Illinois Dissolution Package to Dissolve Corporation
ILLINOIS CORPORATE
DISSOLUTION
LAW SUMMARY
Statutory References:
Statutory Reference: 805 ILLINOIS COMPILED STATUTES, §§ 5/12.05-5/12.85.
General Discussion:
In Illinois, a corporation can be voluntarily dissolved by 1) a majority
of the initial directors or a majority of the incorporators if there are
no directors or 2) by the shareholders either by majority vote or by unanimous
written consent. A corporation may also be involuntarily dissolved
either administratively or judicially.
In order for a corporation to be dissolved by a majority of the initial
directors or a majority of the incorporators:
1. Shares of the corporation must not be issued.
2. Any funds which have been paid for shares must be refunded (less
any expenses)
3. All debts of the corporation must be paid.
4. Written notice of the election to dissolve the corporation must
be given to all incorporators and/or all directors not less than three
days before the execution of articles of dissolution.
For the shareholders to dissolve a corporation, they may do so with their
unanimous written consent. In the alternative, the Board may, by
resolution, propose or recommend dissolution to the shareholders. The resolution
must be voted on by the shareholders at a special or annual meeting and
ALL shareholders MUST be given actual notice of the meeting. The
resolution must be approved by at least 2/3 of those shareholders entitled
to vote - unless the Articles of Incorporation provide that a lesser or
greater percentage of the shareholders is required for approval of the
resolution.
Once the dissolution is approved by the shareholders, the corporation
ceases to exist EXCEPT that it continues its corporate existence for the
limited purpose of "winding up" its affairs. Included in the winding
up process are:
1. Collecting corporate assets;
2. Disposing of corporate assets that will not be distributed in kind
to its shareholders;
3. Giving statutory notice to the corporation's know creditors
and discharging or making provision for discharging the corporation's liabilities;
4. Distributing the corporation's remaining assetsÂÂ
among the  shareholders according to their interests;
and
5. Doing any other acts that are necessary to wind up and liquidate
the corporation's business and affairs.
Dissolution of a corporation DOES NOT:
1. Transfer title to the corporation's assets;
2. Prevent transfer of its shares orÂÂ
securities;
3. Effect any change in the by-laws ofÂÂ
the corporation or otherwise affect the regulation of the affairs
of the corporation except that all action shall be directed to winding
up the business and affairs of the corporation;
4. Prevent suit by or against the corporation inÂÂ
its corporate name;
5. Abate or suspend a criminal, civil or any other proceeding pending
by or against the corporation on the effective date of dissolution.
When the corporation is dissolved, and there are funds or other assets
which are due to a shareholder who cannot be found or who is under a legal
disability, then those funds or assets (which must be reduced to cash)
are reported and delivered to the Illinois State Treasurer.
A dissolved corporation can bar any known claims against it, its directors
and its officers, agents, employees, and its shareholders by following
these statutory procedures:
Within 60 days from the effective date of dissolution, the dissolved
corporation must send a written notification to each claimant setting forth
the following information:
1. That the corporation has been dissolved and the effective
date of the dissolution.
2. The mailing address to which the claimant must send its claim and
the essential information to be submitted with the claim.
3. The deadline, which must be not less than 120 days from the effective
date of dissolution, by which the dissolved corporation must receive the
claim.
4. A statement that the claim will be barred if not received by the
deadline.
If, after providing the above notice, the dissolved corporation rejects
the claim in whole or in part, the dissolved corporation must notify the
claimant of the rejection and must also notify the claimant that the claim
will be barred unless the claimant files suit to enforce the claim within
a deadline not less than 90 days from the date of the rejection notice.
A claimant that does not deliver its claim by the deadline established
pursuant to the written notice or that does not file suit by the deadline
established pursuant to the rejection of a claim, shall have no further
rights against the dissolved corporation, its directors, officers, employees
or agents, or its shareholders or their transferees.
"Claim" does not include any contingent liability or a claim arising
after the effective date of dissolution or a claim arising from the failure
of the corporation to pay any tax, penalty, or interest related to any
tax or penalty.
The statutory procedure for barring claims DOES NOT APPLY to claims
arising out of violations of the criminal law.
805 ILLINOIS COMPILED STATUTES 5/12.85:
"The dissolution of a corporation either (1) by the issuance of
a certificate of dissolution by the Secretary of State, or (2) by a judgment
of dissolution by a circuit court of this State, or (3) by expiration of
its period of duration, shall not: (a) Prohibit the State from prosecuting
said corporation criminally by indictment, information or complaint filed
subsequent to its dissolution for any offenses committed prior to dissolution;
or (b) Abate or suspend a criminal proceeding which is pending againstÂÂ
the corporation on the effective date of dissolution."
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