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Re-instating the Corporation

In Williams v. Martin Lakes Condominium Association, Inc., 284 Ga. App. 569, 644 S.E.2d 424 (2007), the Georgia Court of Appeals, in what it denoted a matter of first impression, addressed the issue of whether a nonprofit corporation that has been administratively dissolved, but later reinstated, has the capacity to bring legal action during the period of its dissolution.

In Georgia, a nonprofit corporation can be administratively dissolved by the Secretary of State pursuant to O.C.G.A. § 14-3-1421. The most common reason for administrative dissolution is the corporation’s failure to file its annual report with the Secretary of State. The corporation can file for reinstatement by following the procedures set out in O.C.G.A. § 14-3-1422. There is no time limit on the period during which a dissolved corporation can apply for reinstatement. O.C.G.A. § 14-3-1422(d) provides:

"When the reinstatement is effective, it relates back to and takes effect as of the effective date of the administrative dissolution and the corporation resumes carrying on its business as if the administrative dissolution had never occurred."

In Williams, Martin Lakes Condominium Association, Inc. ("Martin Lakes") was administratively dissolved in 1993, but its corporate charter was reinstated in 2000. In 1999, Martin Lakes filed suit against Williams, a condominium owner, to recover past-due fees and assessments. Williams argued that Martin Lakes did not have the legal capacity to bring legal action in 1999 because the corporation was dissolved at that time.

The Court of Appeals disagreed, stating that reinstatement of an administratively dissolved corporation validates the corporation’s existence and privileges back to the date of the dissolution. Thus, under Georgia law, a reinstated corporation effectively does have the capacity to bring legal action during the period of time between its dissolution and reinstatement, no matter how long that period lasts.

The Georgia Business Corporation Code provisions for reinstatement of administratively dissolved corporations in O.C.G.A. § 14-2-1422 are identical with those of the Georgia Nonprofit Corporation Code, so it is likely that this decision will be considered as authority in interpreting § 14-2-1422.