Iowa Code 504.1431 – Grounds for judicial dissolution
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1. The district court may dissolve a corporation in any of the following ways:
a. In a proceeding brought by the attorney general, if any of the following is established:
(1) The corporation obtained its articles of incorporation through fraud.
(2) The corporation has continued to exceed or abuse the authority conferred upon it by law.
b. Except as provided in the articles or bylaws of a religious corporation, in a proceeding brought by fifty members or members holding five percent of the voting power, whichever is less, or by a director or any person specified in the articles, if any of the following is established:
(1) The directors are deadlocked in the management of the corporate affairs, and the members, if any, are unable to break the deadlock.
(2) The directors or those in control of the corporation have acted, are acting, or will act in a manner that is illegal, oppressive, or fraudulent.
(3) The members are deadlocked in voting power and have failed, for a period that includes at least two consecutive annual meeting dates, to elect successors to directors whose terms have, or would otherwise have, expired.
(4) The corporate assets are being misapplied or wasted.
c. In a proceeding brought by a creditor, if either of the following is established:
(1) The creditor’s claim has been reduced to judgment, the execution on the judgment is returned unsatisfied, and the corporation is insolvent.
(2) The corporation has admitted in writing that the creditor’s claim is due and owing and the corporation is insolvent.
d. In a proceeding brought by the corporation to have its voluntary dissolution continued under court supervision.
Terms Used In Iowa Code 504.1431
- articles: includes amended and restated articles of incorporation and articles of merger. See Iowa Code 504.141
- Assets: (1) The property comprising the estate of a deceased person, or (2) the property in a trust account.
- Bylaws: means the code or codes of rules other than the articles adopted pursuant to this chapter for the regulation or management of the affairs of a corporation irrespective of the name or names by which such rules are designated. See Iowa Code 504.141
- 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 a public benefit, mutual benefit, or religious corporation. See Iowa Code 504.141
- Directors: means individuals, designated in the articles or bylaws or elected by the incorporators, and their successors and individuals elected or appointed by any other name or title to act as members of the board. See Iowa Code 504.141
- following: when used by way of reference to a chapter or other part of a statute mean the next preceding or next following chapter or other part. See Iowa Code 4.1
- Fraud: Intentional deception resulting in injury to another.
- Mutual benefit corporation: means a domestic or foreign corporation that is required to be a mutual benefit corporation pursuant to section 504. See Iowa Code 504.141
- Person: includes any individual or entity. See Iowa Code 504.141
- Proceeding: includes a civil suit and criminal, administrative, or investigatory actions. See Iowa Code 504.141
- Public benefit corporation: means a domestic or foreign corporation that is required to be a public benefit corporation pursuant to section 504. See Iowa Code 504.141
- Religious corporation: means a domestic or foreign corporation that engages in religious activity as one of the corporation's principal purposes. See Iowa Code 504.141
- Voting power: means the total number of votes entitled to be cast for the election of directors at the time the determination of voting power is made, excluding a vote that is contingent upon the happening of a condition or event that has not occurred at the time. See Iowa Code 504.141
2. Prior to dissolving a corporation, the court shall consider whether:
a. There are reasonable alternatives to dissolution.
b. Dissolution is in the public interest, if the corporation is a public benefit corporation.
c. Dissolution is the best way of protecting the interests of members, if the corporation is a mutual benefit corporation.