CORPORATE TRANSACTIONS & COMPLIANCE BLOG

Dissolution in Delaware: Choosing the Right Form

By: Michelle Sylvester, COGENCY GLOBAL INC. on Mon, Oct 21, 2013

Delaware DissolutionWhen dissolving a Delaware corporation, you have ten different options to choose from depending on the type of entity, its activities, the number of shares authorized and the status of your corporation. Should you file according to Section 274 (Dissolution Before the Beginning of Business), 275 (Stock Dissolution), 276 (Non-Stock Dissolution), 391 (Short Form Dissolution) or a combination thereof? Fees and filing requirements vary depending on the section(s) of the Delaware General Corporation Law chosen.

One thing remains constant for all dissolutions; annual reports and franchise tax must be paid up to and including the year in which the dissolution is filed.

How Does a Short Form Dissolution Differ?

The standard (not short form) Delaware state filing fee for dissolution is $204 plus applicable taxes. This can vary depending on whether a certified copy is requested as evidence and whether expedited services are chosen. However, the short form version, filed according to Section 391, is only $10 plus applicable taxes. Again, this will vary depending on the type of evidence requested and whether expedite fees apply.

In order to be able to file according to Section 391, your company must be able to state the following:

  • The corporation has no assets.
  • Business has not begun or the corporation has ceased transacting business.
  • The corporation for each year since incorporation has only been required to pay the minimum tax.
  • All fees have been paid through the current year.

Summary of Delaware Dissolution Filing Options

The tables below summarize the requirements for the 10 options for dissolution filing. Prior to preparing your document for filing, it is important to consult an attorney or reference the full text of the appropriate sections of the Delaware General Corporate Law to ensure you understand the requirements and ramifications of the different filings.

Section 274

Dissolution Before the Beginning of Business

Date of incorporation

Statement that no business has begun

Statement that no part of the capital of the corporation has been paid or it has been returned to those entitled

Statement that all issued stock certificates have been surrendered or canceled

Statement that all corporation's rights and franchises are surrendered

Executed by incorporator or directors (not officers)

 

Sections 274 & 391

Short Form Dissolution Before Beginning of Business

All of the requirements for Section 274 “Dissolution Before Beginning Business” above plus the following applies:

Statement that the corporation has no assets

Statement that the corporation for each year since incorporation has only been required to pay the minimum

Statement that all fees have been paid through the current year

Section 274

Dissolution Before Issuance of Shares

Date of incorporation

Statement that no shares have been issued

Statement that no part of capital has been paid

Statement that all debts of the corporation have been paid

Statement that the corporation surrenders its rights and franchises

Execution by incorporator or director (not by officers)

 

 

Sections 274 & 391

Short Form Dissolution Before the Issuance of Shares

All of the requirements for Section 274 “Dissolution Before Issuance of Shares” above plus the following applies:

Statement that the corporation has no assets and has ceased transacting business

Statement that the corporation for each year since incorporation has only been required to pay the minimum

Statement that all fees have been paid through the current year

 

 

Section 275

Stock Dissolution

Date of incorporation

Statement that it is being filed under Sections 275  a, b or c

Date dissolution was authorized

Name and addresses of officers and directors. If none, the document must state there are none and be signed by the majority of the stockholders.

 

Sections 275 & 391

Short Form Stock Dissolution

All of the requirements for Section 275 “Stock Dissolution” above plus the following applies:

Statement that it is being filed under Sections 275 and 391

Statement that the corporation has no assets and has ceased transacting business

Statement that the corporation for each year since incorporation has only been required to pay the minimum

Statement that all fees have been paid through the current year

 

Section 276

Non Stock Dissolution

Date of incorporation

Statement that it is being filed under Section 276 a

Date dissolution was authorized

Name and addresses of the officers and directors. If none, document must state there are none and must be signed by the majority of the governing body.

 

 

Sections 276 & 391

Short Form Non Stock Dissolution

All of the requirements for Section 276 “Non Stock Dissolution” above plus the following applies:

Statement that it is being filed under Sections 276 a and 391

Statement that the corporation has no assets and has ceased transacting business

Statement that the corporation for each year since incorporation has only been required to pay the minimum

Statement that all fees have been paid through the current year

 

 

Section 276

Dissolution Non Stock Before Beginning Business

Date of incorporation

Statement that it is being filed under section 276 b

Statement that the corporation surrenders its rights and franchises

 

 

Sections 276 & 391

Short Form Dissolution Non Stock Before Beginning Business

All of the requirements for Section 276 “Dissolution Non Stock Before Beginning Business” above plus the following applies:

Statement that it is being filed under Sections 276 b and 391

Statement that no business has begun and it has no assets

Statement that all fees have been paid through current year

 

This article is provided for informational purposes only and should not be considered, or relied upon, as legal advice.

Topics: Delaware Corporate, UCC and Compliance