The Articles of Dissolution California refer to a document that's filed to formally end an incorporated organization. It identifies the process regarding the distribution of assets.

How to Dissolve a Corporation in California

Dissolution occurs when a corporation closes and begins the process of winding up its business operations. There are five steps to dissolving a corporation in California.

1. Hold a Board Meeting With a Motion and Vote

Voluntary dissolution is possible when 50 percent of voting power stockholders vote for the dissolution of the corporation. However, it's more common for the board of directors to submit a proposal for dissolution and have the stockholders vote on the proposition. A formal meeting may be avoided in cases where 50 percent of the voting power stockholders provide written consent towards the dissolution of the corporation.


2. File a Certificate of Dissolution With the California Secretary of State

In cases where all of the outstanding shares of the corporation were voted to be dissolved, a certificate of election to wind up and dissolve must be filed with the Secretary of State (SOS). However, if the vote was less than unanimous, then the certificate doesn't need to be filed. The certificate of election to wind up and dissolve will indicate the following:

  • A statement declaring that the winding up and dissolution of the business is desired.
  • The voting power for the dissolution is 50 percent or higher.
  • The stockholders signing the certificate have the authority.

The certificate (Form ELEC STK) may be downloaded on the SOS website. After the corporation has completed winding up, a certificate of dissolution must be filed with the SOS and must include the following:

  • A proclamation that the business has been wound up.
  • Any known liabilities or debts for payment of which adequate arrangement has been made.
  • A proclamation that the organization's known liabilities and debts have been paid.
  • A proclamation of what provisions have been made.
  • The address and name of the business, individual, or government agency that's assumed or endorsed the payment.
  • The address and name of the depositary or any other relevant data.
  • A proclamation that the organization's assets have been disbursed to the appropriate individuals or that it has collected no known assets.
  • A proclamation that the corporation has been dissolved.

The certificate of dissolution (Form DISS STK) is available on the SOS website. The certificate of dissolution may be filed in person or by mail. Similar to the certificate of election to wind up and dissolve, there isn't a fee for the certificate of dissolution when it's mailed. However, when it's hand-delivered to the SOS, there is a $15 fee. Additionally, there's a $750 fee for same day delivery and a $350 fee for 24-hour expedited processing.

A domestic stock corporation may file the Certificate of Dissolution short form (Form DSF STK) when the following conditions have been met:

  • There are no debts or liabilities unpaid by the corporation.
  • DSF-STK must be filed within 12 months from the date that the articles of incorporation were filed with the SOS.
  • All tax liability is fulfilled on a taxes paid basis or assumed.
  • No business has been overseen by the corporation.
  • The concluding tax return for the franchise tax board has been filed or will be filed.
  • A majority of the directors or the incorporator have granted the dissolution and voted to have the corporation dissolved.
  • No shares of stock have been dispersed, and all payments have been refunded to investors.
  • All assets were allocated to the individuals entitled to them.

3. Advise Federal and State Tax Agencies of the Corporation Dissolution

California eliminated the tax clearance certificate stipulation regarding the franchise tax board in AB 2341. However, all California corporations that have dissolved must pay all liabilities associated with the final tax return. AB 2341 allows conditionally dissolved businesses to dissolve without receiving a tax clearance certificate from the franchise tax board.

4. Give Notice to Creditors and Other Claimants

It is highly recommended to consult a qualified attorney to ensure that the notices include all legally required information.

5. Close Bank and Open Accounts, Credit Lines, and Cancel Licenses

This includes closing all bank accounts, vendor accounts, and credit lines held in your corporate or business enterprise name. Additionally, make certain that in the process, you notify all consumers and vendors about your corporation's dissolution.

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