Corporate Shareholder Preemptive-Rights Requirements in Georgia
At a glance
| Governing law, entity, holder, security, and issuance scope | O.C.G.A. § 14-2-630; ordinary domestic corporation, statutory close corporation, and qualifying July 1, 1989 legacy corporation; shareholders; unissued/treasury and included convertible/subscription securities |
|---|---|
| Opt-in, opt-out, formation-date, and legacy rights | Ordinary corporation: opt-in by articles. Statutory close corporation and qualifying July 1, 1989 corporation: default right unless articles opt out (§ 14-2-630(a)-(b)) |
| Articles, board, agreement, and contractual-right sources | Articles grant, deny, or vary; shorthand election activates subsection (c). Board prescribes uniform exercise terms and outsider consideration; no separate contractual-right system in § 14-2-630 |
| Covered shares, options, convertibles, treasury shares, and rights | Unissued and treasury shares; 'shares' includes securities convertible into or carrying subscription/acquisition rights (§ 14-2-630(a),(c)(1),(d)) |
| Allocation, price, terms, and board determination | Proportional amounts on uniform board-prescribed terms providing a fair and reasonable exercise opportunity; outsider consideration set by board and not lower (§ 14-2-630(c)(1),(6)) |
| Notice, delivery, exercise deadline, and record date | No statutory offer-content, delivery, minimum exercise-period, or special record-date rule in § 14-2-630; articles and board-prescribed fair/reasonable terms control |
| Cash, noncash, compensation, merger-plan, and other exclusions | Excludes dividends, fractions, merger/exchange, approved compensation shares/rights, first-year article-authorized shares, federal reorganization, qualifying nonmoney sales, and up-to-1-year class-waiver releases (§ 14-2-630(c)(2)) |
| Waiver, denial, limitation, amendment, class vote, and cumulative voting | Individual waiver anytime; two-thirds class vote/written/electronic consent; past-issuance waiver by then-holder; written/electronic waiver irrevocable without consideration; articles may vary (§ 14-2-630(c)(3)) |
| Outside issuance and remedy, securities, fiduciary, and valuation boundaries | Unpurchased shares may issue at no lower consideration with no general time limit. Issued shares remain valid; suit within 3 years after discovery/notice and never over 5 years after issuance (§ 14-2-630(c)(6),(e)-(f)) |
Requirements one by one
Identify the default before applying the mechanics
An ordinary Georgia corporation starts with no right unless its articles grant one. Statutory close corporations and qualifying corporations in existence on July 1, 1989 instead receive the subsection (c) right unless their articles expressly provide otherwise (§ 14-2-630(a)-(b)).
Articles stating that the corporation elects preemptive rights activate subsection (c), subject to express variations. That system gives shareholders proportional amounts of unissued or treasury shares on uniform board-prescribed terms designed to provide a fair and reasonable exercise opportunity (§ 14-2-630(c)(1)).
Exclusions and waivers
The elected system excludes share dividends, fractional shares, merger or share- exchange shares, approved compensation shares and related rights, article- authorized shares issued within one year after incorporation, federal- reorganization shares, and qualifying nonmoney sales (§ 14-2-630(c)(2)(A)-(H)).
A two-thirds class vote or written/electronic consent may release shares for up to one year. Separately, an individual may waive at any time, a class may waive by a two-thirds vote or consent, and a written or electronic waiver is irrevocable even without consideration (§ 14-2-630(c)(2)(I)-(3)).
Later issuance and enforcement boundaries
Unpurchased shares may be issued to another person at board-set consideration not lower than the preemptive offer. Unlike many statutory systems, Section 14-2-630(c)(6) states no general one-year deadline for that outside issuance.
A violation does not disturb shares that are otherwise validly issued and outstanding. An enforcement action must be filed within three years after discovery or notice and never more than five years after the issuance (§ 14-2-630(e)-(f)).
What trips people up
The one-year provisions do two different jobs. One excludes shares authorized in the articles and issued within the first year after incorporation; the other caps the duration of a two-thirds class release. Neither is a general deadline for selling unpurchased shares to outsiders (§ 14-2-630(c)(2)(F), (I), (6)).
The nonmoney exclusion requires more than noncash consideration. The board must in good faith deem the sale advantageous to the corporation's business (§ 14-2-630(c)(2)(H)).
Common questions
Does every Georgia shareholder automatically receive the right?
No. The ordinary rule is opt-in through the articles. Statutory close and qualifying July 1, 1989 legacy corporations follow the separate opt-out branch (§ 14-2-630(a)-(b)).
Can a whole class waive its rights?
Yes. Holders of two-thirds of the class may act by vote, written consent, or electronic transmission. Section 14-2-630(c)(3) also addresses past issuances and makes written or electronic waivers irrevocable without consideration.
Does a violation cancel the issued shares?
No. Section 14-2-630(e) preserves shares that are otherwise validly issued and outstanding, while subsection (f) limits an action to enforce liability.
Statutes and sources
- O.C.G.A. § 14-2-630(a)-(b) — ordinary opt-in, statutory-close default, and July 1, 1989 legacy branch. Official public-domain Title 14 text, accessed August 31, 2026.
- O.C.G.A. § 14-2-630(c)(1)-(2)(H) — allocation, board terms, and principal exclusions. Official public-domain Title 14 text, accessed August 31, 2026.
- O.C.G.A. § 14-2-630(c)(2)(I)-(3) — class releases and individual/class waivers. Official public-domain Title 14 text, accessed August 31, 2026.
- O.C.G.A. § 14-2-630(c)(4)-(6), (d) — class limits, outside issuance, and included securities. Official public-domain Title 14 text, accessed August 31, 2026.
- O.C.G.A. § 14-2-630(e)-(f) — issued-share validity and enforcement deadlines. Official public-domain Title 14 text, accessed August 31, 2026.
Source links
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