What is a Corporate Dissolution?

Corporate Dissolution

Learn what corporate dissolution is and why it's important. And get our free corporate dissolution template!

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What is a Corporate Dissolution?

A corporate dissolution is the process that, quite literally, ends the legal existence of a corporation.

As a legal structure, corporations have the benefit of perpetual existence. This means that corporations live forever, unless some action takes place that causes their dissolution.

Corporations can dissolve for different reasons, some of which may include:

  • voluntary dissolution or wind-up
  • involuntary dissolution by order of a court
  • involuntary dissolution by statute

A voluntary dissolution will typically require the authorization of various stakeholders including the shareholders of the corporation and the government.

Why does the government need to approve a dissolution?

Because corporations are separate legal entities from their directors, employees and shareholders, if a corporation as outstanding liabilities to, for example, the government tax department, the government will have an interest in ensuring that the corporation does not cease to legally exist until all of its debts are paid.

How to dissolve a company?

Dissolving a company can be a pretty straightforward exercise once all approvals have been received. This can vary by jurisdiction but likely involves the following steps:

  • Consent to dissolve by the CRA or other government authority
  • Resolution of the company to dissolve and distribute assets of the company
  • Dissolution agreement of the company signed by the shareholders
  • Filing of Articles of Dissolution with the proper government authority

Although a dissolution is a fairly straightforward legal transaction, it can be tedious to get all the various forms and precedents in order. If you want to get started on a dissolution download our free company dissolution template as a getting started resource!