Corporate Dissolution Petition

PETITION FOR INVOLUNTARY DISSOLUTION OF CORPORATION

IN THE [COURT NAME]

[COUNTY/DISTRICT], [STATE]

IN THE MATTER OF THE DISSOLUTION OF:

[CORPORATION NAME],

a [STATE] Corporation.

[PETITIONER NAME],

Petitioner,

v.

[RESPONDENT NAME(S)],

Respondent(s),

and

[CORPORATION NAME],

Nominal Respondent.

Case No.: _____________________

VERIFIED PETITION FOR INVOLUNTARY DISSOLUTION OF CORPORATION

PRELIMINARY STATEMENT

1. This is a petition for the involuntary judicial dissolution of [CORPORATION NAME] ("the Corporation") pursuant to [STATE STATUTE - e.g., NY BCL 1104-a, Cal. Corp. Code 1800, Del. Code tit. 8 226]. Petitioner [PETITIONER NAME], a shareholder of the Corporation, seeks dissolution based upon [the oppressive conduct of those in control / deadlock among the directors / deadlock among the shareholders / other statutory grounds].

THE PARTIES

Petitioner

2. Petitioner [PETITIONER NAME] is a [shareholder/director] of [CORPORATION NAME].

3. Petitioner owns [NUMBER] shares of the Corporation's [common/preferred] stock, representing approximately [PERCENTAGE]% of the Corporation's outstanding voting shares.

4. Petitioner has owned said shares continuously since [DATE], prior to the acts complained of herein.

5. Petitioner acquired the shares [by purchase / as a founding shareholder / by inheritance / other: ___________].

6. [If applicable for threshold requirements:] Petitioner owns [20% or more] of the outstanding shares of the Corporation as required by [STATE STATUTE] to bring this petition.

Respondent(s) (Controlling Shareholders/Directors)

7. Respondent [NAME 1] is an individual residing at [ADDRESS] who owns [NUMBER] shares, representing approximately [PERCENTAGE]% of the Corporation's outstanding voting shares, and who serves as [director/officer/President] of the Corporation.

8. Respondent [NAME 2] is an individual residing at [ADDRESS] who owns [NUMBER] shares, representing approximately [PERCENTAGE]% of the Corporation's outstanding voting shares, and who serves as [director/officer] of the Corporation.

[Add additional respondents as necessary]

Nominal Respondent (The Corporation)

9. Nominal Respondent [CORPORATION NAME] is a corporation organized and existing under the laws of the State of [STATE], with its principal place of business at [ADDRESS].

10. The Corporation was incorporated on [DATE] and is engaged in the business of [DESCRIBE BUSINESS].

11. The Corporation is named as a nominal respondent because it is a necessary party to this dissolution proceeding.

JURISDICTION AND VENUE

12. This Court has subject matter jurisdiction over this proceeding pursuant to [STATE STATUTE] which grants this Court authority to order the dissolution of corporations.

13. Venue is proper in this Court pursuant to [STATE STATUTE] because [the Corporation's principal place of business is located in this County / the Corporation is incorporated in this State / other basis].

STATEMENT OF FACTS

A. Formation and Nature of the Corporation

14. [CORPORATION NAME] was incorporated on [DATE] under the laws of [STATE].

15. The Corporation was formed by [FOUNDERS' NAMES] for the purpose of [DESCRIBE BUSINESS PURPOSE].

16. The Corporation is a [close/closely-held] corporation, characterized by:

a. A small number of shareholders (currently [NUMBER] shareholders);

b. No ready market for the Corporation's shares;

c. Substantial shareholder participation in management; and

d. [Restrictions on transfer of shares as set forth in the Corporation's [bylaws/shareholder agreement]].

