YSC, Title 23.  Corporations, Partnerships & Associations
 
 
 
Chapter 7:  Dissolution

701.   Voluntary dissolution.
702.   Involuntary dissolution.
703.   Proceedings after dissolution; appointment of trustees.
704.   Trustee; powers, liabilities, duties.
705.   Claims, administration, accounts, commissions; notice to creditors.
706.   Witnesses and documents subpoenaed.
707.   Reinstatement of involuntarily dissolved corporations.
708.   Dissolution of corporations; failure of stockholders to agree; receivers.

     701. Voluntary dissolution.

     (a)  Any corporation wishing to dissolve itself before the expiration of its charter or articles of incorporation may file with the Registrar a certificate verified on oath by any two officers of the corporation, or by the presiding officer and secretary of the stockholders. meeting at which the vote was taken, setting forth that the dissolution has been approved, at a meeting duly called for that purpose, by the holders of not less than three-fourths of all of the stock of the corporation issued and outstanding and having voting powers.  If the articles of incorporation or charter require authorization or approval of a higher proportion of the stockholders, or a higher proportion of any class or classes of stockholders, such higher proportion shall be required.

     (b)  Upon the filing of a certificate in compliance with this section, the Registrar shall issue and enter of record in his office a decree of dissolution decreeing that the corporation is then dissolved, unless the corporation has requested that the dissolution be as of the date of the filing of the certificate or as of some subsequent date, in which case the dissolution shall become effective on or as of the date requested.  Upon the issuance of the decree of dissolution, the corporation shall cease to exist and all powers previously held by the corporation shall vest in the trustee or trustees, if any, appointed pursuant to section 702 of this division.

Source:  YSL 2-51 58, modified.

Cross-reference:  The statutory provisions on the Registrar of Corporations are found in chapter 2 of this division.

     702.  Involuntary dissolution.
     If any corporation has failed or neglected, for a period of two years, to file an annual exhibit as required by law, or if any corporation ceases to have any assets and fails to function as shown by the certificate, under oath, of any officer or director of the corporation, or if the charter or articles of incorporation of the corporation have expired and, within a period of two years, no application for renewal has been filed in accordance with this division, or if any corporation has been adjudicated a bankrupt as shown by a certified copy of a judgment or decree of a bankruptcy court, filed in the office of the Registrar, the Registrar may in that event disincorporate the corporation or annul the articles of incorporation or charter and declare the corporation dissolved.  Prior to taking this action, the Registrar must give notice of his intention to dissolve by mailing to the corporation at its last known address appearing in the records of the Registrar and by publication in the media once in each of three successive weeks.  The costs incurred by the Registrar in causing dissolution shall be reimbursed out of the funds that may be available to any trustee appointed to settle the affairs of the corporation.

Source:  YSL 2-51 59, modified.

Cross-reference:  The statutory provisions on the Registrar of Corporations are found in chapter 2 of this division.

     703.  Proceedings after dissolution; appointment of trustees.

     (a)  Upon the voluntary dissolution of any corporation, the Registrar shall appoint a trustee or trustees with full powers to settle the affairs of the corporation; provided, that if the certificate seeking voluntary dissolution states that the corporation has not engaged in any business since incorporation, that no debts of the corporation remain unpaid or undischarged, and that all amounts, if any, paid in on subscriptions, less any amounts disbursed for necessary expenses, have been returned to the subscribers, then the Registrar need not appoint a trustee.

     (b)  Upon the involuntary dissolution of a corporation, the Registrar may appoint a trustee or trustees with full powers to settle the affairs of the corporation.  Unless and until some other person or persons are appointed by the Registrar or a court, the directors of the corporation shall be and act as trustees for the creditors and stockholders or members of the corporation with full powers to settle its affairs.

Source:  YSL 2-51 60.

Cross-reference:  The statutory provisions on the Registrar of Corporations are found in chapter 2 of this division.  The statutory provisions on the State Court and Judiciary are found in Title 4 of this Code.

