Is it time to close your Hawaii 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 Hawaii corporation. In no time, you’ll be on your way to whatever’s next.

The Basics of Dissolving a Hawaii 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 Hawaii Department of Commerce and Consumer Affairs (DCCA) and fill out the appropriate Articles of Dissolution.
  • Fulfill your tax obligations: Your corporation will need to pay any taxes due to the IRS and the Hawaii Department of Taxation. 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 Hawaii corporation. But before you can truly start the process, you’ll need to answer one important question.

Who’s Dissolving the Hawaii Corporation?

Two key groups can dissolve a corporation: the original incorporators and the initial board or the directors with the shareholders’ approval. The group initiating the dissolution affects how you file with the DCCA. So let’s talk about each.

Dissolving a Hawaii corporation by the incorporators or initial board of directors

In some cases, a Hawaii corporation might decide to dissolve before they really get things up and running. More specifically, if the corporation hasn’t issued stock or conducted any business yet, then the incorporators or initial directors will be the ones who vote to dissolve the corporation.

Once the dissolution vote passes, the corporation can file the Articles of Dissolution by Incorporators or Initial Directors form. Here’s the information required to complete this document:

  • Name of the corporation
  • Date of original incorporation
  • Whether the corporation hasn’t started business OR hasn’t issued shares
  • Confirmation of the following:
    • Net assets have been distributed (if applicable)
    • No debts are unpaid
    • A majority of directors or incorporators approved the dissolution
  • Name, signature, and title of individual(s) filing the form

There is a $25 fee for this form. Hawaii usually takes 3-5 business days to process these documents.

Dissolving a Hawaii corporation by the shareholders

In a corporation that has issued shares, the dissolution process looks a tad 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 Articles of Dissolution form. Here’s the information required to complete the document:

  • Name of the corporation
  • Date the dissolution was authorized
  • How the resolution was adopted: a description of the vote split or confirmation that it was a unanimous decision
  • The effective date for the filing
  • Name, signature, and title of an authorized officer

There is a $25 fee for this form. Hawaii usually takes 3-5 business days to process most documents.

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 Hawaii 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 write a letter to the director of the DCCA, requesting reinstatement for your corporation. This letter needs to include some information, along with any delinquent fees or reports. You can find more details here.

Please note that you only have two years after your corporation is administratively dissolved to get reinstated. After that point, you would have to create a new corporation entirely. Important note: the two-year window is for administrative dissolutions only. Voluntary dissolutions (as discussed above) have a shorter filing window.

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 Hawaii business name?

After you dissolve your corporation, your business doesn’t instantly vanish off of Hawaii’s records. Your business name will still “belong” to your dissolved corporation. It will stay listed as your name for 120 days after you dissolve; after that period, the name will become available again. This time period is a bit longer for corporations that are administratively dissolved.

Can I change my mind and go back into business?

Yes, but you can’t dawdle. If you voluntarily dissolved your corporation, you have just 120 days to go back into business. To do that, you’ll need approval from your board and shareholders. Then you can file your Articles of Revocation of Dissolution form. There’s a $25 fee for this filing. Find the full state guidelines for this process here.

What if I want to become an LLC instead of closing my business?

Hawaii allows corporations to convert into any entity type they choose, provided the proper procedure is followed. To convert into an LLC, you’ll need to first vote to convert and draft a plan of conversion. Then you can file your Articles of Conversion. The fee for this filing is $100. For more information on starting and running an LLC, check out our guide to starting a Hawaii LLC.

Do I have to publish a notice that my corporation is dissolving?

You must notify your stakeholders (i.e., shareholders and creditors) that your corporation is dissolving so you can settle debts and distribute any due assets to the shareholders. However, exactly how you notify them is up to you. A newspaper publication is an option, but it’s not a requirement. Most corporations choose to send direct notifications instead.

How can I avoid being dissolved because of a registered agent issue?

In Hawaii, you can be administratively dissolved if you let your registered agent coverage lapse for too long. Thankfully, you can avoid this problem easily. If you’ve picked a new agent or your old agent has notified you that they’ve resigned, simply file the Statement of Change of Registered Agent by Entity form as soon as possible. There’s a $25 fee.

As long as you avoid a lapse in your agent coverage, your corporation will stay compliant.

How long do Hawaii stakeholders have to lay claim to my corporation’s assets?

When you notify your stakeholders that you’re dissolving, you actually get to decide how long they have to come forward and make a claim against your corporation. The only rule is that you must give them at least 120 days to make a claim. You can provide longer than that if you wish, but 120 is the minimum. For a fuller look at these legal requirements, check out the state’s Dissolution Articles.

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