Dissolving a corporation
Posted: Sat Dec 14, 2013 12:23 am
I agree it is common for many corporations to just abandon operations and ultimately be suspended by the Secretary of State, but there certainly is no
provision in California law that intentionally encourages this procedure. Otherwise, I do not know where you are obtaining your information.
I suggest you review the Domestic Stock Corporation Certificate of
Dissolution (DISS STK) Paragraph 3 which requires only one of the following
regarding debts and liabilities:
Box 1 The corporation's known debts and liabilities have been actually
paid.
Box 2 The Corporation's known debts and liabilities have been paid as faras its assets permit.
Box 3 The corporations's known debts and liabilities have been adequatelyprovided for by their assumption and the name and address of the assumer
is____
Box 4... "The cooperation's known debts and liabilities have been
adequately provided for as far as its assets permitted.
Box 5 The corporation never incurred any known debts or liabilities.
This is derived from Corporation's Code Section 1905. (a):
"When a corporation has been completely wound up without
court proceedings therefor, a majority of the directors then in
office shall sign and verify a certificate of dissolution stating:
(1) That the corporation has been completely wound up.
(2) That its known debts and liabilities have been actually paid,
or adequately provided for, or paid or adequately provided for as far
as its assets permitted, or that it has incurred no known debts or
liabilities, as the case may be. If there are known debts or
liabilities for payment of which adequate provision has been made,
the certificate shall state what provision has been made, setting
forth the name and address of the corporation, person or governmental
agency that has assumed or guaranteed the payment, or the name and
address of the depositary with which deposit has been made or any
other information that may be necessary to enable the creditor or
other person to whom payment is to be made to appear and claim
payment of the debt or liability.
(3) That its known assets have been distributed to the persons
entitled thereto or that it acquired no known assets, as the case may
be.
(4) That the corporation is dissolved.
(5) If no certificate of election is to be filed pursuant to
subdivision (c) of Section 1901, that the election to dissolve was
made by the vote of all the outstanding shares.
(6) That a final franchise tax return, as described by Section
23332 of the Revenue and Taxation Code, has been or will be filed
with the Franchise Tax Board, as required under Part 10.2 (commencing
with Section 18401) of Division 2 of the Revenue and Taxation Code.
(b) The certificate of dissolution shall be filed with the
Secretary of State and thereupon the corporate powers, rights, and
privileges of the corporation shall cease. The Secretary of State
shall notify the Franchise Tax Board of the dissolution."
See also Rutter Corporations California Practice Guide by Freidman 8:492 "Its is the responsibility of the directors to pay or make provision for
payment of the corporate debts before distributing assets to the
shareholders. If the directors do so, the corporate distributions will be treated as
an illegal dividend and directors approving may be held personally liable to
creditors...." Thus the directors are only liable when assets are
distributed to the shareholders instead of to creditors.
Mark T. Jessee
Law Offices of Mark T. Jessee
"A Debt Relief Agency"
50 W. Hillcrest Drive, Suite 200
Thousand Oaks, CA 91360
(805) 497-5868 (805) 497-5864 (Facsimile)
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In a message dated 12/13/2013 7:52:37 P.M. Pacific Standard Time,
lschrader@schrader-law.com writes:
To "dissolve" a corporation in California requires that the corporation'sdebts be provided for (ie. all paid). What normally happens is that the
corporation stops doing business, is suspended, and just becomes a shell. Take a look at the Domestic Stock Corporation Dissolution Filing
Requirements. #2 is "The corporation has no debts and liabilities (other than tax
liability)" #3 requires taxes to be paid or assumed.
Link Schrader, Attorney
Law Office of Link W. Schrader
P.O. Box 3723, Tustin, CA 92781
Office: (714) 542-5922; Mobile/Text: (310) 413-6924
Fax: (310) 878-4158; _www.schrader-law.com_ (http://www.schrader-law.com/)
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