How To Resuscitate A Moribund Corporation

Allen Matkins
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Allen Matkins

Sometimes a corporation will for one reason or another fall into desuetude, with all of the directors and officers having resigned or died.  If the corporation has not dissolved and wound up, the shareholders remain shareholders as there is no expiration date on their shares.  If, perchance, a shareholder discovers that the corporation has some remaining assets, there may be a desire to reconstitute the board and management.  The problem is that that there are no incumbent directors or officers who can call a meeting of shareholders.  

One answer may be for the holders of shares entitled to cast not less than 10% of the votes at the meeting to call a special meeting pursuant to Section 600(d) of the California Corporations Code.  This may be a good dog, but it may not hunt in all situations.  In some cases, it may not be possible to find shareholders with sufficient shares to call the meeting.  Even when enough shareholders can be rounded up to effect a call, it may not be possible to attain a quorum at the meeting that is called.

Another approach is available under Section 600(c) which allows any shareholder to ask the Superior Court to order the meeting.  This procedure is available when there is a failure to hold an annual meeting for a period of 60 days after the date designated therefor or, if no date has been designated, for a period of 15 months after the organization of the corporation or its last annual meeting.  If the court orders the meeting, then the shares represented at the meeting (either in person or by proxy) will constitute a quorum regardless of what the articles, bylaws or even the General Corporation Law say.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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