     704.  Trustee; powers, liabilities, duties.
     Immediately upon dissolution, the title to all assets and property belonging to the corporation shall vest in the trustee or trustees for the creditors and stockholders or members of the corporation dissolved, unless otherwise ordered by a decree of court of competent jurisdiction.  The trustee or trustees shall have power:

     (a)  To sue for and collect the debts, claims, and demands due to the corporation, or compound and settle any claims as they may deem best;

     (b)  To have, hold, reserve, sell and dispose of property;

     (c)  To adjust and pay all debts of the corporation dissolved;

     (d)  To exercise all powers of the dissolved corporation;

     (e)  To proceed as speedily as practical to a complete winding up of the corporation; and

     (f)  To divide among the stockholders (or members if under the charter of the corporation they are entitled thereto) moneys and other properties that remain after paying the debts and necessary expenses.

The trustee or trustees shall be liable to the creditors and stockholders for any breach of fiduciary duty in handling the affairs of the corporation, to the extent of the corporation property which shall come into their hands.  The corporation may enter into a contract or agreement with any person or persons to act as trustee or trustees, provided that no such contract shall prejudice the rights secured by law to the creditors of the corporation.

Source:  YSL 2-51 61, modified.

Cross-reference:  The statutory provisions on the State Court and Judiciary are found in Title 4 of this Code.

     705.  Claims, administration, accounts, commissions: notice to creditors.

     (a)  The trustees for dissolved corporations shall forthwith publish in the media once in each of four successive weeks a notice to all creditors of the corporation to present their claims, at a place designated in the notice, within ninety days from the first publication.  The trustees shall also, within thirty days of the first publication of the notice, mail a like notice to every creditor whose name and address are known to the trustee.  All claims not presented within 90 days of the date of first publication shall be forever barred.  The trustees, with the approval of the Registrar of Corporations, may omit publication of the notice if the assets of the corporation are insufficient to pay for the publication.

     (b)  The trustees for dissolved corporations appointed by the Registrar shall render and file in the office of the Registrar within one year after their appointment or within 60 days after making a complete distribution of the assets to the creditors and stockholders, whichever date is earlier, an itemized final account, on oath, showing all receipts and disbursements.  If complete disbursement has not been made, the trustees shall file an interim account and shall file further interim accounts and a final account at such time as the Registrar shall determine.  The Registrar may for good cause shown extend the time for filing of any account.  In the event an account is not filed within thirty days after notification by the Registrar that the account is due, the Registrar, any stockholder, member, or creditor may file a petition in State Court requesting an order from the court directing the trustees to account for all assets and properties coming into their hands.  If the court determines that the failure to file the account was willful, the cost of the suit shall be taxed against the trustees in their individual capacities.

     (c)  The trustees for dissolved corporations shall be entitled to reasonable fees and commissions in an amount set by the Registrar or by the court, whichever authority appointed the trustee.  The trustee shall be paid out of the funds of the corporation.  If in the case of involuntary dissolutions there are insufficient assets in the estate to pay the trustee the reasonable value of his services, the Registrar may allow and pay to the trustee out of any available appropriation for the current expenses of the Registrar. s office, a fee of not more than $20.00.

     (d)  Upon the filing of an itemized final account pursuant to this section, the power and authority of the trustee or trustees to receive or retain or in any manner deal with any property or assets of the corporation shall cease and determine; provided, that the trustee or trustees shall safely keep and retain all of the corporate books, records, and papers for a period of ten years from the date of filing of the trustees. itemized account.

     (e)  If other or further assets of a dissolved corporation are discovered after the filing of an itemized final account, the Registrar shall appoint a trustee or trustees for the administration of those assets, with all the powers and duties herein provided for trustees.

Source:  YSL 2-51 62, modified.

Cross-reference:  The statutory provisions on the Registrar of Corporations are found in chapter 2 of this division.  The statutory provisions on the State Court and Judiciary are found in Title 4 of this Code.

     706.  Witnesses and documents subpoenaed.
     Upon application of any trustee or trustees, the Registrar may subpoena witnesses or documentary evidence, administer oaths and examine under oath any individual relative to the affairs of the corporation.  If any individual fails to obey the subpoena or obeys the subpoena and refuses to testify when required concerning the matter under investigation, the Registrar shall apply to the State Court for an order compelling response.

Source:  YSL 2-51 63.

