Also known as:illegally oppressive or fraudulent · unconscionable conduct · improper means
Written by attorneys · grounded in primary & secondary sources — see below
A statutory ground authorizing judicial dissolution of a corporation. Directors or controlling persons trigger the ground when they have acted, are acting, or will act in a manner that is illegal, oppressive, or fraudulent.
Sources & Authorities
How it applies
Common Examples
2
Controller Diverts Contracts and Cash
Ines Ibarra and Ivan Ivanov each own half the shares of Indigo Textiles and sit on its board. Ivan and the investor directors transfer several key supply contracts to a separate firm Ivan controls, leave Indigo with unpaid debts, block Ines from financial records, and spend most available cash on a relative-led side project while rejecting better commercial offers. Ines petitions for dissolution. The court finds the transfers and exclusions qualify as oppressive conduct by those in control, satisfying the statutory ground and authorizing dissolution.
Suspicious Control Transfer Triggers Inquiry
Idris Ives and Imani Idowu control Interlink Communications. They sell their controlling shares to an outside buyer after receiving an unusually high offer with no explanation for the premium. The buyer later loots corporate assets. Minority shareholders sue the sellers. The circumstances surrounding the transfer put the sellers on notice that fraud was likely, so their failure to investigate before parting with control supports liability for resulting injury to the corporation.
Put it into practice
Test Yourself
10
Practice Questions5
· 2 primary sources
Select any source to read its text and confirm it supports the definition.
Uniform Acts
Model Codes
Restatements
Study Supplements
Insuranshares Corp. v. Northern Fiscal Corp.35 F. Supp. 22 (E.D. Pa. 1940)
Common questions
Frequently Asked
3
What conduct qualifies as oppressive under the statute?+
Oppressive conduct includes diverting corporate assets to a controller's personal venture, saddling the company with liabilities, and denying a fifty-percent owner access to financial records. These actions independently justify dissolution even when other grounds such as deadlock are also present.
Supporting sources
Does waste of assets provide a separate ground for dissolution?+
Yes. Directing the bulk of corporate cash toward a passion project that serves personal interests rather than corporate welfare, while rejecting commercially superior offers, constitutes misapplication or waste of assets under the statute.
Supporting sources
Can a shareholder obtain dissolution on multiple independent grounds at once?+
Yes. Director deadlock, shareholder voting deadlock, oppressive conduct, and waste each supply a separate statutory basis. Proof of any one ground is sufficient, and the cumulative effect of several grounds strengthens the case for relief.
Supporting sources
Real PropertyMortgages/security devices · ForeclosureUBEIntermediate