Procedure for and effect of administrative dissolution

(a) If the Secretary of State determines that one or more grounds exist under Code Section 14-2-1420 for dissolving a corporation, he shall provide the corporation with written notice of his determination by mailing a copy of the notice, first-class mail, to the corporation at the last known address of its principal office or to the registered agent. (b) If the corporation does not correct each ground for dissolution or demonstrate to the reasonable satisfaction of the Secretary of State that each ground determined by the Secretary of State does not exist within 60 days after notice is provided to the corporation, the Secretary of State shall administratively dissolve the corporation by signing a certificate of dissolution that recites the ground or grounds for dissolution and its effective date. The Secretary of State shall file the original of the certificate. (c) A corporation administratively dissolved continues its corporate existence but may not carry on any business except that necessary to wind up and liquidate its business and affairs under Code Section 14-2-1405. Winding up the business of a corporation administratively dissolved may include the corporation’s proceeding, at any time after the effective date of the administrative dissolution, (1) in accordance with Code Section 14-2-1406 to notify known claimants, and (2) to mail or deliver, with accompanying payment of the cost of publication, a notice containing the information specified in subsection (b) of Code Section 14-2-1407 for publication in accordance with subsection (b) of Code Section 14-2-1403.1. Upon such notice, claims against the administratively dissolved corporation will be limited as specified in Code Sections 14-2-1406 and 14-2-1407, respectively. (d) The administrative dissolution of a corporation does not terminate the authority of its registered agent. (Code 1981, § 14-2-1421, enacted by Ga. L. 1988, p. 1070, § 1; Ga. L. 1990, p. 257, § 24.) COMMENT Source: Model Act, § 14.21. This replaces provisions previously found in § 14-2-283. Many failures to comply with statutory requirements that may give rise to administrative dissolution under Section 14-2-1420 occur because of oversight or 503 14-2-1421 CORPORATIONS & PARTNERSHIPS 14-2-1421 inadvertence by responsible corporate officers of corporations that are continuing in business. Such failures are usually corrected promptly when brought to the corporation’s attention. Sections 14-2-1421(a) and (b) therefore provide a mandatory notice by the Secretary of State to each corporation subject to administrative dissolution and a 60-day grace period following the notice before the certificate of administrative dissolution may be filed. This follows prior law, § 14-2-283(b). The Model Act provision called for notice in accordance with Section 14-2-504 of the Code, which calls for service on the registered agent, or if there is none, service by registered or certified mail to the secretary of the corporation at its principal office. The Code preserves the more flexible approach of prior law, § 14-2-283(b), by permitting, in the alternative, notice by regular mail to the principal office of the corporation. In most instances, the issue whether the corporation is subject to administrative dissolution will not be controverted. If a corporation is administratively dissolved, it may petition the Secretary of State for reinstatement under Section 14-2-1422 and, if this is denied, it may appeal to the courts under Section 14-2-1423. Subsection (c) provides that the corporate existence continues for purposes of winding up pursuant to Section 14-2-1405. This protects officers and directors engaged in winding up from personal liability for corporate debts. Previously § 14-2-283(g) provided that shareholders were not rendered personally liable for debts incurred subsequent to dissolution, but left directors and officers in a very different position, providing that directors, officers and agents would be liable only if they had actual notice of the dissolution. This raised questions about whether an officer could safely engage in winding up activities once notified of involuntary dissolution, although the statute permitted ratification of the officers’ and agents’ acts once the corporation was reinstated. Note to 1990 Amendment The 1990 amendment clarifies that administratively dissolved corporations may provide notice to known and unknown claimants pursuant to the notice provisions of § 14-2-1406 and § 14-2-1407, respectively. Cross-References Appeal from denial of reinstatement, see § 14-2-1423. Claims, see §§ 14-2-1406 & 14-2-1407. Deposit with Department of Administrative Services, see § 14-2-1440. Effective date of service, see § 14-2-504.