Cross-reference:  The statutory provisions on the Registrar of Corporations are found in chapter 2 of this division.  The statutory provisions on the State Court and Judiciary are found in Title 4 of this Code.

      707.  Reinstatement of involuntarily dissolved corporations.
     Within 90 days after the involuntary dissolution of a corporation under section 702, the corporation may be reinstated by the Registrar upon application executed and verified by the president and secretary or other authorized officers of the corporation setting forth such information as the Registrar may require, and the payment of all delinquent fees, penalties, assessments, and taxes, and costs of involuntary dissolution, and the filing of all exhibits due and unfiled. Within said ninety day period, should the name of the corporation, or a name so nearly similar thereto as to lead to confusion and uncertainty, be registered or reserved by another corporation or partnership, reinstatement shall be allowed only upon the registration of a new name by the involuntarily dissolved corporation pursuant to the amendment provisions of section 313.

Source:  YSL 2-51 64, modified.

Cross-reference:  Section 702 of this chapter is on involuntary dissolution.  The statutory provisions on the Registrar of Corporations are found in chapter 2 of this division.  Section 313 of chapter 3 of this division is on amendments of charters and articles.

     708.  Dissolution of corporations; failure of stockholders to agree; receivers.

     (a)  The State Court shall have full power to dissolve and liquidate the assets and business of a corporation in an action by a stockholder when it is established:

     (1)  that the directors are deadlocked in the management of the corporate affairs and the stockholders are unable to break the deadlock, and that irreparable injury to the corporation is being suffered or is threatened by reason thereof; or

     (2)  that the stockholders are deadlocked in voting power and have failed for a period which includes at least two consecutive annual meeting dates to elect successors to directors whose terms have expired or would have expired upon election of their successors, and that irreparable injury to the corporation is being suffered or is threatened by reason thereof.

     (b)  In proceedings to liquidate the assets and business of a corporation, the court may issue injunctions, appoint a receiver with such powers and duties as the court may direct, and take such other proceedings as may be requisite to preserve corporate assets wherever situated, and carry on the business of the corporation until a full hearing can be had.  After a full hearing upon such notice as the court may direct, the court may appoint a liquidating receiver with all the powers necessary to liquidate the assets and business of the corporation.  The order appointing the liquidating receiver or receivers shall state their powers and duties, which may be increased or diminished by the court at any time during the proceedings.  The court may allow as expenses of the liquidation compensation to the receiver or receivers and to attorneys in the proceedings, and direct the payment thereof out of the assets of the corporation or the proceeds of any sale or disposition of the assets. The receiver of a corporation appointed under this section may sue and defend in all courts in his own name as receiver of the corporation.
 
     (c)  The court may require all creditors of the corporation to file with the Clerk of Court or the receiver proofs under oath of their respective claims.  If the court requires the filing of claims, it shall fix a date not less than four months of the date of the order for the filing of claims, and the court shall provide that adequate notice be given to the creditors and claimants. The date may be extended for good cause shown, offered prior to the expiration of the date.  Creditors and claimants failing to file proofs of claim on or before the date so fixed may be barred, by order of court, from participating in the distribution of the assets of the corporation.

     (d)  The liquidation of the assets and business of a corporation may be discontinued at any time during the liquidation proceedings when it is established that cause for liquidation no longer exists.  In that event the court shall dismiss the proceedings and direct the receiver to redeliver to the corporation all its remaining property and assets.

     (e)  When the costs and expenses of the liquidation proceedings and all debts, obligations, and liabilities of the corporation have been paid and discharged and all of its remaining assets and property distributed to its stockholders, or in case its assets and property are not sufficient to satisfy and discharge the costs, expenses, debts, and obligations, and all the property and assets have been applied so far as they will go to their payment, the court shall enter a decree dissolving the corporation, whereupon the existence of the corporation shall cease.  A copy of the decree shall be filed with the Registrar of Corporations.

Source:  YSL 2-51 65, modified.

Cross-reference:  The statutory provisions on the Registrar of Corporations are found in chapter 2 of this division.  The statutory provisions on the State Court and Judiciary are found in Title 4 of this Code.
                                                                                                                                                                                                                                                                                                           
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