17. A true and correct copy of the Corporation's Certificate of Incorporation is attached hereto as Exhibit A.

18. A true and correct copy of the Corporation's Bylaws is attached hereto as Exhibit B.

B. Ownership Structure

19. The current ownership of the Corporation is as follows:

C. Board of Directors and Officers

20. The current Board of Directors consists of:

a. [NAME]: [Position/Role]
b. [NAME]: [Position/Role]
c. [NAME]: [Position/Role]

21. The current officers of the Corporation are:

a. [NAME]: [President/CEO]
b. [NAME]: [Secretary]
c. [NAME]: [Treasurer/CFO]
d. [NAME]: [Other Officer]

GROUNDS FOR DISSOLUTION

GROUND I: OPPRESSIVE CONDUCT

(Select and complete applicable grounds)

22. Those in control of the Corporation have engaged in illegal, fraudulent, and/or oppressive conduct toward Petitioner, entitling Petitioner to dissolution pursuant to [STATE STATUTE].

23. Specifically, the Respondents have engaged in the following oppressive conduct:

A. Termination of Employment

24. ☐ On or about [DATE], Respondents [terminated Petitioner's employment / forced Petitioner to resign] from [his/her] position as [JOB TITLE] without legitimate business justification.

25. ☐ Petitioner had a reasonable expectation of employment with the Corporation when [he/she] [invested in / became a shareholder of] the Corporation.

B. Exclusion from Management

26. ☐ Respondents have excluded Petitioner from participation in the management of the Corporation by:

a. ☐ Refusing to hold shareholder meetings;
b. ☐ Refusing to hold or provide notice of board meetings;
c. ☐ Removing Petitioner from [his/her] position as [director/officer];
d. ☐ Making major decisions without consulting Petitioner;
e. ☐ Holding secret meetings;
f. ☐ [OTHER]: _______________________

C. Denial of Dividends and Excessive Compensation

27. ☐ Respondents have refused to declare dividends despite the Corporation's profitability, while simultaneously:

a. ☐ Paying excessive compensation to themselves: $_____________ per year;
b. ☐ Using corporate funds for personal expenses;
c. ☐ [OTHER]: _______________________

28. ☐ The Corporation has had profits available for distribution of $_____________ over the period [DATE] to [DATE].

D. Denial of Access to Information

29. ☐ Respondents have denied Petitioner access to the Corporation's books, records, and financial information.

E. Self-Dealing and Waste

30. ☐ Respondents have engaged in self-dealing transactions and/or waste of corporate assets, including:

a. [DESCRIBE TRANSACTION 1]: _______________________
b. [DESCRIBE TRANSACTION 2]: _______________________

F. Dilution

31. ☐ Respondents have taken actions to dilute Petitioner's ownership interest, including:

a. [DESCRIBE]: _______________________

G. Other Oppressive Conduct

32. ☐ Respondents have engaged in other oppressive conduct, including:

a. [DESCRIBE]: _______________________

33. The Respondents' conduct has substantially defeated Petitioner's reasonable expectations as a shareholder.

GROUND II: DIRECTOR DEADLOCK

34. ☐ The directors of the Corporation are deadlocked in the management of the corporate affairs, and the shareholders are unable to break the deadlock.

35. ☐ Specifically, the deadlock exists because:

a. [DESCRIBE THE DEADLOCK - e.g., equal number of directors appointed by each faction, inability to agree on major decisions];

b. The directors have been unable to agree on [DESCRIBE MATTERS IN DISPUTE];

c. [NUMBER] votes have been taken on [ISSUE] without resolution.

36. ☐ The shareholders are unable to break the deadlock because [EXPLAIN - e.g., equal ownership, voting agreements].

37. ☐ As a result of the deadlock, the Corporation is unable to [conduct ordinary business / elect new directors / take necessary corporate action].

38. ☐ Irreparable injury to the Corporation is being suffered or is threatened by reason of the deadlock.

GROUND III: SHAREHOLDER DEADLOCK

39. ☐ The shareholders of the Corporation are deadlocked in voting power and have failed to elect directors for a period of at least [TIME PERIOD - typically 2 consecutive annual meetings].

40. ☐ Specifically:

a. The last successful election of directors occurred on [DATE];

b. The shareholders have been unable to elect directors at annual meetings held on [DATE(S)] because [EXPLAIN];

c. The current directors are [serving past their terms / unable to act effectively].

