Certificate of Dissolution NJ: Everything You Need to Know
A certificate of dissolution NJ may be sought by a company looking to dissolve itself.3 min read
2. Dissolving by Shareholder Vote
3. Dissolving a Company
A certificate of dissolution NJ may be sought by a company looking to dissolve itself. When you dissolve your company in the state of New Jersey, you are ending your existence as a business entity registered in the state. This can put a company past the reach of claimants or creditors.
A corporation may also be dissolved involuntarily for failing to perform required administrative duties such as failing to file annual reports. This form of dissolution occurs via court decree. The process of dissolution of a company can be streamlined if event that the company:
- Has not yet issued stock
- Has no debt
- Has not started doing business
Businesses such as these, with no assets, are subject to special procedures when dissolution occurs.
How to Dissolve a New Jersey Company
The New Jersey Business Corporation Act allows shareholders to dissolve a corporation voluntarily using three primary methods:
- By the board of directors after a vote of the shareholders
- By written consent of the shareholders
- By a specific event that has been outlined in the Certificate of Incorporation
Dissolving by Shareholder Vote
When a company is dissolved by a vote of the shareholders, the board of directors must meet and adopt a resolution to dissolve. This resolution must be submitted to the shareholders, who vote on whether or not to pass the resolution at the next shareholders meeting. In this circumstance, it is important to note that each shareholder must be provided with at least ten days' advance notice, whether they are entitled to a vote or not.
Your Certificate of Incorporation will determine the voting requirements to pass the resolution. Some corporations may be required to have a majority vote of at least two-thirds to pass a resolution for dissolution. Before using this method, it is important to properly record the resolution set forth by the board as well as each shareholder's vote. This includes obtaining written consent from each of the shareholders.
In the event that all of the shareholders provide written notice agreeing to the resolution, you will not need to hold a shareholders meeting in order for it to pass. In the case of a small business where the directors are the only shareholders of a company, it may be more efficient to obtain unanimous written consent from all of the voting shareholders instead of holding a formal shareholder vote.
New Jersey law does allow for a certificate of incorporation to provide for dissolution to be initiated by a shareholder if a specific event occurs.
Dissolving a Company
It is important to note that adopting a resolution for dissolution does not exempt the officers of a company from the same standards that were in force before dissolution. When dissolving a company, you should:
- Transfer titles to the corporation property
- Change the voting requirements of the board of shareholders
- Prevent the transfer of corporate shares until the final date of dissolution
- Prevent the corporation from being sued or bringing suit in its name
- Abate legal actions prior to the date of dissolution
Once a corporation has ceased to perform business operations, its corporate charter is considered invalidated. You must formally dissolve your company with the New Jersey State Treasurer in the Division of Revenue so that you can avoid tax penalties and interest as well as future liabilities.
Even if the company is dissolved, it is required to follow the New Jersey Corporation Business Tax Act, requires that all corporations must file a tax return even if a company has stopped doing business. The company will still be required to pay the New Jersey CBT tax, which is $500 annually from the date that it was authorized to do business in the state until the official dissolution date of the company.
If you fail to dissolve a company once it has stopped doing business, you will be required to continue filing and remitting CBT returns until the date when the state officially authorizes dissolution. Additionally, you will be required to obtain tax clearance from the state before dissolution can occur.
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