Under New York Business Corporation Law (BCL) 1104-a, shareholders possess a powerful tool that allows them to seek the dissolution of a corporation when their interests or the interests of the corporation are at stake. While dissolution may be necessary in extreme cases of internal conflict, shareholders should understand that 1104-a dissolution actions are generally disfavored in New York, and should only be considered as a measure of last resort. This article delves into the reasons why shareholders should explore all other options before taking this significant step, and provides shareholders with viable alternatives to dissolution.
New York’s BCL 1104-a was created to address specific situations where a corporation’s internal disputes, mismanagement, or other critical issues have reached an impasse, thereby threatening the corporation’s ability to function effectively. The statute provides a legal remedy to shareholders who find themselves in situations such as a deadlock among directors, irreconcilable differences among shareholders, an inability to elect a board as required by the corporate bylaws or allegations of illegal, fraudulent or oppressive actions by those in control.
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