Corporations are required by law to conform to certain formalities when making decisions that affect special aspects of corporate affairs. Since a corporation is owned by shareholders who may not be involved in the day-to-day operations of the company, it has a fiduciary duty to maintain accurate records to document the way decisions were made in case of an audit or lawsuit. Closing down a corporation, formally known as dissolution, is a process that is governed by state law. The law determines the proper procedure to follow to substantiate the decision to dissolve a corporation on the record.
Record the board of directors' vote to dissolve the corporation in the meeting minutes. The board secretary is usually tasked with keeping the minutes of board meetings. Board meeting minutes are official corporate documents that form part of the company's records. The minutes are the first place in the corporate documents that the decision to dissolve must be noted.
Prepare a plan for dissolution. Most states require a corporation to put a dissolution plan in writing and to have it approved by a majority of shareholders. The plan becomes part of the company's records and is the second place the decision to dissolve corporation must be noted.
Pass a resolution to dissolve the corporation and ratify the dissolution plan at a general meeting of shareholders. The resolution and the record of the vote of the shareholders, as recorded by the secretary in the meeting minutes, become corporate records that also substantiate the decision to dissolve.
Add the meeting minutes of the board and shareholders meetings, the resolution and the plan for dissolution to the corporate records book. The information presented in these documents are the notations necessary to authorize the dissolution of the corporation.
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