There are several reasons for dissolving a corporation. It could be due to bankruptcy, an internal dispute, among other reasons.
Suppose you are a business owner and decide to cease your business’s operation. In that case, there are many things that you have to do before your corporation is officially out of business. You don’t just simply stop and then disappear.
With that said, here are the things you should know when dissolving a corporation in Kentucky.
What It Means to Dissolve a Corporation
There are some steps a business owner must follow to dissolve his corporation. There may be a few differences between the processes in different states, but most of the steps are similar. Despite the variations of the steps in other states, you must follow the steps below.
- The first step in dissolving a corporation is to hold a board meeting with all the board members present. They all must be aware of the initiative to dissolve the corporation.
Despite the initiative, there must still be a resolution in which most of the board members approve to dissolve the corporation. The shareholders may also need to take part in the voting, but that depends on your organization’s structure. This process must be thoroughly recorded and then stored in the corporate record.
- After this, proceed to the office of the Kentucky Secretary of State to file and fill out form Form DIS (Articles of Dissolution)
- Next, you have to complete all of the IRS tax requirements and the state of Kentucky.
- After this, all your business licenses and permits must be canceled, and all your business bank accounts must be closed.
- Lastly, concerning your employees, vendors, customers, and everyone who has a connection to the company, notify them of the initiative to dissolve the company.
These steps are easy enough to understand, and you should have no trouble going through with each of them. The only step in this process, which causes the most confusion and is the most complex, is the articles of dissolution which will be discussed further in the section below.
Dissolving a Kentucky Corporation by the Board of Directors
As discussed above, the first step of dissolving a corporation is by holding a meeting and informing all board members of the plan to dissolve the company.
For those corporations in the state of Kentucky that have initiated business and have already issued shares, they need to fill the Form DIS in the State of Kentucky.
This is the Articles of Dissolution by the Board of Directors and Shareholders. When filling up this form, you will need to put some information.
This includes the following:
- the name of your corporation
- the names, addresses, and the positions held by the corporate officers
- the date of the authorization of the dissolution
- the addresses and names of the corporate directors
- the date to which the dissolution was filed
- the date to which the dissolution will be effective
- the signature of the representative authorized by the company.
After filling for the Articles of Dissolution with the Kentucky Secretary of State, you’ll write a check of 40 dollars that is payable to the “Kentucky State Treasurer”. Mail 3 copies of your form, one to each of these: Secretary of Revenue, Secretary of State, and the office of the local county clerk alongside the 40 dollars check to the address:
Alison Lundergan Grimes
Secretary of State
P.O. Box 718
Frankfort, KY 40602
It should take the Kentucky Secretary of State about 3 business days to process the dissolution of your business after your documents have been received.
Dissolving a Kentucky Corporation by the Incorporators
There are instances wherein a corporation is dissolved before issuing the shares or before any business transaction has ensued. In these cases, it is the incorporator’s responsibility to spearhead the initiative of dissolving the corporation.
For all those corporations in the State of Kentucky that have not yet issued shares or had any business transaction, you need to file the Form IPD or the Articles of Dissolution before the Issuance of Shares.
You will need less information than the previous step above in filling out this form. As with the previous method, you’ll pay a fee of 40 dollars and mail 2 copies (one to the Secretary of State, and one to the office of the local county clerk). These documents and the 40 dollars check will be mailed to the same address as the Form DIS that was explained above.
Dissolving a Corporation in Kentucky: Other Things You Should Know
If you dissolve your corporation in the State of Kentucky for any reason, the name of your business becomes available for anyone who would like to make use of it.
There are some instances wherein the Kentucky state will be the one to initiate dissolution. This is known as administrative dissolution or involuntary dissolution.
This can happen if a corporation or a company refuses or fails to submit its annual reports by the deadline. If you are subjected to involuntary dissolution, you have the option to reinstate your business by completing the Reinstatement Packet of Kentucky state. You’ll need to pay a sum of 100 dollars as reinstatement fee and another sum of 15 dollars for each of the annual reports you have missed that led to the involuntary dissolution of your corporation.
Whether you plan on dissolving your corporation, which has already issued shares and has started making business transactions, or a corporation that hasn’t commenced business yet, the process remains the same in the state of Kentucky.
The only significant difference is in the form that you need to file. Hopefully, this article has been a great help to you in dissolving your corporation in the State of Kentucky.
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