Dissolution of the Corporation

Question 1

What is the process for dissolution?

Answer 1

board recommends; shareholders approve; corporation files articles of dissolution

Question 2

After the articles of dissolution are filed what does the corporation do?

Answer 2

It must not conduct business except for winding up its affairs.

Question 3

What are the rights of known creditors of a dissolved corporation?

Answer 3

Known creditors must be notified that they have 120 days to make a claim. If the corporation rejects a creditor’s claim, then the creditor can sue after 90 days.

Question 4

What are the rights of unknown creditors of a dissolved corporation?

Answer 4

Unknown creditors must be notified by publication in a newspaper of general circulation in the county where the corporation’s principal office was located. Unknown claimants have 3 years to bring suit.

Question 5

Are creditor’s claims after dissolution enforceable against shareholders?

Answer 5

yes to the extent that they received corporate assets

Question 6

What options does a corporation have if there is an administrative dissolution for non-filing an annual statement, non-payment of license fees, or failure to maintain a registered agent?

Answer 6

• 60 day cure period

- 2 years to apply for retroactive reinstatement

Question 7

What is required for judicial dissolution upon petition of a shareholder?

Answer 7

One or more factors:

• directors or officers are engaged in fraud or crime
• majority shareholders oppress minority shareholders (close corps. usually)
• clear waste of assets
• board and/or shareholders are deadlocked and irreparable injury to the corporation is threatened

Question 8

What are examples of majority shareholders oppressing minority shareholders?

Answer 8

• withholding financial information
• diluting the minority shareholder’s share
• effecting non-pro rata stock redemptions