Chapter 24-11 DISSOLUTION

CHAPTER 24-11
DISSOLUTION

24-11-1 Methods of dissolution.

A corporation may be dissolved:

(A) By the incorporators pursuant to Section 24-11-2;

(B) By the shareholders pursuant to Sections 24-11-3 to 24-11-6; or

24-11-2 Voluntary dissolution by incorporators.

(A) Manner. A corporation that has not issued shares may be dissolved by the incorporators in the manner set forth in this section.

(B) Articles of dissolution. The articles of dissolution shall be filed with the Tribal Secretary. A majority of the incorporators shall sign articles of dissolution containing:

(1) The name of the corporation;

(2) The date of incorporation;

(3) A statement that shares have not been issued;

(4) A statement that all consideration received from subscribers for shares to be issued, less expenses incurred in the organization of the corporation, has been returned to the subscribers; and

(5) A statement that no debts remain unpaid.

(C) Effective date. When the articles of dissolution have been filed with the Tribal Secretary, the corporation is dissolved.

(D) Certificate. The Tribal Secretary shall issue to the dissolved corporation or its legal representative a certificate of dissolution that contains:

(1) The name of the corporation;

(2) The date and time the articles of dissolution were filed with the Tribal Secretary; and

(3) A statement that the corporation is dissolved.

24-11-3 Voluntary dissolution by shareholders.

(A) Manner. A corporation may be dissolved by the shareholders when authorized in the manner set forth in this Section.

(B) Notice; approval.

(1) Written notice shall be given to each shareholder, whether or not entitled to vote at a meeting of shareholders, within the time and in the manner provided in Section 24-8-13 for notice of meetings of shareholders and whether the meeting is a regular or a special meeting shall state that a purpose of the meeting is to consider dissolving the corporation.

(2) The proposed dissolution shall be submitted for approval at a meeting of shareholders. If the proposed dissolution is approved at a meeting by the affirmative vote of the holders of a majority of the voting power of all shares entitled to vote, the dissolution shall be commenced.

24-11-4 Filing notice of intent to dissolve; effect.

(A) Contents. If dissolution of the corporation is approved pursuant to Section 24-11-3 (B) the corporation shall file with the Tribal Secretary a notice of intent to dissolve. The notice shall contain:

(1) The name of the corporation;

(2) The date and place of the meeting at which the resolution was approved pursuant to Section 24-11-3 (B); and

(3) A statement that the requisite vote of the shareholders was received, or that all shareholders entitled to vote signed a written action.

(B) Winding up. When the notice of intent to dissolve has been filed with the Tribal Secretary, and subject to Section 24-11-7, the corporation shall cease to carry on its business, except to the extent necessary for the winding up of the corporation. The shareholders shall retain the right to revoke the dissolution proceedings in accordance with Section 24-11-7 and the right to remove directors or fill vacancies on the board. The corporate existence continues to the extent necessary to wind up the affairs of the corporation until the dissolution proceedings are revoked or articles of dissolution are filed with the Tribal Secretary.

(C) Remedies continued. The filing with the Tribal Secretary of a notice of intent to dissolve does not affect any remedy in favor of the corporation or any remedy against it or its directors, officers, or shareholders in those capacities, except as provided in Sections 24-11-5, 24-11-6, and 24-11-9.

24-11-5 Dissolution procedure for corporations that give notice to creditors and claimants.

(A) When permitted; how given. When a notice of intent to dissolve has been filed with the Tribal Secretary, the corporation may give notice of the filing to each creditor of and claimant against the corporation known or unknown, present or future, and contingent or non-contingent. If notice to creditors and claimants is given, it must be given by publishing the notice once each week for four successive weeks in a legal newspaper on the Reservation and by giving written notice to known creditors and claimants.

(B) Contents. The notice to creditors and claimants shall contain:

(1) A statement that the corporation is in the process of dissolving;

(2) A statement that the corporation has filed with the Tribal Secretary a notice of intent to dissolve;

(3) The date of filing the notice of intent to dissolve;

(4) The address of the office to which written claims against the corporation must be presented; and

(5) The date by which all the claims must be received, which shall be the later of 90 days after published notice or, with respect to a particular known creditor or claimant, 90 days after the date on which written notice was given to that creditor or claimant. Published notice is deemed given on the date of first publication for the purpose of determining this date.

(1) A corporation that gives notice to creditors and claimants has 30 days from the receipt of each claim filed according to the procedures set forth by the corporation on or before the date set forth in the notice to accept or reject the claim by giving written notice to the person submitting it. A claim not expressly rejected in this manner is deemed accepted.

