California Articles of Dissolution

Introduction

Key Things to Know

1. 1

   A California Certificate of Dissolution, form DISS STK, is the filing that ends a domestic for-profit stock corporation's existence with the Secretary of State. It is California's version of what other states call articles of dissolution. An LLC and a nonprofit corporation each use a different California filing.

2. 2

   California requires no tax clearance certificate and no Franchise Tax Board consent before the Secretary of State will accept the filing. Assembly Bill 2341 (Statutes 2006, Chapter 773) repealed Revenue and Taxation Code Section 23334, effective September 29, 2006.

3. 3

   The standard California route is two filings: form ELEC STK, the Certificate of Election to Wind Up and Dissolve, then form DISS STK, the Certificate of Dissolution. ELEC STK is unnecessary where all outstanding shares voted to dissolve and DISS STK states that fact (Corporations Code Section 1901(c)).

4. 4

   There is no filing fee for either certificate (Government Code Section 12186(n)). Certification of a copy is an optional five dollars ($5), and in-person submissions carry a fifteen dollar ($15) handling fee that mail submissions do not.

5. 5

   Shareholders holding shares representing 50 percent or more of the voting power may elect to wind up and dissolve (Corporations Code Section 1900(a)). The board may elect on its own only in the cases Section 1900(b) lists, which include a corporation that has issued no shares and one that disposed of all assets and did no business for five years.

6. 6

   A corporation whose Articles of Incorporation were filed within the last 12 months may qualify for form DSF STK, the Short Form Dissolution Certificate, but only if it satisfies every condition on the form, including having issued no shares and conducted no business since incorporation.

7. 7

   California imposes no mandatory notice to creditors. The duty is substantive instead: the board must determine that known debts and liabilities have been paid or adequately provided for before distributing assets to shareholders (Corporations Code Section 2004), and claims stay enforceable against shareholders up to the amount each received (Section 2011(a)(1)).

California Requirements for Articles of Dissolution

• No Franchise Tax Board Clearance Certificate

  California requires no tax clearance certificate and no Franchise Tax Board consent before the Secretary of State will accept the dissolution filing. Assembly Bill 2341 (Statutes 2006, Chapter 773) repealed Revenue and Taxation Code Section 23334 effective September 29, 2006, and neither the dissolution chapter nor the forms ask for one.

• Sworn Statement on the Final Franchise Tax Return

  In place of a clearance certificate, Corporations Code Section 1905(a)(6) requires the Certificate of Dissolution to state that a final franchise tax return has been or will be filed with the Franchise Tax Board. The form wording is that all final returns required under the Revenue and Taxation Code have been or will be filed.

• Form DISS STK, and ELEC STK Unless All Shares Voted

  California uses form DISS STK, Certificate of Dissolution, normally preceded by form ELEC STK, Certificate of Election to Wind Up and Dissolve. ELEC STK is not required where the election was made by the vote of all outstanding shares and DISS STK states that fact (Corporations Code Section 1901(c)). Both forms are revision 03/2022.

• No Filing Fee

  Government Code Section 12186(n) specifies no fee for filing a certificate of election to dissolve a corporation or a certificate of dissolution. Certification of a copy is an optional $5. Documents delivered in person carry a $15 handling fee, which mail submissions do not.

• Election by 50 Percent or More of the Voting Power

  Shareholders holding shares representing 50 percent or more of the voting power may elect to wind up and dissolve (Corporations Code Section 1900(a)). The board may elect alone only in the Section 1900(b) cases, including a corporation that has issued no shares or that disposed of all assets and conducted no business for the preceding five years.

• The 12-Month Window on the $800 Minimum Franchise Tax

  Revenue and Taxation Code Section 23332(c)(1) excuses the minimum franchise tax for a taxable year only if the corporation files a timely final return, does no business in California after that year, and files the certificate of dissolution within 12 months of the date the final return was filed. The minimum tax is $800 under Section 23153(d)(1).

• Debts Paid or Adequately Provided For Before Distribution

  California prescribes no notice to creditors. Instead Corporations Code Section 2004 bars distribution to shareholders until the board determines that known debts and liabilities are paid or adequately provided for, Section 1905(a)(2) makes the certificate recite which, and Section 2011(a)(1) keeps claims enforceable against each shareholder up to the amount distributed to them.

• Short Form DSF STK Within 12 Months of Incorporation

  Form DSF STK, the Short Form Dissolution Certificate, is open only to a stock corporation filing within 12 months of the date its Articles of Incorporation were filed and meeting every condition on the form, including no shares issued, no business conducted since incorporation, and no debts beyond the tax item.