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HomeCorporations CodeCh. 15§ 12620 Involuntary Dissolution Complaint

§ 12620 Involuntary Dissolution Complaint

Corporations Code·California
AI Summary·Official Text·Key Terms·Related Statutes·References
AI SummaryVerified

§ 12620 Involuntary Dissolution Complaint

This law lets certain people ask a court to force a corporation to shut down if it’s dead‑locked, abandoned, or being run fraudulently.

Key Takeaways

  • •Only directors, big shareholders (≥ 33 ⅓ % of voting power), members (if the corporation’s time limit ran out), or anyone named in the articles can start a dissolution case.
  • •Grounds include abandonment, deadlock among directors or members, failure to elect new directors, fraud, or the corporation’s term ending.
  • •Creditors or members can jump into the case before trial, but the rule doesn’t apply to public utilities or certain insurance companies.

Example

A small nonprofit has two directors who always disagree, so the group can’t make any decisions and its projects stall.

Because the directors are evenly split and can’t agree, a member (or half the directors) can file a court case to dissolve the nonprofit under this law.

How to Calculate

Required voting power = (33 ⅓ % of total voting power) = (33.33/100) × TotalVotingPower

  1. Find the total voting power of all members (ignore any members who took part in the fraud listed in subdivision (b)(5)).
  2. Multiply that total by 0.3333 (which is 33 ⅓ %).
  3. Round up to the nearest whole vote if needed – you need at least that many votes to file the dissolution complaint.

A corporation has 150 voting shares total. Some members who were involved in fraud hold 30 shares, so they are excluded.

Result: Required voting power = 0.3333 × 120 ≈ 40 shares. So a person or group holding at least 40 voting shares can file the involuntary dissolution complaint.

AI-generated — May contain errors. Not legal advice. Always verify source.

Official Source
View on CA.gov

§ 12620 Involuntary Dissolution Complaint

(a) A complaint for involuntary dissolution of a corporation on any one or more of the grounds specified in subdivision (b) may be filed in the superior court of the proper county by any of the following persons: (1) One-half or more of the directors in office. (2) A person or persons holding or authorized in writing by persons holding not less than 331/3 percent of the voting power exclusive of memberships held by persons who have personally participated in any of the transactions enumerated in paragraph (5) of subdivision (b). (3) Any member if the ground for dissolution is that the period for which the corporation was formed has terminated without extension thereof. (4) Any other person expressly authorized to do so in the articles. (b) The grounds for involuntary dissolution are that: (1) The corporation has abandoned its activity for more than one year. (2) The corporation has an even number of directors who are equally divided and cannot agree as to the management of its affairs, so that its activities can no longer be conducted to advantage or so that there is danger that its property will be impaired or lost or its activities impaired, and the members are so divided into factions that they cannot elect a board consisting of an uneven number. (3) There is internal dissension and two or more factions of members in the corporation are so deadlocked that its activities can no longer be conducted with advantage. (4) When during any four-year period or when all voting power has been exercised at two consecutive meetings or in two written ballots for the election of directors, whichever period is shorter, the members have failed to elect successors to directors whose terms have expired or would have expired upon election of their successors. (5) Those in control of the corporation have been guilty of or have knowingly countenanced persistent and pervasive fraud, mismanagement or abuse of authority or persistent unfairness toward any member or the corporation’s property is being misapplied or wasted by its directors or officers. (6) The period for which the corporation was formed has terminated without extension of such period. (c) At any time prior to the trial of the action any member or creditor may intervene therein. (d) This section does not apply to any corporation subject to: (1) The Public Utilities Act (Part 1 (commencing with Section 201) of Division 1 of the Public Utilities Code) unless an order is obtained from the Public Utilities Commission authorizing the corporation either (a) to dispose of its assets as provided in Section 851 of the Public Utilities Code or (b) to dissolve. (2) The provisions of Article 14 (commencing with Section 1010) of Chapter 1 of Part 2 of Division 1 of the Insurance Code when the application authorized by Section 1011 of the Insurance Code has been filed by the Insurance Commissioner unless the consent of the Insurance Commissioner has been obtained. (Added by Stats. 1982, Ch. 1625, Sec. 3. Operative January 1, 1984.)

Last verified: January 10, 2026

Key Terms

corporationdissolutionterminationpropertyshareholderdangerfrauddirector

Related Statutes

  • § 1800 Corporate Involuntary Dissolution
  • § 12626 Corporate Winding Up Claims
  • § 12628 Corporate Dissolution Final Order
  • § 6518 Corporate Dissolution Final Order
  • § 8518 Corporate Dissolution Final Order

References

  • Official text at leginfo.legislature.ca.gov
  • California Legislature. Corporations Code. Section 12620.
View Official Source