Deadlock among directors or shareholders can lead to dissolution if hold what percentage?

• A. 25% or more of the outstanding shares
• B. 50% or more of the outstanding shares
• C. 75% or more of the outstanding shares
• D. 100% of the outstanding shares

Answer: (B)

In a closely held corporation, the remedy of dissolution can be sought when a deadlock among directors or shareholders prevents the business from being continued in a workable way, and there is a need for a controlling party to break the impasse. The threshold is ownership of 50% or more of the outstanding shares because that level creates a controlling interest—the power to influence or determine corporate decisions and push for dissolution if continuing the business is no longer feasible.

Holding at least half the shares means you can effectively control ordinary and fundamental actions and weigh in on the fate of the company, making dissolution a viable remedy to resolve the deadlock. Smaller stakes lack such decisive influence, which is why the minimum 50% benchmark is the best answer. The other percentages describe stronger or weaker levels of control, but 50% or more captures the minimum necessary to address deadlock through dissolution.