Dissolutions, Withdrawals and Companies Merging Out of Existence
As the end of the year approaches, if you are working on transactions that will close prior to December 31st, please keep in mind that if any of the companies in your transaction will be dissolved, withdrawn or merged out of existence, payment of final franchise taxes and, in some states, submission of final annual reports may be required prior to terminating or merging the company out of existence.
For example, a Delaware corporation will be required to file a final annual report and pay final franchise taxes for the 2017 year prior to filing a Certificate of Dissolution of Merger. While this can be done on a same day basis in Delaware, it may take a few days to complete and coordinate the tax clearance in other states. Advance planning to determine the timing will ensure you can meet your closing deadline on or before December 31, 2017.
Also as detailed in our previous update, effective January 1, 2018, Delaware will increase the fees under the authorized shares franchise tax calculation method for corporations with over 10,000 shares to $250 plus $85 (was $75) for each additional 10,000 shares or portion thereof. The penalty for late filing of the annual report/payment of the franchise tax, the assumed par value multiplier, the no par capital calculation and the fees related to certain filings for statutory trusts were also increased. Note that the increased fees will not be applicable for any Delaware company that is dissolved, withdrawn or merged out of existence prior to December 31, 2017.
If you have questions about what you need to do in a specific state to ensure a smooth end-of-year closing, contact your COGENCY GLOBAL service specialist for assistance.