Assigned to COMPS FOR
COMMITTEE
Assigned to COMPS FOR
COMMITTEE
ARIZONA STATE SENATE
Fifty-Third Legislature, Second Regular Session
Purpose
Limits standing to bring a dissolution or receivership claim against a converted entity.
Background
An entity may convert to a different type of entity upon approval of a plan (A.R.S. § 29‑2402). An entity maintains all property, obligations, rights, privileges, immunities and powers upon conversion. A conversion does not give rise to any rights, outside of those provided in the plan of conversion, governing statute or organizational documents, to any governor or interest holder regarding dissolution (A.R.S. § 29-24026).
Current law allows a court to dissolve a corporation in a proceeding by a shareholder, 50 members or members holding 25 percent of interest if: 1) the directors or shareholders are deadlocked by management; 2) directors have lost control; or 3) assets are being misused (A.R.S. §§ 10-1430 and 10-11430). A court may liquidate a corporation's assets in actions filed by an investor, creditor or the Attorney General (A.R.S. § 10-1815). During a proceeding of dissolution, the court may act to preserve corporate assets until a full hearing occurs (A.R.S. § 10-11431). The superior court may appoint a receiver to protect party property and rights and may decree dissolution of limited partnerships or limited liability companies if practice is not reasonable (A.R.S. §§§ 12-1241; 29-345; and 29-785).
There is no anticipated fiscal impact to the state General Fund associated with this legislation.
Provisions
1. Limits standing to bring a claim for dissolution or receivership against a converted entity to a governor or interest holder in the converted entity.
2. Becomes effective on the general effective date.
House Action
JPS 2/14/18 DP 9-0-0-0
3rd Read 2/21/18 60-0-0
Prepared by Senate Research
March 8, 2018
GH/JP/lb