Corporations have their day and unless they redefine themselves, they lose viability and must be dissolved. Unless corporate by-laws prevent it, corporations can voluntarily cease to exist, provided that a process is followed as outlined in General Laws of Massachusetts, Title XXII, Ch. 155 and 156B. Any time it is decided to dissolve a corporation a Cambridge business dissolution attorney should be consulted.
The Three-Stage Process
Chapter 156B provides that a corporation can agree to dissolve with the assent of 2/3 of its board of directors and shareholders. The process usually occurs in three stages after an agreement to dissolve is reached. A corporation does not usually simply die and go away at a moment’s notice. It generally follows the following process over a period that can extend beyond a year.
- Formal Dissolution: A corporation’s board and shareholders must determine whether the business will cease to exist altogether or retain operations in certain states. A Cambridge business dissolution attorney can work help with the task of terminating qualifications separately in each relevant state.
- Ending Business Operations: This process can be somewhat lengthy and the corporation may remain in business during this time. However, officers need to develop a specific plan with a timeline for ceasing of operations, called Articles of Dissolution. During this stage all assets will be determined and collected. Arrangements must be made for discharging/paying off all indebtedness. Properties will be disposed of as well.
- Liquidation: During this final stage, all assets that remain after debts are paid are distributed among shareholders in accordance with the original Articles of Organization and final Articles of Dissolution.
At times dissolution can be forced upon a business if its officers fail to file annual reports or pay taxes for two years. The Secretary of State brings such an action, and begins by issuing notice. A corporation that is dissolved administratively may be reinstated provided that the reason for dissolution is remedied.
For Legal Assistance
To ensure that your corporation follows all proper legal procedures during dissolution, you should hire a Cambridge business dissolution attorney work with you throughout the process. Call Ionson Law today for a consultation at (781) 674-2562.