SB 373 — Nonprofit Corporations; directors and officers of electric membership corporations and foreign electric cooperatives; provisions; change

Summary

A BILL to be entitled an Act to amend Article 8 of Chapter 3 of Title 14 and Part 6 of Article 4 of Chapter 3 of Title 46 of the Official Code of Georgia Annotated, relating to directors and officers of nonprofit corporations and directors and officers of electric membership corporations and foreign electric cooperatives, respectively, so as to change provisions relating to the responsibilities and standard of care of directors and officers of certain corporations; to clarify the ability of directors and officers to rely on other individuals in the performance of their duties; to provide for a rebuttable presumption when directors and officers are acting in good faith; to provide for related matters; to provide for applicability; to repeal conflicting laws; and for other purposes.

Bill Text

AI-generated reading aid from the bill's amendatory text — verify against the official bill.

This bill amends 3 section(s) of the Official Code of Georgia Annotated: O.C.G.A. § 14-3-842; O.C.G.A. § 46-3-303; O.C.G.A. § 46-3-303.1.

• O.C.G.A. § 14-3-842

  : (1) An with discretionary authority shall discharge his or her duties under that authority: (A) In a manner he or she believes in good faith to be in the best interests of the corporation; and (B) With the ; (2) discharging is entitled to rely on information, opinions, reports, or statements, including financial statements and other financial data, if prepared or presented by (A) One or more officers or employees believes matters presented; or (B) Legal the officer reasonably believes are the ; (3) In the instances described in paragraph (2) of this Code section, an officer is not entitled to rely if he or she has knowledge concerning the matter in question that makes reliance otherwise permitted by paragraph (2) of this Code section unwarranted; and (4) An officer is not liable to the corporation, any member, or other person for any action taken or not taken as an officer, if the officer performed the duties of his or her office in compliance with this Code section. → aid article is further amended by revising Code Section 14-3-842, relating to standards of nduct for officers, as follows: 14-3-842." (a) Unless a different standard is prescribed by law , an officer shall perform his or her duties as an officer in good faith and with the degree of care an ordinarily prudent person in a like position would exercise under similar circumstances . (b) In performing his or her duties, an officer may rely upon: (1) Officers, employees, or agents of the corporation whom the officer reasonably believed to be reliable and competent in the functions performed; and (2) Information, data, opinions, reports, or statements provided by officers, employees, or agents of the corporation or by legal counsel, public accountants, investment bankers, religious authorities, ministers, priests, rabbis, 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 . 0 SB 373/AP (c) There shall be a presumption that the process an officer followed in arriving at decisions was done in good faith and that such officer exercised ordinary care; provided, however, that this presumption may be rebutted by evidence that such process constitutes gross negligence by being a gross deviation from the standard of care of an officer in a like position under similar circumstances. (d) 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 (4) of subsection (c) of Code Section 14-3-865, alter the burden of proving the fact or lack of fairness otherwise applicable; (2) Alter the fact or lack of liability of an officer under the Official Code of Georgia Annotated, including the governance of the consequences of a conflicting interest transaction under Code Section 14-3-865; (3) Affect any rights to which the corporation or its members may be entitled under another law of this state or of the United States; or (4) Deprive an officer of the applicability, effect, or protection of the business judgment rule."

  amended

• O.C.G.A. § 46-3-303

  Directors and officers shall discharge the duties of their respective positions in good faith and with that degree of diligence, care, and skill which ordinarily prudent men would exercise under similar circumstances in like positions. In discharging their duties, directors and officers, when acting in good faith, may rely upon financial information concerning the electric membership corporation when such information is represented to them by the president of the electric membership corporation or by the employee of the electric membership corporation having charge of its books of account, or in the form of a written report by an independent or certified public accountant or firm of such accountants, to be correct and to reflect fairly the financial condition of the electric membership corporation. → art 6 of Article 4 of Chapter 3 of Title 46 of the Official Code of Georgia Annotated, lating to directors and officers of electric membership corporations and foreign electric operatives, is amended by revising Code Section 46-3-303, relating to duty of directors and ficers to act in good faith and with due diligence, care, and skill and reliance on financial formation prepared by others, as follows: "46-3-303. (a) 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. 0 SB 373/AP (b) In performing his or her duties a director may rely upon: (1) Officers, employees, or agents of the electric membership 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, or agents of the electric membership corporation or by 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. (c) There shall be a presumption that the process a director followed in arriving at decisions was done in good faith and that such director exercised ordinary care; provided, however, that this presumption may be rebutted by evidence that such process constitutes gross negligence by being a gross deviation from the standard of care of a director in a like position under similar circumstances. (d) 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 electric membership corporation as evaluated under paragraph (3) of subsection (a) of Code Section 46-3-305, 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 a conflicting interest transaction under Code Section 46-3-305; (3) Affect any rights to which the electric membership corporation or its members 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."