(2) A creditor or claimant to whom notice is given and whose claim is rejected by the corporation has 60 days from the date of rejection, 180 days from the date the corporation filed with the Tribal Secretary the notice of intent to dissolve, or 90 days after the date on which notice was given to the creditor or claimant, whichever is longer, to pursue any other remedies with respect to the claim.

(3) A creditor or claimant to whom notice is given who fails to file a claim according to the procedures set forth by the corporation on or before the date set forth in the notice is barred from suing or that claim or otherwise realizing upon or enforcing it, except as provided in Section 24-11-19.

(4) A creditor or claimant whose claim is rejected by the corporation under paragraph (b) is barred from suing on that claim or otherwise realizing upon or enforcing it, if the creditor or claimant does not initiate legal, administrative, or arbitration proceedings with respect to the claim within the time provided in paragraph (b).

(D) Articles of dissolution; when filed. Articles of dissolution for a corporation that has given notice to creditors and claimants under this Section must be filed with the Tribal Secretary after:

(1) The 90-day period in Section 24-11-5 (B) paragraph (5), has expired and the payment of claims of all creditors and claimants filing a claim within that period has been made or provided for; or

(2) The longest of the periods described in Section 24-11-5 (C), paragraph (2), has expired and there are no pending legal, administrative, or arbitration proceedings by or against the corporation commenced within the time provided in Section 24-11-5 (C), paragraph (2).

(E) Contents of articles. The articles of dissolution must state:

(1) The last date on which the notice was given and:

(a) That the payment of all creditors and claimants filing a claim within the 90-day period in Section 24-11-5 (B) paragraph (5), has been made or provided for; or

(b) The date on which the longest of the periods described in Section 24-11-5 (C) paragraph (2), expired;

(2) That the remaining property, assets, and claims of the corporation have been distributed among its shareholders in accordance with Section 24-9-4 (D), or that adequate provision has been made for that distribution; and

(3) That there are no pending legal, administrative, or arbitration proceedings by or against the corporation commenced within the time provided in Section 24-11-5 (C), paragraph (2), or that adequate provision has been made for the satisfaction of any judgment, order, or decree that may be entered against it in a pending proceeding.

24-11-6 Dissolution Procedure for Corporations that Do Not Give Notice.

(A) Articles of dissolution when filed. Articles of dissolution for a corporation that has not given notice to creditors and claimants in the manner provided in Section 24-11-5 must be filed with the Tribal Secretary after:

(1) The payment of claims of all known creditors and claimants has been made or provided for; or

(2) At least two years have elapsed from the date of filing the notice of intent to dissolve.

(B) Contents of articles. The articles of dissolution must state:

(1) If articles of dissolution are being filed pursuant to Section 24-11-6 (A), paragraph (1), that all known debts, obligations, and liabilities of the corporation have been paid and discharged or that adequate provision has been made for payment or discharge;

(3) That there are no pending legal, administrative, or arbitration proceedings by or against the corporation, or that adequate provision has been made for the satisfaction of any judgment, order, or decree that may be entered against it in a pending proceeding.

(1) If the corporation has paid or provided for all known creditors or claimants at the time articles of dissolution are filed. A creditor or claimant who does not file a claim or pursue a remedy in a legal, administrative, or arbitration proceeding within two years after the date of filing the notice of intent to dissolve is barred from suing on that claim or otherwise realizing upon or enforcing it.

(2) If the corporation has not paid or provided for all known creditors and claimants at the time articles of dissolution are filed, a person who does not file a claim or pursue a remedy in a legal, administrative, or arbitration proceeding within two years after the date of filing the notice of intent to dissolve is barred from suing on that claim or otherwise realizing upon or enforcing it, except as provided in Section 24-11-19.

24-11-7 Revocation of dissolution proceedings.

(A) Generally. Dissolution proceedings commenced pursuant to Section 24-11-3 may be revoked prior to filing of articles of dissolution.

(B) Notice to shareholders; approval. Written notice shall be given to every shareholder entitled to vote at shareholders’ meeting within the time and in the manner provided in Section 24-8-13 for notice of meetings of shareholders and shall state that a purpose of the meeting is to consider the advisability of revoking the dissolution proceedings. The proposed revocation shall be submitted to the shareholders at the meeting. If the proposed revocation is approved at a meeting by the affirmative vote of the holders of a majority of the voting power of all shares entitled to vote, the dissolution proceedings are revoked.

