Corporations New York Bar Exam Preparation Condensed Revision Notes

New York Corporations

Organisation of Corporations

I FORMATION REQ. (PEOPLE, PAPER, ACTS)

1 People- incorporators

1 or more required

Adult humans only

2 Paper- Certif. Of Incorporation

Contract b/w corp. & s/h AND contract b/w corp & state

A Cerif. Of Incorp. Info:

Names and Addresses

Must have corp., ltd

County of NY of office of corp.

NY Sec. Of State – designate- corp’s agent for service of process

Can have statement of duration, if not, corp. Has perpetual existence

Corporate Purpose- statement req.

Ultra vires act- beyond scope of certif.

– acts valid not void

– S/H can seek injunction

– Resp. Managers liable for ultra-vires losses.

Capital Structure (Stock)

–Authorised stock – max no. Of shares corp. can sell.

– Issued stock- no of shares corp actually sells

–Outstanding stock- stock corp sold but not reacquired

Info must be included about corp’s stock

–Authorised stock

–No of shares per class

–Info on par value rights, preferences and limitations of each class

–Info on any series of preferred shares

[telling about shares]

3 Acts

Each incorporator signs cert & acknowledges it before notary è deliver to NY Dept of State è if confirms with law è filing fee paid è Dept files cert. = conclusive evidence of valid formation (de jure corp.)

Incorporators hold ORGANISATIONAL MEETING

–Adopt any bylaws + elect initial directors è Board takes over management

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II EFFECTS OF INCORP.

NY law governs internal affairs of corp even if does business outside NY

Corp separate legal person (broad powers by statute, inc power to enter into contracts, transfer property, buy securities and sue and be sued)

Corp political contribution $5k per year per candidate & no more

Corp charitable contribution no statutory ceiling

µ Corp can guaranty loan not in furtherance of corp business with 2/3 of share entitled to vote approval

Directors and officers not liable for what the corp does

s/h not liable – limited liability è liable to pay only for own stock

Corp is liable for what it does- SEPARATE LEGAL PERSONALITY

III DE FACTO CORP DOCTRINE

Proprietors fail to form DE JURE corp è business treated as corp & owners not personally liable è

µ DE FACTO Corp must show

–There is relevant incorp. statute BCL (there is-easy)

–Parties made a good faith, colourable attempt to comply with it

–Business being run as a corp

De facto corp. status NY- BCL probably abolished it but case law suggests it may be alive (ltd circumstances)

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IV BYLAWS

–Can have corp w/o BYLAWS (internal procedure code)

–But almost every corp has them

–If bylaws inconsistent with cert of inc è cert prevails

–Bylaws not filed with state (internal)

–Outsiders not bound by bylaws

–Incorporators adopt the initial bylaws at organisational meeting

–S/H can amend, repeal, adopt new bylaws

–Board can amend, repeal, adopt new bylaws only if cert or S/H bylaw allows

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V PRE-INCORPORATION CONTRACTS**

PROMOTER is person acting on behalf of corp not yet formed

Corp liable on pre-incorp contracts if adopts it (never liable automatically)

Express adoption: board action

Implied adoption: arises if corp knowingly accepts benefit of contract – CONDUCT

Promoter is liable on pre-incorp contracts until there is NOVATION- agreement among promoter, corp and other contracting party that corp will replace the promoter under contract.

Even if corp adopts, promoter still liable è JOINT AND SEVERAL LIABILITY

VI SECRET PROFIT RULE

–Promoter cannot make secret profit on her dealings with corp

If does, liable – return to corp

µ Sale to corp of property acquired BEFORE becoming promoter

Profit= Price paid by corp – fair market value (FMV)

µ Sale to corp of property acquired AFTER becoming promoter

Profit = price paid by corp – price paid by promoter

ê Promoter

Liable for profit to corp

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VII FOREIGN CORP

FOREIGN CORP – incorporated outside NY

“DOING BUSINESS” : regular course of intra-state business activity

FOREIGN CORP can qualify:

Applying to NY Dept of State & designating Sec of State as agent for service of process

Pay fees to NY for privilege

Foreign corp must provide NY Dept of state with info from its cert and proof of good standing in home state

If foreign corp does business in NY w/o qualifying, cannot sue in NY until qualifies and pays fees, penalties and interest

ISSUANCE OF STOCK

ISSUANCE OF STOCK: corp sells OWN stock

–one way of raising capital

–investors become owners of corp

–Distinguish- issuance of bonds-loan to corp to be repaid- holder of bond creditor not owner of corp- holds “debt security”.

