BUSINESS DISSOLUTION IN CALGARY

Corporate Dissolution

There are many reasons why you might want to put an end to your business operations. However, dissolving your company is not as easy as simply shutting the doors. There is a formal process that every corporation must go through to be free of risk and considered officially dissolved in the eyes of the law. However, with careful planning and sound legal advice, it is possible to dissolve a corporation in an orderly and efficient manner.

There are many reasons why dissolving a corporation may be the best option for a business or shareholders. For example, it may no longer be profitable to continue operating the company, or the shareholders may disagree on how to move forward. Dissolution can be an opportunity to start fresh, with new shareholders and a new direction.

However, there are several steps required to make the corporate dissolution official. This can include settling debts, notifying suppliers or landlords, squaring any remaining taxes, closing business accounts, and submitting forms for dissolution to the Corporate Registrar.

You’ll want to protect your interests during this life-changing event. Dissolution is a complicated process, and it is essential to seek experienced legal counsel before taking action.

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Corporate and Business Dissolution

Corporate dissolution is the process of legally ending a business. This can be done voluntarily, by the shareholders, or involuntarily, by the court system or Registrar. Just as a company has to file for incorporation, they also have to file for corporate dissolution. Ensure the process goes smoothly by partnering with a good business lawyer during this process.

LIQUIDATION

Liquidation must take place before a company is formally dissolved. Liquidation means selling off a company’s assets and using the proceeds to pay off creditors. Once all creditors have been paid, any remaining assets are distributed to shareholders.

A company can still operate after liquidation but can not do so after formal dissolution. That’s because once a corporation dissolves, it simply does not exist anymore in the eyes of the law.

BANKRUPTCY

In some cases, bankruptcy and dissolving a corporation go hand in hand. That’s because financial difficulties are a major reason for corporations to pursue the dissolution process.

However, it’s important to keep in mind that bankruptcy does not mean you immediately have a dissolved corporation. You must fulfill your bankruptcy obligations prior to dissolving your corporation, otherwise dissolution will not be granted.

Bankruptcy is often so damaging to the company’s reputation that they can not come back from it, and voluntary dissolving the company seems like the logical next step.

VOLUNTARY DISSOLUTION

Voluntary dissolution is done under the consent of the corporation’s shareholders or directors. While it may seem like an extreme measure, there are many reasons why a company may choose to become voluntarily dissolved.

In some cases, the company may be facing financial difficulties. Alternatively, dissolution may be the best way to protect shareholders’ interests, or the director may be heading into retirement, and more. In either case, voluntary corporate dissolution can provide a way for the company to wind down its operations in an orderly manner.

Most importantly, the shareholders must agree for the corporation to be voluntarily dissolved. To provide evidence of the agreement, a shareholder resolution must be crafted by a lawyer to outline the intended actions of the shareholders.

INVOLUNTARY CORPORATE DISSOLUTION

There are several reasons a corporation may be ordered to dissolve involuntarily. Still, it is usually a sign of severe financial trouble or fraudulent activity. These reasons include but are not limited to the following:

The company has engaged in illegal or fraudulent activity
There is a major dispute among the shareholders that can not be resolved
The company has failed to file tax returns or pay taxes
The company owes large sums of money to lenders
The company has not filed Annual Corporate Returns (see below)
The company has not followed the rules for corporate entities, such as maintaining an appropriate percentage of Canadian directors
Other irregular conditions

After involuntary dissolution, it may still be possible to restore the dissolved corporation. However, the problem which caused it must first be fixed. Also, since involuntary dissolution is usually seen as a bad sign, companies that are facing involuntary dissolution can have difficulty finding new investors. Therefore, they may be forced to close their doors for good even if it isn’t the first choice of the shareholders.

Dissolving a Company in Alberta

CORPORATE DECISION

The dissolution process is set into motion when shareholders vote in agreement to voluntarily dissolve or when a corporation is ordered to dissolve. After this, they must begin to settle their liabilities and debt. A liquidator may be hired at this point to help with the process, as should a lawyer to help with filing the appropriate forms.

THE PAPERWORK

Every corporation in Alberta must file a Notice of Intent to Dissolve and Articles of Dissolution with Alberta Registries (except in the case of a court order). The Certificate of Intent to Dissolve (which is granted from the Notice of Intent to Dissolve) serves as public notice that the company is no longer performing regular business activities except those related to liquidation.

Other forms related to dissolution include notice of bankruptcy, notice of change of record keeper, notice of court-order appointment, or discharge of liquidator. However, whether or not you need to include these is dependent on your situation.

SHUTTING DOWN

Other closing activities include letting employees go (with severance packages when appropriate), closing GST and payroll accounts, completing the final corporate tax return, paying any remaining balances, and issuing appropriate T4 and T5 slips.

Once the liquidation process is completed, a corporation can apply for a certificate of dissolution. When that is issued, the company no longer exists. A government fee is required to be paid to the corporate registry for processing the dissolved corporation. Along with proper identification.

Accidental Corporate Dissolution in Alberta

On an annual basis, a corporation must file its Corporate Annual Return with the Alberta Registry. This helps keep the Alberta Corporate Registries informed about the current state of your business.

It must be filed each year on the date the business was incorporated. However, suppose a company fails to file it for at least 30 months, any year, after that anniversary date. In that case, it will be struck from the register, and the corporation will be considered dissolved. This is a type of involuntarily dissolved corporation.

A corporation does not have any obligation to revive it at this point, and it can simply be left. However, just bear in mind that there may be consequences for businesses that simply let the registry lapse. For example, it could leave shareholders open to litigation or other vulnerabilities.

Can You Stop or Revoke Corporate Dissolution in Alberta?

A corporation can change its mind once a Certificate of Intent has been issued but not before a Certificate of Dissolution. To stop the dissolution process, the corporation must apply for a Certification of Revocation of Intent to Dissolve with the Corporate Registrar. Once this has been issued, the corporation can carry on with business as usual.

It is not possible to revoke the Certificate of Dissolution once the Registrar has already issued it. Still, it is possible to revive the corporation.

You have up to 5 years to revive a company after it has dissolved. First, however, it is advisable to consult with a lawyer to determine whether revocation or revival is possible for your situation and to ensure that all necessary steps are followed.

CORPORATE DISSOLUTION LAWYER

Corporate dissolution lawyers help their clients through the process of voluntary or involuntary dissolution by ensuring that all paperwork is filed correctly and that the dissolved corporation’s assets are properly distributed. They also work with creditors and shareholders to resolve any outstanding issues.

At DLegal, we know that corporate dissolution can be a complex process. However, our corporate dissolution lawyers have the experience and knowledge to handle it smoothly and efficiently. So, if you want someone on your side to protect your interests during the corporation dissolution process, then get in touch with our corporate lawyers in Calgary today.

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