By Fredrick P. Niemann, Esq. of Hanlon Niemann & Wright, a Freehold, NJ Business and Commercial Attorney
Our last blog discussed dissolving corporations in New Jersey based on a triggering event. In this blog, I will discuss other traditional ways to dissolve a corporation based on the votes of the shareholders or board of directors. Each of these votes requires notice be given to all shareholders before an action is taken. The failure to do so can render the vote taken null and void.
If all shareholders consent to a corporation’s dissolution, the shareholders can then file a certificate of dissolution without the need for a formal meeting. The consent of the voting shareholders is all that is necessary to dissolve. However, notice of dissolution must be given to all non-voting shareholders 10-60 days before the filing of the certificate of dissolution.
If a corporation is larger, or not all the shareholders consent, a formal meeting can be held to dissolve a corporation. First, the board of directors must vote to put the question of dissolution to the shareholders. Then at a meeting of the shareholders, a majority must approve the measure to dissolve, and if approved, a certificate of dissolution may be filed. Notice of this meeting to all shareholders must also be given within 10-60 days of the meeting. If the corporation was incorporated prior to January 1, 1969, 2/3 of the shareholders must give their consent.
Note that the articles of incorporation can require higher thresholds to dissolve under this method, such as requiring all board members to consent before certifying the question or requiring ¾ of the shareholders to approve the dissolution, but the articles cannot provide less stringent requirements. The only exception to this is if the corporation was incorporated prior to January 1, 1969, in which case 2/3 of the shareholders can adopt a provision to lower the requirement from a 2/3 majority to a simple majority to dissolve.
A corporate officer can dissolve the corporation if the corporation has no assets, ceased doing business, has no intention to recommence business, and has not made distributions of cash or property to shareholders within 2 years. The officer must give notice to all directors and shareholders of his or her intention to dissolve, and then can file a certificate of dissolution if no objection is given after 30 days of receipt of the notice.
Our laws provide many ways to dissolve a corporation. Finding the proper way or the way that works the best simply depends on the articles of incorporation and the composition of the corporation’s shareholders.
To discuss your NJ Business and Commercial matter, please contact Fredrick P. Niemann, Esq. toll-free at (855) 376-5291 or email him at email@example.com. Please ask us about our video conferencing consultations if you are unable to come to our office.