§ 1767. Appointment of custodian of corporation on deadlock or other cause.
(a) General rule.--Except as provided in subsection (b), upon application of any shareholder, the court may appoint one or more persons to be custodians of and for any business corporation when it is made to appear that:
(1) at any meeting for the election of directors, the shareholders are so divided that they have failed to elect successors to directors whose terms have expired or would have expired upon the qualification of their successors;
(2) in the case of a closely held corporation, the directors or those in control of the corporation have acted illegally, oppressively or fraudulently toward one or more holders or owners of 5% or more of the outstanding shares of any class of the corporation in their capacities as shareholders, directors, officers or employees; or
(3) the conditions specified in section 1981(a)(1), (2) or (3) (relating to proceedings upon application of shareholder or director), other than that it is beneficial to the interests of the shareholders that the corporation be wound up and dissolved, exist with respect to the corporation.
(1) The court shall not appoint a custodian to resolve a deadlock if the shareholders by agreement or otherwise have provided for the appointment of a provisional director or other means for the resolution of the deadlock, but the court shall enforce the remedy so provided if appropriate.
(2) Subsection (a)(2) shall not be applicable:
(i) to a corporation that has at the time a person holding or owning 5% or more of the outstanding shares of any class of the corporation that is:
(A) a registered corporation or a foreign corporation for profit described in section 4102(b) (relating to registered corporation exclusions); or
(B) a person (other than a natural person) that is engaged principally in the business of making equity investments in other businesses; or
(ii) with respect to any matter involving a person described in subparagraph (i) that is or was a holder or owner of shares of the corporation.
(c) Power and title of custodian.--A custodian appointed under this section shall have all the power and title of a receiver appointed under Subchapter G of Chapter 19 (relating to involuntary liquidation and dissolution), but the authority of the custodian shall be to continue the business of the corporation and not to liquidate its affairs and distribute its assets except when the court shall otherwise order.
(d) Contrary provisions of the articles.--
(1) The articles may not contain a provision that varies or is otherwise inconsistent with subsection (b)(2).
(2) A provision of the articles that varies or is otherwise inconsistent with any provision of this section shall not be effective unless it is included in the original articles or in an amendment adopted by the affirmative vote of all shareholders of the corporation whether or not otherwise entitled to vote thereon.
(e) Cross references.--See sections 2525 (relating to appointment of custodian) and 3137 (relating to appointment of custodian).
(Dec. 19, 1990, P.L.834, No.198, eff. imd.)
1990 Amendment. Act 198 amended subsecs. (a) intro. par. and (3) and (b) and added subsecs. (d) and (e).
Cross References. Section 1767 is referred to in sections 2333, 2334, 2525, 3137 of this title.Section: Previous 1760 1761 1762 1763 1764 1765 1766 1767 1768 1769 1770 1781 1782 1791 1792 Next
Last modified: October 8, 2016