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

The Basics of Dissolving a Maryland 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 Maryland Department of Assessments and Taxation 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 Department of Assessments and 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 Maryland corporation. But before you can truly start the process, you’ll need to answer one important question.

Who’s Dissolving the Maryland Corporation?

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

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

In some cases, a Maryland 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 form. Here’s the information required to complete this document:

  • Name of the corporation
  • Principal office address
  • Name and address of the agent who will stay on file for one year after the dissolution is effective
  • Name and address of each director
  • Name and address of each officer
  • Confirmation that stakeholders have been notified OR no creditors are known
  • Effective date for the filing
  • Signature and title of attesting officer and a signing officer (must be two separate individuals)
  • Signature of registered agent designating consent to remain as agent for a year

In addition to the form, you should add an attachment describing whether you’re dissolving before your first organizational meeting or post-meeting but before the issuance of stock.

This form costs $100 to submit, and you can also file online using Maryland Business Express. Maryland usually processes online filings in 7-10 business days, and paper filings take much longer (4-6 weeks). You can expedite a paper filing by dropping it off in person at the Department’s office (a $50 fee).

Dissolving a Maryland corporation by the shareholders

In a corporation that has issued shares, the dissolution process looks a little 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, the corporation will file the Articles of Dissolution. This form is identical to the one above, but you don’t have to file an additional attachment about the vote to dissolve. The filing fee is still $100, and you can expect online documents to take 7-10 business days (4-6 weeks for paper forms).

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 Maryland 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 your Articles of Revival. There’s a $100 base fee for this form (plus $300 for each defunct report). Reinstatement can be a very pricey endeavor.

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 Maryland business name?

After you dissolve your corporation, your name immediately becomes available for other businesses to use. So as soon as the state processes your paperwork, your name is no longer yours.

Can I change my mind and go back into business?

Technically you can, but under very limited circumstances. There’s a period of time between when you submit the dissolution paperwork and when the state processes it; that’s your window of opportunity to change your mind and file a Revocation of Dissolution. So in most cases, you’ll just have to start over from scratch with a new corporation.

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

Maryland allows corporations to convert into other entity types if they choose as long as the proper procedure is followed. To convert, you’ll first need to vote to convert. Then you can draft a plan of conversion and file the Articles of Conversion. You can find details about this process here. For more information on starting and running an LLC, check out our guide to starting a Maryland LLC.

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

Maryland requires you to notify your stakeholders by mail that your business is dissolving; if you want, you can also publish a newspaper notice, but it’s not a statutory requirement.

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

In Maryland, you can be administratively dissolved 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 Resolution to Change Principal Office and/or Resident Agent form as soon as possible. There’s a $25 fee.

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