There are great reasons to have a lawyer assist you when starting a company. There are also important reasons to hire a lawyer when it is time to bring a company to an end. Here is what you need to know about dissolving a corporation in BC.
Options for dissolving a BC company
If your company is registered under BC’s Business Corporations Act (the “Act”), there are a few different options for dissolving your company. Voluntary or “short form” dissolution is the simplest and quickest way to properly dissolve a corporation in BC, and that will be the focus of today’s post. A major benefit of this option is that you can control the exact date the company ceases to exist (e.g., immediately on filing the application, or on a date that lines up with your company’s fiscal year end).
Other options are:
- Formal dissolution with the appointment of a liquidator. “Long-form” dissolution may be necessary if your company’s affairs are complex or its liabilities uncertain.
- Court-ordered liquidation. Intervention of the court may be necessary if there is impasse among shareholders or directors.
- Dissolution due to default under the Act. A BC company that fails to file its annual report for two consecutive years can be dissolved by the Registrar of Companies.
At first blush, the last option – simply defaulting in your filing obligations – seems like an inexpensive way to dissolve. But bear in mind that while waiting for 2 years to pass, your company is still required to make tax filings with the CRA. Note as well that the “failure to file” option is not recommended if your company has any assets or liabilities—if your company owns assets when struck by the Registrar, those assets become property of the government.
Steps to voluntarily dissolve a corporation in BC
An application for voluntary dissolution can be done quickly and easily if the procedures set out in the Act are followed. The first step is for the shareholders of the company to pass an ordinary resolution requesting the Registrar of Companies to dissolve the company. Another step is obtaining a sworn affidavit from a director of the company. The director’s affidavit must confirm that: the dissolution is authorized by the shareholders; the company has distributed its assets to its shareholders; and the company has no liabilities (or has made adequate provision for the payment of liabilities). Once the prerequisites in the Act have been met, the final step is submitting a Dissolution Request with the Company Registry. A corporate lawyer can assist by drafting resolutions and affidavits, holding the shareholders’ meeting, and ensuring the company is in good standing before the application is filed with the Registrar.
We welcome you to contact Invicta Law Corporation today if you need advice on dissolving a BC company. Our lawyers can also advise you on steps for dissolution if your company is not registered in BC (e.g. under the Canada Business Corporations Act).