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| Home > Statutes > Usa Arizona |
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USA Statutes : arizona
Title : Corporations and Associations
Chapter : DISSOLUTION
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10-1401 Dissolution by incorporators or initial directors
A majority of the incorporators or initial directors of a corporation that has not
issued shares or has not commenced business may dissolve the corporation by delivering to
the commission for filing the articles of dissolution. An incorporator or an
initial director, whose signature shall be acknowledged, shall execute the articles of
dissolution, and the articles shall set forth all of the following:
1. The name of the corporation.
2. The date of its incorporation.
3. Either:
(a) That none of the corporation's shares have been issued.
(b) That the corporation has not commenced business.
4. That no debt of the corporation remains unpaid.
5. That the net assets of the corporation remaining after winding up have been
distributed to the shareholders, if shares were issued.
6. That a majority of the incorporators or initial directors authorized the
dissolution.
10-1402 Dissolution by board of directors and shareholders
A. A corporation's board of directors may propose dissolution for submission to the
shareholders.
B. For a proposal to dissolve to be adopted both:
1. The board of directors shall recommend dissolution to the shareholders, unless
the board of directors determines that because of conflict of interest or other special
circumstances it should make no recommendation and communicates the basis for its
determination to the shareholders.
2. The shareholders entitled to vote shall approve the proposal to dissolve as
provided in subsection E of this section.
C. The board of directors may condition its submission of the proposal for
dissolution on any basis.
D. The corporation shall notify each shareholder, whether or not entitled to vote,
of the proposed shareholders' meeting in accordance with section 10-705. The notice
shall also state that the purpose or one of the purposes of the meeting is to consider
dissolving the corporation.
E. Unless the articles of incorporation or the board of directors acting pursuant
to subsection C of this section requires a greater vote or a vote by voting groups, the
proposal to dissolve, in order to be adopted, shall be approved by a majority of all of
the votes entitled to be cast on that proposal.
10-1403 Articles of dissolution; effective date of dissolution
A. At any time after dissolution is authorized, the corporation may dissolve by
delivering to the commission for filing articles of dissolution setting forth all of the
following:
1. The name of the corporation.
2. The date dissolution was authorized.
3. If dissolution was approved by the shareholders both:
(a) The number of votes entitled to be cast on the proposal to dissolve.
(b) Either the total number of votes cast for and against dissolution or the total
number of undisputed votes cast for dissolution and a statement that the number cast for
dissolution was sufficient for approval.
4. If voting by voting groups was required, the information required by paragraph 3
shall be separately provided for each voting group entitled to vote separately on the
plan to dissolve.
B. A corporation is dissolved on the effective date of its articles of dissolution.
C. The articles of dissolution shall not be considered complete until the
commission has received a notice from the department of revenue to the effect that the
tax levied under title 42, chapter 5, article 1 against the corporation has been paid, or
until it is notified by the department of revenue that the corporation is not subject to
the tax and until the commission has received from the department of revenue its
certificate issued pursuant to section 43-1151.
D. The articles of dissolution shall not be considered complete until all fees,
penalties and costs required to be paid under this title have been paid and until the
commission has received an affidavit that a copy of the articles of dissolution has been
published.
10-1404 Revocation of dissolution
A. A corporation may revoke its dissolution within one hundred twenty days of its
effective date.
B. Revocation of dissolution shall be authorized in the same manner as the
dissolution was authorized unless that authorization permitted revocation by action of
the board of directors alone, in which event the board of directors may revoke the
dissolution without shareholder action.
C. After the revocation of dissolution is authorized, the corporation may revoke
the dissolution by delivering to the commission for filing articles of revocation of
dissolution, together with a copy of its articles of dissolution, that set forth all of
the following:
1. The name of the corporation.
2. The effective date of the dissolution that was revoked.
3. The date that the revocation of dissolution was authorized.
4. If the corporation's board of directors or incorporators revoked the
dissolution, a statement to that effect.
5. If the corporation's board of directors revoked a dissolution authorized by the
shareholders, a statement that revocation was permitted by action by the board of
directors alone pursuant to that authorization.
6. If shareholder action was required to revoke the dissolution, the information
required by section 10-1403, subsection A, paragraph 3 or 4.
