Dissolution of Corporation That Has Not Commenced Business
If a corporation has not issued shares or has not commenced business, O.C.G.A. § 14-2-1401 governs the dissolution process. Pursuant to that statute, dissolution may be accomplished by filing Articles of Dissolution with the Georgia Secretary of State. A majority of the shareholders (if shares have been issued) or initial directors must approve the dissolution. The “winding up” process will also need to involve paying any outstanding debts of the corporation and distributing corporate assets after the corporation is dissolved.
Dissolution of Active Corporation
When shares have been issued and a corporation is actively conducting business, the dissolution process is more complex. Dissolution must first be approved by the shareholders of the corporation. The first step in the legal dissolution process involves filing a Notice of Intent to Dissolve pursuant to O.C.G.A. § 14-2-1403. Publication of the Notice is required to allow anyone with a claim against the corporation to file that claim during the dissolution process. Only after all debts of the corporation have been paid and assets distributed to the shareholders may the corporation file Articles of Dissolution pursuant to O.C.G.A. § 14-2-1408.
Dissolution of a corporation can also occur involuntarily pursuant to O.C.G.A. § 14-2-1430 either by order of the Superior Court in a proceeding initiated by the Attorney General or a shareholder. When a shareholder initiates an involuntary dissolution, it is often because of tension or disagreement among the shareholders regarding the operation of the business. Whenever possible, judicial dissolution should be avoided. Not only will the corporation incur the fees and costs associated with dissolving the corporation in general, but the value of the corporate assets distributed to shareholders will be diminished because liquidation of those assets will likely occur through a court-ordered auction.
Our aim is to assist and guide your corporation through the dissolution process to ensure that you do not make costly mistakes – both in terms of time and money. Given the complex nature of the corporate dissolution process, it is in your best interest to have an experienced corporate attorney by your side throughout the process.