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Plaintiff, as executrix of her late
husband’s estate, filed an action under M.G.L. ch. 156D,
§ 7.03 to compel Microwave Engineering Corporation (“MEC”)
to hold a stockholders meeting. Plaintiff alleged that
at the time of his death the decedent owned
approximately 46% of the shares of MEC. Plaintiff sought
a shareholders meeting to address a dispute concerning
the price at which MEC was required to repurchase the
decedent’s shares. MEC refused to hold a shareholders
meeting and moved to dismiss the case on the basis that
the estate was no longer a shareholder.
MEC relied upon a purported 1985
Amendment to the Company’s Articles of Organization
under which failure to accept tender of the repurchase
of the shares resulted in the abandonment of the shares.
The amendment, however, had never been filed with the
Secretary of State’s Office. Accordingly, the Court held
that under M.G.L. ch.156D, § 10.06 |
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the amendment was ineffective and
rejected MEC’s contention that the amendment should be
upheld where the Company had operated for 20 years as if
it were effective.
After denying MEC’s motion to dismiss,
the Court ordered that a shareholders meeting be held
within eleven days. Pursuant to M.G.L. ch. 156D, § 7.03,
the Superior Court has authority to “summarily order a
meeting to be held” if the party making demand is a
shareholder seeking a special meeting or if there has
not been an annual meeting within the earlier of the
preceding
15 months or 6 months after the end of the fiscal year.
MEC acknowledged that the Company had not held a formal
shareholders meeting for twenty years. The Court noted
that “people who seek shelter in the corporate form do
so at their peril if they fail to abide by the minimal
rules and formalities therefor that the law requires.”
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