North Dakota Code 10-33-107 – Involuntary dissolution
1. A court may grant equitable relief it considers just and reasonable in the circumstances or may dissolve a corporation and liquidate its assets and activities:
Terms Used In North Dakota Code 10-33-107
- Amendment: A proposal to alter the text of a pending bill or other measure by striking out some of it, by inserting new language, or both. Before an amendment becomes part of the measure, thelegislature must agree to it.
- Answer: The formal written statement by a defendant responding to a civil complaint and setting forth the grounds for defense.
- Assets: (1) The property comprising the estate of a deceased person, or (2) the property in a trust account.
- Contract: A legal written agreement that becomes binding when signed.
- Corporation: A legal entity owned by the holders of shares of stock that have been issued, and that can own, receive, and transfer property, and carry on business in its own name.
- Equitable: Pertaining to civil suits in "equity" rather than in "law." In English legal history, the courts of "law" could order the payment of damages and could afford no other remedy. See damages. A separate court of "equity" could order someone to do something or to cease to do something. See, e.g., injunction. In American jurisprudence, the federal courts have both legal and equitable power, but the distinction is still an important one. For example, a trial by jury is normally available in "law" cases but not in "equity" cases. Source: U.S. Courts
- Fraud: Intentional deception resulting in injury to another.
- Liabilities: The aggregate of all debts and other legal obligations of a particular person or legal entity.
- Property: includes property, real and personal. See North Dakota Code 1-01-49
- State: when applied to the different parts of the United States, includes the District of Columbia and the territories. See North Dakota Code 1-01-49
- written: include "typewriting" and "typewritten" and "printing" and "printed" except in the case of signatures and when the words are used by way of contrast to typewriting and printing. See North Dakota Code 1-01-37
a. In a supervised voluntary dissolution under section 10-33-106.
b. In an action by a director or at least fifty members with voting rights or ten percent of the members with voting rights, whichever is less, when it is established that:
(1) The directors or the persons having the authority otherwise vested in the board are deadlocked in the management of the corporate affairs, the members cannot break the deadlock, and the corporation or the parties have not provided for a procedure to resolve the dispute; (2) The directors or those in control of the corporation have acted fraudulently, illegally, or in a manner unfairly prejudicial toward one or more members in their capacities as members, directors, or officers; (3) The members of the corporation are so divided in voting power that, for a period that includes the time when two consecutive regular meetings were held, they have failed to elect successors to directors whose terms have expired or would have expired upon the election and qualification of their successors; (4) The corporate assets are being misapplied or wasted; or
(5) The period of duration as provided in the articles has expired and has not been extended as provided in section 10-33-118.
c. In an action by a creditor when:
(1) The claim of the creditor has been reduced to judgment and an execution on it has been returned unsatisfied; or
(2) The corporation has admitted in writing that the claim of the creditor is due and owing and it is established that the corporation cannot pay its debts in the ordinary course of its activities.
d. In an action by the attorney general when it is established that:
(1) The articles and certificate of incorporation were obtained through fraud; (2) The corporation should not have been formed under this chapter; (3) The corporation failed to comply with the requirements of sections 10-33-02 through 10-33-19 essential to incorporation under or election to become governed by this chapter; (4) The corporation has flagrantly violated a provision of this chapter, has violated a provision of this chapter more than once, or has violated more than one provision of this chapter; (5) The corporation has engaged in an unauthorized act, contract, conveyance, or transfer or has exceeded its powers; (6) The corporation has acted, or failed to act, in a manner that constitutes surrender or abandonment of the corporate purpose, franchise, privileges, or enterprise; (7) The corporation has liabilities and obligations exceeding the corporate assets; (8) The period of corporate existence has ended without extension; (9) The corporation has failed for a period of ninety days to pay fees, charges, or penalties required by this chapter; (10) The corporation has failed for a period of thirty days:
(a) To appoint and maintain a registered agent in this state as provided in chapter 10-01.1; or
(b) After changing its registered office, to file with the secretary of state a statement of the change as provided in chapter 10-01.1; (11) The corporation has answered falsely or failed to answer a reasonable written interrogatory from the secretary of state or the attorney general to the corporation, its officers, or directors; (12) The corporation has solicited property and has failed to use it for the purpose solicited; or
(13) The corporation has fraudulently used or solicited property.
e. An action may not be commenced under subdivision d until thirty days after notice to the corporation by the attorney general of the reason for the filing of the action. If the reason for filing the action is an act that the corporation has done, or omitted to do, and the act or omission may be corrected by an amendment of the articles or bylaws or by performance of or abstention from the act, the attorney general shall give the corporation thirty additional days in which to effect the correction before filing the action.
2. In determining whether to order equitable relief or dissolution under this section, the court shall consider the financial condition of the corporation but may not refuse to order equitable relief or dissolution solely on the ground that the corporation is solvent.
3. In deciding whether to order dissolution, the court shall consider whether lesser relief suggested by one or more parties, such as any form of equitable relief or a partial liquidation, would be adequate to permanently relieve the circumstances established under subdivision b, c, or d of subsection 1. Lesser relief may be ordered if it would be appropriate under the facts and circumstances of the case.
4. If the court finds that a party to a proceeding brought under this section has acted arbitrarily, vexatiously, or otherwise not in good faith, it may award reasonable expenses, including attorney’s fees and disbursements, to any of the other parties.
5. Proceedings under this section must be brought in a court within the county in which the principal executive office of the corporation is located. It is not necessary to make members parties to the action or proceeding unless relief is sought against them personally.