California Involuntary Corporate Dissolution Law

The process for involuntary dissolution of a corporation is set forth in Cal Corp Code §§ 1800 -1809.

Under those sections, a verified complaint for involuntary dissolution of a corporation may be filed in the superior court of the proper county.  If the ground for the complaint for involuntary dissolution is a deadlock in the board, the court may appoint a provisional director.  When an involuntary proceeding for winding up has commenced, the board shall conduct the winding up of the affairs of the corporation, subject to the supervision of the court, unless other persons are appointed by the court to conduct the winding up.  The directors or such other persons may exercise all their powers through the executive officers without any order of the court but subject to any restrictions imposed by the court.

When an involuntary proceeding for winding up has commenced, the corporation shall cease to carry on business except to the extent necessary for the beneficial winding up.  The directors shall cause written notice of the commencement of the proceeding for involuntary winding up to be given by mail to all shareholders and to all known creditors and claimants.  Upon the final settlement of the accounts of the directors or other persons appointed, the court may make an order declaring the corporation duly wound up and dissolved.  The order shall declare that the corporation has been duly wound up and its known assets have been distributed to the persons entitled thereto.  The order shall also state that the accounts of directors or such other persons have been settled and that they are discharged from their duties and liabilities to creditors and shareholders.

Corporate existence shall cease upon the making of the order declaring the corporation dissolved except for the purposes of further winding up if needed.  The directors or such other persons shall be discharged from their duties and liabilities except for any completion in the winding up.

The decree or judgment, certified by the clerk of court, shall forthwith be filed in the office of the Secretary of State whenever a corporation is dissolved.


Inside California Involuntary Corporate Dissolution Law