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 Rhode Island.
What It Means to Dissolve a Rhode Island 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 Division of Business Services in the Office of the Rhode Island Secretary of State to file the Articles of Dissolution which will be discussed below.
- Next, you have to complete all of the IRS tax requirements with the State of Rhode Island.
- 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 Rhode Island 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 Rhode Island that have initiated business and have already issued shares, they need to file the Articles of Dissolution with the Secretary of State. Note that they need to file the Domestic Articles of Dissolution with the Division of Business Services in the Office of the Rhode Island Secretary of State. These corporations will require a letter of good standing from the Division of Taxation, Rhode Island by filling this form.
When filling up the Articles of Dissolution, you will need to put in some information. This includes the following:
- the name and ID number 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.
Write a Check for the 50 dollars that is made payable to the “Rhode Island Department of State”. The forms (Articles of Dissolution and the Letter of good standing) and the check should then be mailed to the address:
Office of the Secretary of State
Division of Business Services
148 W. River Street
Providence, Rhode Island 02904-2615
It would take about 4 weeks for the Division of Taxation to get you a letter of Good Standing. Meanwhile, it usually takes 1 week for the Rhode Island Secretary of State to complete your dissolution process.
Dissolving a Rhode Island 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 Rhode Island that have not yet issued shares or had any business transaction, you will need to follow the same steps outlined above, however, you’ll have to file for the Incorporators’ Articles of Dissolution with the Rhode Island Secretary of State because your corporation has not yet issued shares.
You’ll submit the document to the address above and follow the same steps explained above including getting a letter of good standing. The duration of time it takes is the same as above.
Dissolving a Corporation in Rhode Island: Other Things You Should Know
You can’t claim your business name after you have filed for a voluntary business dissolution. In essence, your business name can be claimed by someone else in the state of Rhode Island. However, your business name will be protected for a year if it was dissolved involuntarily.
There are some instances wherein Rhode Island 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. In a case like this, you’ll need to request reinstatement by paying the penalties and submitting the annual reports you have missed.
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 Rhode Island.
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 Rhode Island.