VITAL CORPORATE TUNE-UP ITEMS FOR 2025
If you think your corporation has a shareholders’ agreement, voting trust, voting agreement, or provisions in your articles of incorporation or bylaws for voting rights or economic/transfer rights, think again. They may have already become unenforceable under Georgia corporate law.
Voting Trusts. Under Official Code of Georgia Annotated (O.C.G.A.) §14-2-730, voting trusts become unenforceable 10 years after their effective date. The parties can extend a voting trust for 10 years by signing an extension agreement, with certain statutory and procedural requirements.
Voting Agreements. A voting agreement under O.C.G.A. §14-2-731, unlike a voting trust, becomes unenforceable 20 years after its effective date. A voting agreement can be extended by a renewal agreement signed by all of the shareholders as of the date of the renewal.
Shareholders Agreements. A shareholders’ agreement under O.C.G.A. §14-2-732, whether in the form of a separate shareholders’ agreement, or included in the articles of incorporation, the bylaws, or any other agreement which allows for (1) elimination of the board of directors, (2) provides authorization of distributions not in proportion to ownership of shares, (3) makes use of weighted voting rights, (4) transfers to one or more persons the right to exercise corporate power, (5) requires dissolution of the corporation at the request of one or more of the shareholders, or upon occurrence of a specific event, (6) or otherwise governs the exercise of the corporate powers or management of the corporation, becomes unenforceable 20 years after its effective date. Such an agreement may be renewed for a period not in excess of 20 years from the date all shareholders sign a renewal agreement.
The impact of unintentionally voiding these agreements/ documents could have an existential impact on the corporation, and counsel should carefully review each of the above referenced documents to determine if they are void or voidable, and take remedial action, as necessary.
If you have questions about this information, please contact our office at (404) 365-5682.
