Michigan Dissolution Package to Dissolve Corporation
MICHIGAN CORPORATE DISSOLUTION
LAW SUMMARY
Statutory Reference:
MICHIGAN COMPILED STATUTES §§450.1801-450.1846 and §450.1488.
General Discussion:
A Michigan corporation may be dissolved
1. By the automatic expiration of its period of duration as
set forth in the Articles of Incorporation;
2. By the incorporators or directors;
3. By the board and the shareholders;
4. Pursuant to a shareholder agreement;
5. By a judgment of the circuit court;
6. Automatically for failure to file an annual report or pay the filing
fee; OR
7. By court order in receivership or bankruptcy proceedings.
THIS FORM PACKAGE ADDRESSES ONLY WITH THE VOLUNTARY DISSOLUTION OF A MICHIGAN
CORPORATION BY THE INCORPORATORS AND DIRECTORS, THE BOARD AND THE SHAREHOLDERS,
AND/OR PURSUANT TO A SHAREHOLDER AGREEMENT.
For a corporation to voluntarily dissolve by its incorporators or directors,
the corporation must (1) have not commenced business; (2) have not issued
any shares; (3) have not debts or liabilities; and, (4) have not received
payment for any of its shares (or, if it has received payment for shares,
it has returned those payments)
A majority of the incorporators or directors may file a Certificate
of Dissolution affirming the above requirements and stating that a majority
of the incorporators or directors have elected that the corporation be
dissolved.
A corporation may also be dissolved by its board and shareholders.
The Board must propose and recommend dissolution to the shareholders.ÂÂ
In the alternative, the Board may determine that it has a conflict of interest
or that special circumstances exist which dictate that no recommendation
can be made. In this case, the Board must tell the shareholders the
basis for its determination. The Board may condition its proposal
for dissolution on any basis.
The Board's proposed dissolution is then submitted to the shareholders
at a duly noticed shareholder meeting. All shareholders, whether
entitled to vote on the Board's recommendation or not, shall be notified
of the meeting. Notice shall be timely given and the Notice shall
state that one purpose of the meeting to vote on the dissolution of the
corporation.
The shareholders vote on the proposed dissolution at the meeting.ÂÂ
The proposal must be approved by the holders of a majority of the outstanding
shares of the corporation entitled to vote.
If the dissolution is approved, a Certificate of Dissolution is filed.
Finally, if there is a shareholder agreement regarding dissolution that
complies with §450.1488 of the Michigan Business Corporation Act,
then the Shareholders can dissolve the corporation.
The corporation is dissolved when the Certificate of Dissolution is
filed with the Michigan Department of Consumer and Industry Services.ÂÂ
However, the corporation's existence is continued for the purpose of "winding
up" the affairs of the corporation.
During the winding up period, the corporation may only
1. Collect its assets.
2. Sell or otherwise transfer assets which are not to be distributed
in kind to its shareholders.
3. Pay its debts and other liabilities.
4. And do all other acts incident to liquidation of the corporations
business and affairs.
During the winding up process of a dissolved corporation, its officers,
directors and shareholders continue to function in the same manner as if
dissolution had not occurred and title to the corporation's assets remains
in the corporation's name until they are transferred. Shares may be transferred
and the corporation may sue and be sued in its corporate name. Dissolution
does not abate actions brought against the corporation prior to dissolution.
Corporate dissolution does not change quorum or voting requirements
for the board or shareholders, and does not alter provisions regarding
election, appointment, resignation or removal of, or filling vacancies
among, directors or officers, or provisions regarding amendment or repeal
of bylaws or adoption of new bylaws.
A dissolved corporation should notify its claimants/creditors in writing
of the dissolution of the corporation. This may be done at any time
after the effective date of the dissolution. The written notice MUST include:
1. A description of the information that must be included in
a claim;
2. A mailing address where a claim may be sent;
3. The deadline [not be less than 6 months from the effective date
of the written notice which is the earliest of the following: (a) the date
it is received, five days after its deposit in the United States mail,
as evidenced by the postmark, if it is mailed postpaid and correctly
addressed, or the date shown on the return receipt, if the notice is sent
by registered or certified mail, return receipt requested, and the receipt
is signed by or on behalf of the addressee] by which claims must be received;
AND
4. A statement that the claim will be barred if not received by the
deadline.
Giving of notice to claimants/creditors does not constitute and admission
that a person to whom the notice is directed has a valid claim against
the corporation.
A claim against the dissolved corporation is barred
1. If a claimant who was given written notice does not deliver
the claim to the dissolved corporation by the deadline, OR
2. If a claimant whose claim was rejected by a written notice of rejection
by the dissolved corporation does not commence a proceeding to enforce
the claim within 90 days from the effective date of the written notice
of rejection.
A dissolved corporation should also publish notice of dissolution.ÂÂ
This may be done at any time after the effective date of dissolution.ÂÂ
The published notice MUST
1. Be published 1 time in a newspaper of general circulation
in the county where the dissolved corporation's principal office, or if
there is no principal office in this state, its registered office, is or
was last located.
2. State that a claim against the corporation will be barred unless
a proceeding to enforce the claim is commenced within 1 year after the
publication date of the newspaper notice.
If the dissolved corporation publishes a newspaper notice, the following
claimants are barred from pursuing claims UNLESS the claimant commences
a proceeding to enforce the claim against the dissolved corporation within
1 year after the publication date of the newspaper notice:
1. A claimant who did not receive written notice from
the corporation;
2. A claimant whose claim was timely sent to the dissolved corporation
but not acted on.
3. A claimant whose claim is contingent or based on an event occurring
after the effective date of dissolution.  PROVIDED, HOWEVER,
a claimant having an existing claim known to the corporation at the time
of publication of the notice, and who did not receive a written is not
barred from commencing a proceeding until 6 months after the claimant has
actual notice of the dissolution.
"Before making a distribution of assets to shareholders in dissolution,
a corporation shall pay or make provision for its debts, obligations, and
liabilities. Compliance with this section requires that, to the extent
that a reasonable estimate is possible, provision be made for those debts,
obligations, and liabilities anticipated to arise after the effective date
of dissolution. Provision need not be made for any debt, obligation, or
liability that is or is reasonably anticipated to be barred under section
841a or 842a. The fact that corporate assets are insufficient to satisfy
claims arising after a dissolution does not create a presumption that the
corporation has failed to comply with this section. Adequate provision
is deemed to have been made for any debt, obligation, or liability of the
corporation if payment has been assumed or guaranteed in good faith by
1 or more financially responsible corporations, persons, or the United
States government or agency of the United States government, and the provision,
including the financial responsibility of the corporations or other persons,
was determined in good faith and with reasonable care by the board to be
adequate. After payment or adequate provision has been made for the corporation's
debts, obligations, or liabilities, the remaining assets shall be distributed,
except as otherwise provided in this section, in cash, in kind, or both
in cash and in kind, to shareholders according to their respective rights
and interests. A shareholder beneficially owning less than 5% of the outstanding
shares may be paid in cash only, even if a shareholder beneficially owning
5% or more of the outstanding shares receives a distribution in kind, if
the ownership of all shareholders receiving cash instead of distributions
in kind without their written consent does not exceed 10% of all outstanding
shares." Michigan Compiled Laws, §450.1855a.
A corporation must obtain a tax clearance from the Michigan Department
of Treasury. The Certificate of Dissolution cannot be filed unless it is
accompanied by the tax clearance.
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