Articles Posted in Corporate Compliance

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Columbus Cheer Company ("CCC") entered into a rental contract for the use of school facilities. Subsequently, CCC was informed that Columbus Municipal School District ("CMSD") would not honor the contract with CCC. CCC filed a complaint against CMSD. The complaint read in part: "[p]laintiff Columbus Cheer Company is a profit corporation licensed to due [sic] business in the state of Mississippi . . . ." The prayer sought judgment for plaintiff (CCC). Defendants filed their motion to dismiss or for summary judgment, asserting that CCC was an administratively dissolved corporation; therefore, CCC could not have entered into a valid contract with CMSD, and CCC did not possess the requisite legal status to initiate suit. The trial court entered an order granting Defendants' motion for summary judgment. CCC appealed, and the issues on appeal were: (1) whether a dissolved corporation could pursue a legal action; and if not, (2) could the corporation's shareholders pursue the same action in their own name? The Supreme Court answered both questions "no." View "Columbus Cheer Company v. City of Columbus" on Justia Law

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Plaintiffs, two shareholders of a closely held corporation, attempted to tender their shares to the corporation pursuant to a buy-sell agreement. Dissatisfied with the corporation's offer to purchase, the two shareholders sought relief in Chancery Court, and the court submitted the matter to binding arbitration to determine the stock's value as required by the contract. However, the chancellor rejected the arbitrator's valuations and ordered the corporation to buy the plaintiffs' stock at a much higher purchase price. The corporation appealed the chancellor's rejection of the arbitration award, and plaintiffs cross-appealed, claiming that they were entitled to additional damages, including prejudgment interest. Finding no legal basis for setting aside the arbitration award, the Supreme Court reversed the chancery court and reinstated the arbitration award. View "Bailey Brake Farms, Inc. v. Trout" on Justia Law

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Gary Fordham, David Thompson, and Venture Sales, LLC appealed a chancery court order that dissolved Venture Sales pursuant to Mississippi Code Section 79-29-802 (Rev. 2009). Walter Ray Perkins owned 27.7 acres of land. Sometime in the late 90s, he was approached by Fordham and Thompson about a potential business venture involving his land. Perkins, Fordham, and Thompson eventually agreed that Fordham and Thompson would acquire the 438 acres of land that adjoined Perkins's land; the parties would combine their respective land, along with some cash, and form a venture to develop the land. Following the contributions, the operating agreement of Venture Sales was revised to reflect the arrangement. The parties signed the new operating agreement in 2000. In February 2010, Perkins filed an application for judicial dissolution of Venture Sales. Following a trial, the chancellor found that, based on the property's history, the company's inability to get funding for development, and the uncertainty regarding the economic climate in the area, it was not reasonably practicable to carry on the business of Venture Sales. The chancellor therefore ordered the company dissolved. Upon review, the Supreme Court determined that the chancellor's decision to order the dissolution of Venture Sales was not an abuse of discretion: substantial evidence existed supporting the chancellor's determination that it was not reasonably practicable for Venture Sales to carry on business in conformity with its operating agreement. View "Venture Sales, LLC v. Perkins" on Justia Law

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These three consolidated appeals (all springing from a divorce granted in 1994) presented thirty-eight issues including one of first impression. A judgment creditor served writs of execution on two corporations whose restricted stock was owned by the judgment debtor, who then sold his stock back to the corporations. The chancellor dismissed the writs, holding that the sale of stock rendered them moot. Upon review of the case, the Supreme Court held that statutory restrictions on the transfer of restricted shares of corporate stock apply to both voluntary and involuntary transfers of the shares; that after a judgment creditor serves a corporation with a writ of execution regarding one of its shareholders, repurchasing the shareholder’s shares will not excuse the corporation from responding to the writ of execution by filing the statutorily required sworn statement; and that the judgment creditor may (to the extent allowed by Mississippi statutes and other applicable law) execute on all benefits due the judgment debtor by the corporation, including the purchase price of the judgment debtor’s stock. Because the Court reversed the chancellor on three issues and remanded for a new trial, and because the chancellor's resolution of those issues may affect the outcome of others, the Court held that all issues not specifically resolved in this opinion could be presented by the parties to the chancellor for adjudication. View "West v. West" on Justia Law