Utah Code 16-6a-1414 v2. Grounds and procedure for judicial dissolution

Effective 7/1/2024

16-6a-1414. Grounds and procedure for judicial dissolution.

(1)

The attorney general or the division director may bring an action in a court with jurisdiction under Title 78A, Judiciary and Judicial Administration, to dissolve a nonprofit corporation if it is established that:

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Terms Used In Utah Code 16-6a-1414 v2

Articles of incorporation: include :

(a)	amended articles of incorporation;

(b)	restated articles of incorporation;

(c)	articles of merger; and

(d)

a document of a similar import to the documents described in Subsections (3)(a) through (c). See Utah Code 16-6a-102

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.

Director: means a member of the board of directors. See Utah Code 16-6a-102

Division: means the Division of Corporations and Commercial Code. See Utah Code 16-6a-102

Fraud: Intentional deception resulting in injury to another.

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.

Member: includes :

(i)	"voting member"; and

(ii)

a shareholder in a water company. See Utah Code 16-6a-102

Proceeding: includes :

(a)	a civil suit;

(b)	arbitration;

(c)	mediation;

(d)	a criminal action;

(e)	an administrative action; or

(f)	an investigatory action. See Utah Code 16-6a-102 Writing: includes :Utah Code 68-3-12.5
(a)	the nonprofit corporation obtained the nonprofit corporation’s articles of incorporation through fraud; or

(b)	the nonprofit corporation has continued to exceed or abuse the authority conferred upon the nonprofit corporation by law.

(2)

A member or director of a nonprofit corporation may bring an action in a court with jurisdiction under Title 78A, Judiciary and Judicial Administration, to dissolve the nonprofit corporation if it is established that:

(a)

(i)	the directors are deadlocked in the management of the corporate affairs;

(ii)	the members, if any, are unable to break the deadlock; and

(iii)

irreparable injury to the nonprofit corporation is threatened or being suffered;

(b)	the directors or those in control of the nonprofit corporation have acted, are acting, or will act in a manner that is illegal, oppressive, or fraudulent;

(c)	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 expired or would have expired upon the election of their successors; or

(d)	the corporate assets are being misapplied or wasted.

(3)

A creditor may bring an action in a court with jurisdiction under Title 78A, Judiciary and Judicial Administration, to dissolve a nonprofit corporation if it is established that:

(a)

(i)	the creditor’s claim has been reduced to judgment;

(ii)	the execution on the judgment has been returned unsatisfied; and

(iii)

the nonprofit corporation is insolvent; or

(b)

(i)	the nonprofit corporation is insolvent; and

(ii)	the nonprofit corporation has admitted in writing that the creditor’s claim is due and owing.

(4)	If an action is brought under this section, it is not necessary to make directors or members parties to the action to dissolve the nonprofit corporation unless relief is sought against the members individually.

(5)

In an action under this section, the court may:

(a)	issue injunctions;

(b)	appoint a receiver or a custodian pendente lite with all powers and duties the court directs; or

(c)	take other action required to preserve the nonprofit corporation’s assets wherever located and carry on the business of the nonprofit corporation until a full hearing can be held.

(6)

If a nonprofit corporation has been dissolved by voluntary or administrative action taken under this part:

(a)	the nonprofit corporation may bring a proceeding to wind up and liquidate its business and affairs under judicial supervision in accordance with Section 16-6a-1405; and

(b)	the attorney general, a director, a member, or a creditor may bring a proceeding to wind up and liquidate the affairs of the nonprofit corporation under judicial supervision in accordance with Section 16-6a-1405, upon establishing the grounds set forth in Subsections (1) through (3).

Amended by Chapter 401, 2023 General Session

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