180.1833 Power of court to grant relief.

(1) Grounds for relief. Subject to sub. (4) (b) and (c), a shareholder of record, the beneficial owner of shares held by a nominee or the holder of voting trust certificates of a statutory close corporation may petition the circuit court for the county where the corporation's principal office or, if none in this state, its registered office is located for relief on any of the following grounds:

(a) That the directors or those in control of the corporation have acted, are acting or will act in a manner that is illegal, oppressive, fraudulent or unfairly prejudicial to the petitioner in his or her capacity as a shareholder, director or officer of the corporation.

(b) That the directors or those in control of the corporation are so divided respecting the management of the corporation's affairs that the votes required for action cannot be obtained and the shareholders are unable to break the deadlock, with the consequence that the corporation is suffering or will suffer irreparable injury or that the business and affairs of the corporation can no longer be conducted to the advantage of the shareholders generally.

(c) That conditions exist that would be grounds for judicial dissolution of the corporation under s. 180.1430 (2).

(2) Type of relief.

(a) If the court finds that one or more of the conditions specified in sub. (1) exist, it shall grant appropriate relief, including any of the following:

1. Canceling, altering or enjoining any resolution or other act of the statutory close corporation.

2. Directing or prohibiting any act of the corporation or of shareholders, directors, officers or other persons who are party to the action.

3. Canceling or altering the articles of incorporation or bylaws of the corporation.

4. Removing from office any director or officer, or ordering that a person be appointed a director or officer.

5. Requiring an accounting with respect to any matters in dispute.

6. Appointing a receiver to manage the business and affairs of the corporation.

7. Appointing a provisional director who shall have all of the rights, powers and duties of a duly elected director and shall serve for the term and under the conditions established by the court.

8. Ordering the payment of dividends.

9. If the court finds that it cannot order appropriate relief, ordering that the corporation be liquidated and dissolved unless either the corporation or one or more of the remaining shareholders purchase all of the shares of the petitioning shareholder at their fair value by a designated date, with the fair value and terms of the purchase to be determined under sub. (3).

10. Ordering dissolution if the court finds that one or more grounds exist for judicial dissolution under s. 180.1430 (2) or that all other relief ordered by the court has failed to resolve the matters in dispute.

11. Awarding damages to any aggrieved party in addition to, or in lieu of, any other relief granted.

(b) In determining whether to grant relief under par. (a) 9. or 10., the court shall consider the financial condition of the corporation but may not refuse to order liquidation solely on the grounds that the corporation has net worth or current operating profits.

(c) If the court determines that a party to a proceeding brought under this section has acted arbitrarily, vexatiously or in bad faith, it may award reasonable expenses, including attorney fees and the costs of any appraisers or other experts, to one or more of the other parties.

(3) Share purchase.

(a) If the court orders relief under sub. (2) (a) 9., it shall do all of the following:

1. Determine the fair value of the shares to be purchased, considering the going concern value of the statutory close corporation, any agreement among the shareholders fixing a price or specifying a formula for determining the value of the corporation's shares for any purpose, the recommendations of any appraisers appointed by the court, any legal constraints on the corporation's ability to acquire the shares to be purchased and other relevant evidence.

2. Enter an order specifying all of the following:

a. The identity of the purchaser by name and the purchaser's status as a current shareholder or 3rd-party purchaser.

b. The terms of the purchase found to be proper under the circumstances, including payment of the purchase price in installments, payment of interest on the installments, subordination of the obligation to the rights of the corporation's other creditors, security for the deferred purchase price, and a covenant not to compete or other restriction on the selling shareholder.

3. Order the selling shareholder to deliver all of his or her shares to the court, and order the purchaser to deliver each payment for shares to the court.

4. Order that after the selling shareholder delivers his or her shares, the shareholder has no rights or claims against the corporation or its directors, officers or shareholders by reason of having been a director, officer or shareholder of the corporation, except the right to receive the unpaid balance of the amount awarded under this section and any amounts due under any agreement with the corporation or the remaining shareholders that are not terminated by the court's orders.

5. Order dissolution of the corporation if the purchase is not completed as ordered.

(b) If the share purchase is not consummated and the corporation is dissolved, a shareholder whose shares were to be purchased has the same rights and priorities in the corporation's assets as if the sale had not been ordered.

(4) Other rights; conditions on exercise.

(a) Except as provided in pars. (b) and (c), the rights of a shareholder to commence a proceeding under this section are in addition to, and not in lieu of, any other rights or remedies that the shareholder may have.

(b) If a shareholder has agreed in writing to pursue a nonjudicial remedy to resolve disputed matters, the shareholder may not commence a proceeding under this section with respect to those matters until he or she has exhausted the nonjudicial remedy.

(c) If a shareholder has dissenters' rights under this subchapter or s. 180.1302 with respect to proposed corporate action, the shareholder must commence a proceeding under this section before the shareholder is required to give notice of his or her intent to demand payment under s. 180.1321 or to demand payment under s. 180.1323 or the proceeding is barred.

History: 1989 a. 303.

Corporate Control Contests: Judicial Dissolution of Closely Held Corporations. Laufer. Wis. Law. Feb. 1994.