A corporation may also be dissolved by its board and shareholders.
The Board must propose and recommend dissolution to the shareholders. In the alternative, the Board may determine that it has a conflict of interest or that special circumstances exist which dictate that no recommendation can be made. In this case, the Board must tell the shareholders the basis for its determination. The Board may condition its proposal for dissolution on any basis.
The Board’s proposed dissolution is then submitted to the shareholders at a duly noticed shareholder meeting. All shareholders, whether entitled to vote on the Board’s recommendation or not, shall be notified of the meeting. Notice shall be timely given and the Notice shall state that one purpose of the meeting to vote on the dissolution of the corporation.
The shareholders vote on the proposed dissolution at the meeting. The proposal must be approved by the holders of a majority of the outstanding shares of the corporation entitled to vote.
If the dissolution is approved, a Certificate of Dissolution is filed.
Finally, if there is a shareholder agreement regarding dissolution that complies with §450.1488 of the Michigan Business Corporation Act, then the Shareholders can dissolve the corporation.
The corporation is dissolved when the Certificate of Dissolution is filed with the Michigan Department of Consumer and Industry Services. However, the corporation’s existence is continued for the purpose of “winding up” the affairs of the corporation.
During the winding up period, the corporation may only:
1. Collect its assets.
2. Sell or otherwise transfer assets which are not to be distributed in kind to its shareholders.
3. Pay its debts and other liabilities.
4. And do all other acts incident to liquidation of the corporations business and affairs.
During the winding up process of a dissolved corporation, its officers, directors and shareholders continue to function in the same manner as if dissolution had not occurred and title to the corporation’s assets remains in the corporation’s name until they are transferred. Shares may be transferred and the corporation may sue and be sued in its corporate name. Dissolution does not abate actions brought against the corporation prior to dissolution.
Corporate dissolution does not change quorum or voting requirements for the board or shareholders, and does not alter provisions regarding election, appointment, resignation or removal of, or filling vacancies among, directors or officers, or provisions regarding amendment or repeal of bylaws or adoption of new bylaws.
No, that would not be legal as stated above and the co-owners of A and B would be personally liable for wrongfully doing such.
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