GA Bar GA Bar Business Organizations 3 — Questions and Answers
Question 1: Under Georgia law, which of the following is a required step when dissolving a Georgia corporation voluntarily?
- Shareholder approval of dissolution and filing of articles of dissolution with the Secretary of State (Correct answer)
- Filing dissolution with each county where the corporation does business
- Unanimous director and shareholder approval without any state filing
- Notifying all creditors and receiving court approval before dissolution
Correct answer: Shareholder approval of dissolution and filing of articles of dissolution with the Secretary of State
Voluntary dissolution in Georgia requires approval of the dissolution by shareholders and the filing of articles of dissolution with the Georgia Secretary of State.
Question 2: Under the Georgia Revised Uniform Limited Partnership Act, which of the following best describes a general partner's liability exposure?
- A general partner's liability is limited to their capital contribution
- A general partner is personally liable for all obligations of the limited partnership (Correct answer)
- A general partner is liable only for debts incurred during their tenure
- A general partner has the same limited liability as a limited partner
Correct answer: A general partner is personally liable for all obligations of the limited partnership
General partners in a Georgia limited partnership are personally liable for all obligations of the limited partnership, unlike limited partners.
Question 3: Under Georgia's Business Corporation Code, when may shareholders bring a derivative lawsuit on behalf of a corporation?
- Only after obtaining court permission regardless of demand on the board
- After making a written demand on the board and waiting 90 days unless demand is excused as futile (Correct answer)
- At any time without prior demand on the board
- Only when the corporation is insolvent
Correct answer: After making a written demand on the board and waiting 90 days unless demand is excused as futile
Georgia requires a shareholder to make written demand on the board and wait 90 days before filing a derivative suit unless demand is excused due to irreparable injury or futility.
Question 4: Under the Georgia LLC Act, how may a member dissociate from a member-managed LLC?
- Only by unanimous consent of all other members
- By providing written notice of dissociation to the LLC (Correct answer)
- Only by court order
- A member may never dissociate without selling their interest first
Correct answer: By providing written notice of dissociation to the LLC
A Georgia LLC member may dissociate by providing written notice to the LLC, though wrongful dissociation may expose the member to liability.
Question 5: Under Georgia corporate law, what is the primary purpose of a shareholders' preemptive right?
- To allow shareholders to vote before any corporate debt is issued
- To allow existing shareholders to maintain their proportionate ownership by purchasing new shares before they are offered to outsiders (Correct answer)
- To require the corporation to buy back shares upon shareholder demand
- To give shareholders priority over creditors in dissolution
Correct answer: To allow existing shareholders to maintain their proportionate ownership by purchasing new shares before they are offered to outsiders
Preemptive rights give existing shareholders the opportunity to purchase new share issuances proportionally to preserve their ownership percentage.
Question 6: Under Georgia law, what is the consequence when a corporation acts beyond the scope of its stated corporate purposes (ultra vires)?
- The act is void and has no legal effect
- Ultra vires acts are generally enforceable between parties but may be challenged in specific proceedings such as shareholder suits or by the Attorney General (Correct answer)
- The corporation is automatically dissolved
- All directors are personally liable for the ultra vires act
Correct answer: Ultra vires acts are generally enforceable between parties but may be challenged in specific proceedings such as shareholder suits or by the Attorney General
Georgia law generally enforces ultra vires acts between the parties but permits shareholders or the Attorney General to challenge them in specific proceedings.
GA Bar GA Bar Business Organizations 3
Under Georgia law, which of the following is a required step when dissolving a Georgia corporation voluntarily?