Ryan Hogaboam recently wrote on the iVLG blog about what you should know about voluntary, administrative, and judicial dissolution. Dissolution is the process of winding down your business and dissolving the legal entity that is your business. Below I’ve highlighted some key points from Ryan’s post:
Dissolution in Washington
In Washington, closely-held corporations can be dissolved in three different ways: by the shareholders or directors (voluntarily), by the Secretary of State (administratively), or by the courts (judicially):
Voluntarily: By the Shareholders
In order to voluntarily dissolve a corporation, the corporation’s board of directors may ask the shareholders to vote on dissolving the company. Washington’s statutes require two-thirds of the shareholders to approve dissolution for it occur. Following the vote, the company must file Articles of Dissolution with the Secretary of State’s office in order for the state to formally dissolve the entity.
Administrative: By the State
The Secretary of State has the authority to dissolve your company if you fail to: (i) pay the required licensing fees, (ii) file the necessary documents, or (iii)maintain a registered agent in Washington. If this accidentally occurs (which is actually quite common), you can file for reinstatement within five years of the administrative dissolution.
Judicial: By the Courts
A court can order dissolution of a Washington corporation under a number of circumstances, including (i) directors are deadlocked, (ii) there is illegal, fraudulent behavior by the directors or officers of the company, (iii) the company’s assets are being wasted or misused, or (iv) the company has failed to wind-up the business after it is no longer doing business.
You can check out Ryan’s full post for great explanations of deadlock, oppression, and corporate waste.
If you’d like to learn more about dissolving your company or ways to avoid involuntary dissolution of a small business, please contact me today.
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