§ 35-14-748 — Shareholder Action To Appoint Custodian Or Receiver

35-14-748 . Shareholder action to appoint custodian or receiver. (1) The district court of the county where a corporation's principal office is located or, if its principal office is not located in this state, of the first judicial district may appoint one or more persons to be custodians, or, if the corporation is insolvent, to be receivers of and for a corporation in a proceeding by a shareholder in which it is established that:
(a) 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
(b) the directors or those in control of the corporation are acting fraudulently and irreparable injury to the corporation is threatened or being suffered.
(2) The court:
(a) may issue injunctions, appoint a temporary custodian or temporary receiver with all the powers and duties the court directs, take other action to preserve the corporate assets, wherever located, and carry on the business of the corporation until a full hearing is held;
(b) shall hold a full hearing, after notifying all parties to the proceeding and any interested persons designated by the court, before appointing a custodian or receiver; and
(c) has jurisdiction over the corporation and all of its property, wherever located.
(3) The court may appoint an individual, a domestic corporation, or a foreign corporation registered to do business in this state as a custodian or receiver and may require the custodian or receiver to post bond, with or without sureties, in an amount the court directs.
(4) The court shall describe the powers and duties of the custodian or receiver in its appointing order, which may be amended from time to time. Among other powers:
(a) a custodian may exercise all of the powers of the corporation, through or in place of its board of directors, to the extent necessary to manage the business and affairs of the corporation; and
(b) a receiver:
(i) may dispose of all or any part of the assets of the corporation, wherever located, at a public or private sale if authorized by the court; and
(ii) may sue and defend in the receiver's own name as receiver in all courts of this state.
(5) The court during a custodianship may redesignate the custodian a receiver, and during a receivership may redesignate the receiver a custodian, if doing so is in the best interests of the corporation.
(6) The court from time to time during the custodianship or receivership may order compensation to be paid and expense disbursements or reimbursements to be made to the custodian or receiver from the assets of the corporation or proceeds from the sale of its assets.
(7) In this section, "shareholder" means a record shareholder, a beneficial shareholder, and an unrestricted voting trust beneficial owner.

Legislative History

En. Sec. 91, Ch. 271, L. 2019.