Businesses close for many reasons, but simply shutting the doors does not
result in the end of your corporation or LLC. If your business is no longer
operating, it is critical that you take the necessary steps to officially
dissolve your company within the state. Until the Secretary of State’s
office is aware that your company is no longer in operation, you are still
liable for annual report filings, tax payments, and other obligations.
Although many individuals will simply let the state dissolve their company
involuntarily after three years of inaction, such a strategy could create
a number of problems, including personal liability for judgments against
the business and/or expensive state-assessed penalties and fees.
The best way to put a stop to these obligations is to file Articles of
Dissolution with the state. By doing so, you will end your company’s
existence in your state of incorporation as well as any other states where
you are qualified to do business. Formal dissolution also gives you the
chance to tie up other loose ends that your business may have. In Louisiana,
the Secretary of State permits two forms of dissolution: short form dissolution
and long form dissolution.
Short form dissolution provides that after you and your members/shareholders
authorize dissolution, you will proceed directly to filing an affidavit
to dissolve your business with the Secretary of State. This affidavit
contains a simple statement that your company is no longer doing business,
owes no debts and owns no immovable property. It is important to understand
that under this form of dissolution, the members/shareholders will be
personally liable for any debts or claims that may arise. Therefore, it
is important that you confirm that there are no outstanding debts or claims
before filing for short form dissolution.
For long form dissolutions, after you and your members/shareholders authorize
dissolution, the company will need to appoint a person to act as a “liquidator”
for the company. Generally speaking, all the rights, powers and duties
of the officers and board of directors are transferred to the liquidator
and, unless the liquidator decides otherwise, the authority and duties
of the officers and directors end when the liquidator is appointed. However,
appointment of the liquidator will not be operative until two tasks are
completed: publishing a notice of the authorization of dissolution, and
filing a certificate of dissolution with Secretary of State. The published
notice must state that the company is to be liquidated out of court, give
the name and postal address of each liquidator, and appear at least once
in a newspaper of general circulation in the parish in which the company’s
registered office is located.
After you have published the notice of dissolution and filed a certificate
of dissolution, a copy of the notice dissolution, and the publisher’s
affidavit with the Secretary of State, the liquidator can proceed with
liquidating your company. When the liquidator has completed liquidation,
he or she will need to sign a liquidator certificate and submit it to
the Secretary of State. Once the Secretary of State processes the liquidator’s
certificate, they will send back a certificate of dissolution. By choosing
the long form dissolution process, members/shareholders are prevented
from being held personally liable for any debts or claims that may arise.
If you have a business that needs to be dissolved, or if you have any further
questions concerning the dissolution process or other corporate matters,
please contact attorney
Ryan Monsour at email@example.com.