Is it time to close your Delaware corporation, but you’re not sure where to start the process?
Dissolving a corporation is a lengthy but manageable endeavor. And every state’s procedure looks a bit different. In this guide, we’ll cover the state-specific components of dissolving your Delaware corporation. In no time, you’ll be on your way to whatever’s next.
The Basics of Dissolving a Delaware Corporation
In general, every dissolution follows the same basic structure, with 5 basic steps. There are, of course, a lot more “nuts and bolts” to the process (read more about them here), but for now, let’s get a bird’s eye view:
- Vote to dissolve the corporation: Corporations are not solo endeavors, and ending them isn’t one individual’s call. First, your board will need to convene and vote on a motion to dissolve the corporation. After that, some corporations will need to have their shareholders vote for the dissolution as well (depending on the corporation’s bylaws).
- File the dissolution paperwork: Once your corporation’s members have decided to dissolve, you’ll reach out to the Delaware Division of Corporations and fill out the appropriate Certificate of Dissolution.
- Fulfill your tax obligations: Your corporation will need to pay any taxes due to the IRS and the Delaware Division of Revenue. This can be a multi-step process as you liquidate assets and pay any creditors.
- Cancel licenses and close accounts: If your corporation maintains any licenses or permits, this is the time to cancel them so you aren’t charged renewal fees. You should also close down accounts with vendors and your bank (once your financial affairs are settled).
- Notify your stakeholders: A dissolving corporation must settle any financial debts, liquidate its assets, and distribute the appropriate funds to its shareholders. Stakeholders must be notified so they can lay claim to their share in a timely fashion.
That’s the gist of dissolving a Delaware corporation. But before you can truly start the process, you’ll need to answer one important question.
Who’s Dissolving the Delaware Corporation?
Two key groups can dissolve a corporation: the original incorporators and the initial board of directors or the board of directors with the shareholders’ approval. The group initiating the dissolution ultimately affects how you file with the Division of Corporations. So let’s talk about each.
Dissolving a Delaware corporation by the incorporators or initial board of directors
In some cases, a Delaware corporation might decide to dissolve before they really get things up and running. In this case, the incorporators or initial board of directors will be the ones who vote to dissolve the corporation and file the appropriate paperwork.
Delaware actually provides two specific forms for corporations at this phase. Let’s start with the Certificate of Dissolution Before Beginning Business. Here’s the information required to complete this document:
- Name of the corporation
- Date you originally filed your Certificate of Incorporation
- Confirmation that no capital has been paid or that any capital issued has been returned to its
- Confirmation that any stock issues have been canceled or surrendered
- Surrender of all rights or franchises of the corporation
The Certificate of Dissolution Before Issuance of Shares requires similar information:
- Name of the corporation
- Date you originally file your Certificate of Incorporation
- Confirmation of all the following:
- No stock was issued
- No part of capital has been paid
- All debts have been paid
- All capital and franchises are surrendered
No matter which form you have to file, the price is the same: $204. Delaware usually processes this paperwork within 15 business days.
Dissolving a Delaware corporation by the shareholders
In a corporation that has issued shares, the dissolution process looks just a bit different. In most cases, the board votes for a motion to dissolve the corporation. Then that vote is brought before the shareholders for approval.
Once that approval is obtained, it’s time to file the Certificate of Dissolution form. Here’s the information required to complete the document:
- Name of the corporation
- Date the Certificate of Incorporation was originally formed
- Date the dissolution was authorized
- Name, title, and address of directors and officers of the corporation
- Name and signature of person filing the form
Like the above certificate, the filing fee for this document is $204. It should be processed within 15 business days.
All told, the paperwork steps for dissolving a corporation are pretty similar; it’s primarily a matter of filing the proper form.
What About Administrative Dissolutions?
Sometimes, the state of Delaware may force a corporation to dissolve against its will. Usually, this happens because a corporation hasn’t filed its annual report, paid its taxes, maintained its registered agent, renewed appropriate licensure, or some other clerical error. A corporation may also be dissolved for any activities that are ruled fraudulent or otherwise harmful to the public.
In most cases, these corporations can be restored and resume business. The process can be quite a hassle, but it is manageable. First, a corporation must resolve whatever issue caused its dissolution. A corporation with defunct annual reports, for example, would need to submit the reports and pay any missing fees (plus late fees).
