Dissolving a North Dakota corporation that ceases doing business is done in one of two ways, both of which require filing the appropriate documents with the state and federal government. The distinction between the two methods of dissolution is whether the corporation's shareholders opt to notify the corporation's creditors and claimants of the dissolution. The requirements for each method are set forth in the North Dakota Business Corporation Act.
Shareholder Approval for Dissolution
Before a North Dakota corporation can be dissolved, a majority of shareholders entitled to vote must approve a resolution to dissolve the corporation. The required approval must be done at a meeting of the shareholders, either by vote or writing signed by the shareholders. All shareholders, regardless of whether they have voting rights, must be given notice of the date and time of the meeting and informed the purpose of the meeting is to consider dissolving the corporation. After a majority of shareholders approves dissolving the corporation, the necessary action should be taken to start the dissolution process. In situations where the corporation no longer has any outstanding shares, North Dakota law authorizes the corporation's directors to vote on a resolution to dissolve the corporation and commence dissolution upon its approval.
Notice of Intent to Dissolve
After approving the resolution to dissolve, the corporation must file a document called "Notice of Intent to Dissolve" with the North Dakota Secretary of State. An optional form of notice is provided by the secretary's office; however, any form of notice is acceptable for filing if it includes the following information: corporation's name; date and place of the meeting at which the shareholders approved dissolution of the corporation; and a statement that the required vote of shareholders was received or all shareholders entitled to vote signed a written action to dissolve the corporation. The original notice must be signed by an authorized representative of the corporation and filed with the secretary's office along with the current filing fee. The corporation must cease doing business, but may continue in existence for the purpose of winding up the affairs of the corporation. The corporation will not cease to exist until it files Articles of Dissolution with the Secretary of State.
Within 30 days after approving the resolution to dissolve the corporation, Form 966 -- Corporate Dissolution or Liquidation -- must be filed with the IRS. The form gives the IRS notice of the dissolution. If the corporation amends its resolution to dissolve, an updated Form 966 must be filed.
Procedure for Dissolution Without Notice to Creditors
After filing the Notice of Intent to Dissolve, the corporation's board of directors must take action to collect all outstanding debts owed to the corporation and pay all outstanding debts and obligations of the corporation. This must be done regardless of whether the corporation's creditors and claimants will be notified of the dissolution. If the corporation chooses not to notify its creditors and claimants, this affects when the Articles of Dissolution can be filed with the Secretary of State. The articles cannot be filed until all known creditors and claimants have been paid or a minimum of two years have elapsed since the filing of the Notice of Intent to Dissolve.
Procedure for Dissolution With Notice to Creditors
If the corporation chooses to give notice of the dissolution to its creditors and claimants, it must publish a notice once a week for four consecutive weeks in an approved newspaper in the county or counties where the corporation's principal offices and registered agent are located. The corporation must also give written notice to all known creditors and claimants by any reasonable means, including mail, fax or personal delivery. The published and mailed notices must state the corporation is in the process of dissolving, date on which it filed its notice of intent with the Secretary of State and address where claims are to be sent. For mailed notices, each creditor and claimant must be notified of the deadline for submitting a claim, which must be at least 90 days from the date the notice was sent to the creditor or claimant. By giving notice to creditors and claimants, the corporation can file the Articles of Dissolution at the end of the 90 day period, so long as all creditors and claimants who submitted claims have been paid or provided for. However, if the corporation rejects a creditor's claim, the corporation must wait at least 180 days from the date it filed its notice of intent with the Secretary of State to file its Articles of Dissolution -- and must be able to state there is no pending legal, administrative or arbitration proceeding by or against the corporation.
Distribution of Assets and Filing Articles of Dissolution
After completing the dissolution procedure chosen by the corporation, the remaining assets, if any, are distributed to the shareholders in accordance with the provisions of Section 10-19.1-92 of the North Dakota Business Corporation Act. The corporation can then file its Articles of Dissolution with the Secretary of State. A form of articles is available from the secretary's website. The same form can be used whether or not the corporation gave notice to its creditors and claimants, with appropriate boxes being checked regarding notice. The articles must also state that all remaining assets have been distributed. The articles must also be signed by an authorized corporate representative and include the name, e-mail address and daytime telephone number of a contact person in case there are questions about the filing from the secretary's office.