There is perhaps nothing more exciting from a business perspective than a group of like-minded and talented individuals coming together to devise a unique product or service with a high profit potential.
Indeed, when the timing is right and the potential investors are lined up, these individuals can move forward with realizing their shared vision. While this naturally means moving forward with research, development and perhaps even production, it also means taking more practical steps, such as renting space, leasing office equipment and, of course, registering as a corporation.
What happens, however, when the business venture, despite the best efforts of all parties, simply fails to take off? In other words, what happens when the corporation needs to be dissolved?
At the outset, it’s important to establish that the state of Georgia has essentially two procedures for dissolving corporations: one for those that have commenced business and/or issued shares, and one for those that have done neither.
If there is perhaps any good news to come from the above-discussed scenario, it’s that those corporations falling into the latter category are required to do less.
In general, a corporation that has neither commenced business nor issued shares will need to file Articles of Dissolution with the Secretary of State setting forth the following:
- The corporation’s name
- The date of incorporation
- That the corporation has neither commenced business nor issued shares
- That the corporation has no outstanding debt
- That the corporation’s remaining assets have been distributed among the shareholders (if shares were issued)
- That the dissolution has been authorized by either the majority of the incorporators or initial directors
The articles will need to be signed by chair of the board, an officer, an incorporator (if no directors were appointed), attorney or court-appointed trustee/receiver. While no filing fee is necessary, the corporation will need to be in an active status and current on its registration.
As to when the dissolution becomes effective, this occurs on the date on which the articles are received by the Secretary of State (unless indicated otherwise in the articles).
It’s important to understand that while the act of dissolving a corporation under these circumstances is not inherently complex, the steps leading up to it are. Indeed, there are multifaceted issues that must be considered in order to ensure that goals are met, legal requirements satisfied and legal protections remain in place.
As such, those in this situation should seriously consider consulting with a skilled legal professional.