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How to Dissolve Your California Corporation

October 3, 2018



While most business owners did not create their business with dissolution in mind, sometimes dissolution is inevitable and the best option for the business and its shareholders. If you are at a crossroads in your business and need guidance deciding the next step for your Santa Monica or Los Angeles corporation, contact the business law attorneys at Verhagen Bennett for help. We will review your business with you and help you decide the best next steps for your corporation, whether that means walking you through a dissolution or finding an alternative plan.


Hold a Shareholder Vote


The first step to voluntarily dissolving your corporation is to hold a shareholder vote. In California, as long as the shareholders holding more than 50% of voting power vote to dissolve the corporation, the corporation may be dissolved. Unlike in many other states, in California, there is no requirement that the board of directors take any special action before the shareholder vote. Once the decision to dissolve the corporation is put in writing, the board of directors will work with the shareholders to initiate the “winding up” process. During the winding up process, the corporation will continue to exist for purposes of settling its debts and liabilities, as well as distributing the remaining assets to its shareholders.


File a Certificate of Election to Wind Up and Dissolve With the California Secretary of State.


The next step is to file a Certificate of Election to Wind Up and Dissolve with the California Secretary of State. However, even if you do not file this document, your corporation can still be considered as de facto dissolved once you have finished the winding up process. Make sure you are following your corporation’s bylaws and other standards when winding up the corporation to make sure everything is being completed in a lawful manner.


Send Notice to Creditors and Other Claimants


Once dissolution of your corporation has been approved, you are required to mail written notice of the dissolution to all creditors and claimants whose names appear on company records. Notice must also be sent to any shareholders other than those who voted for dissolution of the corporation.


File a Certificate of Dissolution


Once winding up of your corporation is completed, you will need to file a Certificate of Dissolution with the California Secretary of State. You may wish to file your Certificate of Election to Wind Up and Dissolve and your Certificate of Dissolution at the same time. It can take eight weeks or more for the Secretary of State to process your filing, so be patient during this time. Remember that once your corporation is officially dissolved, your corporation name will be released to the public, as well. Thus, if you wish to keep your corporation name and use it in the future for a new business, make sure you speak with a trademark law attorney for guidance on how to maintain your business name.

Dissolving a corporation can be even more complex than forming one; thus, it is wise to let an experienced business law attorney take the reigns in helping you properly dissolve your corporation. If you are seeking assistance with dissolving your corporation, contact our Los Angeles business lawyers today at 310-917-1064 or online to schedule your free consultation.


(image courtesy of Benedikt Geyer)


For questions or comments about this post, please email us directly at: info@VerhagenBennett.com


© 2018 Verhagen Bennett LLP — This article is for general information only. The information presented should not be construed to be formal legal advice nor the formation of a lawyer/client relationship.

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