What are the steps in dissolving a corporation?

Question

Established a foundation to open a charter school and do community services. Became inactive before any results were achieved. Decided to dissolve the foundation/corporation. How do we/officers do this?

Answer 1

Before you can dissolve a corporation or LLC you have to pay all arrears in franchise tax to each state where it has been registered and the state where incorporated.

If the corporation has no assets, it may be possible to walk away from it -- abandon it -- without paying taxes. If it has creditors, including tax creditors, you cannot withdraw assets from it (except, perhaps, as back salary, paying withholding tax on it) because that would be a preference, or a fraudulent conveyance.

Get legal advice if there is any significant amount of money involved.

The formal requirements for dissolving a corporation are online at the Secretary of State sites for most states. The previous answerer has copied some general info, which should be valid for most or all states -- except that some states are more expensive and more aggressive in auditing a dissolved corp. than others.

Answer 2

Inform the members of the organization that you are closing,
A meeting for this purpose must be held for voting,
Pay all the debts of the organization,
Liquidation of the properties, and
File the dissolution of the entity with the office regulating corporations.

Answer 3

Dissolving a Corporation

How Can I Separate Myself From a Corporation?
To dissolve your financial interest in a corporation, you should transfer all of your shares of corporate stock to another person. This will transfer all of your rights and liabilities attached to your interest and receive the value of the shares from the person who receives your interest. You do not need to file any papers with the government nor do you need to remove yourself in any other way from the corporation.


How Can I Dissolve The Entire Corporation?
There are several ways in which an entire corporation can be dissolved. These include:
a proposal by the board of directors to dissolve, that is subsequently approved by shareholders
shareholders elect to dissolve the board in light of deadlock or misconduct by executives
judicial decree (a Court decides to dissolve the corporation)
creditors liquidate all corporate assets to pay debts
What Do I Have To Do Once a Corporation Has Been Dissolved?
A filing is required in every state to finalize a dissolution of a corporation. Creditors must be paid and any remaining assets should be distributed to shareholders. Try to rebuild working relationships with investors if you want to re-enter the corporate world.



Do I Need an Attorney To Help Dissolve My Corporation?
Only a short discussion with your attorney is needed if you only want to pull out your interests from the corporation because you only need to sell all of your shares. But if you want to dissolve the entire corporation, then you should definitely speak with an attorney who has experience with all the required legal steps.


Dissolving a Corporation: Necessary Legal Steps


There are two primary Acts that dictate the necessary legal steps for dissolving a corporation: the Model Business Corporation Act (MBCA) and the Revised Model Act. Each consists of the same basic legal requirements, but the steps take place in a different order. The Model Business Corporation Act requires a corporation to file a statement of intent to dissolve before starting the winding-up process. After that process, only then can the corporation file the articles of dissolution. The Revised Model Act, used by many states, permits a corporation to file articles of dissolution prior to beginning the winding-up process. Before voting to dissolve a corporation, contact a legal representative who can advise you as to which Act is followed in your individual state.

For states that operate under the Revised Model Act, which allows dissolution articles to be filed prior to winding-up, a dissolved corporation continues its corporate existence but can no longer conduct any business except what is necessary to finish up its affairs. Once the winding-up process is completed, the corporation's existence is considered dissolved.

In cases where the state follows the Model Act, which does not allow dissolution articles to be filed prior to winding-up, dissolution articles formally end the existence of the corporation. (There is an exception granted for lawsuits against the corporation and certain shareholder actions.) In addition, IRS Form 966 must be filed within 30 days after the plan of dissolution is adopted by the shareholders, and the statement of intent must be filed prior to the winding-up process.

For all states, the winding-up process, whether permitted before or after the articles of dissolution are filed, is the same. First, the collection and sale of assets that the corporation does not intend to distribute to shareholders must be handled. Then, all corporate creditors must be notified of the dissolution. Once there has been adequate time for the creditors to respond, all claims must be paid in full. At that time, the distribution of the remaining assets to shareholders may take place. For all states, this is the basic order of operations that you should expect to abide by when beginning your dissolution process.

In addition to all of the standardized practices, each individual state has the liberty to amend the Acts by adding additional requirements. For example, some states require that a corporation file a statement from the state-taxing agency verifying that the corporation is current on all state taxes. For this reason, it is important to involve a legal advisor in the dissolution process. You do not necessarily need the legal advisor to handle the actual dissolution (most required forms can be easily accessed and filled out by shareholders), but it will be worth the financial expense to meet with someone and verify you are taking all necessary legal steps in accordance with your particular state's specific laws.