GROUND IV: CORPORATE ASSETS BEING WASTED OR MISAPPLIED

41. ☐ The corporate assets are being misapplied or wasted by the acts of [RESPONDENT(S)].

42. ☐ Specifically, the following acts constitute waste or misapplication of assets:

a. [DESCRIBE]: _______________________
b. [DESCRIBE]: _______________________

GROUND V: ILLEGAL OR FRAUDULENT ACTS

43. ☐ The directors or those in control of the Corporation have been guilty of illegal, fraudulent, or oppressive actions toward Petitioner.

44. ☐ Specifically:

a. [DESCRIBE ILLEGAL/FRAUDULENT CONDUCT]: _______________________

GROUND VI: IT IS NOT REASONABLY PRACTICABLE TO CARRY ON BUSINESS

45. ☐ It is not reasonably practicable to carry on the business of the Corporation in conformity with [the articles of incorporation / the reasonable expectations of the shareholders].

46. ☐ Specifically:

a. [EXPLAIN WHY]: _______________________

IRREPARABLE HARM

47. Petitioner is suffering and will continue to suffer irreparable harm unless the Corporation is dissolved or alternative relief is granted because:

a. Petitioner has no market for [his/her] shares;

b. Petitioner cannot exit [his/her] investment;

c. Petitioner is being deprived of [his/her] reasonable expectations;

d. The value of Petitioner's shares continues to diminish;

e. [OTHER IRREPARABLE HARM]: _______________________

ALTERNATIVE RELIEF

48. In the alternative to dissolution, Petitioner requests that this Court grant one or more of the following alternative remedies:

a. ☐ Buyout: Order the Respondents and/or the Corporation to purchase Petitioner's shares at their fair value;

b. ☐ Appointment of Provisional Director: Appoint a provisional director to break the deadlock;

c. ☐ Appointment of Custodian/Receiver: Appoint a custodian or receiver to manage the Corporation's affairs;

d. ☐ Removal of Directors/Officers: Remove [NAMES] from their positions as [directors/officers];

e. ☐ Accounting: Order an accounting of all corporate transactions;

f. ☐ Cancellation of Transactions: Cancel any self-dealing or fraudulent transactions;

g. ☐ Payment of Dividends: Order the payment of withheld dividends;

h. ☐ Modification of Bylaws: Modify or cancel any provisions of the articles or bylaws that are causing the deadlock or oppression;

i. ☐ Other Relief: [DESCRIBE]: _______________________

49. Pursuant to [STATE STATUTE - e.g., NY BCL 1118], the Corporation or the Respondents may elect to purchase Petitioner's shares at fair value in lieu of dissolution.

FAIR VALUE OF PETITIONER'S SHARES

50. Upon information and belief, the fair value of Petitioner's shares is approximately $_____________, based upon [DESCRIBE BASIS - e.g., book value, earnings multiple, independent valuation].

51. Petitioner requests that, if dissolution is ordered or a buyout is elected, this Court determine the fair value of Petitioner's shares without application of any minority discount or marketability discount.

PRAYER FOR RELIEF

WHEREFORE, Petitioner respectfully requests that this Court:

1. Enter an Order dissolving [CORPORATION NAME] and directing the winding up of its affairs;

2. Appoint a receiver or liquidating trustee to wind up the Corporation's affairs and distribute its assets;

3. In the alternative to dissolution, enter one or more of the following orders:

a. Order the Respondents and/or the Corporation to purchase Petitioner's shares at fair value;

b. Appoint a provisional director;

c. Appoint a custodian or receiver;

d. Remove [NAMES] from their positions;

e. Order an accounting;

f. Order such other equitable relief as is just and proper;

4. Award Petitioner [his/her] costs and reasonable attorney's fees;

5. Grant such other and further relief as this Court deems just and proper.

Respectfully submitted,

Date: _____________________

_______________________________
[ATTORNEY NAME]
[BAR NUMBER]
[FIRM NAME]
[ADDRESS]
[CITY, STATE, ZIP]
[TELEPHONE]
[FAX]
[EMAIL]

Attorney for Petitioner

VERIFICATION

STATE OF _____________________

COUNTY OF ___________________

I, [PETITIONER NAME], being duly sworn, depose and state:

1. I am the Petitioner in this proceeding.

2. I have read the foregoing Verified Petition and know the contents thereof.

3. The statements contained therein are true to my knowledge, except as to matters stated upon information and belief, and as to those matters, I believe them to be true.

