Corporate dissolution and winding up of a corporation can be initiated by the board of directors or shareholders of the company or judicial dissolution by court proceedings. Corporate dissolution is guided by general corporation statues, which vary from state to state. For Chicago and Illinois corporations, the Illinois Business Corporation Act of 1983 (805 ILCS 5/1) will generally guide a corporate dissolution.
There are certain things, however, that corporate dissolution will not change. For example, corporate dissolution does not: transfer title to the corporation’s property, prevent transfer of corporation shares (note, however, that the authorization to dissolve may provide for the transfer), prevent suit by or against the corporation in its corporate name; or suspend a criminal, civil, or any other proceeding pending by or against the corporation on the effective date of corporate dissolution.
Ways To Initiate Corporate Dissolution In Illinois
Illinois’s Business Corporation Act provides for voluntary corporate dissolution through the unanimous written consent of all shareholders of the corporation that are entitled to vote on dissolution. The shareholders must sign a consent document that states the corporation is dissolved. The consent then must be properly entered in the corporation’s records. For small businesses where typically all of the voting shareholders are also directors, and there is unanimous agreement on dissolution in place, written consent is generally the most efficient way to get corporate dissolution approval . The BCA also provides for voluntary dissolution through a shareholder vote at a shareholder meeting. When using this method, it is important to properly record both the board’s proposal and the shareholders’ votes.