Dissolving a Corporation

Once in a while the obstacles become just too overwhelming and a business closes down and the need to dissolve the Corporation arises.

*A Bankrupt Corporation cannot apply for dissolution.

NOTE: This process is for a FEDERAL Corporation, however, most Provincial Corporations follow the same or a similar process.

There are several things that must take place before you can begin the dissolution process, they include:

• File a Notice of Intent to Dissolve with Corporations Canada Form 19. This may not be necessary but is advisable.
• Eliminate all Assets and All Liabilities.  In other words, you cannot have any Cash, accounts receivable, equipment etc., nor can you owe any taxes (GST, Sales Tax, Payroll Tax) or any suppliers (Accounts Payable).  You can have amounts due to Shareholders, but these will be lost. In some instances the Shareholders may be able to claim some of their losses on their Personal Income Tax Returns.
• Close GST / HST Accounts, Payroll Tax Accounts and Corporate Tax Accounts.  You can close all of your Federal Tax Accounts by completing Form RC145 and filing it with CRA.
• Close Provincial Sales Tax Account (If Applicable) - each Province is different.
• Close Workers Compensation Accounts (each Province is different).
• Ensure the Minute Book is up to date, and issue a Special Resolution of the Shareholder’s declaring the intent to dissolve.
• File Articles of Dissolution, Form 17.  (each Province has their own forms for this purpose)
• File the necessary documents with Corporations Canada (or the Province) and WAIT.

 

 

Of course, that’s not it.  Just because you filed the documents, does not necessarily mean it is done.  Your application still needs to be approved.

Here is what happens next:

• Corporations Canada (or the Province) will review your information and application to ensure it is complete and the applicable fees (if any) are included.
• Corporations Canada then reviews the application itself (and related documents) to ensure that they comply with the Canada Business Corporations Act (CBCA).

If everything is accurate and complete, they will issue you a Certificate of Dissolution.  This should be added to the Minute Book and retained for the requisite period of time (normally 7 years).

If at any point along the way the application or related information is inaccurate or incomplete, the documents will be returned to your for completion.  You then have 4 months from the date of the Corporations Canada Letter, to amend the application, correct the errors and resubmit the documents.

So, what happens if, during this process you decide to stop the dissolution and carry on the business?  

You can revive the Corporation by filing Form 20 - Statement of Revocation of Intent to Dissolve.

 

Do you have a Corporation that you need to dissolve?  

We would be more than happy to assist you!

 

Date published Mar 8, 2024

This article contains general information only and should not be relied upon for accuracy or completeness. You should seek appropriate tax or accounting advice from a qualified accountant before you take, or refrain from taking, any steps based upon this article. This article should not be construed as tax, accounting or other professional advice and QX Franchise Limited (Master Franchisee for TaxAssist in Canada) disclaims liability for any loss, howsoever caused, arising directly or indirectly from reliance on the information in this article.