Under the Illinois Business Corporation Act and the Illinois General Not for Profit Corporation Act, a shareholder may bring an action to dissolve a public, a non-public, or a not-for-profit corporation based on waste of corporate assets. 805 ILCS 5/12.55(a)(3), 5/12.56(a)(4), 105/112.50(b)(3).
Waste is a transaction involving corporate assets that is so “disproportionately small” that it “serves no corporate purpose” or lacks any valid consideration. Sherman v. Ryan, 911 N.E.2d 378, 398 (Ill. App. Ct. 2009) (citing White v. Panic, 783 A.2d 543, 554 (Del. 2000)).
In the case of waste, in addition to dissolution, a shareholder may seek several alternative remedies:
- A court appointed custodian or provisional director to manage the business
- An accounting
- Payment of dividends
- Alteration or cancellation of corporate provisions or by-laws
If you are a shareholder and suspect corporate waste, get in touch with us at (312) 223-1699 or email Thomas E. Patterson at firstname.lastname@example.org for more advice and information.