Corporations Rules 7

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Corporations Rules 7
2010-07-15 18:40:41
Termination corporation

Termination of corporation
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  1. Voluntary dissolution
    No board approval required.

    Majority shareholder vote required, unless formed before 02/22/98, in which case 2/3 required.

    Certificate of incorporation may dictate special terms for dissolution.

    After successful shareholder vote, department of state issues a certificate of dissolution, which effects the dissolution. Consent of state tax commission also required.
  2. Involuntary
    Brought by legal action from state, shareholders, directors, or creditors.

    By state: if corp formed by fraud, abuse of power, ultra vires act, illegal business, or violation of a law that requires dissolution. Includes failure to pay fees or taxes.

    By shareholders: by adopting resolution declaring insolvency or that dissolution will be beneficial to the shareholders.

    By directors: majority adopts resolution finding insolvency or that dissolution will be beneficial to shareholders.
  3. Effect of dissolution
    Corp must wind up affairs and distribute assets to shareholders.

    Directors may continue to act for corporation during winding up.

    Corporation can sue or be sued in its corporate name during winding up.
  4. Acquisition of dissolved corporation's assets
    Corp acquiring assets of dissolved corps does not take on the liabilities, unless it assumes them, there is a consolidation or merger, or the purchasing corp is a mere continuation of the selling corporation.