prerequisite to bringing of stockholder's derivative suit on behalf of corporation, 99 A.L.R.3d 1034.

Propriety of attorney who has represented corporation acting for corporation in controversy with officer, director, or stockholder, 1 A.L.R.4th 1124.

Financial inability of corporation to take advantage of business opportunity as affecting determination whether "corporate opportunity" was presented, 16 A.L.R.4th 185.

Purchase of shares of corporation by director or officer as usurpation of "corporate opportunity,", 16 A.L.R.4th 784.

Fairness to corporation where "corporate opportunity" is allegedly usurped by officer or director, 17 A.L.R.4th 479.

Duty of corporate directors to exercise "informed" judgment in recommending responses to merger or tender offers, 46 A.L.R.4th 887.

Liability of corporate director, officer, or employee for tortious interference with corporation's contract with another, 72 A.L.R.4th 492.