2025 Code of Georgia
Title 14 - Corporations, Partnerships, and Associations (Chs. 1 — 11)
Chapter 2 - Business Corporations (Arts. 1 — 18)
Article 13 - Dissenters’ Rights (Pts. 1 — 3)

Annotations

JUDICIAL DECISIONS

• General Consideration
• Fair Value

General Consideration Editor’s notes.

In light of the similarity of the statutory provisions, decisions under former Code 1933, § 22-1202 and former Code Sections 14-2-251 and 14-2-252, which were repealed by Ga. L. 1988, p. 1070, § 1, effective July 1, 1989, are included in the annotations for this article.

Purpose. —

The general purpose of former § 14-2-251 was to provide an orderly and fair method to evaluate the ownership interests of shareholders who are forced from the corporation by their dissent from certain corporate action. Atlantic States Constr., Inc. v. Beavers, 169 Ga. App. 584, 314 S. E.2d 245, 1984 Ga. App. LEXIS 1640 (1984) (decided under former § 14-2-251).

Corporation’s power to impair shareholder’s rights differs from state’s power. —

There is a substantial difference between corporation’s attempting to reserve right to impair vested rights of its shareholders through altering or amending its internal structure and retention by state of power to modify or withdraw charters granted to corporations created by the state. Baugh v. Citizens & S. Nat'l Bank, 248 Ga. 180, 281 S. E.2d 531, 1981 Ga. LEXIS 911 (1981) (decided under former Code 1933, § 22-1202).

Effect of state bank merger and consolidation provisions on shareholder’s rights. —

Application of provisions dealing with merger and consolidation of state banks does not impair shareholder’s rights in such a way as to offend constitutional prohibition against retroactivity. Baugh v. Citizens & S. Nat'l Bank, 248 Ga. 180, 281 S. E.2d 531, 1981 Ga. LEXIS 911 (1981) (decided under former Code 1933, § 22-1202).

Conditional dissent by shareholder. —

Former Code 1933, § 41A-2408 (see now O. C. G. A. § 7-1-537) and former Code 1933, § 22-1202 (former § 14-2-251) make no provision for conditional dissent by shareholder to plan or propose merger. Baugh v. Citizens & S. Nat'l Bank, 248 Ga. 180, 281 S. E.2d 531, 1981 Ga. LEXIS 911 (1981) (decided under former Code 1933, § 22-1202).

Dissent by minority shareholder. —

Consideration of the minority nature of the dissenting shareholders’ interest is not against public policy for purposes of determining fair value. Atlantic States Constr., Inc. v. Beavers, 169 Ga. App. 584, 314 S. E.2d 245, 1984 Ga. App. LEXIS 1640 (1984) (decided under former § 14-2-251).

Merger statutes not to be used solely to eliminate minority stockholder. —

If a corporation is unable to eliminate a minority stockholder by simply adopting a bylaw or voting to purchase the minority’s stock, its majority stockholders cannot accomplish the same purpose by setting up a second corporation wholly owned by them whose sole purpose is to enable it to take advantage of the merger statutes. Bryan v. Brock & Blevins Co., 490 F.2d 563, 1974 U. S. App. LEXIS 9873 (5th Cir.), cert. denied, 419 U. S. 844, 95 S. Ct. 77, 42 L. Ed. 2d 72, 1974 U. S. LEXIS 2474 (1974) (decided under former Code 1933, § 22-1202).

Injunction not an available remedy. —

The minority shareholders of a railroad company were not entitled to enjoin a merger between the railroad and a non-railroad corporation, having offered no facts to support the merger, and having an adequate remedy at law under former § 14-2-251 and § 14-4-143, which provide for a fair and adequate price to dissenting shareholders. Long v. Atlanta & W. P. R. R., 253 Ga. 257, 320 S. E.2d 530, 1984 Ga. LEXIS 882 (1984) (decided under former § 14-2-251).

Trier of fact may reject expert opinion. —

Nothing in former § 14-2-251 abrogates the general rule allowing the trier of fact to reject an expert opinion. Atlantic States Constr., Inc. v. Beavers, 169 Ga. App. 584, 314 S. E.2d 245, 1984 Ga. App. LEXIS 1640 (1984) (decided under former § 14-2-251).

No direct appeal to Supreme Court. —

An appraisal proceeding pursuant to former § 14-2-251 is legal, not equitable, in character; and thus no right of direct appeal to the Supreme Court lies from such a proceeding. Atlantic States Constr., Inc. v. Beavers, 250 Ga. 828, 301 S. E.2d 635, 1983 Ga. LEXIS 655 (1983), transferred, 169 Ga. App. 584, 314 S. E.2d 245, 1984 Ga. App. LEXIS 1640 (1984) (decided under former § 14-2-251).

Fair Value “Fair market value” defined. —

For discussion of establishment of “fair market value” under former Code 1933, § 22-1202 and pertinent jury instructions, see Multitex Corp. of Am. v. Dickinson, 683 F.2d 1325, 1982 U. S. App. LEXIS 16433 (11th Cir. 1982) (decided under former Code 1933, § 22-1202).

Use of “willing seller and buyer” test. —

The “willing seller, willing buyer” test should not be used to define “fair value,” but should be limited to defining “market value.” Atlantic States Constr., Inc. v. Beavers, 169 Ga. App. 584, 314 S. E.2d 245, 1984 Ga. App. LEXIS 1640 (1984) (decided under former §§ 14-2-251 and 14-2-252).

Factors to be considered in determining “fair value”. —

When determining “fair value” of dissenting stockholder’s shares under paragraph (4) of subsection (g) of former § 14-2-251, the trial court should maintain a flexible standard by considering all factors relevant to the per share fair value in each case, including market, earnings or investment, and asset value, and apply a reasonable methodology supported by the evidence. Atlantic States Constr., Inc. v. Beavers, 169 Ga. App. 584, 314 S. E.2d 245, 1984 Ga. App. LEXIS 1640 (1984) (decided under former §§ 14-2-251 and 14-2-252).

Initial burden of proof of “fair value” rests with the corporation. Atlantic States Constr., Inc. v. Beavers, 169 Ga. App. 584, 314 S. E.2d 245, 1984 Ga. App. LEXIS 1640 (1984) (decided under former §§ 14-2-251 and 14-2-252).

Burden of proof for establishment of fair market value of stock under former § 14-2-251 is upon the corporation and is similar to establishing price under a condemnation action. Multitex Corp. of Am. v. Dickinson, 683 F.2d 1325, 1982 U. S. App. LEXIS 16433 (11th Cir. 1982) (decided under former § 14-2-251).

Research References & Practice Aids

Law reviews.

For article discussing financial statements required under the Georgia Business Corporation Code, see 3 Ga. L. Rev. 11 (1968).

For article, “The Acquisition Process and the Closely-Held Corporation: Selected Legal Aspects,” see 36 Mercer L. Rev. 567 (1985).

For article, “The Civil Jurisdiction of State and Magistrate Courts,” see 24 Ga. St. B. J. 29 (1987).

For article, “Georgia’s New Business Corporation Code,” see 24 Ga. St. B. J. 158 (1988).

For article, “Changes in Corporate Practice under Georgia’s New Business Corporation Code,” see 40 Mercer L. Rev. 655 (1989).

For article, “Why Discounts Are Now Inappropriate Under Georgia’s Dissenters’ Rights Statute,” see 6 Ga. St. B. J. 12 (2001).

Hierarchy Notes:

O. C. G. A. Title 14

O. C. G. A. Title 14, Ch. 2