Ending the existence of a corporation in Florida requires a formal process known as “dissolution.” Typically, the complexity associated with this process varies according to each company.
While some corporations have neither issued stocks nor started doing business, others have many factors, such as complex asset division or legal liability. In this article, you will discover how to dissolve a corporation in Florida.
Types of Corporate Dissolution
There are three main types of corporate dissolution – voluntary dissolution, administrative dissolution, and judicial dissolution. Although this article will focus on voluntary dissolution, it is crucial to explain each type of corporate dissolution.
If a court order dissolves a corporation, then there is a process of judicial dissolution, entailing there is an involuntary dissolution. Meanwhile, administrative dissolution happens solely for administrative reasons such as failing to file an annual report.
As its name suggests, a process of voluntary dissolution happens when the corporation shareholders decide to terminate the business.
Dissolving a Corporation in Florida – Step-by-Step
Voting for Dissolution
As provided by Florida’s Business Corporation Act (BCA), a process of voluntary dissolution requires shareholder voting at a shareholder meeting. Typically, the process follows a particular order of events, as demonstrated in the following topics:
- The corporate board of directors submits a proposal to dissolve to the shareholders.
- The corporate board must give ten days advance notice to each shareholder
- Approving a corporate dissolution requires a majority of shareholder votes casted in favor of such.
Suppose either the company’s articles of incorporation or board of directors require a specific voting procedure or voting by groups. In that case, the approval for corporate dissolution is a bit different.
Regardless of the method used, it is crucial to record the board’s proposal and each shareholder’s vote.
Articles of Dissolution
Once the corporate dissolution process has been approved, it is time to file articles of dissolution with the Florida Department of State – Division of Corporations.
Even though the Business Corporation Act (BCA) does not require so, the best approach is to file articles of dissolution in cases where the company is being dissolved voluntarily.
Accordingly, the articles of dissolution must include the name of the corporation being dissolved, the date of the approval authorizing the process of corporate dissolution, and a written statement that the number of shareholders’ votes was sufficient for approval.
In situations in which voting groups approved the dissolution, it is necessary to include a statement for each shareholder group affirming that the number of votes was sufficient for approval.
Filing Fees and Processing Time
Typically, it is possible to download articles of dissolution form from the Florida Department of State – Division of Corporations official website. Then, someone can submit the document either by mail, hand delivery, or online. Regardless of the chosen method, the filing fee is $35.
Submitting the paperwork by hand delivery is the best option, as it will be processed while you wait. Usually, online fillings take 2 or 3 business days for processing, while mailing the paperwork can take a week or more until you get a response.
Providing Notice to Creditors and Other Claimants
Although giving notice to creditors and other claimants regarding the corporate dissolution is not mandatory, it can help decrease liability risks and ensure an easier final distribution for shareholders.
The BCA provides several rules for giving notice and responding to claims, which may be a complex and intricate task to deal with. Hence, it is crucial to work with an expert business attorney when dissolving a corporation in Florida.
Once the corporation is dissolved, the company continues to exist only to take care of the corporate “winding up,” which is the name given to a process that includes:
- Discharging or providing for the discharge of the corporate liabilities
- Gathering the corporation’s assets
- Disposing of any corporate properties that will not be distributed to shareholders
- Distributing the remaining corporate property among shareholder according to their share of interest
In this context, the first obligation of the director(s) or executive(s) in charge of the final procedures is to discharge any existing corporate liabilities. Such liabilities include paying all remaining taxes and creditors.
After all other steps were completed, shareholeders can distirbute the corporation’s remaining assets amongst them.