(C) Effective date; effect. Revocation of dissolution proceedings is effective when a notice of revocation is filed with the Tribal Secretary. The corporation may thereafter resume business.

24-11-8 Effective date of dissolution; certificate.

(A) Effective date. When the articles of dissolution have been filed with the Tribal Secretary, the corporation is dissolved.

(B) Certificate. The Tribal Secretary shall issue to the dissolved corporation or its legal representative a certificate of dissolution that contains:

(1) The name of the corporation;

(2) The date and time the articles of dissolution were filed with the Tribal Secretary; and

(3) A statement that the corporation is dissolved.

24-11-9 Supervised Voluntary Dissolution.

After the notice of intent to dissolve has been filed with the Tribal Secretary and before a certificate of dissolution has been issued, the corporation or, for good cause shown, a shareholder or creditor may apply to the Tribal Court to have the dissolution conducted or continued under the supervision of the Tribal Court as provided in Sections 24-11-10 to 24-11-19.

24-11-10 Judicial Intervention; Equitable Remedies or Dissolution.

(A) When permitted. The Tribal Court may grant any equitable relief it deems just and reasonable in the circumstances or may dissolve a corporation and liquidate its assets and business:

(1) In a supervised voluntary dissolution pursuant to Section 24-11-9;

(2) In an action by a shareholder when it is established that:

(a) The directors or the persons having the authority otherwise vested in the board are deadlocked in the management of the corporate affairs and the shareholders are unable to break the deadlock;

(b) The directors or those in control of the corporation have acted fraudulently, illegally, or in a manner unfairly prejudicial toward one or more shareholders in their capacities as shareholders, directors, or officers, or as employees of a closely held corporation;

(c) The shareholders of the corporation are so divided in voting power that, for a period that includes the time when two consecutive regular meetings were held, they have failed to elect successors to directors whose terms have expired or would have expired upon the election and qualification of their successors;

(d) The corporate assets are being misapplied or wasted; or

(e) The period of duration as provided in the articles has expired and has not been extended as provided in Section 24-12-1;

(3) In an action by a creditor when:

(a) The claim of the creditor has been reduced to judgment and an execution thereon has been returned unsatisfied; or

(b) The corporation has admitted in writing that the corporation is unable to pay its debts in the ordinary course of business; or

(4) In an action by the Tribal Court to dissolve the corporation in accordance with Section 24-11-13 when it is established that a decree of dissolution is appropriate.

(B) Buy-out on motion. In an action under Section 24-11-10 (A), paragraph (2), involving a closely held corporation at the time the action is commenced and in which one or more of the circumstances described in that clause is established, the Tribal Court may, upon motion of a corporation or a shareholder or beneficial owner of shares of the corporation, order the sale by a plaintiff or a defendant of all shares of the corporation held by the plaintiff or defendant to either the corporation or the moving shareholders, whichever is specified in the motion, if the Tribal Court determines in its discretion that an order would be fair and equitable to all parties under all of the circumstances of the case. Within five days after the entry of the order, the corporation shall provide each selling shareholder or beneficial owner with the information it is required to provide under Section 24-8-28 (E), paragraph (1). If the parties are unable to agree on fair value within 40 days of entry of the order, the Tribal Court shall determine the fair value of the shares under the provisions of Section 24-8-28 (G), and may allow interest or costs as provided in Sections 24-8-28 (A) and 24-8-28 (I). The purchase price shall be paid in one or more installments as agreed on by the parties, or, if no agreement can be reached within 40 days of entry of the order, as ordered by the Tribal Court. Upon entry of an order for the sale of shares under this subdivision and provided that the corporation or the moving shareholders post a bond in adequate amount with sufficient sureties or otherwise satisfy the Tribal Court that the full purchase price of the shares, plus such additional costs, expenses, and fees as may be awarded will be paid when due and payable, the selling shareholders shall no longer have any rights or status as shareholders, officers, or directors, except the right to receive the fair value of their shares plus such other amounts as might be awarded.

(C) Condition of corporation. In determining whether to order equitable relief, dissolution, or a buy-out, the Tribal Court shall take into consideration the financial condition of the corporation but shall not refuse to order equitable relief, dissolution, or a buy-out solely on the ground that the corporation has accumulated or current operating profits.

(D) Considerations in granting relief involving closely held corporations. In determining whether to order equitable relief, dissolution, or a buy-out, the Tribal Court shall take into consideration the duty which all shareholders in a closely held corporation owe one another to act in an honest, fair, and reasonable manner in the operation of the corporation and the reasonable expectations of the shareholders as they exist at the inception and develop during the course of the shareholders’ relationship with the corporation and with each other.

