By Fredrick P. Niemann, Esq. of Hanlon Niemann & Wright, a Freehold, NJ Business Corporation Law Attorney
Over the next two blogs, I will be discussing with you the various ways a New Jersey corporation can be dissolved. Our discussion about dissolution does not apply to LLC’s or partnerships.
First and most important, you need to file a certificate of dissolution with the Secretary of State disclosing that the corporation is being dissolved together with all required details related to how the corporation is/was to be dissolved.
One ground for dissolution is based on an occurrence of a specified event set forth in the articles of incorporation.
Another basis to dissolve a corporation is after the corporation is formed, but before the incorporators have commenced business or set up an organizational meeting to appoint directors and officers. The corporation cannot have issued stock certificates, taken on debt and liabilities, nor received payments for subscriptions of stock.
Finally, actions (or lack thereof) taken by a corporation can trigger the Secretary of State or the Superior Court to dissolve a corporation. The law authorizes the Secretary of State to act on his or her own to dissolve a corporation when it fails to pay its taxes or file annual reports. The Attorney General can commence a court action to dissolve a corporation if it exceeds the authority granted to it, conducts its business unlawfully, or is organized in a fraudulent manner. Finally, directors or shareholders can bring an action to dissolve the corporation if there is shareholder oppression or a corporate deadlock, which I have discussed in my prior blog “Compelling a Shareholder to Sell Shares.” (CLICK HERE) Note that with this last method a court isn’t likely to dissolve a corporation, and will opt to do something less drastic, like compelling the offending shareholder to sell his or her shares back to the corporation at fair market value or appointing a provisional director to oversee operations.
In our next blog, I will go over some ways to dissolve a corporation that can be initiated by the shareholders or a board of directors.
To discuss your NJ Business and Commercial matter, please contact Fredrick P. Niemann, Esq. toll-free at (855) 376-5291 or email him at firstname.lastname@example.org. Please ask us about our video conferencing consultations if you are unable to come to our office.