ALL RULES IN THIS SECTION APPLY WHEN THERE IS AN ISSUANCE!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

II SUBSCRIPTIONS

SUBSCRIPTION- written + signed offer to buy stock from corp.

µ Revocation of pre-incorp subscriptions irrevocable for 3 months

Rule- those forming corp can rely on money being there

µ Post-incorp subscriptions revocable until accepted by corp

êIRREVOCABLE

Board accepts offer

sUBSCRIBER AND CORP OBLIGATED

coRP ACCEPTS OFFER & SUBSCRIBER DEFAULTS ON PAYMENT

µ paid LESS than 1/2 purchase price + fails to pay rest within 30 days of written demand

corp can keep money and cancel the shares

Stock- authorised and unissued- corp can sell stock

µ paid MORE than ½ of purchase price + fails to pay rest within 30 days of written demand

corp can try to sell stock to someone else for cash

Someone pays more than balance due

Subscriber recovers any excess over what she agreed to pay – corp expenses of selling stock

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III CONSIDERATION (WHEN CORP ISSUES STOCK)

–Forms of consideration

Money (cash/check)

Tangible/intangible property

Services already performed for corp

Binding obligation to pay money or property in future (promissory note)

Binding obligation to perform future services

UNPAID STOCK - Stock issued with no consideration (“water”)

Amount of consideration

PAR- minimum issuance price (can issue more but not less than par)

No PAR = no minimum and can sell for any price.

The Board sets the price of par stock (unless cert allows s/h to do it)

Treasury stock- stock previously issued and reacquired by corp – no minimum for selling treasury stock/ no par.

Acquiring property with par value stock – tangible property – property must meet minimum par value

Board’s determination of value of consideration for an issuance is conclusive if w/o fraud

Issuing par stock for less than par value = “watered stock” – Corp can sue for “water”

Directors are liable for water if knowingly authorised issuance.

Buyer is liable for par value – charged with notice of par value

Buyer buys watered stock and transfers to 3rd party- 3rd party not liable if did not know about water.

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IV PREEMPTIVE RIGHTS

PREEMPTIVE RIGHTS: right of an existing s/h to maintain her % of ownership by buying stock whenever there is a new issuance of COMMON STOCK for MONEY (includes cash or cheques)

Whatever s/h % is = % of new issuance

Pre-emptive rights do not apply to sale of treasury stock

µ Pre-emptive rights exist only if certificate says so

DIRECTORS AND OFFICERS

–One or more adult natural persons

–Number set in bylaws, S/H act, board if s/h bylaw allows it

–Incorporators elect initial directors

–S/H elect directors at annual meetings

J Removal of directors before expiration of their term

–s/h can remove directors for cause

–board can remove director for cause only if certif. Or s/h bylaws allow it

Removal of director w/o cause

–S/H and only if certif. Or bylaws allow it

–Filling vacancy on board (director dies/resigns): board selects person who will serve for remainder of term

J How Board acts

–Individual directors are NOT agents of corp- no power to bind corp. Directors must act as a GROUP

µ Two ways directors can take valid act

Unanimous written consent

Meeting

Other acts void unless ratified

–meeting mustn’t be held in NY

Notice requirements for board meetings

Regular meetings of board

µ No if time and place set in bylaws or by Board

Special meetings of board

µ Must state time and place but not purpose

If required notice for special meeting NOT given to director è any action taken at the meeting is void

µUnless director waives notice defect

In writing and signed OR

Attending the meeting w/o objection

–Director cannot give a proxy for director voting è non-delegable fiduciary duties

QUORUM FOR MEETING

µ MAJORITY OF THE ENTIRE BOARD (not only those in office)

PASSING RESOLUTION

µ MAJORITY VOTE OF THOSE PRESENT

–If director leaves then there is possibility of breaking the quorum and cannot do any business

CORPORATION DECREASES QUORUM TO LESS THAN MAJORITY OF DIRECTORS

µ IN CERTIFICATE OR BYLAWS BUT CAN NEVER BE FEWER THAN 1/3 OF DIRECTORSOF ENTIRE BOARD (DECREASE)

µ CORPORATION CANNOT DECREASE THE REQ THAT PASSING RESOLUTION REQUIRES A MAJORITY OF DIRECTORS PRESENT (DECREASE- PASSING RESOLUTION= NO!!!)

