29-3701. Events causing dissolution

496 words·~2 min read·/az/title-29/29-3701

A research copy — for the controlling text, always check the official state or federal source. Not legal advice.

A. A limited liability company is dissolved, and its activities and affairs must be wound up, on the occurrence of any of the following:

1. An event or circumstance that the operating agreement or articles of organization state causes dissolution.

2. The consent to dissolution is given in a record signed by the number of members specified in the operating agreement or, if none is specified, by a majority in interest of the members and by one or more members that on dissolution of the company and liquidation of its assets would be entitled to receive more than one-half of the value of all assets to be distributed to all members on liquidation.

3. The passage of one hundred eighty consecutive days during which the company has no members unless before the end of the period both of the following occur:

(a)Consent to admit at least one specified person as a member is given in a record signed by one or more transferees that on dissolution of the company and liquidation of its assets would be entitled to receive more than one-half of the value of all assets to be distributed to all transferees at the time the consent is to be effective.

(b)At least one person becomes a member in accordance with the consent.

4. On application by a member, the entry by a court of competent jurisdiction of an order dissolving the company on the grounds that any of the following apply:

(a)The conduct of all or substantially all of the company's activities and affairs is unlawful.

(b)It is not reasonably practicable to carry on the company's activities and affairs in conformity with the articles of organization and the operating agreement.

(c)The members or managers are deadlocked in the management of the company and irreparable injury to the company is threatened or being suffered or the activities and affairs of the company cannot be conducted to the advantage of the members because of the deadlock.

(d)The managers or those members in control of the company do any of the following:

(i)Have acted or are acting in a manner that is illegal or fraudulent with respect to the activities and affairs of the company, causing or threatening a material and adverse effect on the company or the applicant.

(ii)Have wilfully or persistently breached the operating agreement or the duty of loyalty under section 29-3409, as modified by the operating agreement, causing or threatening a material and adverse effect on the company or the applicant.

(iii)Have wasted, misapplied or diverted substantial assets of the company for purposes not related to the activities and affairs of the company, causing or threatening a material and adverse effect on the company.

5. The signing and filing of a statement of administrative dissolution by the commission under section 29-3708.

B. In a proceeding brought under subsection A, paragraph 4 of this section, the court may order a remedy other than dissolution.