Reinstate a Corporation
When a corporation is dissolved it is not always a purposeful action. Sometimes, if you establish your business as a corporation, the company may no longer be active. Although this is according to state records, you may be able to reinstate its registration. There are a variety of reinstatement requirements, procedures, and fees, but they are state-specific.
In the state of Delaware, you may need to contact the Secretary of State or other business authority that is responsible for corporate entity registrations. This can help you to determine what steps you should take.
Domestic corporations or limited liability companies (LLCs) that have been administratively dissolved may apply for reinstatement within 5 years of the date of the administrative dissolution. This can be done by filing an application for reinstatement. You may also file a reinstatement application online for reinstating the corporation.
Why Would a Corporation Dissolve?
There are many reasons why a corporation may have an inactive status. This can be because of voluntary or involuntary dissolution.
When shareholders decide to close a business, someone within the company must work to file articles of dissolution. This is important because by doing this, creditors will not be able to come back and present new claims for payment.
Each state has a different statute that dictates the additional steps that corporations must take for voluntary dissolutions. In general, these steps include:
- Paying the creditors of the company
- Distributing corporate assets to the shareholders
It is recommended that if you want to dissolve your corporation, you should get help from a licensed attorney in your state. This can help you to ensure that you do the process properly.
Sometimes, corporations are inactive because they have been involuntarily dissolved by the state. This may occur if the company has done one of the following:
- Failed to submit required reports
- Failed to submit tax filings
- Failed to submit other required administrative filings
Companies can avoid being dissolved if they have someone implement proper internal policies and procedures. By appointing a responsible person to handle renewals and filings, it can limit your company's risk of involuntary dissolution.
Are Corporations Allowed to be Reinstated After they have been Dissolved?
At any time prior to the expiration of 3 years following the dissolution of a corporation pursuant, you can reinstate your dissolved company. Corporations may “revoke the dissolution therefore affected by it or restore its certificate of incorporation after it has expired by its own limitation,” according to the Secretary of State. In general, most states allow reinstatement, but in Delaware, this must be done within three years. Otherwise, you will be required to start from scratch in the incorporation process.
Reasons a Corporation needs to be Reinstated
When companies fail to meet their annual filing obligations, they risk losing their good standing. This can occur for various reasons, some voluntary, some involuntary. If you've forgotten to file the right forms or delayed payment, then individual states can take action against your business by dissolving your corporation or limited liability company (LLC) and then revoking its status.
Your corporation or LLC's status can easily be revoked for a number of reasons, this might include:
- Failure to file annual reports
- Failure to pay franchise taxes
- Failure to pay state fees
When your company or LLC loses its status it also removes the legal protections typically given to business owners by the state, This can expose shareholders or LLC members to personal liability.
How to Reinstate a Corporation
The steps to reinstating a corporation vary based on state law. You will need to go through 7 standard steps though to ensure you can be reinstated.
- Identify any outstanding state fees your business owes
- Obtain the correct reinstatement forms
- Review your completed reinstatement forms
- Submit your reinstatement forms to the relevant state agencies
- Pay Debts owed by the company
- Wait to be reinstated
- Get Accepted and Reopen for Business
If your business has been voided for a long period of time, then another entity may have taken its name. This is one part of the reinstatement process that you will need to complete, otherwise, you will need to choose a new name should your old name be taken.
Costs Associated with Corporate Reinstatement
In order to reinstate a corporation in the state of Delaware, the fee to file the Certificate is $169. If your document is more than 1 page, you must include $9 for each additional page. You will receive a stamped “Filed” copy of your submitted document. Then, a certified copy may be requested for an additional $50. Expedited services are available as well.
When it comes to penalties for not filing a completed Annual Report (on or before March 1st) you must pay $200. In addition, there is interest at 1.5% per month. This will be applied to any unpaid tax balance.
If you would like help reinstating your corporation, our experienced business law attorneys can help. Our attorneys have been creating corporations and LLCs for hundreds of companies and we can do the same for you.
Contact a business law attorney today to find out the best way to reinstate your corporation.