Sec. 2A.30. Involuntary termination of close corporation status; proceeding to prevent loss of status.

376 words·~2 min read·/il/chapter-805/act-5/2a-30

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(a)If any event occurs that results in the breach of one or more of the provisions or conditions set forth in paragraph

(s)of Section 1.80 as necessary to qualify the corporation as a close corporation, then upon discovery by the corporation of the event, the corporation shall promptly notify all of the shareholders in writing of the event and of the shareholders' rights under subsection

(b)of this Section. If, within 90 days after such notification, the breach is not remedied or a proceeding under subsection

(b)of this Section is not commenced, then the corporation's status as a close corporation under this Article shall terminate. In the event that all of the shareholders of the corporation are not so notified within one year after the discovery by the corporation, or a shareholder thereof, of the breach, then the corporation's status as a close corporation under this Article shall terminate as of the last day of that one year period, unless within that one year period the breach is remedied or a proceeding is commenced under subsection

(b)of this Section. Upon termination as a close corporation, the corporation shall no longer be governed by this Article, but shall continue to be governed by the remaining provisions of this Act.

(b)The circuit court of the county in which the registered office of the corporation is located, upon the suit of the corporation or any shareholder thereof, shall have jurisdiction to issue all orders necessary to prevent the corporation from losing its status as a close corporation, or to restore its status as a close corporation by enjoining or setting aside any act or threatened act on the part of the corporation or a shareholder thereof which would be inconsistent with any of the provisions or conditions set forth in paragraph

(s)of Section 1.80 as necessary to qualify the corporation as a close corporation, unless it is an action approved in accordance with Section 2A.25. The circuit court shall enjoin or set aside any transfer or threatened transfer of shares of a close corporation which is contrary to any transfer restriction set forth in paragraph

(s)of Section 1.80.