Corporations – Corporate Dissolution – Utah
UTAH CODE, Title 16, Chapter 10a, §§ 1401 through 1440
In Utah, a corporation may be dissolved voluntarily, administratively, or judicially. THIS SUMMARY ADDRESSES ONLY VOLUNTARY DISSOLUTION.
If a corporation has not yet issued shares, a majority of its directors, or if no directors have been elected or if elected directors are no longer serving, a majority of its incorporators may authorize the dissolution of the corporation.
After shares have been issued, for a proposal to dissolve the corporation to be authorized the board of directors must recommend dissolution to the shareholders (unless the board determines that because of a conflict of interest or other special circumstances it should make no recommendation and communicates the basis for its determination to the shareholders) and the shareholders entitled to vote on the proposal must approve the proposal to dissolve. The proposal to dissolve must be approved by each voting group entitled to vote separately on the proposal by a majority of all the votes entitled to be cast on the proposal by that voting group. A greater vote may be required by the articles of incorporation or the bylaws or the board of directors may condition the effectiveness of the dissolution on any basis.
The corporation must give notice in accordance with §16-10a-705 to each shareholder entitled to vote on the proposal to dissolve, of the proposed 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.
At any time after dissolution is authorized, the corporation may dissolve by delivering to the division for filing articles of dissolution setting forth:
(a) the name of the corporation;
(b) the address of the corporation’s principal office or, if none is to be maintained, a statement that the corporation will not maintain a principal office, and, if different from the address of the principal office or if no principal office is to be maintained, the address to which service of process may be mailed pursuant to §16-10a-1409;
(c) the date dissolution was authorized;
(d) if dissolution was authorized by the directors or the incorporators.
(e) if dissolution was approved by the shareholders:
(i) the number of votes entitled to be cast on the proposal to dissolve by each voting group entitled to vote separately thereon; and
(ii) either the total number of votes cast for and against dissolution by each voting group or the total number of undisputed votes cast for dissolution by each voting group and a statement that the number cast for dissolution was sufficient for approval; and
(f) any additional information the division determines is necessary or appropriate.
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 appropriate to wind up and liquidate its business and affairs, including:
(a) collecting its assets;
(b) disposing of its properties that will not be distributed in kind to its shareholders;
(c) discharging or making provision for discharging its liabilities;
(d) distributing its remaining property among its shareholders according to their interests; and
(e) doing every other act necessary to wind up and liquidate its business and affairs.
Dissolution of a corporation does not:
(a) transfer title to the corporation’s property;
(b) prevent transfer of its shares or securities, although the authorization to dissolve may provide for closing the corporation’s share transfer records;
(c) subject its directors or officers to standards of conduct different from those prescribed by statute;
(i) quorum or voting requirements for its board of directors or shareholders;
(ii) provisions for selection, resignation, or removal of its directors or officers or both; or
(iii) provisions for amending its bylaws or its articles of incorporation;
(e) prevent commencement of a proceeding by or against the corporation in its corporate name;
(f) abate or suspend a proceeding pending by or against the corporation on the effective date of dissolution; or
(g) terminate the authority of the registered agent of the corporation.
A dissolved corporation electing to dispose of known claims may give written notice of the dissolution to known claimants at any time after the effective date of the dissolution. The written notice must:
(a) describe the information that must be included in a claim;
(b) provide an address to which written notice of any claim must be given to the corporation;
(c) state the deadline, which may not be fewer than 120 days after the effective date of the notice, by which the dissolved corporation must receive the claim; and
(d) state that unless sooner barred by any other state statute limiting actions, the claim will be barred if not received by the deadline. Unless sooner barred by any other statute limiting actions, a claim against the dissolved corporation is barred if a claimant was given notice and the claim is not received by the dissolved corporation by the deadline or the dissolved corporation delivers to the claimant written notice of rejection of the claim within 90 days after receipt of the claim and the claimant whose claim was rejected by the dissolved corporation does not commence a proceeding to enforce the claim within 90 days after the effective date of the rejection notice.
Claims which are not rejected by the dissolved corporation in writing within 90 days after receipt of the claim by the dissolved corporation are considered accepted.
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 publish notice of its dissolution and request that persons with claims against the corporation present them in accordance with the notice. The notice must:
(a) be published one time in a newspaper of general circulation in the county where the dissolved corporation’s principal office or, if it has no principal office in this state, its registered office is or was last located;
(b) 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
(c) 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.
If the dissolved corporation publishes a newspaper notice, then, unless sooner barred under §16-10a-1406 or under any other statute limiting actions, the claim of any claimant against the dissolved corporation is barred unless the claimant commences an action to enforce the claim against the dissolved corporation within five years after the publication date of the notice.
A “claim” means any claim, including 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 any civil action, and any arbitration under any agreement for binding arbitration between the dissolved corporation and the claimant.
A claim may be enforced against the dissolved corporation to the extent of its undistributed assets or against a shareholder of the dissolved corporation if the assets have been distributed in liquidation. A shareholder’s total liability for all claims may not exceed the total value of assets distributed to him, as that value is determined at the time of distribution. Any shareholder required to return any portion of the value of assets received by him in liquidation is entitled to contribution from all other shareholders.
Assets of a dissolved corporation that should be transferred to a creditor, claimant, or shareholder of the corporation who cannot be found or who is not competent to receive them must be reduced to cash and deposited with the state treasurer in accordance with the Unclaimed Property Act.
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