How do I Dissolve a Corporation?

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  • Written By: John Lister
  • Edited By: Kristen Osborne
  • Last Modified Date: 15 August 2019
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To dissolve a corporation is a process that can vary widely from country to country. Within the US, there are two main systems; which system is used determines the order of events. In both systems, there are five main steps to the dissolution itself.

Which rules must be followed to dissolve a corporation depend on which law the relevant state follows. Some follow the Model Business Corporation Act, known also as the Model Act. Others follow the Revised Model Business Corporation Act, known as the Revised Model Act.

With the Revised Model Act, the corporation is dissolved immediately, but remains in existence during the winding-up process. During this process, it cannot conduct any further business. With the Model Business Corporation Act, the directors cannot dissolve a corporation until the winding-up process is complete. At this stage, the corporation no longer legally exists, except in the context of any lawsuits filed against it.


The first step of the process to dissolve a corporation is for the directors to propose the dissolution to shareholders, and for the shareholders to vote in favor. The majority required for approval will depend on the corporation's rules. Step two is to file paperwork with the relevant state. With states following the Model Act, the corporation must file a statement of intent before beginning the winding-up process and then file articles of dissolution when the process is complete. With states following the Revised Model Act, the articles of dissolution are usually filed before the process begins.

Step three is to notify creditors of the dissolution, or the intent to dissolve the company. They must be given an address and deadline for filing claims. In states following the Revised Model Act, the corporation must usually publish an advertisement in a local newspaper for the attention of unknown creditors.

Step four is to process the claims of creditors. A claim can either be accepted and paid, or rejected. If the claim is rejected, the claimant must be notified in writing and given a deadline to pursue the claim legally.

The final step is to distribute any remaining assets to shareholders. The corporation must file IRS form 1099-DIV, which details these distributions. The corporation must also have filed IRS form 996 within 30 days of the shareholders approving the dissolution.


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