FINAL BILL REPORT

                  SSB 5334

                           C 47 L 95

                      Synopsis as Enacted

Brief Description:  Amending the corporations act.

Sponsors:  Senate Committee on Law & Justice (originally sponsored by Senators Smith, Long and Johnson).

Senate Committee on Law & Justice

House Committee on Law & Justice

Background:  A corporation that is administratively dissolved has up to two years to reinstate itself.  There is concern that the law is unclear as to who may reinstate a dissolved corporation.  Additionally, concern exists that the two-year reinstatement period is too short, producing a number of negative consequences for unintended dissolutions.

A corporation may be dissolved in a proceeding by a shareholder if the shareholder shows that there is a voting deadlock and the shareholders have failed for at least two consecutive years to elect successive directors.

If a court finds grounds for dissolution, it may dissolve the corporation.

There is no requirement that creditors receive notice of the dissolution of a corporation.

Summary:  The reinstatement period for a corporation is extended to five years.  Application for reinstatement may be made by either the corporation's shareholders or board of directors determined as of the date of dissolution.

A corporation may be dissolved in a proceeding by a shareholder if the shareholder shows that there is a voting deadlock, the shareholders fail for at least two consecutive years to elect successive directors, and that injury results to the corporation because of the deadlock.

If a court finds grounds for dissolution, it may dissolve the corporation with or without conditions, or grant the remedy that the court finds just.

The Secretary of State must prepare a list of corporations dissolved during the preceding month.  The list is to be published monthly in the Washington State Register.

There are also a number of technical changes clarifying, among other things, the definition of "distribution,"  dissolutions, and rights of transferees.

Votes on Final Passage:

Senate    46 0

House     97 0

Effective:  July 23, 1995