How Do You Dissolve a Florida Corporation?

Circumstances could propel you to decide to close out your corporation’s business operations.  The way to properly dissolve your corporation is to follow the procedures that are prescribed under the Florida Business Corporation Act.

We will go over the basic steps which you’d need to take to dissolve a Florida corporation.

Dissolving the Corporation

The first step the corporation must take to dissolve itself is to have the action approved.  An action to approve the dissolution of the corporation may be done by the board of directors and shareholders.  Or, the dissolution can be accomplished by a written consent of the shareholders without the board.

Dissolution by the Board & Shareholders.  To approve the dissolution of the corporation, the Board must adopt a resolution that proposes to dissolve the corporation.  Once the Board has adopted the resolution, the proposal to dissolve the corporation must then be submitted to the shareholders for a vote.  Approval will require a majority of the votes entitled to be cast on the proposal.  Thus, for example, if 60% of the total voting interests of the shareholders approved the action to dissolve the corporation, the action is effective.

Dissolution by the Shareholders Only.  Alternatively, the corporation may be dissolved by the written consent of the shareholders.  A written consent does not require any formal board meeting or shareholders’ meeting.  To properly dissolve the corporation, a valid written consent must describe the action so taken, and be dated and signed by the approving shareholders.  To approve the action a majority of the total shareholder votes who are entitled to vote must sign the consent.

Once approved, a notice must be given to those shareholders who have not consented in writing to the dissolution, or who were otherwise not entitled to vote on the action.  The notice must summarize the action so taken by the shareholders.

Filing Articles of Dissolution   

Once the dissolution of the corporation has been approved, the next step is to file articles of dissolution with the department of state.  The articles of dissolution is essentially a written statement that is filed with state of Florida.  The corporation will also have to pay a state filing fee.  Once the articles are duly filed with state the corporation has been formally dissolved.

What is the effect of a corporate dissolution?    

There may be some confusion as to what status the corporation holds after it is dissolved.  Does the dissolution mean that the corporation cannot do anything, or that it cannot perform any function?  Actually, no.

A dissolved corporation will hold a limited capacity to do certain things.  Generally, a dissolved corporation is not allowed to carry on its normal business.  However, the dissolved corporation is statutorily permitted to wind up and liquidate its business affairs.  For instance, the corporation can proceed to collect its assets, dispose of its properties, discharge and pay off its outstanding debts, and, if any assets remain, disburse the remaining assets to the shareholders.

What about creditors’ claims?

When dissolving a corporation one of the things the principals should think about are creditors’ claims.  The principals may wish to address any potential claims against the corporation.  Claims against the corporation fall into one of two categories:  known and unknown claims.

Known Claims

Florida statutes allow the dissolved corporation to dispose of known claims by submitting to a notice process that is governed by section 607.1406.  This “notice” process will require the dissolved corporation to send written notice to any known claimants within 3 years after the effective date of dissolution.  The notice requirement must contain certain specific information.  The claimant must be given at least 120 days after receipt of notice to submit a claim.  Ultimately, the claim against the dissolved corporation will be barred if the claimant does not timely respond to the claims process.

Unknown Claims

Florida law allows two alternative procedures in which to dispose of an unknown claim.  The procedure is governed by section 607.1407.  The first method is to file a notice of dissolution with the department of state and make request in the notice to address any potential unknown claims.  The notice must contain certain information, including the name of the corporation and the information which must be included in the claim. If the corporation complies the notice requirements, the claim will be barred within 4 years after the filing of the notice.

Alternatively, the dissolved corporation can dispose of unknown claims through the publication of a “Notice of Corporation Dissolution” in a newspaper in the county of the state in which the corporation’s principal office is located.  The notice must be published once a week for two consecutive weeks.

If the corporation satisfies one of the above two methods any potential unknown claims may be barred by law.

If you need assistance to dissolve your Florida corporation, or other entity, please contact our office for a reasonable quote.

Filed under: Florida Business

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