4. I own [NUMBER] shares of [CORPORATION NAME], representing [PERCENTAGE]% of the outstanding shares, and have owned said shares continuously since [DATE].

5. [I own at least 20% of the outstanding shares as required by [STATUTE] to bring this petition.] (if applicable)

_______________________________
[PETITIONER NAME]

Subscribed and sworn to before me this _____ day of ____________, 20___.

_______________________________
Notary Public

My Commission Expires: _______________

EXHIBITS CHECKLIST

☐ Exhibit A - Certificate/Articles of Incorporation
☐ Exhibit B - Bylaws
☐ Exhibit C - Shareholder Agreement (if any)
☐ Exhibit D - Stock Certificate / Evidence of Ownership
☐ Exhibit E - Corporate Financial Statements
☐ Exhibit F - Evidence of Oppressive Conduct
☐ Exhibit G - Meeting Minutes / Voting Records (for deadlock)
☐ Exhibit H - Correspondence Between Parties
☐ Exhibit I - Demand Letters (if any)
☐ Exhibit J - Valuation Evidence (if available)

STATE-SPECIFIC NOTES

New York

• NY BCL 1104-a: Shareholders owning 20%+ may petition for dissolution based on oppression
• "Oppressive actions" = conduct substantially defeating reasonable expectations
• NY BCL 1118: Election to purchase shares at fair value in lieu of dissolution
• Fair value determined without minority discount
• Court has broad equitable powers

California

• Cal. Corp. Code 1800: Grounds include deadlock, fraud, mismanagement, abuse of authority
• Cal. Corp. Code 1800(b)(5): 33-1/3% threshold for shareholder petition
• Court may appoint provisional director (Cal. Corp. Code 308)
• Close corporation provisions provide additional protections

Texas

• Tex. Bus. Orgs. Code 11.404: Grounds for judicial dissolution
• No statutory "shareholder oppression" remedy
• Claims typically brought as breach of fiduciary duty
• Court may order receivership pending dissolution

Florida

• Fla. Stat. 607.1430: Grounds for judicial dissolution
• Includes deadlock, illegal/oppressive conduct, waste
• No specific shareholder oppression statute
• Emphasis on contractual protections in shareholder agreements

Delaware

• Del. Code tit. 8, 226: Appointment of custodian for deadlock
• Del. Code tit. 8, 273: Dissolution of joint venture corporations
• Delaware does not have a shareholder oppression statute
• Court of Chancery has exclusive jurisdiction

PRACTICE NOTES

1. Ownership Threshold: Many states require a minimum ownership percentage (e.g., 20% in NY) to petition for dissolution. Verify standing.

2. Close Corporation Status: Oppression remedies typically apply only to close/closely-held corporations. Document that the corporation qualifies.

3. Reasonable Expectations: The key inquiry in many jurisdictions is whether controlling shareholders have substantially defeated minority shareholders' reasonable expectations. Document those expectations.

4. Buyout Right: In many states (e.g., NY BCL 1118), the corporation or other shareholders can elect to purchase petitioner's shares at fair value, avoiding dissolution.

5. Fair Value Standard: In buyout situations, argue that fair value should be determined without minority discount or marketability discount.

6. Alternative Remedies: Courts generally prefer remedies short of dissolution. Be prepared to accept buyout or other equitable relief.

7. Verification Required: Dissolution petitions are typically required to be verified.

8. Provisional Remedies: Consider seeking appointment of a receiver or custodian to protect assets during litigation.

9. Tax Consequences: Dissolution has significant tax consequences. Advise client to consult tax counsel.

10. Valuation: Be prepared to address valuation issues. Consider retaining a business valuation expert.