Arizona Corporate Dissolution Law


Corporations – Corporate Dissolution – Arizona

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STATUTORY REFERENCE

ARIZONA REVISED STATUTES, ยงยง 10-1401 through 10-1440

In Arizona, a corporation may be dissolved voluntarily, administratively, or judicially.

If a corporation has not issued shares or has not commenced business, then a majority of the incorporators or initial directors may dissolve the corporation by filing Articles of Dissolution with the Arizona Corporation Commission.

Additionally, the Board of Directors of a corporation may propose dissolution for submission to the shareholders. For the Board’s proposal to be adopted, the Board must recommend dissolution to the shareholders – unless the Board determines that, because of conflict of interest or other special circumstances, it should make no recommendation and advises the shareholders of the basis for its determination. Then, the shareholders entitled to vote must approve the proposal to dissolve. Unless the articles of incorporation or the Board requires a greater vote or a vote by voting groups, for the proposal to dissolve to be adopted, must be approved by a majority of all of the votes entitled to be cast on the Board’s proposal.

The Board may condition its submission of the proposal for dissolution on any basis.

The corporation must notify each shareholder, whether or not entitled to vote, of the proposed shareholders’ meeting. The notice must state that the purpose (or one of the purposes) of the meeting is to consider dissolving the corporation.

A corporation is dissolved on the effective date of its articles of dissolution.

The articles of dissolution are not considered complete until the commission receives a notice from the Department of Revenue confirming that any and all taxes levied pursuant to Title 42, Chapter 5, Article 1 (Transaction Privilege and Affiliated Excise Taxes) due by the corporation have been paid or that the corporation is not subject to those taxes.

Articles of dissolution are not considered complete until all fees, penalties and costs required to be paid have been paid and the Commission has received an affidavit that a copy of the articles of dissolution has been published.

A dissolved corporation continues its corporate existence but cannot carry on any business except that business appropriate to wind up and liquidate its business and affairs, including:

1. Collecting its assets.

2. Disposing of its properties that will not be distributed in kind to its shareholders.

3. Discharging or making provisions for discharging its liabilities.

4. Distributing its remaining property among its shareholders according to their interests.

5. Doing every other act necessary to wind up and liquidate its business and affairs.

Dissolution of a corporation does not:

1. Transfer title to the corporation’s property.

2. Prevent transfer of its shares or securities, although the authorization to dissolve may provide for closing the corporation’s share transfer records.

3. Subject its directors or officers to standards of conduct different from those prescribed under Arizona general corporation law.

4. Change quorum or voting requirements for its board of directors or shareholders, change provisions for selection, resignation or removal of its directors or officers, or both, or change provisions for amending its bylaws.

5. Prevent commencement of a proceeding by or against the corporation in its corporate name or any officers, directors or shareholders or affect applicable statutes of limitation.

6. Abate or suspend a proceeding pending by or against the corporation or any officers, directors or shareholders on the effective date of dissolution.

7. Terminate the authority of the statutory agent of the corporation.

A dissolved corporation may dispose of the known claims against it by notifying its known claimants in writing of the dissolution. The written notice must:

1. Describe information that shall be included in a claim.

2. Provide a mailing address where a claim may be sent.

3. State the deadline, which may not be fewer than one hundred twenty days from the effective date of the written notice, by which the dissolved corporation must receive the claim.

4. State that the claim will be barred if not received by the deadline.

A claim against the dissolved corporation is barred:

1. If a claimant who was given written notice under subsection B does not deliver the claim to the dissolved corporation by the deadline.

OR

2. If a claimant whose claim was rejected by the dissolved corporation does not commence a proceeding to enforce the claim within ninety days from the effective date of the rejection notice.

A “claim” does not include a contingent claim. However, a claim that is contingent as of the effective date of dissolution but later ripens into a known claim or a claim based on an event occurring after the effective date of dissolution may be disposed of by the dissolved corporation by noticing the claimant as set out above.

If there are potential unknown claims against the corporation, the corporation may publish notice of its dissolution and request that persons with claims against the corporation present them in accordance with the notice. The notice must:

1. Be published one time in a newspaper of general circulation in the county where the dissolved corporation’s known place of business is or was last located.

2. Describe the information that must be included in a claim and provide a mailing address where the claim may be sent.

3. State that a claim against the corporation will be barred unless a proceeding to enforce the claim is commenced within five years after the publication of the notice.

If the corporation publishes a newspaper notice, the claim of each of the following claimants is barred unless the claimant commences a proceeding to enforce the claim against the dissolved corporation within five years after the publication date of the newspaper notice:

1. A claimant who did not receive written notice under section 10-1406.

2. A claimant whose claim was timely sent to the dissolved corporation but not acted on.

3. A claimant whose claim is contingent or based on an event occurring after the effective date of the dissolution.

A claim, including a contingent claim or a claim based on an event occurring after the effective date of dissolution, may be enforced under this section either:

1. Against the dissolved corporation to the extent of its undistributed assets.

OR

2. If the assets have been distributed, against a shareholder of the dissolved corporation to the extent of that shareholder’s pro rata share of the claim or the corporate assets distributed to him in liquidation, whichever is less. A shareholder’s total liability for all claims cannot exceed the total amount of assets distributed to him. Assets of a dissolved corporation that should be transferred to a creditor, claimant or shareholder of the corporation who either cannot be found or who is not competent to receive them and does not have a legal representative who is legally competent to receive them must be reduced to cash and deposited with the unclaimed property division of the Department of Revenue for safekeeping.

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