D. Revocation of dissolution is effective on the effective date of the articles of
revocation of dissolution.
E. When the revocation of dissolution is effective, it relates back to and takes
effect as of the effective date of the dissolution and the corporation resumes carrying
on its business as if dissolution had never occurred.
10-1405 Effect of dissolution
A. A dissolved corporation continues its corporate existence but shall not carry on
any business except that business appropriate to wind up and liquidate its business and
affairs, including:
1. Collecting its assets.
2. Disposing of its properties that will not be distributed in kind to its
shareholders.
3. Discharging or making provisions for discharging its liabilities.
4. Distributing its remaining property among its shareholders according to their
interests.
5. Doing every other act necessary to wind up and liquidate its business and
affairs.
B. Dissolution of a corporation does not:
1. Transfer title to the corporation's property.
2. Prevent transfer of its shares or securities, although the authorization to
dissolve may provide for closing the corporation's share transfer records.
3. Subject its directors or officers to standards of conduct different from those
prescribed in chapter 8 of this title.
4. Change quorum or voting requirements for its board of directors or shareholders,
change provisions for selection, resignation or removal of its directors or officers, or
both, or change provisions for amending its bylaws.
5. Prevent commencement of a proceeding by or against the corporation in its
corporate name or any officers, directors or shareholders or affect applicable statutes
of limitation.
6. Abate or suspend a proceeding pending by or against the corporation or any
officers, directors or shareholders on the effective date of dissolution.
7. Terminate the authority of the statutory agent of the corporation.
10-1406 Known claims against dissolved corporation; definition
A. A dissolved corporation may dispose of the known claims against it by following
the procedure described in this section.
B. The dissolved corporation shall notify its known claimants in writing of the
dissolution at any time and from time to time after its effective date. The written
notice shall:
1. Describe information that shall be included in a claim.
2. Provide a mailing address where a claim may be sent.
3. State the deadline, which may not be fewer than one hundred twenty days from the
effective date of the written notice, by which the dissolved corporation must receive the
claim.
4. State that the claim will be barred if not received by the deadline.
C. A claim against the dissolved corporation is barred either:
1. If a claimant who was given written notice under subsection B does not deliver
the claim to the dissolved corporation by the deadline.
2. If a claimant whose claim was rejected by the dissolved corporation does not
commence a proceeding to enforce the claim within ninety days from the effective date of
the rejection notice.
D. For purposes of this section, "claim" does not include a contingent
claim. Notwithstanding the foregoing, a claim that is contingent as of the effective
date of dissolution but later ripens into a known claim or a claim based on an event
occurring after the effective date of dissolution may be disposed of by the dissolved
corporation by following the procedures described in subsections B and C.
10-1407 Unknown claims against dissolved corporation
A. A dissolved corporation may also publish notice of its dissolution and request
that persons with claims against the corporation present them in accordance with the
notice.
B. The notice shall:
1. Be published one time in a newspaper of general circulation in the county where
the dissolved corporation's known place of business is or was last located.
2. Describe the information that must be included in a claim and provide a mailing
address where the claim may be sent.
3. State that a claim against the corporation will be barred unless a proceeding to
enforce the claim is commenced within five years after the publication of the notice.
C. If the dissolved corporation publishes a newspaper notice in accordance with
subsection B of this section, the claim of each of the following claimants is barred
unless the claimant commences a proceeding to enforce the claim against the dissolved
corporation within five years after the publication date of the newspaper notice:
1. A claimant who did not receive written notice under section 10-1406.
2. A claimant whose claim was timely sent to the dissolved corporation but not
acted on.
3. A claimant whose claim is contingent or based on an event occurring after the
effective date of the dissolution.
D. A claim, including a contingent claim or a claim based on an event occurring
after the effective date of dissolution, may be enforced under this section either:
1. Against the dissolved corporation to the extent of its undistributed assets.
2. If the assets have been distributed in liquidation, against a shareholder of the
dissolved corporation to the extent of his pro rata share of the claim or the corporate
assets distributed to him in liquidation, whichever is less, but a shareholder's total
liability for all claims under this subsection shall not exceed the total amount of
assets distributed to him.
