Termination of Corporate Status

Question 1

What is the procedure for voluntary dissolution of C prior to issuance of stock?

What is the procedure for voluntary dissolution of C after issuance of stock?

Answer 1

Originale incorporators or directors can voluntarily dissolve C with a majority vote.

BD adopts a proposal for the dissolution of C and a majority of SHs approve.

Question 2

What is the winding up process after voluntary dissolution of a C?

Answer 2

Dissolving C can continue to exist to collect assets, dispose of property not distributed to SHs, discharge liabilities, AND distribute property among SHs according to their interests.

Question 3

When can an involuntary dissolution happen?

Answer 3

Creditors can pursue involuntary dissolution only for an insolvent C.

Shareholders can pursue involuntary dissolution IF
-> C’s assets are being misapplied/waste
-> Ds are acting illegally/oppressively/fraudulently
-> SHs are unable to break Ds deadlock causing irreparable injury
OR
-> if the SHs are deadlocked and fail to elect successor Ds

Question 4

What is the oppression doctrine under involuntary dissolution?

Answer 4

Doctrine of SH oppression protects minority from oppressive majority control
-> statutory provisions regarding involuntary dissolution are interpreted to protect the reasonable expectations of She