Dissolving a Missouri Corporation
Closing a Missouri corporation is a two-step process. The corporation is first dissolved. Then it is terminated by filing a request for termination. Dissolving a Missouri corporation is done in one of three ways: (i) by voluntary dissolution, (ii) by administrative dissolution, or (iii) by judicial dissolution.
Voluntary Dissolution
Voluntarily dissolving a Missouri corporation occurs in three ways. First, if the corporation has issued no shares of stock or it has not conducted any business, then a majority of the incorporators or initial directors may file articles of dissolution. Second, the board of directors may submit to the shareholders a proposal to dissolve the corporation. Unless the articles of incorporation or the proposal calls for a difference amount, at least two thirds of the shareholders entitled to vote must approve the proposal. Third, the corporation may be dissolved upon the written consent of all shareholders entitled to vote on a dissolving the corporation. Articles of dissolution filed with the secretary of state may be revoked within 120 days of the effective date of the articles of dissolution.
A dissolved corporation carries on as a legal entity, but it may conduct no business except to wind up its affairs and liquidate its assets. After the dissolution is authorized according to one of the three methods described above, the corporation must send a written notice delivered by the US Postal Service to each entity known to have a claim against the corporation. The notice must include the information required by Missouri law, including the date by which the corporation must receive the claim. The deadline to submit claims to the corporation as provided in the notice may not be less than 180 days from the effective date of the notice. Claims not received by the corporation by the deadline are barred under Missouri law. If the corporation rejects a claim, the claimant must take legal action to enforce the claims within 90 days of the effective date of the rejection notice. The claim will likewise be barred if legal action to enforce the claim is not filed with the 90 days.
The corporation may also publish notice of its dissolution and state, among other information required by law, that claims will be barred if no action is filed to enforce the claim within two years of the date of publication of the notice. This provision does not apply to claimants to which a notice was mailed as provided in the previous paragraph.
Generally, claims made pursuant to notice by publication may be satisfied only to the extent of the undistributed assets of the corporation. However, claimants can also reach the assets of the corporation that have been distributed to its shareholders. Shareholders should consider this possibility before disposing of corporate assets in their possession during this two year period.
Finally, neither the 180-day bar nor the two-year bar applies to claims that will be paid by the corporation’s insurance coverage. Those claims are barred by the statute of limitation relating to the cause of action filed against the corporation. Judgments obtained pursuant to this exception may be satisfied only from such insurance policy.
The corporation must file with the secretary of state a request for termination after the corporation has disposed of all of the claims asserted against it and all of its remaining assets have been distributed to its shareholders. Once the secretary issues a certificate of termination, the corporation ceases to exist as a legal entity, and its name will be available for use by others.
Administrative Dissolution
The secretary of state can dissolve a corporation for any of the reasons provided under Missouri law. The typical reasons include failing to (i) file an annual registration report with the secretary, (ii) file a Missouri income tax return, (iii) pay Missouri corporate income tax, and (iv) have a registered agent.
As with a corporation that is voluntarily dissolved, a corporation dissolved by the secretary continues as a legal entity, but it may not carry on any business except to wind up its affairs and to liquidate its assets. Also as with a voluntary dissolution, the corporation must notify known creditors of the dissolution, and it may voluntarily publish notice of the dissolution. Claims against the corporation are barred pursuant to such notices as with a voluntary dissolution. Any officer or director who otherwise conducts business on behalf of the administratively dissolved corporation shall be personally liable for any obligations incurred by the corporation in relation to such conduct.
After correcting the grounds for dissolution, an administratively dissolved corporation may apply to the secretary for reinstatement of the corporation. If the secretary decides to reinstate the corporation, the secretary shall cancel the certificate of dissolution and file a certificate of reinstatement. The corporation can then resume carrying on its business as if the dissolution never occurred. The corporation may appeal to a Missouri circuit court for a trial de novo (new trial) of a denial of an application for reinstatement. As with any circuit court case, the judgment of the circuit court may be appealed to the Missouri State Court of Appeals.
If the corporation does not seek reinstatement following an administrative dissolution, it must, as with a voluntary dissolution, file with the secretary a request for termination after the corporation has disposed of all of the claims asserted against it and all of its remaining assets have been distributed to its shareholders. Once the secretary issues a certificate of termination, the corporation ceases to exist as a legal entity, and its name will be available for use by others.
Judicial Dissolution
Finally, dissolving a Missouri corporation by legal proceeding may be initiated by (i) the Missouri attorney general, (ii) a shareholder of the corporation, or (iii) a creditor of the corporation.
A court may dissolve a corporation if the attorney general demonstrates that the articles of incorporation were obtained by fraud, or if the corporation exceeds or abuses its authority. A court may also dissolve a corporation if a shareholder demonstrates certain harmful conduct by the directors, if the shareholders are deadlocked in electing successor trustees, or if the assets of the corporation are being misapplied or wasted. Lastly, a court may dissolve a corporation if a judgment creditor of the corporation demonstrates that the corporation is insolvent. Additionally, a court may, upon petition, supervise the voluntary dissolution of a corporation.
When dissolving a Missouri corporation, the court may issue injunctions, appoint a receiver to liquidate corporate assets, appoint a custodian to manager the affairs of the corporation, and take other action to preserve corporate assets. As with any other dissolution, a corporation that is judicially dissolved must file with the secretary a request for termination after the claims against it have been disposed of and its remaining assets have been distributed to the shareholders.
Michael Sewell, JD, MBA has formed more than 100 LLCs, including traditional, series, IRA, real estate brokerage, and S corporation. He has also litigated more than 100 lawsuits involving contracts, businesses, and real estate. Michael additionally provides advice to businesses on a wide range of matters, including taxation.
Please contact Michael Sewell for an initial consultation at no charge. (314) 942-3232 | michael@sewelllaw.net.
This article is for general informational purposes only. This information is not intended as legal advice. You should consult an attorney regarding how this information might apply to your specific circumstances.
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