New York Law (NYLE) Practice Exam

Which shareholder in a corporation is likely to successfully obtain dissolution if they argue that the shareholders are too divided?

1. Only Kate, because her argument is based on board actions

2. Only Rose and Dave, because their argument relates to shareholder voting

3. All shareholders may seek dissolution

4. No shareholders will obtain dissolution

The correct answer is: Only Rose and Dave, because their argument relates to shareholder voting

In the context of New York law regarding corporate dissolution, a shareholder may petition for dissolution if they can demonstrate that there is deadlock or significant division among the shareholders that hinders the company's ability to carry on its business. The situation described highlights Rose and Dave's argument about shareholder voting, which is critical. When a corporation experiences such division, particularly in shareholder voting, it can lead to an impasse that interferes with decision-making within the company. This instability can adversely affect the corporation's operations and, ultimately, its viability. Therefore, shareholders like Rose and Dave, who can argue that their differences prevent essential decisions from being made, are in a stronger position to seek dissolution. Their focus on the internal conflict related to voting among shareholders underscores the potential for sustained disagreement, which is a basis for dissolution in a situation where the corporation cannot effectively function. On the other hand, while Kate's argument concerning board actions may be relevant, it doesn't directly address the issue of shareholder voting and the division of shareholders in the same way. Thus, her claim may not be as compelling for dissolution compared to the situation presented by Rose and Dave. Overall, the successful argument for dissolution hinges on demonstrating that the discord among shareholders impedes essential corporate functions, which is