2014 Louisiana Laws
Revised Statutes
TITLE 12 - Corporations and Associations
RS 12:1-1436 - Judicial determination of fair value and payment terms for withdrawing shareholder's shares

§1-1436. Judicial determination of fair value and payment terms for withdrawing shareholder's shares

A.(1) If a shareholder's right to withdraw from a corporation is recognized by means of a notice of acceptance under R.S. 12:1-1435(E), but the notice does not create a contract under R.S. 12:1-1435(F), the corporation and shareholder shall have sixty days from the effective date of the notice of acceptance to negotiate the fair value of the shareholder's shares and the terms under which the corporation is to purchase the shares. Within one year after the expiration of the sixty-day period, either party may file an action against the other to determine the fair value of the shares and the terms for the purchase of the shares. Venue for the action lies in the district court of the parish where the corporation's principal office or, if none in this state, where its registered office is located.

(2) If neither party files an action to establish the fair value of the shares within the time period provided in this Subsection, then subject to the terms of any settlement reached between the parties, the effects of the earlier notices of withdrawal and acceptance under R.S. 12:1-1435 are terminated. The termination of the effects of the earlier notices does not affect the right of the shareholder to reassert the shareholder's right to withdraw through the filing of a new notice of withdrawal in accordance with R.S. 12:1-1435(D).

B. If a shareholder's right to withdraw from a corporation is recognized by a judgment in an action under R.S. 12:1-1435(G), the court shall stay the proceeding for a period of at least sixty days from the date that the judgment is rendered to allow the corporation and shareholder to negotiate the fair value and purchase terms for the withdrawing shareholder's shares, or other terms for the settlement of their dispute. After the stay expires or is lifted, either party may file a motion to have the court determine the fair value and terms for the purchase of the shares.

C. The court shall conduct the trial of the action under Subsection A of this Section or the motion under Subsection B of this Section by summary proceeding.

D. Except as provided in Subsection E of this Section, at the conclusion of the trial the court shall render final judgment as follows:

(1) In favor of the shareholder and against the corporation for the fair value of the shareholder's shares.

(2) In favor of the corporation and against the shareholder for the following:

(a) Terminating the shareholder's ownership of shares in the corporation.

(b) Ordering the shareholder to deliver to the corporation within thirty days of the date of the judgment any certificate issued by the corporation for the shares or an affidavit by shareholder that the certificate has been lost, stolen, or destroyed.

E. If at the conclusion of the trial the court finds that the corporation has proved that a full payment in cash of the fair value of the withdrawing shareholder's shares would violate the provisions of R.S. 12:1-640 or cause undue harm to the corporation or its creditors, the court shall not render the judgment specified in Subsection D of this Section, but shall instead render final judgment which provides for both of the following:

(1) Ordering the corporation to issue and deliver to the shareholder within thirty days of the date of the judgment an unsecured negotiable promissory note of the corporation which is all of the following:

(a) Payable to the order of the shareholder.

(b) In a principal amount equal to the fair value of the withdrawing shareholder's shares.

(c) Bearing simple interest on the unpaid balance of the note at a floating rate equal to the judicial rate of interest.

(d) Having a term up to ten years, as specified by the court in its judgment as necessary to prevent a violation of R.S. 12:1-640 or undue harm to the corporation or its creditors.

(e) Containing such other terms, customary in negotiable promissory notes issued in commercial transactions, as the court may order.

(2) Terminating the shareholder's ownership of shares in the corporation upon delivery to the shareholder of the note required by the judgment under Paragraph (E)(1) of this Section, and ordering the shareholder to deliver to the corporation, within ten days of the delivery of the note, any certificate issued by the corporation for the shares or an affidavit by shareholder that the certificate has been lost, stolen, or destroyed.

F. If a withdrawing shareholder fails to deliver the certificate for a share covered by a judgment rendered under Subsection C or D of this Section, and a third person presents the certificate to the corporation after the shareholder's ownership of the share is terminated by the judgment, the shareholder shall indemnify the corporation for any dilution in value imposed on other shareholders as a result of the corporation's obligations to recognize the person presenting the certificate as the owner of the shares represented by the certificate.

Acts 2014, No. 328, §1, eff. Jan. 1, 2015.