CORPORATION INCREASES QUORUM TO MORE THAN MAJORITY OF DIRECTORS

µ IN CERTIFICATE ONLY AND NOT BYLAWS (INCREASES QUORUM)

CORPORATION REQUIRES SUPERMAJORITY VOTE TO PASS RESOLUTION

µ IN CERTIFICATE ONLY AND NOT BYLAWS (SUPERMAJORITY- RESOLUTION)

J WHAT BOARD OF DIRECTORS DOES

MANAGES business of corp (big ticket stuff)

Certif or bylaws can allow the MAJORITY OF THE ENTIRE BOARD TO DELEGATE substantial management functions to committee of ONE or more directors. But the board cannot delegate all powers and responsibilities to a committee.

Committee cannot:

Set director compensation

Fill a board vacancy

Submit fundamental change to s/h

Amend bylaws

But can recommend any of these for full board action

Committees important topic in shareholder derivative suits.

J DUTY OF CARE***

µ DUTY OF CARE STANDARD: A DIRECTOR MUST DISCHARGE HER DUTIES IN GOOD FAITH AND WITH THAT DEGREE OF DILIGENCE, CARE AND SKILL THAT AN ORDINARY PRUDENT PERSON WOULD EXERCISE UNDER SIMILAR CIRCUMSTANCES IN LIKE POSITION.

NONFEASANCE (director does nothing)

µ BREACH MUST CAUSE LOSS TO CORP- MUST SHOW CAUSATION

MISFEASANCE (board does sth that harms corp)

µ BUSINESS JUDGMENT RULE (BJR): DEFENSE

PRUDENT PEOPLE DO APPROPRIATE HOMEWORK/ DID THEY DELIBERATE ANALYSE

COURT WILL NOT SECOND GUESS A BUSINESS DECISION IF IT WAS MADE IN GOOD FAITH, WAS REASONABLY INFORMED AND HAD A RATIONAL BASIS.

Director is not a guarantor of success (prudent person)

J DUTY OF LOYALTY***

µ DUTY OF LOYALTY STANDARD: A DIRECTOR MUST ACT IN GOOD FAITH AND WITH THE CONSCIENTIOUSNESS, FAIRNESS, MORALITY AND HONESTY THAT THE LAW REQUIRES OF FIDUCIARIES.

BJR DOES NOT APPLY

Interested director transactions

Any deal between corp and one of its directors

µ Interested director transaction will be set aside UNLESS

Director shows:

Deal was fair and reasonable to the corp when approved

Material facts and her interests were disclosed or known and the deal was approved by 1) s/h action 2) board approval by sufficient vote not counting votes of interested directors 3) unanimous vote of disinterested directors if disinterested are insufficient to take board acts.

–Interested directors count towards the quorum of the board, can participate at the meeting but votes do not count

Competing ventures

µ Director cannot compete with her corp

IF director competes against corp, corp can get constructive trust against director’s profits- make her account for profits DISGORGE PROFITS

Corporate Opportunity

µ Director cannot USURP a corporate opportunity.

Cannot take it until he tells board about it and waits for board to reject it.

Corporate opportunity: something corp needs, or has an interest of tangible expectancy in, logically related to its business.

If corp cannot afford financing, director should help it to acquire it.

Constructive trust- usual remedy for usurpation

Improper loans of corporate funds

Must receive s/h approval or if Board finds it will benefit corp.

For these or any other thing a director can be liable for

µ General rule: a director is presumed to have concurred with board action unless her dissent is noted in writing in corporate records.

Dissent + writing

Minutes of meeting

 Writing to corp secretary at the meeting

 Registered letter to the corp secretary

Oral dissent not valid, writing required.

Director cannot dissent if voted for the resolution at the meeting

J OFFICERS

–Owe duties of care and loyalty as directors

–Agents of Corp and can bind corp to acts that they take on corps behalf.

–Board may select a president, vice-presidents, secretary, treasurer and any others the Board may determine or bylaws provide.

–Board selects and removes officers unless cert allows s/h to elect them

–S/H hire and fire directors & Board hires and fires officers

–Board sets officer compensation

J REIMBURSEMENT OF DIRECTORS AND OFFICERS

–Person sued in her capacity as officer or director by or on behalf of corp and incurs costs, attorney’s fees, judgment or settlement and seeks reimbursement (indemnification) from corp.

