Chapter 180

180.1823(2)(c) (c) Has the effect of treating the statutory close corporation as a partnership.

180.1823(2)(d) (d) Creates a relationship among the shareholders or between the shareholders and the corporation that would otherwise be appropriate only among partners.

180.1823(3) (3) If the statutory close corporation has a board of directors, an agreement authorized by this section that restricts the discretion or powers of the directors relieves the directors of, and imposes upon each person in whom the directors’ discretion or powers are vested, the liability for acts or omissions imposed by law upon directors, unless the agreement provides otherwise.

180.1823(4) (4) An election not to have a board of directors in an agreement authorized by this section is not valid unless the articles of incorporation contain a statement to that effect adopted under s. 180.1821.

180.1823(5) (5) A shareholder agreement authorized by this section may not be amended except by the unanimous written consent of the shareholders, unless otherwise provided in the agreement.

180.1823(6) (6) Any action permitted by this section to be taken by shareholders may be taken by the subscribers for shares of the statutory close corporation if no shares have been issued at the time of the agreement authorized by this section.

180.1823(7) (7) This section does not prohibit any other agreement among 2 or more shareholders.

180.1823 History History: 1989 a. 303.

180.1824 180.1824 Irrevocable proxies.

180.1824(1) (1) A shareholder in a statutory close corporation may execute a proxy which is irrevocable for the period specified in the proxy when it is held by any of the following or a nominee of any of the following:

180.1824(1)(a) (a) A pledgee of shares.

180.1824(1)(b) (b) A person who has purchased or agreed to purchase or holds an option to purchase the shares or a person who has sold a portion of the person’s shares in the corporation to the maker of the proxy.

180.1824(1)(c) (c) A creditor of the corporation or the shareholder who extended or continued credit to the corporation or the shareholder in consideration of the proxy if the proxy states that it was given in consideration of the extension or continuation of credit and the name of the person extending or continuing credit.

180.1824(1)(d) (d) A person who has contracted to perform services as an employee of the corporation, if a proxy is required by the contract of employment and if the proxy states that it was given in consideration of such contract of employment, the name of the employee and the period of employment contracted for.

180.1824(1)(e) (e) A person, including an arbitrator, designated by or under a shareholders’ agreement authorized by s. 180.1823.

180.1824(2) (2) Regardless of the period of irrevocability specified in a proxy executed under sub. (1), the proxy becomes revocable when the pledge is redeemed, the option or agreement to purchase is terminated or the seller no longer owns any shares of the corporation or dies, the debt of the corporation or the shareholder is paid, the period of employment provided for in the contract of employment has terminated or the shareholders’ agreement has terminated.

180.1824(3) (3) In addition to sub. (1), a proxy given to secure the performance of a duty or to protect a title, either legal or equitable, may be irrevocable until the happening of events which, under the terms of the proxy agreement, discharge the obligations secured by it.

180.1824(4) (4) A proxy may be revoked, regardless of a provision making it irrevocable, by a purchaser of shares without actual knowledge of the existence of the provision, unless the existence of the proxy and its irrevocability appears on the certificate representing the shares.

180.1824 History History: 1989 a. 303.

180.1825 180.1825 Bylaws. A statutory close corporation need not adopt bylaws if provisions required by law to be contained in corporate bylaws are contained in the articles of incorporation or in an agreement authorized under s. 180.1823.

180.1825 History History: 1989 a. 303.

180.1827 180.1827 Annual meeting.

180.1827(1) (1) Notwithstanding s. 180.0701 (1), the annual meeting date for a statutory close corporation is the first business day after May 31, unless the corporation’s articles of incorporation or bylaws or an agreement authorized under s. 180.1823 fixes a different date.

180.1827(2) (2) Notwithstanding s. 180.0701 (1), except as otherwise provided in the articles of incorporation, a statutory close corporation need not hold an annual meeting unless a written request is delivered to the corporation by a shareholder at least 30 days before the meeting date determined under sub. (1).

180.1827 History History: 1989 a. 303.

180.1829 180.1829 Shareholder sale option at death.