10-1420 Grounds for administrative dissolution
The commission may commence a proceeding under section 10-1421 to administratively
dissolve a corporation if either:
1. The corporation does not pay within sixty days after they are due any fees or
penalties imposed by chapters 1 through 17 of this title.
2. The corporation does not deliver its annual report to the commission within
sixty days after it is due.
3. The corporation is without a statutory agent or known place of business in this
state for sixty days or more.
4. The corporation does not notify the commission within sixty days that its
statutory agent or known place of business has been changed, that its statutory agent has
resigned or that its principal office has been discontinued.
5. The corporation has failed to make any publication required by this title and
file an affidavit of publication within the time prescribed by this title, provided the
commission has notified the corporation of the intent of the commission to commence a
dissolution proceeding for that reason and the corporation has failed to file an
affidavit of publication within sixty days after that notice.
6. The corporation's period of duration stated in its articles of incorporation
expires.
7. The corporation has failed to comply with section 10-202, subsection F.
8. Any officer or other representative of the corporation has made any
misrepresentation of a material matter in any application, report, affidavit or other
document submitted by the corporation pursuant to chapters 1 through 17 of this title.
9. The corporation has failed to comply with section 10-1403, subsection D, or the
commission has not received the notice required by section 10-1403, subsection C, within
six months after filing articles of dissolution.
10. The corporation has failed to file a certificate of disclosure or answer
interrogatories as prescribed in chapters 1 through 17 of this title.
11. The corporation failed to comply with section 10-1623, subsection A.
10-1421 Procedure for and effect of administrative dissolution
A. If the commission determines that one or more grounds exist under section
10-1420 for dissolving a corporation, it shall serve the corporation with written notice
of its determination under section 10-504.
B. If the corporation does not correct each ground for dissolution or demonstrate
to the reasonable satisfaction of the commission that each ground determined by the
commission does not exist within sixty days after service of the notice is perfected
under section 10-504, the commission shall administratively dissolve the corporation by
signing a certificate of dissolution that recites the ground or grounds for dissolution
and its effective date. The commission shall file the original of the certificate and
serve a copy on the corporation under section 10-504.
C. Subject to the provisions of section 10-1422 regarding reinstatement, a
corporation administratively dissolved continues its corporate existence but may not
carry on any business except that necessary to wind up and liquidate its business and
affairs under section 10-1405 and notify claimants under sections 10-1406 and
10-1407. If the corporation has not applied for reinstatement within six months after
the effective date of the dissolution, the commission shall release the corporate name
for use in accordance with chapters 1 through 17 of this title or by a person intending
to register the name as a trade name pursuant to title 44, chapter 10, article 3.1.
D. The administrative dissolution of a corporation does not terminate the authority
of its statutory agent.
10-1422 Reinstatement following administrative dissolution
A. A corporation administratively dissolved under section 10-1421 may apply to the
commission for reinstatement within three years after the effective date of
dissolution. The application shall both:
1. Recite the name of the corporation and the effective date of its administrative
dissolution.
2. State that the ground or grounds for dissolution either did not exist or have
been eliminated.
B. If the commission determines that the application contains the information
required by subsection A of this section and that the information is correct, it shall
cancel the certificate of dissolution and shall prepare a certificate of reinstatement
that recites this determination and the effective date of reinstatement, shall file the
original of the certificate and shall serve a copy on the corporation under section
10-504.
C. When the reinstatement is effective, it relates back to and takes effect as of
the effective date of the administrative dissolution and the corporation resumes carrying
on its business as if the administrative dissolution had never occurred.
D. If another corporation has adopted the name of the corporation or another person
has adopted the name of the corporation as a trade name, the application shall be
accompanied by articles of amendment that are in accordance with chapter 10, article 1 of
this title and that adopt a new name for the corporation that complies with chapter 4,
article 1 of this title.
10-1430 Grounds for judicial dissolution or equitable relief
A. The court may dissolve a corporation in a proceeding by the attorney general if
it is established that either:
1. The corporation obtained its articles of incorporation through fraud.
2. The corporation has continued to exceed or abuse the authority conferred on it
by law.
