How Can A Corporation Be Dissolved?

A corporation can be dissolved either voluntarily or involuntarily. There is a voluntary dissolution of a corporation when its corporate existence ceases due to voluntary means or methods or as decided by the stockholders or members through the board of directors or through the board of trustees as the case may be. An example of a voluntary dissolution is when the persons composing the corporation allowed the corporate term to just expire or when they caused the shortening of the corporate existence to a lesser period than what has been stated in the articles of corporation. In these cases, it is clear that the stockholders or members intend to dissolve the corporation since they did not do anything for the continuation of the corporation. On the other hand, an example of an involuntary dissolution is when, without any effort or decision coming from the members, stockholders, board of trustees, or board of directors, the corporation is dissolve by the law of the state where it was created. You may ask how these can happen. Well, we must remember that a corporation is merely a juridical person allowed by law to be created for a certain purpose. If and when that purpose ceased to exist, then, the law giving it the legal personality may take it back if so warranted. For example, if the corporation divested from the authority it was allowed to operate, the state may cause its dissolution for violation of the corporate purpose. Another example is when there has been a violation of state rules and regulations by the persons composing the corporation. In such a case, the state may again cause the dissolution of the corporation as may be provided for under the law.

The importance of knowing all of these is in order for stockholders, members, board of directors or board of trustees to always be on guard concerning the affairs of the corporation. By keeping the operations of the corporation within the limits and bounds set forth by state laws and regulations, you can avoid the untimely dissolution of your corporation.

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Major Advantages of Establishing a Corporation

Do you want to establish your own business but you want other persons to join you in your business venture? If this is what you perceive to do, then we advice you to form a corporation. A corporation is an artificial being created by operation of law having the right of succession and whose powers, attributes and properties expressly authorized by law or incident to its existence. It is composed of at least 5 persons who will be known as the incorporators. For financial reasons and practicality, forming a corporation will definitely be very advantageous most specially when you want to engage in a feasible business venture but you lack the appropriate capital to establish it by yourself. In a corporation, you, together with other business partners will be joining your resources for the purpose of pursuing the business venture. Aside from this, one of the major advantages of a corporation will be its right to continuous existence or the right of succession. This means that even if all the original personalities that establish it are no longer part of the business venture or are already separated therefrom, the corporation will continue to exist so long as it still has the attributes as required by law.

Likewise, a very important attribute of a corporation is that it has a separate and distinct personality from those persons who compose it. Now what does this mean? The answer is simple. Since a corporation is an artificial being merely created by operation of law, it is considered as to having a personality different and unconnected with the persons making up the corporation. The rights, properties and attributes of the corporation are not the rights, properties and attributes of the stockholders or members and vice versa. Although they are intertwined, they are in the eyes of the law, separate and distinct from each other.

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John Luke Matthews is a regular contributor of relevant articles about the jurisprudence of businesses. He is part of the Mesriani Law Group and is currently taking information technology studies as well.