180.1829(1) (1) Opt-in or modify.

180.1829(1)(a) (a) This section applies to a statutory close corporation only if so provided in the articles of incorporation. A modification of this section by the corporation is valid if it is stated in the articles of incorporation.

180.1829(1)(b) (b) An amendment to the articles of incorporation to provide that this section applies or to delete or modify the provisions of this section must be approved by the holders of at least two-thirds of the votes of each class or series of shares of the corporation, voting as separate voting groups, whether or not the holders are otherwise entitled to vote on amendments. If the corporation has no shareholders when the amendment is proposed, it must be approved by at least two-thirds of all of the subscribers for shares, if any, or, if none, by all of the incorporators.

180.1829(1)(c) (c) A shareholder who did not vote in favor of an amendment to delete or modify the provisions of this section is entitled to assert dissenters’ rights under ss. 180.1301 to 180.1331, if the amendment terminates or substantially alters the existing rights of the shareholder under this section to have his or her shares purchased.

180.1829(2) (2) Purchase shares or dissolve. If the articles of incorporation of a statutory close corporation make this section applicable to the corporation in whole or modified form, a deceased shareholder’s personal representative may, subject to the shareholder’s will, require the corporation to elect one of the following:

180.1829(2)(a) (a) To purchase or cause the purchase of, under subs. (3) and (4), all, but not less than all, of the decedent’s shares.

180.1829(2)(b) (b) Dissolution of the corporation.

180.1829(3) (3) Exercise of compulsory purchase.

180.1829(3)(a) (a) A person exercising rights under this section shall, within 6 months after the death of the beneficial owner of shares, deliver a written notice to the statutory close corporation. The notice shall comply with s. 180.0141, shall specify the number and class or series of all shares beneficially owned by the deceased shareholder and shall state that an offer by the corporation to purchase the shares is being solicited under this section.

180.1829(3)(b) (b) Within 20 days after receipt of the notice, the corporation shall call a special meeting of shareholders, which shall be held within 60 days after receipt of the notice, for the purpose of determining whether to offer to purchase the shares. A purchase offer must be approved by the holders of a majority of the votes entitled to be cast at the meeting, excluding votes in respect of the shares covered by the notice.

180.1829(3)(c) (c) With the consent of all of the shareholders entitled to vote for approval of the purchase offer, the corporation may allocate some or all of the shares to one or more shareholders or to other persons, except as provided in par. (d).

180.1829(3)(d) (d)

180.1829(3)(d)1. 1. If all shares are not accepted for purchase by the corporation, the remaining shares shall be offered to shareholders of the class or series being offered for sale in proportion to their ownership of shares of that class or series.

180.1829(3)(d)2. 2. If all shares are not accepted for purchase by shareholders under subd. 1., the remaining shares shall be allocated among shareholders of the class or series being offered for sale who are willing to purchase the shares in proportion to their ownership of shares of that class or series after the acquisitions under subd. 1.

180.1829(3)(d)3. 3. If all shares are not accepted for purchase by shareholders under subds. 1. and 2., the remaining shares shall be offered to all other shareholders in proportion to their ownership of shares of the corporation.

180.1829(3)(d)4. 4. If all shares are not accepted for purchase by shareholders under subd. 3., the remaining shares shall be allocated among shareholders who are willing to purchase the shares in proportion to their ownership of shares of the corporation before the acquisitions under subd. 3.

180.1829(3)(e) (e) The corporation must deliver written notice of an offer to purchase approved by the shareholders or written notice that no offer to purchase was approved, to the person exercising rights under this section, within 75 days after receipt of the notice under par. (a) soliciting the offer to purchase. The notice must comply with s. 180.0141. An offer to purchase must be accompanied by copies of the corporation’s balance sheets as of the end of, and profit and loss statements for, its preceding 2 accounting years and any available interim balance sheet and profit and loss statement.

