Today I am revisiting a question that I posed more than six years ago: What happens when the incorporator dies? More specifically, what happens when the incorporator dies and the corporation's initial directors are not named in the articles?
When the initial directors are not named in the articles, the incorporator, Section 210 of the Corporations Code empowers the incorporator to do whatever is necessary and proper to effect the organization of the corporation, including the adoption and amendment of bylaws and the election of directors and officers. When the incorporator has shuffled off this mortal coil, however, there is pause (Hamlet, Act III, Sc. 1). Section 306 provides a possible solution. It provides that the Superior Court of any county may appoint directors upon application by any "party in interest".
The statute does not answer several questions, however. For example, who is a "party in interest"? Section 1174 of the Financial Code provides that the Commissioner of Business Oversight is deemed to be a party in interest within the meaning of Section 306 with respect to a bank. Who else might be a "party in interest" is a mystery.
Another unanswered question is: How many directors may the court appoint if the articles of incorporation do not specify the number and the incorporator did not adopt bylaws before shuffling off to that "undiscover'd country, from whose bourn no traveller returns"?
Finally, Section 306 also applies when the incorporator has resigned or become incompetent or when the corporation has not issued shares and all of the directors resign, die or become incompetent.