As addressed in the prior post, under Section 273 of Delaware General Corporation Law (“DGCL”), the “joint venture” entity sought to be dissolved must be comprised of no more than two stockholders, each holding 50% of the corporation’s stock. However, the question becomes whether a corporation that has two 50/50 stockholders at the time of filing of the petition, but was formed with more (or less) than two stockholders initially, qualifies under Section 273.
This precise issue was addressed in the case of Wah Chang Smelting & Ref. Co. of America, Inc. v. Cleveland Tungsten Inc., 1996 Del. Ch. LEXIS 102 (Aug. 19, 1996). There, the Court of Chancery stated that “the relevant inquiry is not the number of stockholders that formed the joint venture corporation, but rather the number currently involved….”
Accordingly, simply because a joint venture corporation with two 50/50 stockholders was formed with more than two stockholders does not preclude the dissolution of such entity under Section 273.