180.1829(3)(f) (f)

180.1829(3)(f)1. 1. To the extent that the price and other terms for purchasing shares of a transferring shareholder by the corporation or remaining shareholders are fixed or are to be determined under provisions in the articles of incorporation or bylaws of the corporation, or by written agreement, those provisions are binding, except as provided in subd. 2.

180.1829(3)(f)2. 2. In the event of a default in any payment due, sub. (4) (e) applies, and the person exercising rights under this section may petition for dissolution of the corporation.

180.1829(3)(g) (g) A person exercising rights under this section must accept or reject an offer to purchase in writing within 15 days after the offer.

180.1829(4) (4) Action to compel.

180.1829(4)(a) (a) If an offer to purchase is rejected, or if no offer to purchase is made, the person exercising rights under this section may commence an action in the circuit court for the county where the corporation’s principal office or, if none in this state, its registered office is located to compel purchase or dissolution. The statutory close corporation shall be made a party defendant and shall, at its expense, give notice of the commencement of the action to all of its shareholders and other persons as the court may direct.

180.1829(4)(b) (b) The court shall, under s. 180.1833 (3), determine the fair value of the shares of the person exercising rights under this section and enter an order requiring the corporation to cause the purchase of the shares at fair value and on other terms determined by the court or to give the person the right to have the corporation dissolved.

180.1829(4)(c) (c) Upon the petition of the corporation, the court may modify its decree to change the terms of payment if it finds that the changed financial or legal ability of the corporation or other purchasers of the shares to complete the purchase justifies a modification.

180.1829(4)(d) (d) A person making a payment to prevent or cure a default by the corporation or other purchaser is entitled to recover the excess payment from the defaulting person.

180.1829(4)(e) (e) If the corporation or other purchaser fails to make a payment specified in the court order within 30 days after it is due, the court shall, upon the petition of the person to whom the payment is due and in the absence of good cause shown by the corporation, enter an order dissolving the corporation.

180.1829(5) (5) Court costs and other expenses.

180.1829(5)(a) (a) The court may assess all or a portion of the costs and expenses of an action commenced under sub. (4) as follows:

180.1829(5)(a)1. 1. Against the person exercising rights under this section if the fair value of the shares as determined by the court does not materially exceed the last offer made by the statutory close corporation before the person commenced the action under sub. (4) and the court finds that the failure of the person to accept the corporation’s last offer was arbitrary, vexatious or not otherwise in good faith.

180.1829(5)(a)2. 2. Against the corporation if the fair value of the shares as determined by the court materially exceeds the amount of the last offer made by the corporation before an action was commenced under sub. (4) and the court finds that the corporation’s last offer was arbitrary, vexatious or otherwise not made in good faith.

180.1829(5)(b) (b) Expenses assessable under par. (a) include reasonable compensation for, and reasonable expenses of, appraisers appointed by the court and the reasonable fees and expenses of counsel for, and experts employed by, any party.

180.1829(5)(c) (c) Except as provided in par. (a), the legal costs of an action filed under sub. (4) shall be assessed on an equal basis between the corporation and the party exercising rights under this section, and all other fees and expenses shall be borne by the party incurring the fees and expenses.

180.1829(6) (6) Shareholder waiver. A shareholder may, by signed writing, waive the rights under this section of the shareholder and the shareholder’s estate and heirs.

180.1829(7) (7) Other agreements and remedies. This section does not prohibit other agreements for the purchase of shares of the corporation, nor does it prevent the enforcement of other remedies.

180.1829 History History: 1989 a. 303.

180.1831 180.1831 Shareholder option to dissolve corporation.

180.1831(1) (1) The articles of incorporation of a statutory close corporation or a shareholders’ agreement under s. 180.1823 may grant to any shareholder, or to the holders of any specified number or percentage of shares of any class or series, an option to have the corporation dissolved at will or upon the occurrence of any specified event or contingency. The shareholders exercising the option shall give written notice of the intent to dissolve to all other shareholders. Any notice given under this subsection shall comply with s. 180.0141. Upon the expiration of 30 days after the effective date of the notice, the corporation shall do all of the following:

180.1831(1)(a) (a) File articles of dissolution that satisfy s. 180.1403 except the statement under s. 180.1403 (1) (c) shall specify that dissolution was authorized in accordance with this section.

