13.1-749.1 - Election to purchase in lieu of dissolution. - Virginia Statutes

§ 13.1-749.1. Election to purchase in lieu of dissolution.

A. Unless otherwise provided in the articles of incorporation, in aproceeding under subdivision A 1 of § 13.1-747 to dissolve a corporation, thecorporation may elect or, if it fails to elect, one or more shareholders mayelect to purchase all shares owned by the petitioning shareholder at the fairvalue of the shares. An election pursuant to this section shall beirrevocable unless the court determines that it is equitable to set aside ormodify the election.

B. An election to purchase pursuant to this section may be filed with thecourt at any time within 90 days after the filing of the petition undersubdivision A 1 of § 13.1-747 or at such later time as the court in itsdiscretion may allow. If the election to purchase is filed by one or moreshareholders, the corporation shall, within 10 days thereafter, give writtennotice to all shareholders, other than the petitioner. The notice shall statethe name and number of shares owned by the petitioner and the name and numberof shares owned by each electing shareholder and shall advise the recipientsof their right to join in the election to purchase shares in accordance withthis section. Shareholders who wish to participate shall file notice of theirintention to join in the purchase no later than 30 days after the effectivedate of the notice to them. All shareholders who have filed an election ornotice of their intention to participate in the election to purchase therebybecome parties to the proceeding and shall participate in the purchase inproportion to their ownership of shares as of the date the first election wasfiled, unless they otherwise agree or the court otherwise directs. After anelection has been filed by the corporation or one or more shareholders, theproceeding under subdivision A 1 of § 13.1-747 may not be discontinued orsettled, nor may the petitioning shareholder sell or otherwise dispose of thepetitioner's shares, unless the court determines that it would be equitableto the corporation and the shareholders, other than the petitioner, to permitsuch discontinuance, settlement, sale, or other disposition.

C. If, within 60 days of the filing of the first election, the parties reachagreement as to the fair value and terms of purchase of the petitioner'sshares, the court shall enter an order directing the purchase of petitioner'sshares upon the terms and conditions agreed to by the parties.

D. If the parties are unable to reach an agreement as provided for insubsection C, the court, upon application of any party, shall stay theproceedings under subdivision A 1 of § 13.1-747 and determine the fair valueof the petitioner's shares as of the day before the date on which thepetition under subdivision A 1 of § 13.1-747 was filed or as of such otherdate as the court deems appropriate under the circumstances. In determiningthe fair value, the court may, in its discretion, select an appraiser toappraise the fair value of the petitioner's shares and shall assess the costof any such appraisal to the parties, to the corporation, or both, as theequities may appear to the court.

E. Upon determining the fair value of the shares, the court shall enter anorder directing the purchase upon such terms and conditions as the courtdeems appropriate, which may include payment of the purchase price ininstallments, where necessary in the interests of equity, provision forsecurity to assure payment of the purchase price and any additional costs,fees and expenses as may have been awarded, and, if the shares are to bepurchased by shareholders, the allocation of shares among them. In allocatingpetitioner's shares among holders of different classes of shares, the courtshould attempt to preserve the existing distribution of voting rights amongholders of different classes insofar as practicable and may direct thatholders of a specific class or classes shall not participate in the purchase.Interest may be allowed at the rate and from the date determined by the courtto be equitable, but if the court finds that the refusal of the petitioningshareholder to accept an offer of payment was arbitrary or otherwise not ingood faith, no interest shall be allowed. If the court finds that thepetitioning shareholder had probable grounds for relief under subdivision A 1b or d of § 13.1-747, it may award to the petitioning shareholder reasonablefees and expenses of counsel and of any experts employed by the shareholder.

F. Upon entry of an order under subsection C or E, the court shall dismissthe petition to dissolve the corporation under subdivision A 1 of § 13.1-747and the petitioning shareholder shall no longer have any rights or status asa shareholder of the corporation, except the right to receive the amountsawarded to him by the order of the court, which shall be enforceable in thesame manner as any other judgment.

G. The purchase ordered pursuant to subsection E shall be made within 10 daysafter the date the order becomes final unless before that time thecorporation files with the court a notice of its intention to adopt aproposal to dissolve pursuant to § 13.1-742, in which event articles ofdissolution must be filed within 50 days thereafter. Upon filing of sucharticles of dissolution, the corporation shall be dissolved in accordancewith the provisions of this article, and the order entered pursuant tosubsection E shall no longer be of any force or effect, except that the courtmay award the petitioning shareholder reasonable fees and expenses inaccordance with the provisions of the last sentence of subsection E and thepetitioner may continue to pursue any claims previously asserted on behalf ofthe corporation.

H. Any payment by the corporation pursuant to an order under subsection C orE, other than an award of fees and expenses pursuant to subsection E, issubject to the provisions of § 13.1-653.

(2005, c. 765; 2007, c. 165.)