  amended

• O.C.G.A. § 46-3-303.1

  (1) A director shall discharge his duties as director, including his duties as a member of a committee: (A) In ; (B) With the (2) In discharging his duties, a director is entitled to rely on information, opinions, reports, or statements, including financial statements and other financial data, if prepared or presented by (A) One or more officers or employees director believes matters presented; (B) Legal the director reasonably believes are the ; or (C) A committee of the board of directors of which he is not a member if the director reasonably believes the committee merits confidence. (3) A director is not acting in good faith if he has knowledge concerning the matter in question that makes unwarranted the reliance otherwise permitted by paragraph (2) of this subsection. (4) A director is not liable for any action taken as a director or any failure to take any action if he performed the duties of his office in compliance with this subsection. (b)(1) An officer with discretionary authority shall discharge his duties under that authority: (A) In good faith; and (B) With the care an ordinarily prudent person in a like position would exercise under similar circumstances. (2) In discharging his duties, an officer is entitled to rely on information, opinions, reports, or statements, including financial statements and other financial data, if prepared or presented by: (A) One or more officers or employees of the electric membership corporation whom the officer reasonably believes to be reliable and competent in the matters presented; or (B) Legal counsel, public accountants, investment bankers, or other persons as to matters the officer reasonably believes are within the person's professional or expert competence. (3) An officer is not acting in good faith if he has knowledge concerning the matter in question that makes unwarranted the reliance otherwise permitted by paragraph (2) of this subsection. (4) An officer is not liable for any action as an officer or any failure to take any action if he performed the duties of his office in compliance with this subsection. The general standards of care and conduct for actions of directors or officers of electric membership corporations, which actions occur on July 1, 1988, shall be as provided in this Code section and not as provided in Code Section 46-3-303. This Code section shall not relieve any director or officer from liability for the payment of taxes. → aid part is further amended by revising Code Section 46-3-303.1, relating to standards of re for directors and officers in discharge of duties on or after July 1, 1988 and reliance pon financial information, as follows: "46-3-303.1. (a) An officer shall perform his or her duties as an officer in 0 SB 373/AP with the degree of care an ordinarily prudent person in a like position would exercise under similar circumstances. (b) In performing his or her duties, an officer may rely upon : (1) Officers, employees, or agents of the electric membership corporation whom the officer reasonably believed to be reliable and competent in the functions performed; and (2) Information, data, opinions, reports, or statements provided by officers, employees, or agents of the electric membership corporation or by 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 . 0 SB 373/AP (c) There shall be a presumption that the process an officer followed in arriving at decisions was done in good faith and that such officer exercised ordinary care; provided, however, that this presumption may be rebutted by evidence that such process constitutes gross negligence by being a gross deviation from the standard of care of an officer in a like position under similar circumstances. (d) 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 electric membership corporation as evaluated under paragraph (3) of subsection (a) of Code Section 46-3-305, alter the burden of proving the fact or lack of fairness otherwise applicable; (2) Alter the fact or lack of liability of an officer under the Official Code of Georgia Annotated, including the governance of the consequences of a conflicting interest transaction under Code Section 46-3-305; (3) Affect any rights to which the electric membership corporation or its members may be entitled under another law of this state or of the United States; or (4) Deprive an officer of the applicability, effect, or protection of the business judgment rule."

  amended

Action History

1. July 01, 2020

   Effective Date

2. June 29, 2020

   Act 391

3. June 29, 2020

   Senate Date Signed by Governor

4. June 29, 2020

   Senate Sent to Governor

5. June 26, 2020

   House Passed/Adopted

6. June 26, 2020

   House Third Readers

7. June 22, 2020

   House Committee Favorably Reported

8. March 04, 2020

   House Second Readers

9. March 03, 2020

   House First Readers

10. March 02, 2020

    Senate Passed/Adopted As Amended

11. March 02, 2020

    Senate Third Read

12. February 24, 2020

    Senate Read Second Time

13. February 21, 2020

    Senate Committee Favorably Reported

14. February 18, 2020

    Senate Read and Referred

15. February 05, 2020

    Senate Hopper

Sponsors

• Jesse Stone · Primary
• Emanuel Jones · Primary
• Steve Gooch · Primary
• Bill Cowsert · Primary
• Burt Jones · Primary
• Jeff Mullis · Primary
• John Albers · Primary
• Jr. William Ligon · Primary
• Chuck Hufstetler · Primary
• Dean Burke · Primary
• Matt Brass · Primary
• Chuck Payne · Primary
• Renee Unterman · Primary
• Frank Ginn · Primary
• Tyler Harper · Primary
• Kay Kirkpatrick · Primary
• Michael 'Doc' Rhett · Primary
• III Larry Walker · Primary
• Sally Harrell · Primary
• Brandon Beach · Primary
• John F. Kennedy · Primary

Votes

Subjects