Corporations – Corporate Dissolution – New Jersey

Statutory Reference:

NEW JERSEY PERMANENT STATUTES, 14A:12-1 through 14A:12-19

A New Jersey corporation may be dissolved:

• By the filing of a certificate of dissolution upon expiration of any period of duration stated in the corporation’s certificate of incorporation;
• By action of the incorporators or directors;
• By action of the shareholders;
• By action of the board and the shareholders;
• By action of a shareholder or shareholders;
• By a judgment of the Superior;
• Automatically by a proclamation of the Secretary of State repealing or revoking a certificate of incorporation for nonpayment of taxes or for failure to file annual reports; or
• By action of a corporation without assets.

Dissolution – Action of the Incorporators or Directors

A corporation may be dissolved by action of its incorporators when there has been no organizational meeting of the board, or by the board if there has been an organization meeting, if the corporation:

• Has not commenced business;
• Has not issued any shares;
• Has no debts or other liabilities; and
• Has received no payments on subscriptions for its shares, or, if it has, has returned them to those entitled thereto, less any part disbursed for expenses.

The dissolution of a corporation under these circumstances is effected in the following manner: the sole incorporator or director, if there is only one, or both incorporators or directors, if there are only two, or a majority of the incorporators or directors, if there are more than two, must file a Certificate of Dissolution with the Secretary of State.

Dissolution – Action of the Shareholders

A corporation may be dissolved by the consent of all its shareholders entitled to vote on the issue of dissolution. Notice of dissolution must be provided to all shareholders not entitled to vote less than 10 nor more than 60 days before the filing of the certificate of dissolution. Notice must be in the same manner as for the giving of notice of meetings of shareholders. All shareholders entitled to vote must sign and file a Certificate of Dissolution with the Secretary of State.

Dissolution – Action of Board and Shareholders;

A corporation may be dissolved by action of its board and its shareholders. The board must recommend that the corporation be dissolved and direct that the question of dissolution be submitted to a vote at a meeting of shareholders.

Written notice of the meeting must be given not less than 10 nor more than 60 days before the meeting to each shareholder of record whether or not entitled to vote at such meeting and notice must be in the same manner as for the giving of notice of meetings of shareholders.
At the meeting, a vote of the shareholders must be taken on the proposed dissolution. The dissolution is approved upon receiving the affirmative vote of a majority of the votes cast by the holders of shares of the corporation entitled to vote thereon. These voting requirements are subject to such greater requirements as may be provided in the certificate of incorporation.

If dissolution is approved, a certificate of dissolution must be executed on behalf of the corporation and filed with the Secretary of State.

Dissolution – Without Assets

A corporation which has ceased doing business and does not intend to recommence doing business may be dissolved by action of its board and shareholders or by a corporate officer if the corporation:

• Has no assets;
• Has ceased doing business and does not intend to recommence doing business; and
• Has not made any distributions of cash or property to its shareholders within the last 24 months and does not intend to make any distribution following its dissolution.

The dissolution of the corporation without assets may be authorized by the shareholders without a meeting or by action of a corporate officer if the officer has given 30 days’ prior written notice of his intention to dissolve the corporation by mail or personal service to all known directors and shareholders at their last known address and no director or shareholder has objected to the proposed dissolution. The dissolution is effected by filing with the Secretary of State a certificate of dissolution.

Dissolution – Provisions of Certificate of Incorporation

The certificate of incorporation may provide that any shareholder, or any specified number of shareholders, or the holders of any specified number or proportion of shares, or of any specified number or proportion of shares of any class or series, may effect the dissolution of the corporation at will or upon the occurrence of a specified event. In this event, dissolution of the corporation is effected by the filing of a certificate of dissolution with the Secretary of State, signed, as the certificate of incorporation may provide, by a single shareholder, or the specified number of shareholders, or the holders of any specified number or proportion of shares, or of any specified number or proportion of shares of any class or series.

Dissolution – Expiration of Period of Duration

A corporation is not dissolved when the period of duration stated in its certificate of incorporation expires until a certificate of dissolution has been filed in the office of the Secretary of State.

Effective Time of Dissolution

A corporation is dissolved:

• When the period of duration stated in the corporation’s certificate of incorporation expires and the corporation files a certificate of dissolution in the office of the Secretary of State; or
• Upon the proclamation of the Secretary of State; or
• When a certificate of dissolution (voluntary) is filed in the office of the Secretary of State, except when a later time not to exceed 90 days after the date of filing is specified in the certificate of dissolution; or
• When a judgment of forfeiture of corporate franchises or of dissolution is entered by a court of competent jurisdiction.

