Just as partnerships, LLCs, S-Corps, and corporations are formed by starting a business, so too must these entities be dissolved when the business entity will no longer be conducting business operations. A reputable and experienced Orange County commercial litigation attorney can provide you and your partners with the documents and procedural guidance needed to properly and legally dissolve your business entity in accordance with the California Corporations Code.
Each business entity requires its own set of rules for a proper dissolution. Your Orange County commercial litigation attorney has provided a brief overview of the proper dissolution steps for the various business entities below.
There are three steps that must be followed in order to cease a partnership: 1) dissolve the partnership, 2) wind up the partnership, and 3) terminate the partnership. There are four different reasons a California partnership may be dissolved per California Corporations Code Section 16801: 1) the term stated in the partnership agreement expires; 2) continuation of the partnership would be prohibited by law; 3) there is a stated agreement for dissolution in the partnership agreement; and 4) there is a court order for the dissolution of the partnership. Upon the dissolution of the partnership, the partnership may still remain in existence for the purposes of settling its obligations.
Legally dissolving an LLC in California requires compliance with California Corporations Code Section 17350. There are three ways to dissolve an LLC: (1) the operating agreement must specifically permit such dissolution; 2) there must have been a successful vote by a specific percentage of its members as specified in its operative agreement; or 3) upon a judicial dissolution.
A dissolved LLC will still remain in existence until all of its obligations have been satisfied. Upon conclusion of the satisfaction of the obligations, a certificate of cancellation must be filed with the Secretary of State.
Corporation and S-Corp
A California corporation or S-Corp may be dissolved in one of three ways. It may be dissolved through voluntary proceedings validated by the voting power of at least 50% of the shareholders, involuntary proceedings initiated by a complaint filed in a state court, or through proceedings initiated by the State of California in the event that the corporation or S-Corp fails to pays its taxes.
Contact a knowledgeable Orange County commercial litigation attorney at the Daily Aljian law firm for a free consultation to discuss the dissolution of your partnership, LLC, S-Corp, or corporation.