Liquidation and dissolution (CBCA Part XVIII)

A seller meets this process when winding up the old company after an asset sale, and a buyer may ask whether that has happened. Section 211 sets the voluntary route: the directors, or a shareholder entitled to vote at an annual meeting (by a proposal under s. 137), may propose it, and the corporation may liquidate and dissolve by special resolution of the shareholders or, where it has issued more than one class of shares, by special resolutions of the holders of each class.

The steps in s. 211

• A statement of intent to dissolve goes to the Director, who issues a certificate of intent to dissolve.
• The corporation then ceases to carry on business except as needed for the liquidation, but its corporate existence continues until the Director issues a certificate of dissolution.
• It gives notice to each known creditor and in each province where it was carrying on business, collects its property and discharges its obligations, and after giving notice and adequately providing for its obligations distributes what remains among shareholders according to their rights.
• On receipt of articles of dissolution, the Director issues the certificate, and the corporation ceases to exist on the date it shows.

A shorter route

Under s. 210(3), a corporation with property or liabilities may dissolve by special resolution (of each class, where it has issued more than one) if the resolution authorizes the directors to distribute its property and discharge its liabilities, and it has done so before it sends articles of dissolution. Compare articles of dissolution and read whether dissolving an old company after a sale can trigger a lease default. This entry covers corporations under the CBCA; check the statute your corporation was incorporated under.