Effect of Dissolution
Except as a court may otherwise direct, a dissolved corporation continues its corporate existence but cannot carry on any business except for the purpose of winding up its affairs by:

• collecting its assets;
• conveying for cash or upon deferred payments, with or without security, such of its assets as are not to be distributed in kind to its shareholders;
• paying, satisfying and discharging its debts and other liabilities; and
• doing all other acts required to liquidate its business and affairs.

When a corporation is dissolved, the corporation, its officers, directors and shareholders continue to function in the same manner as if dissolution had not occurred. In particular:

• the directors of the corporation are not deemed to be trustees of its assets and are held to no greater standard of conduct than that prescribed by section 14A:6-14;
• title to the corporation’s assets remain in the corporation until transferred by it in the corporate name;
• the dissolution does not change quorum or voting requirements for the board or shareholders and it does not alter provisions regarding election, appointment, resignation or removal of, or filling vacancies among, directors or officers, or provisions regarding amendment or repeal of by-laws or adoption of new by-laws;
• shares may be transferred until the record date of the final liquidating distribution or dividend to shareholders;
• the corporation may sue and be sued in its corporate name and process may issue by and against the corporation in the same manner as if dissolution had not occurred;
• no action brought against any corporation prior to its dissolution shall abate by reason of a dissolution.

The right of the corporation to sell its assets and the right of a shareholder to dissent from such a sale are governed by Chapters 10 and 11 in the same manner as if dissolution had not occurred.

A dissolved corporation may condition the payment to its shareholders:

• of any partial liquidating distribution or dividend on the surrender to it of the share certificates on which the distribution or dividend is to be paid for endorsement to reflect such payment; or
• of the final liquidating distribution or dividend on the surrender to it for cancellation of the share certificates on which the distribution or dividend is to be paid.

Notice to Creditors

At any time after a corporation has been dissolved, the corporation, or a receiver appointed for the corporation pursuant to this chapter, may give notice requiring all creditors to present their claims in writing. The notice must be published once a week for three consecutive weeks in a newspaper of general circulation in the county in which the registered office of the corporation is located. The notice must state that all persons who are creditors of the corporation must present written proof of their claims to the corporation or the receiver at a place and on or before a date named in the notice. The date must not be less than 6 months after the date of the first publication.

On or before the date of the first publication of this notice, the corporation or the receiver must mail a copy of the notice to each known creditor of the corporation. The giving of such notice does not constitute recognition that any person to whom a notice is directed is a creditor of the corporation other than for the purpose of receipt of the notice.

A “creditor” is any person to whom the corporation is indebted, and any other person(s) who have claims or rights against the corporation, whether liquidated or unliquidated, matured or unmatured, direct or indirect, absolute or contingent, secured or unsecured.

Proof of the publication and mailing of the notice must be made by an affidavit filed in the office of the Secretary of State.

Barring of Creditors’ Claims

Any creditor who does not file a claim as provided in the notice, and all persons claiming through that creditor are forever barred from suing on that claim or otherwise enforcing it except, in the case of a creditor who shows good cause for not having previously filed his claim, to such extent as the Superior Court may allow:

• against the corporation to the extent of any undistributed assets; or
• if the undistributed assets are not sufficient to satisfy a claim, against a shareholder to the extent of his ratable part of such claim out of the assets of the corporation distributed to him in liquidation or dissolution.

This restriction does not apply to claims which are in litigation on the date of the first publication of the notice.

Disposition of Rejected Claims

If the corporation or the receiver of a corporation rejects in whole or in part any claim filed by a creditor, the corporation or the receiver must mail notice of the rejection to the creditor. If the creditor does not bring suit upon the claim within 60 days from the time such notice was mailed, the creditor and all those claiming through the creditor are forever barred from suing on the claim. Proof of the mailing of a notice of rejection of claim must be made by an affidavit filed in the office of the Secretary of State.

Jurisdiction of the Superior Court

At any time after a corporation has been dissolved in any manner, a or a shareholder of the corporation, or the corporation itself, may apply to the Superior Court for a judgment that the affairs of the corporation and the liquidation of its assets continue under the supervision of the court.

Distribution to Shareholders

Any assets remaining after payment of or provision for claims against the corporation are distributed among the shareholders according to their respective rights and interests. Distribution may be made in either or both cash and kind.

Disposition of Unclaimed Distributive Shares

The distributive shares payable to any person who is unknown or cannot be found, or who is under a disability and for whom there is no legal representative, are paid into the Superior Court to be held for the benefit of the owners, subject to the order of the court.

Dissolution Upon Liquidation

No corporation is completely liquidated and all of its assets distributed to its shareholders unless provision is made for the dissolution of the corporation and the payment of all fees, taxes, and other expenses incidental thereto.

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