Rhode Island General Laws 7-1.2-1314. Jurisdiction of court to liquidate assets and business of corporation
(a) The superior court has full power to liquidate the assets and business of a corporation:
(1) In an action by a shareholder when it is established that, whether or not the corporate business has been or could be operated at a profit, dissolution would be beneficial to the shareholders because:
(i) The directors or those other individuals who may be responsible for management pursuant to §?7-1.2-1701(a) are deadlocked in the management of the corporate affairs and the shareholders are unable to break the deadlock; or
(ii) The acts of the directors or those in control of the corporation are illegal, oppressive, or fraudulent; or
(iii) The shareholders are deadlocked in voting power, and have failed, for a period which includes at least two (2) consecutive annual meeting dates, to elect successors to directors whose terms have expired or would have expired upon the election and qualification of their successors; or
(iv) The corporate assets are being misapplied or are in danger of being wasted or lost; or
(v) Two (2) or more factions of shareholders are divided and there is such internal dissension that serious harm to the business and affairs of the corporation is threatened; or
(vi) The holders of one-half (½) or more of all the outstanding shares of the corporation have voted to dissolve the corporation;
(2)(i) In an action by a creditor:
(A) When it is established that the corporation is insolvent; or
(B) When it is established that the corporate assets are being misapplied or are in danger of being wasted or lost.
(ii) If it is established that the claim of a creditor has been reduced to judgment and an execution on the judgment returned unsatisfied or that a corporation has admitted, in writing, that the claim of a creditor is due and owing, the establishment of the facts are prima facie evidence of insolvency.
(iii) Every petition filed by a creditor for the liquidation of the assets and business of a corporation must contain a statement as to whether the creditor is or is not an officer, director, or shareholder of the corporation. Every petition for the liquidation of the assets and business of a corporation filed by an officer, director, or shareholder of a corporation or by a creditor who is an officer, director or shareholder, must contain, to the best of petitioner’s knowledge, information, and belief, the names and addresses of all known creditors of any class of the corporation.
(3) When an action has been filed by the attorney general to dissolve a corporation and it is established that liquidation of its business and affairs should precede the entry of a decree of dissolution.
Terms Used In Rhode Island General Laws 7-1.2-1314
- Assets: (1) The property comprising the estate of a deceased person, or (2) the property in a trust account.
- 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.
- Evidence: Information presented in testimony or in documents that is used to persuade the fact finder (judge or jury) to decide the case for one side or the other.
- in writing: include printing, engraving, lithographing, and photo-lithographing, and all other representations of words in letters of the usual form. See Rhode Island General Laws 43-3-16
- Insolvent: means the inability of a corporation to pay its debts as they become due in the usual course of its business. See Rhode Island General Laws 7-1.2-106
- Shareholder: means one who is a holder of record of shares in a corporation. See Rhode Island General Laws 7-1.2-106
- Shares: means the units into which the proprietary interests in a corporation are divided. See Rhode Island General Laws 7-1.2-106
(b) Proceedings under subsections (a)(1) or (a)(2) should be brought in the county in which the registered or principal office of the corporation is situated.
(c) It is not necessary to make shareholders parties to any action or proceeding unless relief is sought against them personally.
History of Section.
P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2; P.L. 2005, ch. 120, § 1; P.L. 2005, ch. 130, § 1.