Corporations – Corporate Dissolution – Colorado
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COLORADO REVISED STATUTES, §§7-114-101 through 7-114-401
A Colorado “for profit” corporation may be dissolved in three different ways: voluntarily, administratively, or judicially.
If a corporation has not yet issued shares, a majority of its directors or, if no directors have been elected, a majority of its incorporators may authorize the dissolution of the corporation.
After shares have been issued, dissolution of a corporation may be dissolved as follows:
The board of directors must adopt the proposal to dissolve.
The board of directors must recommend the proposal to dissolve to the shareholders unless the board of directors determines that, because of conflict of interest or other special circumstances, it should not make a recommendation and the board communicates the basis for its determination to the shareholders.
The shareholders entitled to vote on the proposal to dissolve must approve the proposal to dissolve as provided in subsection (5) of this section. Unless the Colorado Revised Statutes (Articles 101 to 117 of Title 7, including § 7-117-101(10)), the articles of incorporation, bylaws adopted by the shareholders, or the board of directors require a greater vote, the proposal to dissolve must be approved by each voting group entitled to vote on the proposal by a majority of all the votes entitled to be cast by that voting group.
The board of directors may condition the effectiveness of the dissolution on any basis.
The corporation must give notice, in accordance with § 7-107-105, to each shareholder entitled to vote on the proposal of the shareholders’ meeting at which the proposal to dissolve will be voted upon. The notice must state that the purpose (or one of the purposes) of the meeting is to consider the proposal to dissolve the corporation, and the notice must contain or be accompanied by a copy of the proposal or a summary of the proposal.
On and after the effective date of dissolution, the entity name of a dissolved corporation must include the words “a dissolved Colorado corporation” and the year of dissolution.
A dissolved corporation continues its corporate existence but may not carry on any business except as is 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 provision for discharging its liabilities;
4. Distributing its remaining property among its shareholders according to their interests; and
5. Doing any 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 in Title 7, Article 108;
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 or its articles of incorporation;
5. Prevent commencement of a proceeding by or against the corporation in its corporate name; or
6. Abate or suspend a proceeding pending by or against the corporation on the effective date of dissolution.
A dissolved corporation must dispose of the known claims against it by following the statutory procedures.
A dissolved corporation must give written notice of the dissolution to known claimants within ninety days after the effective date of the dissolution. The notice must:
1. Describe the information that must be included in a claim;
2. Provide an address to which written notice of any claim must be given to the corporation; and
3. State that, unless sooner barred by any other statute limiting actions, the claim will be barred if an action to enforce the claim is not commenced by a deadline that is stated on the notice, which deadline must not be less than two years after the giving of notice. Unless sooner barred by any other statute limiting actions, a claim against a dissolved corporation is barred if a claimant received the notice of dissolution as set out above and an action to enforce the claim is not commenced by the deadline stated in the notice of dissolution.
The failure of a dissolved corporation to give the statutorily required notice to a known claimant does not affect the disposition of any claim held by any other known claimant.
With regard to known claimants, a “claim” does not include a contingent liability or a claim based on an event occurring after the effective date of dissolution. An action to enforce a claim includes an arbitration under any agreement for binding arbitration between a dissolved corporation and the claimant and includes a civil action.
A dissolved corporation may publish notice of its dissolution and request that persons with claims against the corporation present them in accordance with the notice. A published notice must:
1. Be published one time in a newspaper of general circulation in the county where the dissolved corporation’s principal office is located or, if it has no principal office in this Colorado, where its registered office is or was last located;
2. Describe the information that must be included in a claim and provide an address at which any claim must be given to the corporation; and
3. State that, unless sooner barred by any other statute limiting actions, the claim will be barred if an action to enforce the claim is not commenced within five years after the publication of the notice or within four months after the claim arises, whichever is later.
If a dissolved corporation publishes a notice in accordance with the statutory requirements, then, unless sooner barred under section 7-114-106 or under any other statute limiting actions, the claim of any claimant against the dissolved corporation is barred unless a claimant commences an action to enforce the claim within five years after the publication date of the notice or within four months after the claim arises, whichever is later.
With regard to publishing notice to claimants, a “claim” means any claim, excluding claims of this state, whether known, due or to become due, absolute or contingent, liquidated or unliquidated, founded on contract, tort, or other legal basis, or otherwise. An action to enforce a claim includes an arbitration under any agreement for binding arbitration between a dissolved corporation and the claimant and includes a civil action.
A claim may be enforced:
1. Against the dissolved corporation to the extent of its undistributed assets; and
2. If assets have been distributed in liquidation, against a shareholder of a dissolved corporation (however, a shareholder’s total liability for all claims may not exceed the total value of assets distributed to the shareholder). A shareholder required to return any portion of the value of assets received by the shareholder in liquidation is entitled to contribution from all other shareholders. Each such contribution must be in accordance with the contributing shareholder’s rights and interests and cannot exceed the value of the assets received by the contributing shareholder in liquidation.
A dissolved corporation must either:
1. Maintain a registered agent to accept service of process on its behalf; or
2. Be deemed to have authorized service of process on it by registered or certified mail, return receipt requested, to the address of its principal office, if any, as set forth in its articles of dissolution or as last changed by notice delivered to the secretary of state for filing or to the address for service of process that is stated in its articles of dissolution or as last changed by notice delivered to the secretary of state for filing.
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