North Carolina § 55A-14-30 - Grounds for judicial dissolution.

§ 55A-14-30. Grounds for judicial dissolution.

The superior court may dissolve a corporation: In a proceeding by the Attorney General if it is established that: The corporation obtained its articles of incorporation through fraud; or The corporation has, after written notice by the Attorney General given at least 20 days prior thereto, continued to exceed or abuse the authority conferred upon it by law; In a proceeding by a member or director, if it is established that: The directors are deadlocked in the management of the corporate affairs, and the members, if any, are unable to break the deadlock; 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; 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; The corporate assets are being misapplied or wasted; or The corporation is no longer able to carry out its purposes. In a proceeding by a creditor if it is established that: The creditor's claim has been reduced to judgment and execution on the judgment has been returned unsatisfied; or The corporation has admitted in writing that the creditor's claim is due and owing and the corporation is insolvent. In a proceeding by the corporation to have its voluntary dissolution continued under court supervision. Prior to dissolving a corporation, the court shall consider whether: There are reasonable alternatives to dissolution; Dissolution is in the public interest, if the corporation is a charitable or religious corporation; and Dissolution is reasonably necessary for the protection of the rights or interests of the members, if any. History (1955, c. 1230; 1985 (Reg. Sess., 1986), c. 801, s. 42; 1993, c. 398, s. 1.) NORTH CAROLINA COMMENTARY This Act does not bring forward the duty of the Attorney General under former G.S. 55A-51 to bring an action for involuntary dissolution under certain circumstances. Subdivision (a)(2) differs from prior law in the following respects: First, the requirement in former G.S. 55A-53(a)(1)a. that "irreparable injury to the corporation or to the public" be established when the directors are deadlocked was not brought forward. Second, the prior law did not expressly provide that deadlock of the members was grounds for involuntary dissolution. The requirement in former G.S. 55A-53(b) that a creditor must show that the corporation is insolvent in order to be entitled to judicial dissolution was not brought forward. Even if there are grounds for dissolution under subsection (a), subsection (b) requires the court to consider other factors. Although former G.S. 55A-53(f), which permitted the court to grant relief other than dissolution, was not brought forward, the court has inherent power to grant such alternative relief under subsection (b). In addition, if dissolution is ordered and the articles of incorporation or bylaws of the dissolved corporation do not provide for the disposition of its assets, it is intended that the assets will be distributed or transferred as directed by the court. See former G.S. 55A-57(b) and (c). Legal Periodicals. - For article, "The Common Law Powers of the Attorney General of North Carolina," see 9 N.C. Cent. L.J. 1 (1977). For note, " The Nonprofit Corporation in North Carolina: Recognizing a Right to Member Derivative Suits," see 63 N.C.L. Rev. 999 (1985).