µ PROHIBITED reimbursement: held LIABLE to corp

µ OF RIGHT reimbursement: won a judgment on the merits

µ PERMISSIVE other case (officer who settles): must show she acted in good faith and for purpose reasonably believed in corp’s best interests

Any time you see director breaching a duty say: the certificate may eliminate director liability to the corp or s/h for damages for breach of duty except:

For acts in bad faith

Intentional misconduct

Receipt of improper financial benefit

Approval of unlawful distribution loan

IV SHAREHOLDERS

–Shareholders cannot manage corp, board manages

–S/H can manage business directly in a CLOSE CORPORATION (closely held)

–CLOSE CORP: few s/h, stock not publicly traded (almost every corp is close corp)

–Can have a board in close corp

–S/H Management requires:

A provision in certif. Restricting or transferring board power to s/h

All incorp or s/h approve it

Conspicuously noted on front and back of all shares

All subseq s/h have notice AND

Shares are not publicly traded

–Managing s/h owes duties of care and loyalty

–Controlling shareholders cannot use their powers for personal gain at the expense of minority s/h or the corp or to oppress minority s/h.

µ DUTY OF UTMOST GOOD FAITH (FIDUCIARY DUTY TO OTHER S/H)

J S/H LIABILITY***

PVC = piercing the corporate veil

– Separate legal entity

–S/H personally liable if PCV

–PCV can only happen in close corp

µ PCV & hold S/H liable:

1 MUST HAVE ABUSED PRIVILEGE OF INCORPORATING AND

2 FAIRNESS MUST REQUIRE HOLDING THEM LIABLE

FAIRNESS: PREVENT FRAUD OR A USE OF CORP AS A CLOAK FOR ILLEGALITY

ABUSE: COMPLETE DOMINATION & PERPETRATE FRAUD/INJUSTICE REQUIRED

Factors to consider when determining whether corp “ABUSED the privilege of doing business in the corporate form”:

Failure to adhere to corporate formalities

Inadequate capitalization

Commingling of personal and corporate assets

Use of personal funds for personal expenses

Alter ego

µ GENERAL RULE: s/h generally not liable for debts or acts of corp)

State PCV standard and explain PCV

µ To PCV in NY the S/H must exercise COMPLETE DOMINATION over corp to perpetrate a FRAUD/INJUSTICE on P.

–We PCV to impose liability on S/H

–S/H can be another corp

Undercapitalisation

State general rule + explain PCV

S/H failed to invest enough to cover prospective liabilities- abusing privilege of incorporating + complete domination & fraud/injustice required (first prong of PCV- “abuse”)

–PCV more commonly expected in TORT cases

J S/H DERIVATIVE SUITS

DERIVATIVE SUIT- S/H suing to enforce corp’s claim NOT her own personal claim.

–Could corp have brought this suit, if so, its a derivative suit

–If s/h wins derivative suit, corp gets recovery since its corp’s claim

–S/H receives costs and attorney’s fees (from judgment won for corp)

–Damages go to corp

–S/H can recover damages directly if recovery by corp would return the money to the “bad guys”

–IF s/h loses derivative suit, s/h cannot recover costs and expenses- pay own bills and liable to Ds for costs

µ Requirements for bringing a s/h derivative suit:

µ STOCK OWNERSHIP WHEN CLAIM AROSE

–Person bringing suit- must have owned stock at the time the claim arose or have gotten it by operation of law from someone who owned stock when claim arose (inheritance /divorce decree)

Must own stock when the action is brought and through entry of judgment (have that stock all the way through)

–S/H may be required to post a bond for D’s costs (not if own 5% or more of stock or stock worth $50k or more)

–Must make a DEMAND ON DIRECTORS THAT CORP SUE

–Do not need to make demand if would be FUTILE

–FUTILE: 1) majority of board interested; 2) Board did not inform itself of transaction to extent reasonable under circumstances; 3) transaction is so egregious on its face that it could not be result of sound business judgment

–Interested directors most likely

–P must plead with PARTICULARITY (details)

–Corp must be joined in litigation

S/H makes demand & board refuses: s/h must show 1) Majority of board is interested or 2) its procedure was incomplete or inadequate

–Corp can move to dismiss derivative suit- finding by independent directors “special litigation committee” that suit is not in corp’s best interests i.e. low chances of recovery. When deciding whether to dismiss court looks at independence of those making the decision and sufficiency of investigation

–Director/officer can sue another director/officer to compel her to account for violation of duties or misappropriation of corp assets

–Director sues in her own name but recovery is by corp- easier than S/H D suit.

