Texas Business Organizations Code 21.761 – Appointment of Custodian
(a) In a judicial proceeding under this section, a court shall appoint a custodian for a close corporation on presentation of proof that:
(1) at a meeting held for the election of directors, the shareholders are so divided that the shareholders have failed to elect successors to directors whose terms have expired or would have expired on qualification of a successor;
(2) the business of the close corporation is suffering or is threatened with irreparable injury because the directors, or the shareholders or the persons empowered to manage the business and affairs of the close corporation under a shareholders’ agreement, are so divided with respect to the management of the business and affairs of the close corporation that the required vote or consent to take action on behalf of the close corporation cannot be obtained and a remedy with respect to the deadlock in a close corporation provision has failed; or
(3) the plaintiff or intervenor has the right to wind up and terminate the close corporation under a shareholders’ agreement as provided by § 21.714.
(b) To be eligible to serve as a custodian, a person must comply with all the qualifications required to serve as a receiver under § 11.406.
Terms Used In Texas Business Organizations Code 21.761
- Business: means a trade, occupation, profession, or other commercial activity. See Texas Business Organizations Code 1.002
- Close corporation: means a for-profit corporation that elects to be governed as a close corporation in accordance with Subchapter Texas Business Organizations Code 1.002
- 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.
- Corporation: means an entity governed as a corporation under Title 2 or 7. See Texas Business Organizations Code 1.002
- Person: means an individual or a corporation, partnership, limited liability company, business trust, trust, association, or other organization, estate, government or governmental subdivision or agency, or other legal entity, or a protected series or registered series of a domestic limited liability company or foreign entity. See Texas Business Organizations Code 1.002
- Plaintiff: The person who files the complaint in a civil lawsuit.