Georgia Commons

Official Code of Georgia Annotated

Title 14. CORPORATIONS, PARTNERSHIPS, AND ASSOCIATIONS · Chapter 3. NONPROFIT CORPORATIONS · Article 8. DIRECTORS AND OFFICERS · Part 4. OFFICERS

14-3-842. Standards of conduct for officers; presumption of good faith and ordinary care.

Active

Current through: Including Acts of the 2025 Regular Session of the General Assembly.

  1. (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.#

  2. (b)

    In performing his or her duties, an officer may rely upon:#

    1. (1)

      Other officers, employees, or agents of the corporation whom the officer reasonably believed to be reliable and competent in the functions performed; and#

    2. (2)

      Information, data, opinions, reports, or statements provided by other officers, employees, or agents of the corporation or by legal counsel, public accountants, investment bankers, religious authorities, ministers, priests, rabbis, other similar persons in a religious organization, 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. (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.#

  4. (d)

    Nothing contained in this Code section shall:#

    1. (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. (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. (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;#

    4. (4)

      Deprive an officer of the applicability, effect, or protection of the business judgment rule; or#

    5. (5)

      Deprive an officer of the applicability, effect, or protection of Code Sections 51-1-20 and 51-1-20.1.#

The notes below are printed with the section but are not enacted law (O.C.G.A. § 1-1-1(c)). They are shown apart from the text.

History

Code 1981, § 14-3-842, enacted by Ga. L. 1991, p. 465, § 1; Ga. L. 2004, p. 508, §§ 66, 68; Ga. L. 2020, p. 85, § 2/SB 373; Ga. L. 2023, p. 419, § 1-1/SB 148, effective July 1, 2023.

Amendments

The 2020 amendment, effective July 1, 2020, rewrote this Code section, which read: “Unless a different standard is prescribed by law: “(1) An officer 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 care an ordinarily prudent person in a like position would exercise under similar circumstances; “(2) In discharging his or her 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 corporation whom the officer reasonably believes to be reliable and competent in the matters presented; or “(B) Legal counsel, public accountants, or other persons as to matters the officer reasonably believes are within the person’s professional or expert competence; “(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.” See Editor’s notes for applicability. The 2023 amendment, effective July 1, 2023, in subsection (b), substituted “Other officers” for “Officers” at the beginning of paragraph (b)(1), inserted “other” following “statements provided by” and inserted “other similar persons in a religious organization,” following “priests, rabbis,” in paragraph (b)(2); in subsection (d), deleted “or” at the end of paragraph (d)(3); inserted “; or” at the end of paragraph (d)(4), and added paragraph (d)(5).

Editor's notes

Ga. L. 2020, p. 85, § 6/SB 373, not codified by the General Assembly, provides that: “This Act shall apply only to causes of action arising on or after July 1, 2020.”

Read the official page (the state's PDF, opened at the page this text was read from).

Current through: Including Acts of the 2025 Regular Session of the General Assembly.

Text read from t14-(v12)-pdf.pdf, Volume V12, 2017 edition, 2025 supplement, pages 122 to 124; merge action: replaced; file SHA-256 b004123363dc.

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