J S/H VOTING

–Record owner as of record date has right to vote

–record owner- person shown as owner in corp records

–record date is voter eligibility cut-off- no fewer than 10 and no more than 60 days before the meeting.

–If own stock on record date- vote

–PROXIES ok for s/h voting: 1) writing 2)signed by record s/h 3) directed to secretary of corp 4) authorising another to vote shares

–fax email is writing

–Proxy is good for 11 months if proxy silent as to time

–can revoke proxy in WRITING or ATTENDING THE MEETING and VOTING

–s/h can revoke proxy even if it says it is irrevocable

–Irrevocable proxy: 1) says irrevocable 2) proxy has some interest in stock other than voting PROXY + INTEREST (option)

Voting trusts

–X Y Z own relatively few shares in corp

–BLOCK VOTING- can increase influence (voting alike)

µ VOTING TRUST REQ:

Written trust agreement controlling how shares will be voted

Copy to corp

Transfer legal title of shares to voting trustee and

Original s/h receive voting trust certificates and retain all s/h rights except voting

10 year time limit under BCL

Voting Agreements

–Pooling agreements

–S/h can enter into voting agreements

–Voting agreements not enforceable by court

µ S/H can take a VALID ACT:

Written consent of the holders of all voting shares

Meeting

ANNUAL MEETINGS (elect directors)- highest vote getter for each seat on board wins- PLURALITY not majority of votes.

SPECIAL MEETING can be called by 1) board 2) anyone provided in cert or bylaws

µ NOTICE REQ: must give written notice to every s/h entitled to vote for every meeting (annual or special) between 10 and 60 days before meeting.

State time and place

NOTICE OF SPECIAL MEETING: state who called it and purpose of meeting (cannot do anything else)

If NO NOTICE to everyone entitled to vote, action taken at the meeting is VOID

Not given notice, waive the notice defect

Express: in writing and signed

Implied: attend meeting w/o objection

– Must be a quorum represented at the meeting

–QUORUM: NUMBER OF SHARES REPRESENTED and NOT S/H

–Requires a MAJORITY OF OUTSTANDING SHARES

þ Certificate or bylaws can REDUCE a quorum to LESS than majority but never fewer than 1/3

ý Can never reduce requirement for majority APPROVAL

þ It is possible to impose req that supermajority of SHARES ENTITLED TO VOTE to be PRESENT AT MEETING TO CONSTITUTE A QUORUM

þ It is possible to impose req that resolutions at a meeting must be approved by supermajority but in CERTIFICATE ONLY NOT BYLAWS

If quorum met, MAJORITY may act to bind corp.

MAJORITY- MAJORITY OF SHARES ACTUALLY VOTING

ý QUORUM is never lost even if people leave meeting (focus is on shares rather than s/h) but director quorum can be lost

CUMULATIVE VOTING- when s/h voting to elect directors.

Device to help small s/h to get representation on board.

µ Multiply number of shares by number of directors to be elected

EXISTS ONLY IF CERTIFICATE SAYS SO

J V Transfer of Stock by a S/H

– Stock transfer restrictions sometimes imposed in close corp when we want to keep outsiders out

–Restrictions must be set in certificate, bylaws, agreement

µEven if restriction is valid, cannot be invoked unless

Conspicuously noted on the stock certificate

Transferee had actual knowledge of the restriction

J VI RIGHT OF S/H TO INSPECT (AND COPY) THE BOOKS AND RECORDS OF CORP

On 5 days written demand, any S/H can demand access to:

Minutes of S/H proceedings

Record of S/Hs

Corp can demand that s/h give affidavit that his purpose is not other than in the interest of the corp and he has not within 5 years tried to sell any list of s/h

Corp can deny access if s/h refuses to furnish this info

List of current director and officers – s/h can demand that on 2 days notice && no affidavit required.

Any s/h can make a written request re: corp’s assets 1) annual balance sheet, 2) profit and loss statements 3) interim statements distributed to s/h or public.

