question.jpgIn Business Law

How do I end a corporation?

While a sole proprietorship and partnership generally only exist for as long as its owners, corporations hold a more perpetual existence and can outlive their individual shareholders. Thus, corporations are generally ended by dissolution, where the company closes its doors, pays off its creditors, sells off its remaining assets and resolves any other remaining issues. Dissolution can be voluntary or involuntary.

Voluntary dissolution would be where the directors decide, on their own, to dissolve the corporation.

Involuntary dissolution is where the corporation’s existence is terminated either administratively or judicially. An administrative dissolution occurs where the secretary of state (or some other state entity in charge of overseeing corporations) orders a corporation to be dissolved because the company has failed to comply with the state’s mandatory filing and reporting requirements, or is somehow otherwise delinquent under state law requirements (this most commonly occurs where a corporation is behind in tax payments). A judicial dissolution occurs where a court orders the termination of a corporation at the request of the state attorney general, shareholders, or creditors.