Administrative Dissolution of Corporations in California
Beginning in 2019, California corporations may be administratively dissolved by the Franchise Tax Board (“FTB”) if the FTB has suspended the corporation’s corporate powers for 60 consecutive months.
Before the corporation can be administratively dissolved, the FTB must provide the corporation with adequate notice in the form of an Administrative Dissolution/Cancelation – Intent Notice letter mailed to the last known address of the corporation. FTB has stated that nearly 500 California corporations have been sent Intent Notice letters.
In most cases, these corporations have been out of business and abandoned for years, but where the corporation retains valuable contract rights or intellectual property rights (patent, trademark, or copyright) corporate owners will want to avoid administrative dissolution. To avoid dissolution, Corporations must object in writing within 60 days of receiving an Intent Notice letter. Failure to file a timely objection will result in automatic administrative dissolution.
After filing a timely objection, the corporation has 90 days to do the following: (1) file any past-due tax returns, (2) pay all accrued taxes, penalties, and interest, (3) file a current Statement of Information with the Secretary of State, (4) fulfill any other requirements to be eligible, and (5) apply for a certificate of revivor. If the corporation satisfies the above conditions, administrative dissolution will be canceled. Otherwise, the FTB will go forward with dissolution.
Administrative dissolution is final and cannot be appealed, however the FTB may extend the 90-day response period one time.