Director has UNFETTERED ACCESS- doesn’t have to go through above hoops- manager

J DISTRIBUTIONS

DISTRIBUTIONS- payments by corp to s/h

Dividend or

Payment to repurchase shares or

Redeem shares

–Distribution are declared in Board’s discretion.

–S/H have a right to a distribution when board declares it.

–Court will not interfere with Board’s discretion to order distribution provided there is no showing of bad faith, dishonest purpose- business decision- courts don’t second guess.

COMMON STOCK = $X per share

PREFERRED STOCK= “pay first” at $X dividend preference

PREFERRED STOCK THAT IS PARTICIPATING

PARTICIPATING= “pay again”, participates with common stock

CUMULATIVE: “meter is running”, add them up- for years in which no dividend was paid

FUNDS used for DISTRIBUTION

SURPLUS= ASSETS – (LIABILITIES – STATED CAPITAL) or NET ASSETS – STATED CAPITAL

SURPLUS can be used for distribution

STATED CAPITAL

ý can never be used for distribution

Surplus= excess over par

If no par value, board can allocate any part of consideration but not all to surplus within 60 days after issuance.

ý Corp cannot make distributions if it is insolvent

þ can make distributions even if lost money

INSOLVENT= corp is unable to pay its debts as they come due in the ordinary course of business

Directors personally liable for unlawful distributions. Corps claim- could be derivative

Directors defence- good faith reliance

FUNDAMENTAL CORPORATE CHANGES

So fundamental that require S/H and Board approval + must notify Dept of State by delivering a doc which Dept of State files

DISSENTING S/H’s RIGHT OF APPRAISAL: right to force corp to buy your stock @ fair value- “right to be bought out”

Actions triggering above:

Amendments to Certificate

Consolidation

Corp merges into another corp*

Corp transfers substantially all of its assets*

Corps shares acquired in a share exchange

Do not apply if corp is publicly listed

Right of appraisal exists in close corporations

µ Actions S/H must take to perfect the right:

 Before S/H vote, file written objections and intent to demand payment

 Abstain or vote against the change

AND

 After Vote, make a written demand to be bought out

Amendments to Certificate

–Minor changes can be made by board alone

–Other Amendments must be approved by 1) director action and 2) majority of the shares entitled to vote

If amendment approved, deliver certificate of amendment to Dept of State for its filing

Consolidation (A and B form C) & Corp merges into another corp* (A corp merges into B)

–Each corp’s directors adopt a plan of merger (or consolidation) and

S/H approval from each corp (MAJORITY OF SHARES ENTITLED TO VOTE)

–Deliver certificate of merger to Dept of State for filing

–DISSENTING S/H RIGHTS OF APPRAISAL available for S/H of Corp that DISAPPEARED

–Effect of merger/consolidation = surviving corp succeeds to all rights & liabilities of the CONSTITUENTS (disappearing corp)= SUCCESSOR LIABILITY (makes sense, creditors need to sue someone)

Corp transfers substantially all of its assets* Not in the ordinary course of business

–Fundamental corporate changes for the SELLING CORP only NOT for buying corp

Each corps board authorises the deal and

Approval by selling corp’s s/h (MAJORITY OF THE SHARES ENTITLED TO VOTE)

DISSENTING S/H rights of appraisal available only to SELLERS

–No filing required for transfer of assets

J DISSOLUTION

VOLUNTARY – no Board vote necessary & S/H vote MAJORITY OF SHARES ENTITLED TO VOTE

Cert of dissolution delivered to dept of state for filing

INVOLUNTARY (judicial) DISSOLUTION

Someone is asking for court order of dissolution

Board resolution or resolution of majority of shares entitled to vote stating that corp has insufficient assets to discharge liabilities or dissolution would be beneficial to S/H

µ 20% or more of voting shares in corp (close corp) may petition on following grounds:

Management illegal, oppressive, fraudulent acts towards the complaining S/H

Management is wasting, diverting or taking assets (misbehaving)

“MANAGEMENT” = board or managing S/H

–Court may deny dissolution – other way- buy out

–Corp or non-complaining s/h can avoid dissolution by buying stock @ fair value on terms approved by court within 90 days of petition

–Dissolution doesn’t end corps existence. Corp stays in existence to wind up. Steps in liquidating

Gather all assets

Convert to cash

Pay creditors (1st in line)

Distribute remainder to S/H