Closing Down A Business
Howard Nightingale has successfully practiced Corporate and Commercial law in Toronto since 1982.
The closing down of a business/corporation involves the concept of dissolution, the legal termination of a corporation. In other words, dissolution is the act of ending the existence of a corporation.” In Canada, a corporation is dissolved when a Certificate of Dissolution is issued by the appropriate federal or provincial body. With the exception of bankruptcy, a corporation can apply to dissolve when it has no property (any property has been distributed) and all of its liabilities have been discharged.
To implement terminating the corporate existence of a corporation on a voluntary basis Howard Nightingale conducts the following steps:
- Obtain instructions and all basic preliminary advice.
- Prepare all material.
- Arrange the holding all requisite meetings, preparation of minutes of such meetings.
- Arrange for publication of all requisite notices and obtaining consents of tax authorities.
- Arrange necessary attendances, correspondence and report to the client.
Please contact Howard Nightingale to discuss any questions you may have regarding the termination of a corporation.
Frequently Asked Questions
This happens when the government cancels your corporation because you failed to file annual returns or pay the required fees. Involuntary dissolution is dangerous because it can lead to personal liability for directors and the forfeiture of corporate property to the Crown. We can help you “Revive” a corporation if this has happened.
When winding up, you may be required to publish a notice in a local newspaper or the Ontario Gazette to notify potential creditors of the impending dissolution. This gives them a chance to come forward and settle any outstanding claims before the assets are distributed to shareholders.
Yes, for a limited time. In Ontario, a person can generally still bring a legal action against a dissolved corporation for up to two years after its dissolution for causes of action that arose before it was closed.
Under the Business Corporations Act and the Income Tax Act, you are generally required to keep corporate and financial records for six to seven years after the date of dissolution. This includes minute books, accounting records, and tax filings.
Before a corporation can be fully wound up, the CRA must confirm that all taxes, including corporate income tax, HST, and payroll source deductions, have been paid in full. Without this “clearance,” directors could be held personally liable for the company’s unpaid taxes.
Yes. Voluntary dissolution typically requires a “Special Resolution” passed by the shareholders. This means that a significant majority (usually two-thirds) of the voting shares must agree to the dissolution. We help prepare the formal minutes and resolutions to document this consent.
This is your official proof that the corporation no longer exists. It is required to finalize your relationship with the Canada Revenue Agency (CRA), close corporate bank accounts, and officially end the directors’ ongoing fiduciary duties.
Before dissolution, all corporate property must be distributed. Typically, this means selling the assets to pay off creditors first. Any remaining cash or property is then distributed to the shareholders according to their share rights.
Generally, no. Under Ontario law, a corporation must discharge all of its liabilities (pay off its debts) before it can apply for voluntary dissolution. If the company is insolvent and cannot pay its debts, you may need to look into bankruptcy or a proposal to creditors instead of a standard dissolution.
Simply stopping operations or closing your doors doesn’t end the legal existence of a corporation. Dissolution is the formal legal process of “killing” the corporation. Until a Certificate of Dissolution is issued, the corporation still exists in the eyes of the government, and you may still be required to file annual tax returns and corporate filings.
Your information will always remain private and confidential.