As discussed in previous posts, the creation of a formal corporate entity and compliance with state prescribed formalities can offer business owners and members substantial protections from individual liability for business debts when acting by and through an entity. This compliance with formality can also offer substantial protections in the event the choice is made to close, or otherwise cease conducting business through, a formal entity.
If the choice is made to dissolve an entity, members would be well advised to take the proper statutory steps in order to cease operations formally. It is important to undertake the appropriate formalities in order to terminate the existence of the entity with State officially, and more importantly, to place the dissolved entity and any remaining assets (including final shareholder/member distributions) outside of the reach of third party claims.
The Massachusetts Business Corporations Act spells out all steps necessary to dissolve a corporation formally. Among other formalities, it is necessary to take a proper vote to initiate dissolution, file Articles of Dissolution with the Commonwealth, properly notice creditors and potential creditors of dissolution, and properly wind down corporate activity. As previously noted, adherence to the prescribed steps is paramount to limiting future liabilities as they may relate to a dissolved corporation. If you have questions with regard to business formation and/or operations you should consult with a knowledgeable attorney to determine your best options.
