In Ohio and most states, a corporation is dissolved by filing a Certificate of Dissolution with the Secretary of State’s office. After the Certificate of Dissolution is filed, the corporation will continue to exist so long as necessary for the corporation to wrap up its affairs. If the corporation has shareholders or assets or has been doing business, the Certificate of Dissolution must be approved by the shareholders or the Board of Directors. If the corporation has never had shareholders or assets and has never done business, the Certificate of dissolution may be signed by the Incorporator.
In addition to the Certificate of Dissolution, an Affidavit must also be submitted to the Secretary of State stating that various state agencies have been sent Notice of the dissolution and stating where in Ohio the corporation has assets. This Affidavit must be signed by an Officer of the corporation or the person submitting the Certificate.
It is also necessary to file a Form 966 with the Internal Revenue Service to report the dissolution of the corporation. The Form 966 must be filed within 30 days after the corporate action is taken approving the dissolution. There are penalties for late filing.
Dissolution in and of itself does result in transfer of the assets of the corporation. Upon dissolution and during the wrapping-up process, assets are sold, creditors are paid, reserves may be established and any balance is distributed to shareholders. The corporation generally reserves the rights to its name for a year after the dissolution.
Dissolving a corporation will likely have tax consequences for the corporation and/or the shareholders. These will be discussed in more detail in a future blog. Please call or email if you want to know more how to dissolve a corporation. Jsenney@pselaw.com or 937-223-1130.
AND ONE MORE THING. Under the federal income tax code, “S” corporations are not permitted to be owned by corporate shareholders. So “S” corporations cannot be part of a parent-subsidiary consolidated group of corporations. One way around this limitation is to use qualified “S” subsidiaries commonly referred to as “QSSS”. More about how and why to use QSSS in a future blog. Call or email me if you have a question about QSSS and can’t wait. Jsenney@pselaw.com or 937-223-1130. |
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