Dissolution Of Corporation Definition and Legal Meaning
On this page, you'll find the legal definition and meaning of Dissolution Of Corporation, written in plain English, along with examples of how it is used.
What is Dissolution Of Corporation?
n. A corporation’s termination either a) voluntary by paying all debts, distributing assets and filing documents of dissolution with the Secretary of State; or b) by suspension from the state for not paying corporate taxes or some other government action.
History and Definition of Dissolution Of Corporation
The concept of dissolution of corporations dates back to the 19th century when corporations started playing a key role in economic growth. Dissolution of a corporation means a legal process of closing or terminating an incorporated business entity. It can be voluntary, meaning the corporation itself chooses to shut down, or it can be involuntary, wherein the state government intervenes in the corporation's affairs due to non-compliance with legal regulations.
When a corporation decides to dissolve voluntarily, it must follow a legal process to ensure that all debts are paid, assets are distributed among shareholders, and the proper documentation is filed with the Secretary of State. In contrast, an involuntary dissolution occurs when a corporation fails to pay its dues, taxes, or fails to comply with legal regulations. The state government can then take action, which can be as light as suspending the corporation's license or as serious as liquidating the corporation's assets to pay off outstanding debts.
Examples of Dissolution Of Corporation
- After years of losses, the board of directors voted to initiate the dissolution of the corporation.
- ABC Inc. was dissolved by the state government for failing to pay taxes for three consecutive years.
- The shareholders decided to sell the company's assets and dissolve the corporation.
- The CEO filed the necessary paperwork with the Secretary of State to dissolve the corporation.
- The shareholders voted to dissolve the corporation, and the assets were sold off to pay off debts.
Legal Terms Similar to Dissolution Of Corporation
- Liquidation: The legal process of selling off assets to pay off debts.
- Bankruptcy: A legal process in which an individual or company declares its inability to pay off debt and seeks protection from creditors.
- Mergers and Acquisitions: The process by which one company buys another company or merges with it.
- Termination: The process of ending an agreement or a contract.
- Winding Up: The process of finalizing a company's affairs before dissolution.