When it is time to wind down the affairs of a corporation, state law governs the protocol for how to terminate the business. There is a formal process by which the corporation must be dissolved and this process is overseen by a state governmental body. In South Carolina, the Secretary of State administers the laws relating to corporations in the South Carolina Code of Laws. Chapter 14 of Title 33 of the South Carolina Code of Laws specifically governs the dissolution of corporations.
What is Dissolution?
Dissolution is the legal term for the termination of a corporation. It is a decision typically made by the majority of individuals who incorporated the corporation or a board of directors. A corporation that has been dissolved ceases to operate as a business, except as necessary to wind up the affairs of the corporation. Dissolution is an important process as it terminates the liability of the corporation for taxes and ongoing business expenses. It also eliminates the possibility that the company may be sued.
How to Dissolve a Corporation
To dissolve a corporation, South Carolina law requires that a corporation adopt Articles of Dissolution, which include information such as the name of the corporation, date of the dissolution decision, a statement explaining that proper protocol under the articles of incorporation was met in deciding to dissolve as well as the specific vote breakdown for dissolution. The process for dissolution differs based on the party making the decision – whether it is the incorporators or board of directors and shareholders. The South Carolina Secretary of State website provides a template for Articles of Dissolution that can be customized for a particular corporation. Once the Articles of Dissolution have been adopted, two originals of the signed articles and filing fees must be delivered to the South Carolina Secretary of State along with a self-addressed stamped envelope. The Secretary of State will return a certified copy for the corporate records.
Revocation of Dissolution
There is a 120-day window, following the decision to dissolve the corporation, in which the decision can be revoked. This decision must be made in the same manner as the decision to dissolve was made, unless the Articles of Dissolution allow for a different manner. Once the decision to revoke the dissolution has been made, the corporation must deliver the following to the South Carolina Secretary of State: the Articles of Dissolution and revocation containing the name of the corporation, effective date of revocation, date revocation was authorized and a statement detailing the revocation vote.
The State of South Carolina has the ability to dissolve corporations registered within the state for failing to file and/or pay required taxes. If your corporation is dissolved by the state, you will have the opportunity to cure the reasons for which it was dissolved. Once the problems have been fixed, the state will issue you a Certificate of Tax Compliance, which then must be filed with the Secretary of State along with an Application for Reinstatement and required fees.