In re Security Finance Co

In In re Security Finance Co. (1957) 49 Cal.2d 370, the California Supreme Court recognized the application of equitable limitations to the dissolution process. The court observed that shareholders representing 50 percent of the voting power who had the right to initiate voluntary winding up and dissolution pursuant to former section 4600 "do not have an absolute right under section 4600 to dissolve a corporation. Thus, they have no right to dissolve a corporation to defraud the other shareholders , to 'freeze out' minority shareholders , or to sell the assets of the dissolved corporation at an inadequate price. . . . There is nothing sacred in the life of a corporation that transcends the interests of its shareholders, but because dissolution falls with such finality on those interests, above all corporate powers it is subject to equitable limitations. " ( Id. at pp. 376-377.)