(E) Dissolution as remedy. In deciding whether to order dissolution, the Tribal Court shall consider whether lesser relief suggested by one or more parties, such as any form of equitable relief, a buy-out, or a partial liquidation, would be adequate to permanently relieve the circumstances established under Section 24-11-10 (A), paragraph (2) or (3). Lesser relief may be ordered in any case where it would be appropriate under all the facts and circumstances of the case.

(F) Expenses. If the Tribal Court finds that a party to a proceeding brought under this Section has acted arbitrarily, vexatiously, or otherwise not in good faith, it may in its discretion award reasonable expenses, including attorneys’ fees and disbursements, to any of the other parties.

(G) Venue; parties. Proceedings under this Section shall be brought before the Tribal Court. It is not necessary to make shareholders parties to the action or proceeding unless relief is sought against them personally.

24-11-11 Procedure in Involuntary or Supervised Voluntary Dissolution.

(A) Action before hearing. In dissolution proceedings the Tribal Court may issue injunctions, appoint receivers with all powers and duties the Tribal Court directs, take other actions required to preserve the corporate assets wherever situated, and carry on the business of the corporation until a full hearing can be held.

(B) Action after hearing. After a full hearing has been held, upon whatever notice the Tribal Court directs to be given to all parties to the proceedings and to any other parties in interest designated by the Tribal Court, the Tribal Court may appoint a receiver to collect the corporate assets, including all amounts owing to the corporation by subscribers on account of any unpaid portion of the consideration for the issuance of shares. A receiver has authority, subject to the order of the Tribal Court, to continue the business of the corporation and to sell, lease, transfer, or otherwise dispose of all or any of the property and assets of the corporation either at public or private sale.

(C) Discharge of obligations. The assets of the corporation or the proceeds resulting from a sale, lease, transfer, or other disposition shall be applied in the following order of priority to the payment and discharge or:

(1) The costs and expenses of the proceedings, including attorney’s fees and disbursements;

(2) Debts, taxes and assessments due the Nation, its subdivisions, the United States, states and their subdivisions, and other Nations and their subdivisions, in that order;

(3) Claims duly proved and allowed to employees under the provisions of any applicable workers compensation act; provided, that claims under this clause shall not be allowed if the corporation carried workers’ compensation insurance, as provided by law, at the time the injury was sustained;

(4) Claims, including the value of all compensation paid in any medium other than money, duly proved and allowed to employees for services performed within three months preceding the appointment of the receiver, if any; and

(5) Other claims duly proved and allowed.

(D) Remainder to shareholders. After payment of the expenses of receivership and claims of creditors duly proved, the remaining assets, if any, shall be distributed to the shareholders in accordance with Section 24-9-4 (D).

24-11-12 Qualifications of Receivers; Powers.

(A) Qualifications. A receiver shall be a natural person or a tribal corporation or a foreign corporation authorized to transact business on the Reservation. A receiver shall give bond as directed by the Tribal Court with the sureties required by the Tribal Court.

(B) Powers. A receiver may sue in and defend the Tribal Court as receiver of the corporation. The Tribal Court appointing the receiver has exclusive jurisdiction of the corporation and its property.

24-11-13 Action by Tribal Secretary.

(A) When permitted. A corporation may be dissolved involuntarily by a decree of the Tribal Court in an action filed by the Tribal Secretary on behalf of the Tribal Council when it is established that:

(1) The articles and certificate of incorporation were procured through fraud;

(2) The corporation was incorporated for a purpose not permitted by Section 24-3-1;

(3) The corporation failed to comply with the requirements of Sections 24-2-1 to 24-3-16 essential to incorporation under or election to become governed by this Code;

(4) The corporation has flagrantly violated a provision of this Code, or has violated a provision of this Code more than once, or has violated more than one provision of this Code; or

(5) The corporation has acted, or failed to act, in a manner that constitutes surrender or abandonment of the corporate franchise, privileges, or enterprise.

(B) Recusal. The Tribal Secretary may recuse him or herself from any action involving an involuntary decree of dissolution when such action is before the Tribal Council for decision.

(C) Notice to corporation; correction. An action shall not be commenced under this section until 30 days after notice to the corporation by the Tribal Council of the reason for the filing of the action. If the reason for filing the action is an act that the corporation has done, or omitted to do, and the act or omission may be corrected by an amendment of the articles or bylaws or by performance of or abstention from the act, the Tribal Council shall give the corporation 30 additional days in which to effect the correction before filing the action.