B. The court may dissolve a corporation in a proceeding by a shareholder if it is
established that either:
1. The directors are deadlocked in the management of the corporate affairs, the
shareholders are unable to break the deadlock and irreparable injury to the corporation
is threatened or being suffered or the business and affairs of the corporation cannot be
conducted to the advantage of the shareholders generally because of the deadlock.
2. 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.
3. The shareholders are deadlocked in voting power and have failed for a period
that includes at least two consecutive annual meeting dates to elect one or more
directors.
4. The corporate assets are being wasted, misapplied or diverted for noncorporate
purposes.
C. The court may dissolve a corporation in a proceeding by a creditor if it is
established that either:
1. The creditor's claim has been reduced to a judgment, the execution of the
judgment has been returned unsatisfied and the corporation is insolvent.
2. The corporation has admitted in writing that the creditor's claim is due and
owing and the corporation is insolvent.
D. The court may dissolve a corporation in a proceeding by the corporation to have
its voluntary dissolution continued under court supervision.
10-1431 Procedure for judicial dissolution or equitable relief
A. Venue for a proceeding by the attorney general to dissolve a corporation or for
a proceeding brought by any other party named in section 10-1430 is in the county where a
corporation's known place of business is or was last located.
B. It is not necessary to make shareholders parties to a proceeding to dissolve a
corporation unless relief is sought against them personally.
C. A court in a proceeding brought to dissolve a corporation may issue injunctions,
appoint a receiver with all of the powers and duties the court directs, take other action
required to preserve the corporate assets wherever located and carry on the business of
the corporation until a full hearing can be held.
10-1432 Receivership
A. A court in a judicial proceeding brought to dissolve a corporation may appoint
one or more receivers to wind up and liquidate or manage the business and affairs of the
corporation. After notifying all parties to the proceeding and any interested persons
designated by the court, the court shall hold a hearing before appointing a
receiver. The court appointing a receiver has exclusive jurisdiction over the
corporation and all of its property wherever located.
B. The court may appoint an individual or a domestic or foreign corporation
authorized to transact business in this state as a receiver. The court may require the
receiver to post bond with or without sureties in an amount the court directs.
C. The court shall describe the powers and duties of the receiver in its appointing
order, which may be amended from time to time. Among other powers, the receiver may
exercise all of the powers of the corporation, through or in place of its board of
directors, executive committee or officers, to the extent necessary to carry on the
ordinary and necessary business of the corporation and to manage the affairs of the
corporation in the best interests of its shareholders and creditors.
D. The court from time to time during the receivership may order compensation paid
and expense disbursements or reimbursements made to the receiver and its counsel from the
assets of the corporation or proceeds from the sale of the assets.
E. A receiver of a corporation may sue and defend in all courts in his own name as
receiver of such corporation.
10-1433 Decree of dissolution
A. If after a hearing the court determines that one or more of the grounds for
judicial dissolution described in section 10-1430 exist, it may enter a decree that
dissolves the corporation and that specifies the effective date. The clerk of the court
shall deliver a certified copy of a dissolution decree to the commission which shall file
it.
B. After entering a decree of dissolution, the court shall direct the winding up
and liquidation of the corporation's business and affairs in accordance with section
10-1405 and the notification of claimants in accordance with sections 10-1406 and
10-1407.
10-1434 Election to purchase in lieu of dissolution
A. In a proceeding under section 10-1430, subsection B to dissolve a corporation
that has no shares listed on a national securities exchange or regularly traded in a
market maintained by one or more members of a national or affiliated securities
association, the corporation may elect or, if it fails to elect, one or more shareholders
may elect to purchase all shares owned by the petitioning shareholder at the fair value
of the shares. An election pursuant to this section is irrevocable unless the court
determines that it is equitable to set aside or modify the election.
