CALIFORNIA CORPORATE DISSOLUTION
The voluntary dissolution of a domestic stock corporation is initiated by an election to dissolve. The election to dissolve may be made by the vote or written consent of at least fifty percent of the outstanding shares of the corporation, by the board of directors if no shares have been issued, or, in limited circumstances, by a majority of the incorporators, if no directors have been named in the Articles of Incorporation and none have been elected.
Following the election, a Certificate of Election to Wind Up and Dissolve must be prepared, submitted to and filed by the Secretary of State. To complete the dissolution, a Certificate of Dissolution must also be prepared, submitted to and filed by the Secretary of State. The Certificate of Election must be filed prior to, or simultaneously with, the Certificate of Dissolution.
NOTE: If the election to dissolve is made by the vote of all the outstanding shares, the Certificate of Election does not have to be filed, provided the Certificate of Dissolution includes the following statement: The election to dissolve was made by the vote of all the outstanding shares.
In limited circumstances, a Short Form Certificate of Dissolution (Form DISS-STOCK - SHORT FORM) can be filed if the corporation meets the requirements set forth in California Corporations Code section 1900.5.
Except as provided by Corporations Code section 1900.5, a current and valid Tax Clearance Certificate issued by the Franchise Tax Board or a completed Request for Tax Clearance Certificate - Corporations (Form FTB 3555) must accompany the Certificate of Dissolution.
A Certificate of Dissolution (meeting statutory requirements) submitted with a current and valid Tax Clearance Certificate will be filed by the Secretary of State as a final dissolution.
If the Certificate of Dissolution (meeting statutory requirements) is submitted with a completed Form FTB 3555, the Secretary of State will forward the completed Form FTB 3555 to the Franchise Tax Board and the dissolution will be considered "conditional" pending issuance of the Tax Clearance Certificate. Once the Tax Clearance Certificate is issued, the Franchise Tax Board will forward a copy of the Tax Clearance Certificate to the Secretary of State at which time the dissolution will become final as of the date the Certificate of Dissolution was filed by the Secretary of State.
The corporate powers, rights and privileges cease upon the filing of the Certificate of Dissolution with the Secretary of State, whether final or conditional. However, corporate existence of the conditionally dissolved corporation continues until the issuance of a Tax Clearance Certificate.
Jacobs & Dodds can assist you with the dissolution of your corporation. Call us today at (949) 645-7300.
