Dissolution takes place when a company needs to be legally terminated. In simple words, it is a way to put an end to a business. An article or certificate of dissolution needs to be issued in order to dissolve a company.
Dissolution can be divided into the following types:
In some cases, the court can order for the dissolution of the company, such dissolution is provided for by the CBCA and is known as involuntary dissolution.
Following situations can lead to the dissolution:
Moreover, under special circumstances, a company can be dissolved upon the courts order which maybe a result of a shareholders application. The shareholders may file an application due to unfair treatment by the company.
A liquidator can be appointed if the court makes an order regarding the dissolution of the company. The company is required to stop any of its activities if an order has been issued by the court, only such activities which are necessary for a systematic liquidation can be continued. Furthermore, the power of shareholders and directors is ceased and entrusted in the liquidator.
This type of dissolution takes place due to the mutual consent and resolution of the shareholders or directors of the company.
The following situations can lead to the dissolution if a company has issued an article or a certificate of dissolution:
Note: A dissolution notice must be issued to the company and its directors by Corporations Canada before dissolving the company.
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