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Legislative updates

House Bill 230, effective January 1, 2021, provides for the formation of new benefit corporations and for existing corporations to elect to become a benefit corporation. Among other things the bill provides that the board of directors of a benefit corporation shall consider the public benefit or benefits specified in its articles of incorporation when managing or directing the business and affairs of the benefit corporation, and that benefit corporation shall, no less than annually, provide to its shareholders and to any other person who may request a copy in writing, a written report addressing the benefit corporation's performance with respect to its pursuit of the public benefit or benefits specified in its articles of incorporation.

Case summaries

Inspection of LLC Records
Ridgewalk Holdings, LLC v. Atlanta Apartment Investment Corp., A201968, decided March 4, 2021. The Georgia Court of Appeals held that Sec. 14-11-313 of the LLC law, which permits a member seeking an inspection of an LLC’s books and records to apply to the superior court for an order directing the LLC to show why the inspection should not be permitted applies only where it is undisputed that the party seeking an inspection was still a member of the LLC.

Piercing the Corporate Veil
G & E Construction, LLC v. Rubicon Construction, Inc., A20A1381, decided October 7, 2020. The Georgia Court of Appeals ruled it could not pierce the corporate veil based on evidence that the founder and president of the corporation hired his corporation to renovate his house considering he used his own funds to pay the corporation, nor could it pierce based on a failure to comply with corporate formalities without evidence of wrongdoing, fraud, or bad faith.

Business License
Saks Mgmt. & Assocs. v. Sung General Contracting, Inc., A20A1085, decided August 21, 2020. The Georgia Court of Appeals ruled that a property owner that entered into a construction contract with a corporate general contractor was entitled to summary judgment on the contractor’s counterclaims because the contractor did not have a valid license at the time of entering into the contract.

Doing Business Without a License
LFR Investments LLC v. Van Sant, A20A0142, decided May 1, 2020. The Georgia Court of Appeals held that an LLC that did not have a license to build houses could not enforce a contract to build the defendant’s house. Although its sole member held a license he did not hold it as an agent of the LLC and thus his license could not be imputed to the LLC.

Other notices

January 24, 2020 — The Secretary of State issued an alert to Georgia’s business community about what it calls misleading mailers regarding that ordering of a certificate of existence.
December, 2019 — Georgia’s Secretary of State’s Office has announced that as a part of its continuing anti-fraud and cyber security effort, it is implementing identity proofing services. This identity proofing, known as Experian identity verification, will be used to verify the identity of online filers in connection with certain online filings made through eCorp, the Corporation Division’s online services website. For those online filings requiring Experian identity verification, an online filer will be directed to an Experian webpage where they will enter identifying information and will then be presented with 5 questions designed to confirm the identity of that filer. If the filer answers these questions correctly, they will be able to complete their online filing.