“My Corporation has Dissolved, Does it Matter?”
April 27th, 2023 by Samuel Teichroew
Yes it does.
A corporation, whether non-profit or for profit, is a legal “person”. Once a corporation has dissolved, it is no longer an active legal entity. Dissolution for a corporation is similar to when an individual has died. An incorporated body may be dissolved intentionally or unintentionally. The unintentional dissolutions are usually due to failure to file annual returns with the Companies Office. If the annual returns are not filed, the corporation will be automatically dissolved by the Companies Office.
Any property owned by a dissolved corporation can no longer be validly dealt with, and it is deemed to have been distributed to the shareholders. This can have serious tax consequences. Any real estate owned in the corporation’s name cannot be remortgaged, sold, or otherwise dealt with. Also, if the corporation has a mortgage the bank will certainly require the corporation to be maintained in good standing at the Companies Office. Other contracts, such as fire insurance, may be invalidated. If the corporation has been dissolved as it can no longer hold any insurance policies after it ceases to exist.
If the business continues after it has been dissolved, it may be deemed to be a sole proprietorship or a partnership. This negates many of the benefits of incorporating as the owners become personally liable for the debts of the business and unable to realize any tax benefits of the corporate structure.
Fortunately, if you realize that your corporation has lapsed it may be possible to revive it. Under The Corporations Act, a dissolved corporation can be revived by filing Articles of Revival at the Companies Office. However, if business was conducted in the corporations name while it was dissolved, the owners may be held personally liable as the corporation was unable to conduct any business while dissolved.
If you find that your corporation has been dissolved or is on notice that it may happen soon, you should immediately contact a lawyer for assistance. One of our lawyers would be pleased to assist you with your annual filings to ensure your corporation remains in good standing at all times.
Article by Samuel Teichroew with contribution by Grant Driedger
Notice: The articles on our website are provided for general information purposes only and should not be relied upon as legal advice or opinion. They reflect the current state of the law as at the date of posting on the website, and are subject to change without notice. If you require legal advice or opinion, we would be pleased to provide you with our assistance on any of the issues raised in these articles.
