From Attorney: In this email, I am going to discuss why an involuntary dissolution suit does not appear to offer to your group of POW! shareholders a viable alternative as a device to protect the assets of POW!, but there is another potential theory under Delaware law that might be what we have been looking for.
First, why does involuntary dissolution not look like an attractive option? In Greb v. Diamond Int’l Corp. (2013) 56 Cal.4th 243, at p. 272, the California Supreme Court ruled that sec. 2010 of California’s Corp. Code (which is California’s “survival” statute, which sets no time limit on suits by plaintiffs against dissolved corporations for injuries or damages arising from pre-dissolution conduct) did not apply to a Delaware corporation which had been dissolved under DE law, which has a three-year survival statute which would bar the plaintiff’s suit if the DE survival statute was applicable. In Greb, The CA Supreme Court held that the only sections of California’s Corp. Code that apply to foreign corporations doing business in California are those that explicitly state that the particular code section applies to foreign corporations. California’s involuntary dissolution statute, found in section 1800 of the Corp. Code, does not explicitly state that it applies to foreign corporations and the reach of Corp. Code sec. 2115, which subjects foreign corporations that satisfy certain criteria to various sections of the Corp. Code, does not extend to the involuntary dissolution statute.
As a result of the decision by the CA Supreme Court in Greb, we must look to the Delaware involuntary dissolution statute to determine if it might offer any assistance to the minority stockholders of POW! The DE dissolution statute is found in sec. 275 of the DE General Corporation Law, I have attached a copy of that statute to this email. The DE statute gives the board of directors the authority to initiate a dissolution of the corporation (not much help since the wrongdoers are also the board members in the instance of POW!) and it also allows the stockholders to initiate such action without action of the directors, if all of the stockholders consent to the action. [it seems pretty unlikely that we could get Stan Lee and Gill Champion to vote their shares to dissolve the corporation!]
There may be another way to go under DE law, however. If I understand things correctly, POW! has already transferred a bunch of its assets to Focus Media, so what is at play here is the remaining 25% of its rights in the performing assets still owned by POW! that are at risk of being sold, is that correct? If that is correct, then another DE statute may offer a solution to your POW! shareholder group, depending on whether the assets that POW! now proposes to sell constitute, “all or substantially all” of POW!’s assets. If the assets that POW! proposes to sell can be described as all or substantially all of its assets, shareholder approval must be obtained under DE law.
Please reply to this email and inform: do the assets that POW! now proposes to sell to Focus constitute all or substantially all of POW!’s assets? Give me your thoughts.
