Sometimes, you just can’t be sure whether about the identity of a corporation’s directors. Doubt can arise for a number of reasons. Corporate records may be lost entirely. Corporate records may be incomplete or inconsistent. Corporate formalities may have been ignored. In a sea of doubt, how does one find a safe harbor of certitude?
California Corporations Code Section 2003 provides one possible path. That statute allows any interested person to petition the Superior Court to determine the directors, or if there are no directors, to appoint directors to wind up the affairs of the corporation, when the identity of the directors or their right to hold office “is in doubt”.
The statute is part of Chapter 20 of the General Corporation Law which is entitled “General Provisions Relating to Dissolution”. Thus, some might take the position that this procedure is only available when the corporation is in dissolution. However, Section 6 of the Corporations Code provides “Title, division, part, chapter, article, and section headings contained herein do not in any manner affect the scope, meaning, or intent of the provisions of this code.” Further, the current statute is derived from former Corporations Code Section 4804, which was clearly limited to corporations in dissolution. Below is a portion of the mark-up of former Section 4804 from the files of Harold Marsh, Jr., the principal draftsman of the current General Corporation Law:
As enacted, Section 2003 included “if there are no directors” to make it clear that the court should only appoint directors pursuant to this statute if there are no directors. Comment Letter from Michael J. Halloran to Harold Marsh and Anthony R. Pierno dated August 26, 1974 (recommending the insertion and commenting “The court should not appoint directors if there is a remaining director who can fill vacancies on his own. The court should interfere as little as possible with the remaining directors’ right to choose their fellow directors.”)
Beware – It’s Eight Days After The Nones of March!
If you’re wondering why today is referred to as the “Ides of March”, see this post. The word itself is derived from the Etruscan word meaning to divide.