Corporations – Corporate Dissolution – Nevada

Statutory Reference:

NEVADA REVISED STATUTES, Title 7, Chapter 78, §§78.575 through 78.615

General Discussion:

A Nevada corporation may be voluntarily dissolved in two ways:

First, if the corporation has not begun in business and there has been no payment of capital into the corporation, then the incorporators (or the Board of Directors as named in the original Articles of Incorporation) may dissolve the corporation by filing a Certificate of Dissolution with the Secretary of State.  The Certificate must be signed by a majority of the incorporators (or the Board of Directors as named in the original Articles of Incorporation).

Second, if stock has been issued by the corporation, or if the corporation has begun in business, then the Board of Directors may pass a resolution that the corporation should be dissolved.  If the corporation has issued no stock, then only the directors need to approve the resolution.  If stock has been issued, then the resolution must be recommended to the shareholders by the Board.  The stockholders must be notified each shareholder entitled to vote of a special meeting to consider the resolution to dissolve.  The shareholders must approve the resolution by majority vote (or such other vote as the By-Laws might require).

Upon following the appropriate procedure as set out above, the secretary of state, when satisfied that these requirements have been complied with, shall issue a certificate that the corporation is dissolved.

This, however, does not totally end the existence and/or liability of the corporation or the duties of the Directors who were in office at the time of the dissolution.

The corporation continues ” as a body corporate for the purpose of prosecuting and defending suits, actions, proceedings and claims of any kind or character by or against it and of enabling it gradually to settle and close its business, to collect and discharge its obligations, to dispose of and convey its property, and to distribute its assets, but not for the purpose of continuing the business for which it was established.”  Further, any cause of action existing BEFORE the dissolution of the corporation, and any cause of action arising within two years AFTER the dissolution of the corporation, is still a viable cause of action.

When a corporation is dissolved, the directors of the corporation become trustees of the corporate assets. The trustees then have the power and obligation to ” settle the affairs, collect the outstanding debts, sell and convey the property, real and personal of the corporation and to use the corporate assets to pay or provide for the payment of all liabilities of the corporation.  If there are insufficient funds to satisfy all corporate liabilities, then the liabilities shall be satisfied in order of priority and, if and when applicable, on a pro-rata basis.

The Trustees, IN THE NAME OF THE CORPORATION, have the authority to sue for and recover the debts and property of the corporation and may be sued, IN THE NAME OF THE CORPORATION, for the debts owing by the corporation at the time of its dissolution.  The Trustees are jointly and severally responsible for corporate debts, BUT ONLY TO THE EXTENT THAT MONEY OR PROPERTY OF THE CORPORATION COMES INTO THEIR POSSESSION.

After all liabilities of the corporation have been paid or provided for, then the Trustees may divide any remaining money or property among the shareholders.

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