Q: Dissolution and closing of a Personal Service C Corp upon the death of sole shareholder & president
A Personal Service C Corp had only one shareholder, who was also the president. Upon the death of the sole shareholder & president, the business is closed and the C Corp needs to be dissolved. The Secretary of the C Corp will sign the Certificate of Dissolution to be filed with the Secretary of State. Please guide me with what resolution needs to be prepared and how the C Corp can be dissolved and closed.
A:
In the case of a Personal Service C Corporation with a single shareholder who was also the president, and upon their death, the corporation needs to be dissolved and closed. Here's a step-by-step guide on how to proceed:
1. Appoint a new director: If the deceased shareholder was the sole director, the corporation's secretary should call a special shareholders' meeting to appoint a new director. In this case, the deceased shareholder's estate or the executor of the will would be the shareholder.
2. Board resolution for dissolution: The newly appointed director should hold a board meeting to pass a resolution approving the dissolution of the corporation. The resolution should state the reason for the dissolution (death of the sole shareholder and president) and authorize the secretary to file the Certificate of Dissolution with the Secretary of State.
3. File Certificate of Dissolution: The secretary should fill out and sign the Certificate of Dissolution (Form DISS STK) and file it with the California Secretary of State. The form can be found on the Secretary of State's website.
4. Notify tax authorities: Notify the California Franchise Tax Board and the Internal Revenue Service (IRS) about the dissolution of the corporation by filing the final tax returns and any necessary forms.
5. Wind up the business: Settle any outstanding debts, distribute remaining assets to the shareholder's estate, and cancel any licenses or permits.
6. Notify other parties: Inform creditors, vendors, customers, and employees about the closure of the business.
7. Keep records: Maintain the corporate records, including the Certificate of Dissolution, for at least three years after the dissolution date.
Sample Board Resolution for Dissolution:
"RESOLVED, that the Corporation shall be dissolved due to the death of [Name], the sole shareholder and president of the Corporation. The Secretary of the Corporation, [Secretary's Name], is hereby authorized and directed to file the Certificate of Dissolution with the California Secretary of State and to take all necessary actions to wind up the affairs of the Corporation in accordance with California law."
Please note that this is a general guide, and it's advisable to consult with a legal professional experienced in California corporate law to ensure compliance with all legal requirements.
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