A Letter of Dissolution of Corporation, also known as a dissolution resolution, is a formal document that is used to officially dissolve a corporation. Dissolving a corporation is a serious legal step that requires the cooperation of all shareholders, and the letter of dissolution is a necessary part of the process. This document serves as a way to formally notify the government, creditors and other interested parties that the corporation is being dissolved. It also serves as a way for shareholders to agree on the terms of the dissolution and to provide written evidence that the dissolution has been approved by all shareholders.
When a corporation is dissolved, it no longer exists as an entity. This means that all assets, liabilities, contracts and obligations of the company are legally terminated. The shareholders will no longer be held responsible for the debts and liabilities of the company, and the corporation will no longer have the right to conduct business. All of its assets and property will be sold off and the proceeds will be distributed to the shareholders.
To be legally valid, the dissolution of a corporation must be approved by all shareholders. The shareholders must unanimously agree on the terms of the dissolution, and they must also vote in favor of the dissolution. Once approved, the shareholders must sign the letter of dissolution to make it official. The letter must then be filed with the appropriate government agency, usually the Secretary of State, to officially dissolve the company.
What Should Be Included in a Letter of Dissolution?
The letter of dissolution must include certain information to be legally valid. It must include the name of the corporation, the date of the dissolution, the names of the shareholders, the date of the shareholders’ meeting where the dissolution was approved, the terms of the dissolution, and the signatures of all shareholders.
The letter should also include a statement that all liabilities and debts of the corporation have been taken care of. This should include a list of all creditors and how much money is owed to them. Any assets of the company should also be listed and how the proceeds will be distributed to the shareholders. Finally, the letter should include a clause that states that all shareholders agree to the dissolution and understand the consequences of the dissolution.
Sample Letter of Dissolution of Corporation
This letter is to serve as written notice that the shareholders of [Corporation Name], a [State] corporation, have voted unanimously in favor of dissolving the corporation. The date of the shareholders’ meeting where the dissolution was approved was [Date], and the following shareholders were present: [Names of shareholders].
The terms of the dissolution are as follows:
- The corporation will no longer exist as an entity.
- All assets, liabilities, contracts and obligations of the company are legally terminated.
- The shareholders will no longer be held responsible for the debts and liabilities of the company.
- The corporation will no longer have the right to conduct business.
- All of its assets and property will be sold off and the proceeds will be distributed to the shareholders.
The shareholders have taken care of all liabilities and debts of the corporation. The list of creditors and the amounts owed to each are as follows: [List of creditors, amounts owed]. The proceeds from the sale of the assets of the company will be distributed to the shareholders according to the following agreement: [Agreement].
All shareholders agree to the dissolution and understand the consequences of the dissolution. The shareholders have signed this letter in agreement of the dissolution.
Sincerely,
[Names of shareholders]
Frequently Asked Questions (FAQ)
What is the difference between dissolution and liquidation?
Dissolution and liquidation are two different processes. Dissolution is the legal process of terminating a corporation and ceasing its business activities. Liquidation is the process of selling off all of the corporation’s assets and distributing the proceeds to the shareholders. Dissolution must take place before liquidation.
Can I dissolve a corporation on my own?
Yes, you can dissolve a corporation on your own as long as all shareholders are in agreement. You will need to create a letter of dissolution and have it signed by all shareholders. You will then need to file the letter with the appropriate government agency.
What happens if I don't dissolve a corporation?
If you do not dissolve a corporation, it will remain in existence and you will still be held responsible for its debts and liabilities. This means that creditors can still come after you for payment, and the corporation will still be responsible for filing taxes and other legal obligations. To avoid this, it is important to dissolve the corporation as soon as possible.
Do I need a lawyer to dissolve a corporation?
No, you do not need a lawyer to dissolve a corporation. However, it is a good idea to consult a lawyer if you have questions about the dissolution process or how it will affect your legal rights. A lawyer can also help you ensure that the dissolution is done correctly and all legal requirements are met.
What is the difference between a letter of dissolution and a dissolution resolution?
A letter of dissolution is a formal document that is used to officially dissolve a corporation. It includes the names of the shareholders, the date of the shareholders’ meeting where the dissolution was approved, the terms of the dissolution, and the signatures of all shareholders. A dissolution resolution is a vote that must be approved by all shareholders before the letter of dissolution can be filed.
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