Q: After the certification of dissolution, if the business continues to receive payments for service what happens?
If a business continues to be "active" and a subcontract to another business even though it failed to file annual reports and has already the certificate of dissolution. Does this business infringe any law? if yes, can you state which one?
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A:
If a business continues operations after its official dissolution, it may be violating state corporate laws. The certificate of dissolution generally indicates that a business is no longer legally recognized as an active entity for the purposes of conducting business, incurring debt, or entering into contracts.
Operating after dissolution can lead to legal complications. For instance, the individuals acting on behalf of the dissolved business might become personally liable for any new debts or obligations incurred. This is because the corporate shield, which typically protects owners and officers from personal liability, may no longer apply.
Additionally, the continued operation of a dissolved business could be seen as misrepresentation to clients or partners, particularly if they are unaware of the dissolution. This could potentially lead to legal action against the individuals involved for fraud or misrepresentation.
Given these risks, it's important for any business in this situation to seek legal advice promptly. A legal advisor can clarify the specific laws and regulations that apply, based on the jurisdiction and the details of the business's situation, and help navigate the process of either properly winding down the business or reinstating it, if that's a desired course of action.
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