North Carolina Dissolution Package to Dissolve Corporation
NORTH CAROLINA CORPORATE
DISSOLUTION
Statutory Reference:
NORTH CAROLINA GENERAL STATUTES, §§55-14-01 through
55-14-08
General Discussion:
There are two ways to voluntarily dissolve a business corporation in
the State of North Carolina: 1) by the directors or, if the corporation
has no directors, by a majority of the incorporators if the corporation
has not issued any shares, or 2) by board of directors and shareholders.
If the corporation has not issued shares, the directors or, if the corporation
has no directors, a majority of the incorporators may dissolve the corporation
by filing articles of dissolution with the Secretary of State.
If the corporation has issued shares, then the corporation may be dissolved
if the board of directors recommends dissolution to the shareholders and
the shareholders approve the recommendation of dissolution. If the Board
determines that special circumstances exist, or that there is some conflict
with the board making a recommendation of dissolution, then the board may
make no recommendation to the shareholders and advise the shareholders
of why it is failing to make a recommendation. The board of directors
may condition the submission of its proposal for dissolution on any basis.
The shareholders entitled to vote on whether or not the corporation
should be dissolved must approve the board's recommendation. Prior
to a vote on any recommendation of the board, all shareholders must be
notified of the proposed shareholders meeting to address the issue of dissolution.Â
Unless the certificate of incorporation or the board of directors requires
a greater vote, the proposal to dissolve must be approved by a majority
of all the votes entitled to be cast on that proposal. If the board's
recommendation is approved by the shareholders, then articles of dissolution
are filed with the Secretary of Sate.
A corporation is dissolved upon the effective date of its articles of
dissolution.
However, as important as following the correct procedures for "dissolving"
the corporation are the actions which must be taken by the "dissolved"
corporation after dissolution to accomplish the "winding up" of the corporation's
affairs.
A dissolved corporation continues its corporate existence, but it but
may not carry on any business except that appropriate to wind up and liquidate
its business and affairs. As part of the "winding up," the corporation
may collect its assets, dispose of property that will not be distributed
to shareholders, satisfy or make provision to satisfy its liabilities,
and distribute any assets remaining after creditors have been satisfied
to its shareholders. Generally speaking, the "dissolved" corporation
can do anything necessary to wind up and liquidate its business affairs.
Dissolution of a corporation does not transfer title to the corporation's
property, does not prevent the transfer of corporate shares, does not subject
the directors and officers to a different standard of care than before
the dissolution, does not change any voting requirements, does not prevent
transfer of the corporation's stock, does not stop any one from suing the
corporation, does not stop any pending legal action, does not terminate
the authority or obligations of the corporation's registered agent, and
does not automatically render the shareholders liable for the debts of
the corporation.
A dissolved corporation may dispose of the known claims against it by
following these statutory requirements:
The corporation must notify its known claimants in writing of the dissolution
after the effective date of dissolution. This written notice must
describe the information that must be included in a claim, must provide
a mailing address where a claim may be sent, must state the deadline by
which the corporation must receive the claim, and must state that the claim
will be barred if not received by the deadline, which must be at least
120 days from the date of the notice.
A claim against the corporation is barred if a claimant who was given
written notice does not deliver the claim to the corporation by the deadline
OR if a claimant whose claim was rejected by the corporation by written
notice of rejection does not sue to enforce the claim within 90 days from
the date of the rejection notice. Note: a "claim" does not
include a contingent liability or a claim based on an event occurring after
the effective date of dissolution.
A corporation may satisfy and dispose of the unknown claims against
it by following the procedure:
The corporation may publish notice of its dissolution and request that
persons with claims against the corporation present them in accordance
with the notice. The notice must be published one time in a newspaper of
general circulation in the county where the corporation's principal office
is/was located or, if the corporation had no office in North Carolina,
then in a newspaper of general circulation in the county where the corporations
registered office is/was located. The notice must describe the information
that must be included in a claim and provide a mailing address where the
claim may be sent. The notice must also state that claims against
the corporation will be barred unless a proceeding to enforce the claim
is commenced within five years after the publication of the notice.
If the corporation publishes a newspaper notice, claims against the
corporation are barred unless the claimant commences a proceeding to enforce
the claim against the corporation within five years after the publication
date of the newspaper notice.
Any entity having a claim against the corporation may enforce its claim
against undistributed assets of the corporation, or if the assets have
been distributed to shareholders, then against the shareholders. Claims
against a shareholder of the corporation are limited to the shareholder's
pro rata share of the claim or to the corporate assets distributed to the
shareholder, whichever is less. A shareholder's total liability for
all claims cannot exceed the total amount of assets distributed to the
shareholder.
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