Dissolve Delaware LLC: Everything You Need to Know
Dissolve Delaware LLC is a topic that many individuals who are thinking about closing their business are interested in. 3 min read
2. How Do You Dissolve a Delaware Limited Liability Company?
3. Process of Dissolving
4. Certificate of Cancellation
5. LLC Act of Delaware
Updated November 4, 2020:
Dissolve Delaware LLC
Dissolve Delaware LLC is a topic that many individuals who are thinking about closing their business are interested in. If the owners of an LLC no longer want to do business, it is in their best interest to go through the formal process of dissolving the company. Otherwise, they may still have to pay annual fees. Liability issues are another possible negative side effect of not formally dissolving a Delaware LLC.
How Do You Dissolve a Delaware Limited Liability Company?
If you want to dissolve your LLC in the state of Delaware, you need to complete the Certificate of Cancellation of an LLC. This form needs to be filed with Delaware's Department of State. This can be done in person, by fax, or by mail. The filing fee should be sent along with the form.
It's also a good idea to file a Filing Cover Memo along with the form. The Filing Cover Memo should include your name and contact information. That way, when the Department of State processes the form, they will have no problem getting into contact with you if required.
If you want to dissolve your LLC voluntarily, you should read the LLC agreement. Chances are the rules in the LLC agreement state that the members of the LLC need to vote to dissolve the LLC. A certain percentage of the owners may need to vote in favor of dissolving the company.
Process of Dissolving
During the process of dissolving the LLC, you need to follow all of the procedural requirements described in the dissolution rules. For example, it may be necessary to choose a specific time to meet with the members and vote. You may also need to give all the members advance notice when it comes to the meeting.
The operating agreement of your LLC may not have any guidelines for dissolving an LLC. If this is the case, the LLC Act of Delaware states that the members will need to provide written or affirmative consent to cancel the LLC. Only members who own more than 66 percent of the percentage of ownership needs to provide this consent.
Certificate of Cancellation
You will need to file the certificate of cancellation with Delaware's secretary of state after you dissolve your LLC.
The certificate of cancellation needs to include the following information about the dissolution of your LLC. This includes:
- The LLC name
- The date on which the certificate of formation of the LLC was filed
- The effective date of cancellation if this differs from the filing date
The function of the certificate of cancellation is that it cancels the certificate of formation of the LLC.
LLC owners can download the certificate of cancellation form from the website of the secretary of state.
Members are able to vote in writing or in person. The outcome of the vote should be recorded in the meeting's minutes. If the vote passes, the members must appoint a manager to deal with the dissolution of the LLC.
The cancellation form, the cover memo, and proof of payment of the franchise tax should be sent to the address printed on the form. 302-739-3812 is the fax number for individuals who intend to send the certificate of cancellation, the cover letter, and the franchise tax payment by fax. The filing fee is $200.
LLC Act of Delaware
The LLC Act of Delaware allows an LLC that is in good standing to enjoy perpetual existence. The only instance in which this is not the case is if the operating agreement or the certificate of formation disallows the LLC from having a perpetual existence. However, the LLC can still be canceled if the owners fail to pay the franchise tax, fail to have a registered agent, or if the owners file the certificate of cancellation.
When the Delaware LLC is no longer in operation, the LLC Act allows the LLC to file a certificate of cancellation to end the existence of the LLC.
You should only file the certificate of cancellation after the LLC has wound down all of its affairs. The LLC is no longer able to do business once the owners file the certificate of cancellation.
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