Corporations – Corporate Dissolution – Texas
TEXAS BUSINESS CORPORATION ACT, Articles 6.01 through 6.07
In Texas a corporation may be dissolved either voluntarily or involuntarily. THIS SUMMARY ADDRESSES ONLY VOLUNTARY DISSOLUTION.
Voluntary dissolution is accomplished by the incorporators or initial directors of a corporation that has not issued shares or has not commenced business. If the corporation has issued shares, then the dissolution is accomplished by the written consent of all of its shareholders or by following the statutory procedures requiring a vote of the shareholders.
A corporation which has not commenced business and which has not issued any shares may be voluntarily dissolved by its incorporators or its directors at any time by filing Articles of dissolution shall be signed by a majority of the incorporators or directors. The Articles must set forth:
1. The name of the corporation.
2. The date of issuance of its certificate of incorporation.
3. That none of its shares has been issued.
4. That the corporation has not commenced business.
5. That the amount, if any, actually paid for its shares, less disbursements for necessary expenses, has been returned to the person(s) entitled to those funds.
6. That no debts of the corporation remain unpaid.
7. That a majority of the incorporators or directors elect that the corporation be dissolved.
An original and a copy of the articles of dissolution are filed with the Secretary of State. When the Articles are filed, a certificate from the Comptroller of Public Accounts that all franchise taxes have been paid must also be filed.
A corporation which has issued shares may be voluntarily dissolved by the written consent of all of its shareholders. When a written consent is executed, and the other statutory requirements are met, articles of dissolution are filed with the Secretary of State.
In the alternative, a corporation which has issued shares may be voluntarily dissolved by the corporation if the dissolution is authorized in the following manner:
1. The board of directors must adopt a resolution recommending that the corporation be dissolved and directing that the question of such dissolution be submitted to a vote at a meeting of shareholders. The meeting can be either an annual meeting or a special meeting.
2. Written notice must be given to each shareholder of record entitled to vote. The notice must be within the time and in the manner provided in the Texas Business Corporation Act for the giving of notice of meetings of shareholders, and, whether the meeting be an annual or special meeting and must state that the purpose, (or one of the purposes) of the meeting is to consider the advisability of dissolving the corporation.
3. At the meeting a vote of shareholders must be taken on a resolution to dissolve the corporation. The resolution must be adopted on the affirmative vote of the holders of at least two-thirds of the outstanding shares of the corporation entitled to vote. If any class or series of shares is entitled to vote as a class on the resolution, the resolution requires adoption the affirmative vote of the holders of at least two-thirds of the outstanding shares within each class or series of shares and at least two-thirds of the outstanding shares otherwise entitled to vote. Shares entitled to vote as a class are entitled to vote only as a class unless the articles of incorporation provide to the contrary. When the resolution is adopted, and the other provisions of the Texas Business Corporation Act are complied with, then articles of dissolution are filed with the Secretary of State.
Before articles of dissolution may be filed:
1. The corporation must cease to carry on its business (except as may be necessary to wind up the corporation’s business affairs).
2. The corporation must mail, by registered or certified mail, each known claimant against the corporation a written notice of the corporation’s intent to dissolve.
3. The corporation must collect its assets, dispose of its properties that are not to be distributed in kind to its shareholders, pay, satisfy, or discharge all its debts, liabilities, and obligations, or make adequate provision for payment, satisfaction, or discharge of its debts, obligations, and liabilities, and do any other acts required to liquidate its business and affairs. If the properties and assets of the corporation are not sufficient to discharge all the corporation’s obligations, the corporation must distribute its assets so far as they will go to the just and equitable payment, satisfaction, or discharge of its debts, liabilities, and obligations or it must make adequate provision for that distribution. After satisfying its obligations, or making adequate provision to satisfy its obligations, the corporation must then distribute the remainder of its properties and assets, either in cash or in kind, to its shareholders according to their respective rights and interests.
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