B. An election to purchase pursuant to this section may be filed with the court at
any time within ninety days after the filing of the petition under section 10-1430,
subsection B or at a later time as the court may allow. If the election to purchase is
filed by one or more shareholders, the corporation, within ten days after the filing,
shall give written notice to all shareholders other than the petitioner. The notice
shall state the name and number of shares owned by the petitioner and the name and number
of shares owned by each electing shareholder and shall advise the recipients of their
right to join in the election to purchase shares in accordance with this
section. Shareholders who wish to participate shall file notice of their intention to
join in the purchase no later than thirty days after the effective date of the notice to
them. All shareholders who have filed an election or notice of their intention to
participate in the election to purchase become parties to the proceeding and shall
participate in the purchase in proportion to their ownership of shares as of the date the
first election was filed, unless they otherwise agree or the court otherwise
directs. After an election has been filed by the corporation or one or more
shareholders, the proceeding under section 10-1430, subsection B shall not be
discontinued or settled, and the petitioning shareholder shall not sell or otherwise
dispose of his shares, unless the court determines that it would be equitable to the
corporation and the shareholders other than the petitioner to permit this discontinuance,
settlement, sale or other disposition.
C. If, within sixty days of the filing of the first election, the parties reach
agreement as to the fair value and terms of purchase of the petitioner's shares, the
court shall enter an order directing the purchase of the petitioner's shares on the terms
and conditions agreed to by the parties.
D. If the parties are unable to reach an agreement as provided for in subsection C
of this section, the court, on application of any party, shall stay the proceedings under
section 10-1430, subsection B and determine the fair value of the petitioner's shares as
of the day before the date on which the petition under section 10-1430, subsection B was
filed or as of another date as the court deems appropriate under the circumstances.
E. On determining the fair value of the shares, the court shall enter an order
directing the purchase on the terms and conditions as the court deems appropriate, which
may include payment of the purchase price in installments, if necessary in the interests
of equity, provision for security to assure payment of the purchase price and any
additional costs, fees and expenses as may have been awarded and, if the shares are to be
purchased by shareholders, the allocation of shares among them. In allocating the
petitioner's shares among holders of different classes of shares, the court shall attempt
to preserve the existing distribution of voting rights among holders of different classes
insofar as practicable and may direct that holders of a specific class or classes shall
not participate in the purchase. Interest may be allowed at the rate and from the date
determined by the court to be equitable, but if the court finds that the refusal of the
petitioning shareholder to accept an offer of payment was arbitrary or otherwise not in
good faith, interest shall not be allowed. If the court finds that the petitioning
shareholder had probable grounds for relief under section 10-1430, subsection B,
paragraph 2 or 4, it may award to the petitioning shareholder reasonable fees and
expenses of an attorney and of any experts employed by him.
F. On entry of an order under subsection C or E of this section, the court shall
dismiss the petition to dissolve the corporation under section 10-1430 and the
petitioning shareholder does not have any rights or status as a shareholder of the
corporation, except the right to receive the amounts awarded to the petitioning
shareholder by the order of the court that is enforceable in the same manner as any other
judgment.
G. The purchase ordered pursuant to subsection E of this section shall be made
within ten days after the date the order becomes final unless before that time the
corporation files with the court a notice of its intention to adopt articles of
dissolution pursuant to sections 10-1402 and 10-1403, which articles shall be adopted and
filed within fifty days thereafter. On filing of the articles of dissolution, the
corporation shall be dissolved in accordance with sections 10-1405, 10-1406 and 10-1407,
and the order entered pursuant to subsection E of this section does not have any force or
effect, except that the court may award the petitioning shareholder reasonable fees and
expenses in accordance with subsection E of this section and the petitioner may continue
to pursue any claims previously asserted on behalf of the corporation.
H. Any payment by the corporation pursuant to an order under subsection C or E of
this section, other than an award of fees and expenses pursuant to subsection E of this
section, is subject to section 10-640.
10-1440 Deposit with department of revenue
Assets of a dissolved corporation that should be transferred to a creditor, claimant
or shareholder of the corporation who either cannot be found or who is not competent to
receive them and does not have a legal representative who is legally competent to receive
them shall be reduced to cash and deposited with the unclaimed property division of the
department of revenue for safekeeping. When the creditor, claimant, shareholder or legal
representative who is legally competent to receive the distributive portion furnishes
satisfactory proof of entitlement to the amount deposited, the unclaimed property
division of the department of revenue shall pay the creditor, claimant, shareholder or
legal representative that amount.
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