Business Law in Georgia: Forming an LLC or Corporation and Governing It
Starting or running a company in Georgia comes down to a few Secretary of State filings and a few statutes that decide who controls the company when owners disagree. Georgia's LLC Act gives maximum effect to freedom of contract and the enforceability of operating agreements (O.C.G.A. 14-11-1107), so what you sign matters more than the default rules.
We have no Georgia office. Aaron Bedy, Of Counsel, is admitted in Georgia and in Florida; his listed practice areas are estate planning and real estate law.
Forming and governing a Georgia company
A Georgia LLC is formed when articles of organization become effective at the Secretary of State; they name each organizer, the registered office and agent, and the principal place of business mailing address (14-11-203). A corporation files articles of incorporation stating, among other things, its authorized shares and an initial registered agent (14-2-202). An LLC files an annual registration between January 1 and April 1 (14-11-1103). A corporation follows the same window, except that its first registration is due within 90 days after its articles are filed, unless they are filed after October 1 (14-2-1622). An LLC more than 60 days late can be administratively dissolved, with reinstatement available within 5 years (14-11-603).
The operating agreement is where Georgia gives you room. Fiduciary and other duties of members and managers can be expanded, restricted or eliminated in the articles or a written operating agreement, except liability for intentional misconduct, a knowing violation of law, or a transaction yielding a personal benefit in breach of the agreement (14-11-305). When owners deadlock, a court may dissolve an LLC if it is not reasonably practicable to carry on the business under the articles or agreement (14-11-603). A superior court may dissolve a corporation for director deadlock, or for illegal or fraudulent conduct if shareholders holding at least 20 percent bring the proceeding (14-2-1430).
Covenants fall under the Restrictive Covenants Act. A post-employment non-compete cannot be enforced against an employee who does not solicit customers, make sales, manage others, or hold a key-employee or professional role (13-8-53). For employees, 2 years or less is presumed reasonable and more than 2 years unreasonable; for a seller of a business, the presumption runs to the longer of 5 years or the period payments are made (13-8-57). A court may narrow an overbroad covenant (13-8-54).
Entity Formation and Compliance
Articles, registered agent selection, and a calendar for the January 1 to April 1 annual registration.
Operating and Shareholder Agreements
Agreements drafted to the freedom 14-11-305 allows: defined duties, transfer restrictions, buy-sell terms and deadlock exits.
Restrictive Covenants
Employee and sale-of-business covenants written to 13-8-53 and 13-8-57, and review of covenants you are asked to sign.
How do I form an LLC in Georgia?
File articles of organization with the Secretary of State naming each organizer, the registered office and agent, and the principal place of business mailing address (14-11-203). The LLC exists when the articles become effective. Filing fees follow the Secretary of State's fee schedule.
When is the Georgia annual registration due?
Between January 1 and April 1 each year (14-11-1103 for LLCs). A new corporation's first registration is generally due within 90 days after its articles are filed (14-2-1622).
Can an operating agreement change members' fiduciary duties?
Yes, within limits. Georgia lets the articles or a written operating agreement expand, restrict or eliminate duties, but not liability for intentional misconduct, a knowing violation of law, or a personal-benefit transaction that breaches the agreement (14-11-305).
Are non-compete agreements enforceable in Georgia?
Against some employees: those who solicit customers, make sales, manage others, or are key employees or professionals (13-8-53). A restraint of 2 years or less is presumed reasonable (13-8-57).
Facing a business law question in Georgia?
The first consultation is confidential, and we respond within one business day. Tell us what you are building or what has gone wrong, and we will tell you what Georgia law requires.