2010 Pennsylvania Code
Title 15 - CORPORATIONS AND UNINCORPORATED ASSOCIATIONS
Chapter 17 - Officers, Directors and Shareholders
1767 - Appointment of custodian of corporation on deadlock or other cause.

     § 1767.  Appointment of custodian of corporation on deadlock or
                other cause.
        (a)  General rule.--Except as provided in subsection (b),
     upon application of any shareholder, the court may appoint one
     or more persons to be custodians of and for any business
     corporation when it is made to appear that:
            (1)  at any meeting for the election of directors, the
        shareholders are so divided that they have failed to elect
        successors to directors whose terms have expired or would
        have expired upon the qualification of their successors;
            (2)  in the case of a closely held corporation, the
        directors or those in control of the corporation have acted
        illegally, oppressively or fraudulently toward one or more
        holders or owners of 5% or more of the outstanding shares of
        any class of the corporation in their capacities as
        shareholders, directors, officers or employees; or
            (3)  the conditions specified in section 1981(a)(1), (2)
        or (3) (relating to proceedings upon application of
        shareholder or director), other than that it is beneficial to
        the interests of the shareholders that the corporation be
        wound up and dissolved, exist with respect to the
        corporation.
        (b)  Exceptions.--
            (1)  The court shall not appoint a custodian to resolve a
        deadlock if the shareholders by agreement or otherwise have
        provided for the appointment of a provisional director or
        other means for the resolution of the deadlock, but the court
        shall enforce the remedy so provided if appropriate.
            (2)  Subsection (a)(2) shall not be applicable:
                (i)  to a corporation that has at the time a person
            holding or owning 5% or more of the outstanding shares of
            any class of the corporation that is:
                    (A)  a registered corporation or a foreign
                corporation for profit described in section 4102(b)
                (relating to registered corporation exclusions); or
                    (B)  a person (other than a natural person) that
                is engaged principally in the business of making
                equity investments in other businesses; or
                (ii)  with respect to any matter involving a person
            described in subparagraph (i) that is or was a holder or
            owner of shares of the corporation.
        (c)  Power and title of custodian.--A custodian appointed
     under this section shall have all the power and title of a
     receiver appointed under Subchapter G of Chapter 19 (relating to
     involuntary liquidation and dissolution), but the authority of
     the custodian shall be to continue the business of the
     corporation and not to liquidate its affairs and distribute its
     assets except when the court shall otherwise order.
        (d)  Contrary provisions of the articles.--
            (1)  The articles may not contain a provision that varies
        or is otherwise inconsistent with subsection (b)(2).
            (2)  A provision of the articles that varies or is
        otherwise inconsistent with any provision of this section
        shall not be effective unless it is included in the original
        articles or in an amendment adopted by the affirmative vote
        of all shareholders of the corporation whether or not
        otherwise entitled to vote thereon.
        (e)  Cross references.--See sections 2525 (relating to
     appointment of custodian) and 3137 (relating to appointment of
     custodian).
     (Dec. 19, 1990, P.L.834, No.198, eff. imd.)

        1990 Amendment.  Act 198 amended subsecs. (a) intro. par. and
     (3) and (b) and added subsecs. (d) and (e).
        Cross References.  Section 1767 is referred to in sections
     2333, 2334, 2525, 3137 of this title.