In this post published yesterday, UCLA Law Professor Stephen Bainbridge challenges the following statements attributed to Robert F. Kennedy Jr.:
I do, however, believe that corporations which deliberately, purposefully, maliciously and systematically sponsor climate lies should be given the death penalty. This can be accomplished through an existing legal proceeding known as “charter revocation.” State Attorneys General can invoke this remedy whenever corporations put their profit-making before the “public welfare.”
Professor Bainbridge cites three ways in which the death penalty may be imposed on corporations under the Model Business Corporation Act - "voluntary dissolution approved by the shareholders and the board of directors"; administrative dissolution by the Secretary of State; and judicial dissolution at the request of the Attorney General. California generally follows this pattern, but there are some differences.
Voluntary Dissolution
First, California doesn't use the terminology of "administrative dissolution" vis-a-vis the Secretary of State. Sections 2205 and 2206 of the California Corporations Code provide for suspension and forfeiture, respectively, of corporate powers, rights, and privileges.
Involuntary Dissolution
Second, voluntary dissolution is by the election of the shareholders. Cal. Corp. Code § 1900(a). A corporation may be voluntarily dissolved by election by "approval by the board" only in the following three circumstances:
Professor Bainbridge omits involuntary dissolution - a remedy available under both the Model Business Corporation Act and Chapter 18 of the California Corporations Code. The California statute authorizes involuntary dissolution to be pursued by filing a verified complaint by any of the following persons:
Cal. Corp. Code § 1800(a). The MBCA list (§ 14.30) is different and includes certain creditors.
Corporate Death Penalty
Professor Bainbridge's point, however, isn't these legal technicalities. His post focuses on the basis for dissolution by a state's Attorney General (these proceedings are often referred to as quo warranto actions). California authorizes the Attorney General to file an action seeking to procure a judgment dissolving the corporation and annulling, vacating or forfeiting its corporate existence upon any of the following grounds:
The corporation has seriously offended against any provision of the statutes regulating corporations;
The corporation has fraudulently abused or usurped corporate privileges or powers;
The corporation has violated any provision of law by any act or default which under the law is a ground for forfeiture of corporate existence; or
The corporation has failed to pay to the Franchise Tax Board for a period of five years any tax imposed upon it by the Bank and Corporation Tax Law.
I agree with the professor, none of these authorizes the killing of a corporation merely because it has put its profit motive above the "general welfare".