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CORPORATE LEGAL DISSOLUTION

Legal Dissolution

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.

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Dissolution can be divided into the following types:

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  • Dissolution by court order

  • Voluntary dissolution

  • Administrative dissolution

Voluntary Dissolution

This type of dissolution takes place due to the mutual consent and resolution of the shareholders or directors of the company.

Dissolution by Court Order

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.

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Following situations can lead to the dissolution:

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  • If the annual meetings of shareholders have not been conducted by the company.

  • If the company has breached some of the rules or requirements imposed by CBCA. For instance, the shareholders have no access to the records or financial statements of the company, or if the company participated in unlawful activities.

  • If any document has been dishonestly obtained by the company under the CBCA.

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​Moreover, under special circumstances, a company can be dissolved upon the court's order which may be a result of a shareholders application. The shareholders may file an application due to unfair treatment by the company.

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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 that are necessary for a systematic liquidation can be continued. Furthermore, the power of shareholders and directors is ceased and entrusted in the liquidator.

Administrative Dissolution

The following situations can lead to the dissolution if a company has issued an article or a certificate of dissolution:

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  • There are no directors in the company.

  • The business activities have not been carried out continuously for three years.

  • The company does not operate within the first three years of the commencement date as shown in the articles or certificates of the company.

  • The default period of a company which can last up to a year. In this period it is important for the company to submit any required documents or fees to the CBCA.

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