Deadlock Does Not Mean Dissolution
Updated: Jun 17, 2022
A 50% shareholder sued to have the corporation dissolved because of irreconcilable differences with the other 50% owner. The court dismissed the claim because there was no proof of irreparable injury to the corporation.
Why This Is Important… Massachusetts, like most states, does not dissolve corporations because of a shareholder deadlock standing alone. It has to be shown that the shareholder deadlock has caused irreparable injury due to severe corporate dysfunction or frustration of purpose. Even though the shareholders were in deadlock, the corporation was still functioning and making money in this particular case.