This post discusses how to dissolve a Delaware corporation or LLC (limited liability company) – i.e., how to terminate the entity’s existence.
For information about dissolving California entities, see How to Kill Your Company when that’s the Only Choice.
Dissolve a Delaware Corporation
Shortcuts are available if the corporation has not conducted business or has not issued shares. Otherwise, the following procedure will apply.
Delaware General Corporation Law Section 275 provides that to dissolve a Delaware corporation, either of two procedures may be followed.
- A majority of the directors, followed by a majority of the outstanding stock entitled to vote, may approve dissolution.
- Alternatively, all stock entitled to vote may consent to dissolution.
The appropriate Certificate of Dissolution (see Online Forms, below) must be filed with the Division of Corporations.
However, the Division of Corporations will not file the Certificate of Dissolution until a final Franchise Tax Report is filed and any outstanding franchise (or other) tax is paid.
Dissolve a Delaware LLC
Delaware Limited Liability Company Act Section 18-801 provides the following procedure to dissolve a Delaware LLC, unless the operating agreement provides otherwise:
- Members who hold more than 2/3 of the profits interests, or members who hold more than 2/3 of the profits interests for each membership class if there are multiple classes, may approve dissolution.
A Certificate of Cancellation (see Online Forms, below) must be filed with the Division of Corporations.
As with corporations, the Division of Corporations will not file the LLC’s Certificate of Cancellation until a final Franchise Tax Report is filed and any outstanding franchise (or other) tax is paid.
The Delaware Division of Corporations provides fill-in-the-blank forms for dissolutions and cancellations.
In summary, the process to dissolve a Delaware corporation or LLC is straightforward so long as a sufficient percentage of equity holders agree that dissolution is what they want.
Dana H. Shultz, Attorney at Law +1 510-547-0545 dana [at] danashultz [dot] com
This blog does not provide legal advice and does not create an attorney-client relationship. If you need legal advice, please contact a lawyer directly.