There are many reasons corporate dissolution may be the best choice. Perhaps
the corporation’s purpose has been completed, there are cash flow
problems, or there are insurmountable disagreements between directors.
Whatever the reason, there is a statutory process in Colorado for business
If shares have not yet been issued, a majority of the corporation’s
directors (or a majority of the incorporators if no directors have been
elected) may authorize the dissolution.
However, if shares have been issued, the board of directors will need to
adopt a proposal to dissolve. After the board of directors adopts the
dissolution proposal, they shall recommend the proposal to the shareholders.
The shareholders entitled to vote on the proposal will then need to approve
the dissolution approval. Unless a greater vote is required by the corporation’s
articles of incorporation or bylaws, the proposal has to be approved by
a majority of votes in each voting group entitled to vote separately.
For example, a majority of class A share votes, a majority of class B
share votes, and a majority of class C share votes would accomplish the
approval of the dissolution proposal. In addition to the requirements
listed above, there are important notice provisions related to the shareholder
vote pursuant to C.R.S. § 7-114-102(5), which must be followed.
After the dissolution is authorized, the corporation may dissolve by filing
Articles of Dissolution with the Colorado Secretary of State and will
be deemed dissolved as of the effective date of its Articles of Dissolution.
Post-dissolution, the corporation will continue its existence to wind up
existing affairs, but no new business may be carried out. State, federal,
and local tax returns will need to be filed and customers, creditors,
and employees will need to be notified of the dissolution. Assuming the
corporation has assets, those assets will need to collected and distributed.
Keep in mind that dissolution does not transfer title to the corporation’s property.
Navigating the statutory requirements of dissolution and winding up a corporation
alone can be inefficient and challenging. If you need to dissolve your
corporation, we have a team of business law attorneys ready to help you.