Usually, there are specific measures your business attorney will lead a company through for an organized termination of its existence. Firstly, a company must go through a process of winding up. In winding up, a company will stop doing business and will gather its property for sale or its distribution to its creditors and shareholders or its members. A company has to pay its obligations and liabilities or make payment provision. Then a company might distribute the rest of its assets to the company’s owners.
Preparation of Certificate of Termination
At the completion of the process of winding up, the business lawyer prepares a certificate of termination that will be filed with the secretary of state.
The individual who submits the certificate of termination has to date it and state that she’s signing the paperwork subject to the penalties that are imposed by law for the submission of a materially false or a fraudulent instrument, as well as certify under penalty of perjury that she’s authorized to execute the paperwork.
Certificate from Comptroller
Besides the certificate of termination, a company has to file a certificate from the comptroller of public accounts that states all taxes were paid and the entity is within good standing for termination. A company might request the certificate in person at one of the comptroller’s area offices or by mail. A certificate from a comptroller’s site isn’t enough for termination. Asking for the certificate by mail might be problematic due to of the lag time between the request and certificate receipt. If any franchise tax returns are due prior to the request being processed, the comptroller won’t have the ability to issue a certificate until all tax reports are filed, even if there isn’t any tax owed.
Termination through Neglect
Also, you can terminate the company’s existence through neglect. For example, if the company doesn’t file franchise tax returns or additional paperwork as required by the secretary of state, upon notice and opportunity to cure, a secretary of state might issue a forfeiture of existence. As this type of involuntary termination isn’t uncommon, it’s better practice to undergo the statutory procedure for winding up and termination because it’ll allow a company to sustain control over when and how a company is going to terminate.