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 North Carolina.
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 Secretary of State of North Carolina and go to the Corporations Division. Once there, you need to file and fill out form Form B-06 (Articles of Dissolution by Board of Directors and Shareholders)
- Next, you have to complete all of the IRS tax requirements and the state of North Carolina.
- 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 North Carolina 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 North Carolina that have initiated business and have already issued shares, they need to file the B-06 form to the Corporations Division of the Secretary of State.
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.
Filing for articles of dissolution by the Board of Directors and Shareholders has a filing fee of 30 dollars.
You can complete this online by uploading the necessary documents to the North Carolina Secretary of State’s website and then pay it by online methods, or you can mail the documents with a check made payable to the Secretary of State.
If you choose the online method, your dissolution will be processed in about 3 to 5 business days. If you filed your dissolution by mail, it would take about 7 to 10 business days.
Dissolving a North Carolina 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 North Carolina that have not yet issued shares or had any business transaction, you need to file the form B-05 or the Articles of Dissolution before the Issuance of Shares.
You will need the same information as the previous step above in filling out this form. As with the previous method, you can also file this dissolution online or through the mail.
Dissolving a Corporation in North Carolina: Other Things You Should Know
The good thing about filing dissolution in North Carolina is that it does not require you to acquire clearance from the Department of Revenue to file your dissolution. In contrast, in other states, this is a must.
You can also cancel your dissolution within 120 days from the date of filing. You can do this by filing for B-07, otherwise known as the Application for Reinstatement Following Administrative Dissolution.
If 120 days have passed, you can no longer revoke your dissolution. In these cases, you have to do the registration all over again. The name of your business entity will be available for others to use. To make things more straightforward in the long run, it’s best to verify everything before filing your dissolution.
There are some instances wherein the North Carolina 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 filling the form B-08, which is also known as Application for Reinstatement Following Administrative Dissolution.
Suppose your corporation has been subjected to Administrative Dissolution. In that case, the state of North Carolina will protect your business entity name for up to five years. No one can use your name in that period, so you can still use it should you decide to reinstate your company.
Conclusion
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 North Carolina.
The only significant difference is in the form in that you need to file. Hopefully, this article has been a great help to you in dissolving your corporation.
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