GA Code § 14-7-5 (2021)
2021 Georgia Code|Title 14 - Corporations, Partnerships, and Associations|Chapter 7 - Professional Corporations|§ 14-7-5. Stock

  Shares in a professional corporation may only be issued to, held by, or transferred to a person who is licensed to practice the profession for which the corporation is organized and who, unless disabled, is actively engaged in such practice as an active practicing member of the issuing corporation, except as otherwise permitted under this Code section. Each stock certificate shall be appropriately endorsed disclosing this restriction and stating that shares standing in the name of a disqualified or retired person, or in the name of the personal representative of a deceased person, except during the holding period provided in this Code section, are void.   Shares in a professional corporation shall be voted by the holder of record or by another shareholder in the same corporation in accordance with a proxy or an agreement providing for the voting of the shares.   Shares in a professional corporation held by a deceased or retired shareholder shall, within six months after the date of death or retirement of such shareholder, be either redeemed or canceled by the corporation or transferred to a person or persons authorized to hold the shares unless transferred under a written agreement to an authorized shareholder pursuant to subsection (d) of this Code section. The shares held by a shareholder who becomes legally disqualified from practicing the profession for which the corporation is organized or who is disqualified as a shareholder under subsection (a) of this Code section shall be so redeemed, canceled, or transferred within 90 days after the disqualification becomes final. In the absence of an article or bylaw provision or an agreement providing for the redemption or transfer of such shares or, if the shares are not redeemed or transferred pursuant to such a provision or agreement within the required period of time, the corporation is authorized to and shall cancel the shares on its books at the termination of the required period. If valuation and payment terms are not fixed under such an existing provision or agreement and are not agreed upon either prior to or at any time after the termination of the required period, the fair value of the redeemed or canceled shares shall be determined and paid in the same manner as if the personal representative of the deceased shareholder, or the retired or disqualified shareholder, were a shareholder entitled to valuation and payment for his shares under Code Section 14-2-1327. The personal representative of the deceased shareholder, or the retired or disqualified shareholder, shall not be authorized at any time to participate in or vote on any matter concerning the rendering of professional services by the corporation. Upon the actual transfer or redemption or termination of the required holding period, whichever first occurs, the personal representative of the deceased shareholder, or the retired or disqualified shareholder, shall cease to be a holder of record for all purposes and shall deliver the share certificates to the purchaser or to the corporation with any required endorsement.   Shares held in a professional corporation and owned by a shareholder may be transferred under a written agreement to an authorized shareholder which allows the shares to remain outstanding provided that the shares are collateral under a security agreement for the purchase price of the shares. In the event that the purchase price is not paid and the shares held as collateral are returned to the selling shareholder, the selling shareholder shall have a reasonable period of time, not to exceed one year after the return of the shares, to transfer the shares to an authorized shareholder. During that period the shareholder, if an active or inactive member of his profession, may vote the shares.   If a professional corporation at any time ceases to have a shareholder licensed or otherwise authorized to practice and actually practicing, the profession for which the corporation is organized, or if a professional corporation does not redeem, cancel, or transfer the shares of a disqualified, retired, or deceased person in accordance with this Code section, the corporation shall cease to be a professional corporation and shall operate as a corporation for profit organized under Chapter 2 of this title for the sole purpose of liquidation. The corporation may at any time after it ceases to be a professional corporation change its purpose by amending its articles.    (Ga. L. 1970, p. 243, § 5; Ga. L. 1988, p. 1369, § 1; Ga. L. 1989, p. 946, § 107.)   Law reviews.   - For survey article on business associations, see 34 Mercer L. Rev. 13 (1982). For annual survey of cases discussing business associations, see 57 Mercer L. Rev. 49 (2005).   JUDICIAL DECISIONS   Nonphysician as shareholder in medical professional corporation.    - Nonphysician cannot be shareholder in medical professional corporation, except under limited circumstances prescribed by law. Sherrer v. Hale, 248 Ga. 793, 285 S.E.2d 714 (1982).   Interpretation of professional corporation's bylaws.    - Trial court erred by granting partial summary judgment to a doctor in a declaratory judgment action against the former clinic the doctor had worked for and was a shareholder of, because the trial court erroneously interpreted the professional corporation's bylaws as a restrictive covenant in restraint of trade when, in fact, the bylaws were not part of the doctor's employment contract and did not provide for a noncompetition penalty or forfeiture provision upon the doctor's departure. Albany Bone & Joint Clinic, P.C. v. Hajek, 272 Ga. App. 464, 612 S.E.2d 509 (2005).    Cited in Broome v. Ginsberg, 159 Ga. App. 202, 283 S.E.2d 1 (1980); Dougherty, McKinnon & Luby v. Greenwald, 225 Ga. App. 762, 484 S.E.2d 722 (1997); Davis v. VCP South, LLC, 297 Ga. 616, 774 S.E.2d 606 (2015).   OPINIONS OF THE ATTORNEY GENERAL   Issuance of professional corporation shares to employee stock ownership plan trustees.   - Professional corporations may issue shares to persons who are trustees of an employees' stock ownership plan so long as all trustees and all beneficiaries are persons licensed by the state to practice the profession for which the corporation was organized. 1975 Op. Att'y Gen. No. 75-61.   A professional corporation is prohibited by state law from issuing stock to an employee stock ownership plan, established as a trust, if some of the beneficiaries of the trust are not licensed in the profession of the corporation. 1995 Op. Att'y Gen. No. U95-4.   RESEARCH REFERENCES   ALR.   - Issues pertaining to ownership of professional corporation as affected by resignation from corporate practice by active shareholder, 32 A.L.R.4th 921.