Corporations – Corporate Dissolution – Iowa
IOWA CODE, §§ 490.1401 through 490.1407
A majority of the incorporators or initial directors of an Iowa corporation that has not issued shares or has not commenced business may dissolve the corporation by filing articles of dissolution with the Secretary of State. The Articles must set forth:
1. The name of the corporation.
2. The date of its incorporation.
3. Either of the following:
That none of the corporation’s shares has been issued.
That the corporation has not commenced business.
4. That no debt of the corporation remains unpaid.
5. That the net assets of the corporation remaining after winding up have been distributed to the shareholders, if shares were issued.
6. That a majority of the incorporators or initial directors authorized the dissolution.
An Iowa corporation’s board of directors may propose dissolution for submission to the shareholders. For a proposal to dissolve to be adopted, both of the following must apply:
1. The board of directors must recommend dissolution to the shareholders unless the board of directors determines that because of conflict of interest or other special circumstances it should make no recommendation and communicates the basis for its determination to the shareholders.
2. The shareholders entitled to vote must approve the proposal to dissolve. The board of directors may condition its submission of the proposal for dissolution on any basis.
The corporation must notify EVERY shareholder, whether or not entitled to vote, of the proposed shareholders’ meeting to consider dissolution. The notice must state that the purpose, or one of the purposes, of the meeting is to consider dissolving the corporation.
Unless the articles of incorporation or the board of directors require a greater vote or a vote by voting groups, the proposal to dissolve to be adopted must be approved by a majority of all the votes entitled to be cast on the proposal to dissolve.
At any time after dissolution is authorized, the corporation may dissolve by delivering to the Secretary of State for filing Articles of Dissolution. The Articles of Dissolution must set forth the following:
1. The name of the corporation.
2. The date dissolution was authorized.
3. If dissolution was approved by the shareholders, both of the following:
(1) The number of votes entitled to be cast on the proposal to dissolve.
(2) Either the total number of votes cast for and against dissolution or the total number of undisputed votes cast for dissolution and a statement that the number cast for dissolution was sufficient for approval.
4. If voting by voting groups was required, the information set out above must be separately provided for each voting group entitled to vote separately on the plan to dissolve.
A corporation is dissolved upon the effective date of its articles of dissolution. A dissolved corporation continues its corporate existence but may not carry on any business except that necessary to wind up and liquidate its business and affairs, including any of the following:
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.
5. Doing every other act necessary to wind up and liquidate its business and affairs.
Dissolution of a corporation does not do any of the following:
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 by statute.
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.
6. Abate or suspend a proceeding pending by or against the corporation on the effective date of dissolution.
7. Terminate the authority of the registered agent of the corporation. A dissolved corporation may dispose of the known claims against it by following the statutory procedures.
The dissolved corporation must notify its known claimants in writing of the dissolution at any time after the effective date of the dissolution. The written notice must:
1. Describe information that must 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 if either of the following occur:
1. A claimant who was given written notice does not deliver the claim to the dissolved corporation by the deadline.
2. 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 liability or a claim based on an event occurring after the effective date of dissolution.
A dissolved corporation may also publish notice of its dissolution and request that persons with claims against the corporation present them in accordance with the notice. The notice must meet all of the following requirements:
1. Be published one time in a newspaper of general circulation in the county where the dissolved corporation’s principal office or, if none in this state, its registered office 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 dissolved corporation publishes a newspaper notice in accordance with the statutory requirements, 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.
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 dissolution.
A claim may be enforced in either of the following ways:
1. Against the dissolved corporation, to the extent of its undistributed assets.
2. If the assets have been distributed in liquidation, against a shareholder of the dissolved corporation to the extent of the shareholder’s pro rata share of the claim or the corporate assets distributed to the shareholder in liquidation, whichever is less. A shareholder’s total liability for all claims cannot exceed the total amount of assets distributed to the shareholder in liquidation.
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