Company Dissolution Process
When a company dissolves, assets like cash, accounts receivable, inventory, equipment, and prepaid expenses are distributed. Intellectual property may also be distributed.
Shareholder Rights in Dissolution
If a dissolved company’s share capital has not been distributed, it is passed to government legal departments. The government decides whether to sell or disclaim the shares. Share capital and assets should be transferred before dissolution.
Steps to Company Dissolution
When dissolution occurs, assets must be wound up, liquidated, and distributed.
Shareholder’s Claim in Asset Acquisition
A shareholder owns stock and can claim a company’s assets and earnings if it dissolves.
Closing a Business Account
When a business account closes, the bank issues a cheque for any remaining balance.
Reasons for Closure
A bank may close a business account due to shutting down the business, wanting to switch banks, or policy violations.
Sole Proprietor and Corporation Account Closure
To close an account, provide necessary details to the IRS based on business structure.
Effects of Company Closure on Employee Benefits
If a company dissolves before employer 401(k) contributions fully vest, unvested funds are lost. Fully vested employee contributions remain intact.
Liquidation and Creditor Repayment
When a company liquidates, assets are sold to repay creditors before the business closes. Shareholders receive remaining funds last.
Handling Bankruptcy Claims
If a company goes bankrupt, stop collection efforts and review bankruptcy documents.
Tax Considerations
Selling assets can trigger capital gains tax and considerations for ‘small business entity’ discounts.
Ownership of Assets upon Business Closure
If not sold, owners can keep or dispose of assets. Asset sales may trigger capital gains tax.
Government Handling of Dissolved Company Assets
Upon dissolution, assets transfer to the government. For asset recovery, company restoration may be necessary.
Post-Dissolution Processes
After dissolution, assets distribute to shareholders following debt settlement.
Company Name Registration
Dissolved company names can be registered by new or existing companies, considering the reputation of the dissolved entity.