A. The district courts may liquidate the assets and business of a corporation:
(1) in an action by a shareholder when it is established that:
(a) the directors are deadlocked in the management of the corporate affairs and the shareholders are unable to break the deadlock, and that irreparable injury to the corporation is being suffered or is threatened by reason thereof; or
(b) the acts of the directors or those in control of the corporation are illegal, oppressive or fraudulent; or
(c) the shareholders are deadlocked in voting power, and have failed, for a period which includes at least two consecutive annual meeting dates, to elect successors to directors whose terms have expired or would have expired upon the election of their successors; or
(d) the corporate assets are being misapplied or wasted;
(2) in an action by a creditor:
(a) when the claim of the creditor has been reduced to judgment and an execution thereon returned unsatisfied and it is established that the corporation is insolvent; or
(b) when the corporation has admitted in writing that the claim of the creditor is due and owing and it is established that the corporation is insolvent;
(3) upon application by a corporation which has filed a statement of intent to dissolve, as provided in the Business Corporation Act, to have its liquidation continued under the supervision of the court; or
(4) when an action has been filed by the attorney general to dissolve a corporation and it is established that liquidation of its business and affairs should precede the entry of a decree of dissolution.
B. Proceedings under Subsections A(1), A(2) or A(3) of this section shall be brought in the county in which the registered office or the principal office of the corporation is situated.
C. It is not necessary to make shareholders parties to any such action or proceeding unless relief is sought against them personally.
History: 1953 Comp., § 51-29-16, enacted by Laws 1967, ch. 81, § 94.
ANNOTATIONSCompiler's notes. — This section is derived from Section 97 of the ABA Model Business Corporation Act.
Jurisdiction of district court sitting in probate. — District courts sitting in probate possess general civil jurisdiction in formal probate proceedings. It follows from this rule that the trial court had jurisdiction to liquidate the business pursuant to either 45-3-911 NMSA 1978 or 53-16-16 NMSA 1978 as long as the necessary parties were properly before it and proper procedures were utilized. Harrington v. Bannigan, 2000-NMCA-058, 129 N.M. 266, 5 P.3d 1070.
This section does not provide that disagreement warrants liquidation. DiIaconi v. New Cal Corp., 1982-NMCA-064, 97 N.M. 782, 643 P.2d 1234.
Action to liquidate or dissolve. — A derivative action is authorized by this section and the court is authorized to discontinue the liquidation or to dissolve the corporation under 53-16-20 and 53-16-21 NMSA 1978 as is necessary to do justice to all involved. Prager v. Prager, 1969-NMSC-149, 80 N.M. 773, 461 P.2d 906.
Recognition of remedies not listed in section. — The court of appeals approved the trial court's recognition of remedies not specifically stated in this section, since an order of corporate dissolution is a drastic remedy and should be utilized sparingly, after consideration of other alternative forms of relief. McCauley v. Tom McCauley & Son, 1986-NMCA-065, 104 N.M. 523, 724 P.2d 232.
Substantial evidence to support finding of oppressive conduct. McCauley v. Tom McCauley & Son, 1986-NMCA-065, 104 N.M. 523, 724 P.2d 232.
Individual without shares cannot do business as corporation. — An individual, who owns no shares of a corporation, cannot be "doing business as" the corporation, and this same individual, by merely using the term "dba" cannot place the corporation in bankruptcy. Great W. Constr. Co. v. N.C. Ribble Co., 1967-NMSC-085, 77 N.M. 725, 427 P.2d 246.
Law reviews. — Annual Survey of New Mexico Corporate Law, see 17 N.M.L. Rev. 253 (1987).
For annual survey of commercial law in New Mexico, see 18 N.M.L. Rev. 313 (1988).
Am. Jur. 2d, A.L.R. and C.J.S. references. — Propriety of applying minority discount to value of shares purchased by corporation or its shareholders from minority shareholders, 13 A.L.R.5th 840.
19 C.J.S. Corporations § 816.