Georgia § 14-2-870 - Procedures for disclaimer of business opportunities.

§ 14-2-870. Procedures for disclaimer of business opportunities.

A corporation may disclaim, in its articles of incorporation or bylaws or by action of its shareholders or board of directors, any interest of the corporation in, or in being offered, or in excluding directors or officers from taking advantage of or participating in, specific business opportunities or classes or categories of business opportunities that are, have been, or may be in the future presented to the corporation or to one or more of its directors or officers. For purposes of this part, the terms "director" and "directors" include a person or persons other than directors to the extent discretion or powers of the board of directors are vested in such person or persons pursuant to Code Sections 14-2-732, 14-2-920, or 14-2-922. A director's or officer's taking advantage of, or participating in, directly or indirectly, a specific business opportunity may not be the subject of equitable relief, or give rise to an award of damages or other sanctions against the director or officer, in a proceeding by a shareholder or by or in the right of the corporation on the ground that such opportunity should have been first offered to the corporation or that the corporation had an interest in, or in being offered, or in excluding the director or officer from taking advantage of or participating in, such opportunity, to the extent the corporation has disclaimed any such interest with respect to such business opportunity pursuant to subsection (a) of this Code section, either with respect to the specific business opportunity or with respect to a class or category of business opportunities that includes such opportunity. Action by the shareholders or board of directors of the corporation approving a disclaimer pursuant to subsection (a) of this Code section that applies to a director with respect to a specific past, present, or future business opportunity shall be effective for all purposes if the director brings such opportunity to the attention of the corporation (if such opportunity is not known to the corporation) and: Such disclaimer is approved by qualified directors in compliance with the procedures set forth in Code Section 14-2-862, as if the decision being made concerned a director's conflicting interest transaction; or Such disclaimer is approved by shareholders' action taken in compliance with the procedures set forth in Code Section 14-2-863, as if the decision being made concerned a director's conflicting interest transaction; except that, rather than making "required disclosure" as defined in Code Section 14-2-860, in each case the director shall have made prior disclosure to those approving such disclaimer on behalf of the corporation of all material facts concerning the business opportunity that are then known to the director, subject to subsection (e) of this Code section, and that a "qualified director" is a director who, at the time action is to be taken under paragraph (1) of subsection (c) of this Code section, would be a qualified director under subsection (d) of Code Section 14-2-862 if the business opportunity were a director's conflicting interest transaction. Action by the board of directors or shareholders of the corporation approving a disclaimer pursuant to subsection (a) of this Code section that applies to an officer with respect to a specific past, present, or future business opportunity shall be effective for all purposes if the officer brings such opportunity to the attention of the corporation (if such opportunity is not known to the corporation) and such disclaimer is approved by the board of directors or shareholders in compliance with the procedures set forth in Code Section 14-2-864, as if the decision being made concerned an officer's conflicting interest transaction, except that, rather than making "required disclosure" as defined in Code Section 14-2-864, in each case the officer shall have made prior disclosure to those approving such disclaimer on behalf of the corporation of all material facts concerning the business opportunity that are then known to the officer, subject to subsection (e) of this Code section. Notwithstanding subsection (c) or (d) of this Code section, a director or officer is not obligated to make prior disclosure to those approving a disclaimer on behalf of the corporation pursuant to subsection (c) or (d) of this Code section of all material facts concerning the business opportunity subject to such disclaimer that are then known to the director or officer to the extent that the director or officer reasonably believes that doing so would violate a duty imposed under law, a legally enforceable obligation of confidentiality, or a professional ethics rule, provided that such director or officer discloses to those acting on behalf of the corporation: All information required to be disclosed that is not so violative; and The nature of the director's or officer's duty not to disclose the confidential information. In any proceeding seeking equitable relief or other remedies based upon an alleged improper taking advantage of or participation in a business opportunity by a director or officer, directly or indirectly, the fact that the director or officer did not employ the procedures described in this Code section before taking advantage of the opportunity shall not: Create an inference that the opportunity should have been first presented to the corporation, that the corporation had an interest in, or in being offered, or in excluding the director or officer from taking advantage of or participating in, such opportunity or that the director or officer has or will have appropriated the opportunity in violation of his or her duties by taking advantage of or participating in the opportunity; or Alter the burden of proof otherwise applicable to establish that the director or officer breached a duty to the corporation in the circumstances. (Code 1981, § 14-2-870 , enacted by Ga. L. 2016, p. 225, § 1-11/SB 128; Ga. L. 2017, p. 774, § 14/HB 323.) The 2017 amendment, effective May 9, 2017, part of an Act to revise, modernize, and correct the Code, substituted "subsection (c) or (d)" for "subsections (c) or (d)" at the beginning of subsection (e).