How to Re-Open a Dissolved Company

By Heather Frances J.D.

In theory, corporations can exist forever, but they can also go out of business or be dissolved for other reasons. For example, you and the other corporate shareholders may dissolve one corporation to pursue another business venture; however, you can typically recreate your original corporation if you decide to go back to it. Corporations are independent legal entities formed under state law, and each state has its own laws that control the ability of dissolved corporations to reactivate.

In theory, corporations can exist forever, but they can also go out of business or be dissolved for other reasons. For example, you and the other corporate shareholders may dissolve one corporation to pursue another business venture; however, you can typically recreate your original corporation if you decide to go back to it. Corporations are independent legal entities formed under state law, and each state has its own laws that control the ability of dissolved corporations to reactivate.

Corporate Dissolution

Corporations have a life cycle that includes a date of birth, or formation, and date of death, or dissolution. Corporations can be dissolved involuntarily by the state or voluntarily by the shareholders. For example, if you fail to file annual reports as required by your state’s laws, the secretary of state’s office, or similar regulatory agency, could dissolve your corporation involuntarily. Alternatively, shareholders could vote to dissolve the corporation because the business is struggling or they are no longer interested in continuing it. Dissolution requires a detailed process of filing notices with your state, closing accounts, paying debts and distributing assets to shareholders.

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Re-Establishing a Dissolved Corporation

Most states do not have a way for a dissolved corporation to reactivate itself, particularly when the corporation voluntarily dissolved. In these states, shareholders must form a new corporation by filing new articles of incorporation with the state business registration authority. Essentially, the corporation must follow the same registration process it followed when it initially began. The corporation can choose to use the same name it used before dissolution, as long as that name is still available, or use a similar name. Regardless of the name chosen, the new corporation is a completely different legal entity from the dissolved corporation.

Reactivation

In some states, dissolved corporations can reactivate by filing paperwork with the state business registrar. States that administratively dissolve corporations for failing to file annual paperwork typically offer a way to reactivate the company. This lessens the burden caused when a corporation forgets to file annual reports but does not want to stop doing business. For example, New York can dissolve your corporation if it fails to file annual returns or pay taxes or fees for two consecutive years, but it allows you to reinstate your corporation by following a specific process.

Curing Deficiencies

State rules may require you to reactivate your corporation within a certain time period. For example, Montana allows involuntarily dissolved corporations to be reinstated within five years of dissolution by filing specific forms, obtaining a tax certificate and paying a filing fee. If your corporation was administratively dissolved by the state, you must cure any deficiencies before you can reactivate the corporation, including filing missing annual reports or paying past due fees and taxes.

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A dissolved corporation ceases to legally exist and the effect this has on its shareholders depends on how it was dissolved. If the corporation is dissolved voluntarily and its assets distributed to the shareholders without paying all remaining corporate debts, the shareholders could become liable for the debts. If the corporation is dissolved involuntary by the court or administratively by the state, the shareholders can incur additional expenses and liabilities. Avoiding these negative financial consequences requires proper dissolution of the corporation.

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