How to dissolve a Delaware corporation

To dissolve a Delaware corporation you approve the dissolution under section 275 of the Delaware General Corporation Law, bring franchise taxes and annual reports up to date, and file a Certificate of Dissolution with the Division of Corporations. The corporation is dissolved when the certificate takes effect. Until then, Delaware says, franchise taxes keep accruing, and its annual reports keep falling due every March 1 with a $200 penalty plus 1.5% monthly interest if late.

Step by step

1. Board resolution. A majority of the whole board adopts a resolution that dissolution is advisable and calls a stockholder vote, with notice to stockholders entitled to vote.
2. Stockholder approval. A majority of the outstanding stock entitled to vote approves it at the meeting. Alternatively, all stockholders entitled to vote can consent in writing, without a board resolution.
3. Pay taxes and file reports. Section 277 says no corporation is dissolved until all franchise taxes are paid, including those for the whole calendar month in which the dissolution takes effect, and all annual franchise tax reports are filed, including a final report for that year.
4. File the Certificate of Dissolution with the Division of Corporations. The Division’s forms page lists a standard certificate and a short form under section 275.
5. Wind up. Collect assets, pay or provide for claims, distribute what remains. Delaware law has procedures for notice to creditors; your lawyer will choose one.
6. File IRS Form 966 within 30 days after the dissolution plan is adopted, then the final federal returns. See final tax returns.

Foreign registrations and other states

A Delaware corporation that operates elsewhere is usually registered as a foreign corporation in those states. Withdraw those registrations too, or the other states keep charging fees and expecting reports.

Before you file: the company’s records

Dissolution does not end the duty to keep tax and employment records. Export what you must keep before you cancel email, chat and accounting accounts, and decide what happens to the rest. A closed Delaware company with 30 or more employees at peak can still be eligible for micro1’s program for companies no longer operating, as long as the records exist.