180.1831(1)(b) (b) Begin to wind up and liquidate its business and affairs under ss. 180.1405 to 180.1407.

180.1831(2) (2) Unless the articles of incorporation provide otherwise, an amendment to the articles of incorporation to include, modify or delete a provision authorized by sub. (1) must be approved by the holders of all of the outstanding shares, whether or not the holders are otherwise entitled to vote on amendments, or, if no shares have been issued, by all of the subscribers for shares, if any, or, if none, by all of the incorporators.

180.1831 History History: 1989 a. 303.

180.1833 180.1833 Power of court to grant relief.

180.1833(1) (1) Grounds for relief. Subject to sub. (4) (b) and (c), a shareholder of record, the beneficial owner of shares held by a nominee or the holder of voting trust certificates of a statutory close corporation may petition the circuit court for the county where the corporation’s principal office or, if none in this state, its registered office is located for relief on any of the following grounds:

180.1833(1)(a) (a) That the directors or those in control of the corporation have acted, are acting or will act in a manner that is illegal, oppressive, fraudulent or unfairly prejudicial to the petitioner in his or her capacity as a shareholder, director or officer of the corporation.

180.1833(1)(b) (b) That the directors or those in control of the corporation are so divided respecting the management of the corporation’s affairs that the votes required for action cannot be obtained and the shareholders are unable to break the deadlock, with the consequence that the corporation is suffering or will suffer irreparable injury or that the business and affairs of the corporation can no longer be conducted to the advantage of the shareholders generally.

180.1833(1)(c) (c) That conditions exist that would be grounds for judicial dissolution of the corporation under s. 180.1430 (2).

180.1833(2) (2) Type of relief.

180.1833(2)(a) (a) If the court finds that one or more of the conditions specified in sub. (1) exist, it shall grant appropriate relief, including any of the following:

180.1833(2)(a)1. 1. Canceling, altering or enjoining any resolution or other act of the statutory close corporation.

180.1833(2)(a)2. 2. Directing or prohibiting any act of the corporation or of shareholders, directors, officers or other persons who are party to the action.

180.1833(2)(a)3. 3. Canceling or altering the articles of incorporation or bylaws of the corporation.

180.1833(2)(a)4. 4. Removing from office any director or officer, or ordering that a person be appointed a director or officer.

180.1833(2)(a)5. 5. Requiring an accounting with respect to any matters in dispute.

180.1833(2)(a)6. 6. Appointing a receiver to manage the business and affairs of the corporation.

180.1833(2)(a)7. 7. Appointing a provisional director who shall have all of the rights, powers and duties of a duly elected director and shall serve for the term and under the conditions established by the court.

180.1833(2)(a)8. 8. Ordering the payment of dividends.

180.1833(2)(a)9. 9. If the court finds that it cannot order appropriate relief, ordering that the corporation be liquidated and dissolved unless either the corporation or one or more of the remaining shareholders purchase all of the shares of the petitioning shareholder at their fair value by a designated date, with the fair value and terms of the purchase to be determined under sub. (3).

180.1833(2)(a)10. 10. Ordering dissolution if the court finds that one or more grounds exist for judicial dissolution under s. 180.1430 (2) or that all other relief ordered by the court has failed to resolve the matters in dispute.

180.1833(2)(a)11. 11. Awarding damages to any aggrieved party in addition to, or in lieu of, any other relief granted.

180.1833(2)(b) (b) In determining whether to grant relief under par. (a) 9. or 10., the court shall consider the financial condition of the corporation but may not refuse to order liquidation solely on the grounds that the corporation has net worth or current operating profits.

180.1833(2)(c) (c) If the court determines that a party to a proceeding brought under this section has acted arbitrarily, vexatiously or in bad faith, it may award reasonable expenses, including attorney fees and the costs of any appraisers or other experts, to one or more of the other parties.

180.1833(3) (3) Share purchase.