24-11-14 Filing claims in proceedings to dissolve.

(A) In proceedings referred to in Section 24-11-10 to dissolve a corporation, the Tribal Court may require all creditors and claimants of the corporation to file their claims under oath with the Tribal Secretary or with the receiver in a form prescribed by the Tribal Court.

(B) If the Tribal Court requires the filing of claims, it shall fix a date, which shall be not less than 120 days from the date of the order, as the last day for the filing of claims, and shall prescribe the notice of the fixed date that shall be given to creditors and claimants. Before the fixed date, the Tribal Court may extend the time for filing claims. Creditors and claimants failing to file claims on or before the fixed date may be barred, by order of the Tribal Court, from claiming an interest in or receiving payment out of the property or assets of the corporation

24-11-15 Discontinuance of dissolution proceedings.

The involuntary or supervised voluntary dissolution of a corporation shall be discontinued any time during the dissolution proceedings when it is established that cause for dissolution no longer exists. When this is established, the Tribal Court shall dismiss the proceedings and direct the receiver, if any, to redeliver to the corporation all its remaining property and assets.

24-11-16 Decree of Dissolution.

(A) When entered. In an involuntary or supervised voluntary dissolution after the costs and expenses of the proceeding and all debts, obligations, and liabilities of the corporation have been paid or discharged and all of its remaining property and assets have been distributed to its shareholders or, if its property and assets are not sufficient to satisfy and discharge the costs, expenses, debts, obligations, and liabilities, when all the property and assets have been applied so far as they will go to their payment according to the priorities set forth in Section 24-11-11, the Tribal Court shall enter a decree dissolving the corporation.

(B) Effective date. When the decree dissolving the corporation has been entered, the corporation is dissolved.

24-11-17 Filing Decree.

After the Tribal Court enters a decree dissolving a corporation, the Tribal Secretary shall file a certified copy of the decree in his office. The Tribal Secretary shall not charge a fee for filing the decree.

24-11-18 Deposit with Tribal Finance Department of Amount Due Certain Shareholders.

Upon dissolution of a corporation, the portion of the assets distributable to a shareholder who is unknown or cannot be found, or who is under disability, if there is no person legally competent to receive the distributive portion, shall be reduced to money and deposited with the Tribal Finance Department at the direction of the Tribal Secretary. The amount deposited may be appropriated to the Tribal Finance Department and shall be paid over to the shareholder or a legal representative, upon proof satisfactory to the Tribal Secretary of a right to payment.

24-11-19 Claims Barred; Exceptions.

(A) Claims barred. Except as provided in this section, a creditor or claimant whose claims are barred under Section 24-11-5, 24-11-6, or 24-11-14 includes a person who is or becomes a creditor or claimant at any time before, during, or following the conclusion of dissolution proceedings, and all those claiming through or under the creditor or claimant.

(B) Claims reopened. At any time within one year after articles of dissolution have been filed with the Tribal Secretary pursuant to Section 24-11-5 or 24-11-6 (A), paragraph (2), or a decree of dissolution has been entered, a creditor or claimant who shows good cause for not having previously filed the claim may apply to the Tribal Court to allow a claim:

(1) Against the corporation to the extent of undistributed assets; or

(2) If the undistributed assets are not sufficient to satisfy the claim, against a shareholder, whose liability shall be limited to a portion of the claim that is equal to the portion of the distributions to shareholders in liquidation or dissolution received by the shareholder, but in no event may a shareholder’s liability exceed the amount which that shareholder actually received in the dissolution.

(C) Obligations incurred during dissolution proceedings. All known contractual debts, obligations, and liabilities incurred in the course of winding up the corporation’s affairs shall be paid or provided for by the corporation before the distribution of assets to a shareholder. A person to whom this kind of debt, obligation, or liability is owed but not paid may pursue any remedy before the expiration of the applicable statute of limitations against the officers and directors of the corporation who are responsible for, but who fail to cause the corporation to pay or make provision for payment of the debts, obligations, and liabilities or against shareholders to the extent permitted under Section 24-9-7. This subdivision does not apply to dissolution under the supervision or order of the Tribal Court.

24-11-20 Right to Sue or Defend After Dissolution.

After a corporation has been dissolved, any of its former officers, directors, or shareholders may assert or defend, in the name of the corporation, any claim by or against the corporation.

24-11-21 Omitted Assets.

Title to assets remaining after payment of all debts, obligations, or liabilities and after distributions to shareholders may be transferred by the Tribal Court to any person entitled to those assets.