After that, you’ll need to file the Certificate of Renewal and Revival for a Voided Corporation. This form costs $5, and it includes some important information such as your name, registered agent, and the day the corporation will be reinstated. An authorized officer will also have to sign the form.
It’s far easier to avoid dissolution entirely; remain compliant with your corporation, and you can skip this step completely.
Frequently Asked Questions
What happens to my Delaware business name?
After you dissolve your corporation, your business name becomes available almost immediately for other businesses to use. That’s why we recommend being 100% sure that you’re done with business before filing any dissolution paperwork.
Can I change my mind and go back into business?
Delaware doesn’t provide for reinstatement of corporations that are voluntarily dissolved; the only reinstatement provisions are for corporations that were dissolved administratively.
What if I want to become an LLC instead of closing my business?
Delaware allows corporations to convert into an entity type they choose, including LLCs. Of course, you’ll have to vote for that conversion. And then you’ll need to file the appropriate paperwork. You can find more details about this process here. For more information on starting and running an LLC, check out our guide to Delaware LLCs.
Do I have to publish a notice that my corporation is dissolving?
You must notify your stakeholders that your corporation is dissolving so you can settle any claims. However, exactly how you notify them is up to you. You can publish a notice in a public newspaper if you’d like, but the state doesn’t requirement. Many corporations choose to notify their constituents more directly.
How can I avoid being dissolved because of a registered agent issue?
Delaware can dissolve your corporation administratively if you let your registered agent coverage lapse. Thankfully, you can avoid this problem easily. If you’ve picked a new agent or your old agent has resigned, simply file the Change of Agent form as soon as possible. There’s a $50 fee. If your agent resigns, they must notify you 30 days in advance of their resignation, giving you plenty of time to appoint a new one.
As long as you avoid a lapse in your agent coverage, your corporation will stay compliant.
How long do Delaware stakeholders have to lay claim to my corporation’s assets?
When you notify your stakeholders, you can set out the time period that they have to come forward to make a claim. That said, you must give them at least 60 days to make a claim. For more information on these requirements (and how claims can be maintained or barred), check out the state’s dissolution statutes.
Dissolve a Corporation in all States
We break down the corporation dissolution process in every state. View all of our guides below.
- Dissolve an Alabama Corporation
- Dissolve an Alaska Corporation
- Dissolve an Arizona Corporation
- Dissolve an Arkansas Corporation
- Dissolve a California Corporation
- Dissolve a Colorado Corporation
- Dissolve a Connecticut Corporation
- Dissolve a Florida Corporation
- Dissolve a Georgia Corporation
- Dissolve a Hawaii Corporation
- Dissolve an Idaho Corporation
- Dissolve an Illinois Corporation
- Dissolve an Indiana Corporation
- Dissolve an Iowa Corporation
- Dissolve a Kansas Corporation
- Dissolve a Kentucky Corporation
- Dissolve a Louisiana Corporation
- Dissolve a Maine Corporation
- Dissolve a Maryland Corporation
- Dissolve a Massachusetts Corporation
- Dissolve a Michigan Corporation
- Dissolve a Minnesota Corporation
- Dissolve a Mississippi Corporation
- Dissolve a Missouri Corporation
- Dissolve a Montana Corporation
- Dissolve a Nebraska Corporation
- Dissolve a Nevada Corporation
- Dissolve a New Hampshire Corporation
- Dissolve a New Jersey Corporation
- Dissolve a New Mexico Corporation
- Dissolve a New York Corporation
- Dissolve a North Carolina Corporation
- Dissolve a North Dakota Corporation
- Dissolve an Ohio Corporation
- Dissolve an Oklahoma Corporation
- Dissolve an Oregon Corporation
- Dissolve a Pennsylvania Corporation
- Dissolve a Rhode Island Corporation
- Dissolve a South Carolina Corporation
- Dissolve a South Dakota Corporation
- Dissolve a Tennessee Corporation
- Dissolve a Texas Corporation
- Dissolve a Utah Corporation
- Dissolve a Vermont Corporation
- Dissolve a Virginia Corporation
- Dissolve a Washington Corporation
- Dissolve a Washington D.C. Corporation
- Dissolve a West Virginia Corporation
- Dissolve a Wisconsin Corporation
- Dissolve a Wyoming Corporation