Virginia Code 13.1-672.6: Shareholder action to appoint a custodian or receiver for a public corporation
A. The circuit court in any city or county where a public corporation‘s principal office is or was last located, or, if none in the Commonwealth, where its registered office is or was last located may appoint one or more persons to be custodians, or, if the corporation is insolvent, to be receivers, of and for a public corporation in a proceeding by a shareholder where it is established that:
Terms Used In Virginia Code 13.1-672.6
- Assets: (1) The property comprising the estate of a deceased person, or (2) the property in a trust account.
- City: means an independent incorporated community which became a city as provided by law before noon on July 1, 1971, or which has within defined boundaries a population of 5,000 or more and which has become a city as provided by law. See Virginia Code 1-208
- 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.
- Foreign corporation: means a corporation authorized by law to issue shares, organized under laws other than the laws of the Commonwealth. See Virginia Code 13.1-603
- Individual: means a natural person. See Virginia Code 13.1-603
- Jurisdiction: (1) The legal authority of a court to hear and decide a case. Concurrent jurisdiction exists when two courts have simultaneous responsibility for the same case. (2) The geographic area over which the court has authority to decide cases.
- Principal office: means the office, in or out of the Commonwealth, where the principal executive offices of a domestic or foreign corporation are located, or, if there are no such offices, the office, in or out of the Commonwealth, so designated by the board of directors. See Virginia Code 13.1-603
- Proceeding: includes civil suit and criminal, administrative, and investigatory action. See Virginia Code 13.1-603
- Public corporation: means a corporation that has shares listed on a national securities exchange or regularly traded in a market maintained by one or more members of a national or affiliated securities association. See Virginia Code 13.1-603
- shareholder: means a record shareholder, a beneficial shareholder, and a voting trust beneficial owner whose entitlement to bring the proceeding under this article is not inconsistent with the voting trust agreement. See Virginia Code 13.1-672.7
1. The directors are deadlocked in the management of the corporate affairs, the shareholders are unable to break the deadlock, and irreparable injury to the corporation is threatened or being suffered; or
2. The directors or those in control of the corporation are acting fraudulently and irreparable injury to the corporation is threatened or being suffered.
B. The court:
1. May issue injunctions, appoint a temporary custodian or temporary receiver with all the powers and duties the court directs, take other action to preserve the corporate assets wherever located, and carry on the business of the corporation until a full hearing is held;
2. Shall hold a hearing, after notifying all parties to the proceeding and any interested persons designated by the court, before appointing a custodian or receiver; and
3. Has jurisdiction over the corporation and all of its property, wherever located.
C. The court may appoint an individual or domestic or foreign corporation, authorized to transact business in the Commonwealth, as a custodian or receiver and may require the custodian or receiver to post bond, with or without sureties, in an amount the court directs.
D. The court shall describe the powers and duties of the custodian or receiver in its appointing order, which may be amended from time to time. Among other powers:
1. A custodian may exercise all of the powers of the corporation, through or in place of its board of directors, to the extent necessary to manage the business and affairs of the corporation; and
2. A receiver (i) may dispose of all or any part of the assets of the corporation wherever located, at a public or private sale, if authorized by the court, and (ii) may sue and defend in the receiver’s own name as receiver in all courts of the Commonwealth.
E. The court during a custodianship may redesignate the custodian a receiver, and during a receivership may redesignate the receiver a custodian, if doing so is in the best interests of the corporation.
F. The court from time to time during the custodianship or receivership may order compensation paid and expense disbursements or reimbursements made to the custodian or receiver from the assets of the corporation or proceeds from the sale of its assets.