Corporations: dissolutions: separate shareholder agreements.
The enactment of AB 1535 will directly modify the procedures under which corporations can be dissolved. By stipulating that shareholder agreements can dictate the terms under which shares may be sold to avoid dissolution, this legislation promotes a more structured approach to corporate governance. The bill aims to protect shareholder interests by allowing for the fair valuation and sale of shares, potentially reducing conflicts among shareholders during dissolution proceedings. It encourages corporations to establish explicit agreements regarding share transfers, fostering clarity and reducing disputes.
Assembly Bill No. 1535, introduced by Maienschein, pertains to the dissolution of corporations and clarifies aspects related to shareholder agreements. The bill amends Section 2000 of the Corporations Code to specify that in cases where a shareholder vote representing 50% of the voting power initiates a voluntary or involuntary dissolution, the corporation or shareholders with a majority ownership can prevent the dissolution by purchasing the shares at fair value. The bill also allows for the inclusion of separate written agreements about share purchases in the corporation's articles.
Overall, the sentiment towards AB 1535 is generally positive, particularly among business owners and legal professionals who value the clarification it brings to corporate dissolution processes. Supporters argue that this bill enhances flexibility for corporations facing dissolution, enabling them to resolve conflicts amicably and maintain operations. However, there may be concerns about how this will affect minority shareholders, as the ability of majority shareholders to purchase shares could limit exit options for those holding fewer shares.
One notable point of contention surrounding AB 1535 involves the potential complications that could arise from allowing separate agreements in the articles. Critics might argue that while the bill aims to provide clarity, it also introduces complexities where individual shareholder agreements could lead to inconsistencies in the dissolution process. Additionally, concerns may rise regarding the fairness of valuations discussed within these agreements if not conducted transparently, which may disadvantage minority shareholders in the case of a corporate dispute.