Guide on dissolving a business corporation
A corporation can apply to dissolve when it has no property or liabilities. The exception is a bankrupt corporation. Bankruptcy does not end a corporation's existence. A bankrupt corporation cannot request to be dissolved under the Canada Business Corporations Act (CBCA). For more information, see Bankrupt and insolvent corporations.
There are some steps to dissolve a corporation with property or liabilities.
Although the information provided here will assist you in completing the dissolution process, it is not intended to replace legal advice. Consider consulting a lawyer or another professional advisor to ensure that the specific needs of your corporation are met.
Approval of the dissolution when the corporation has shareholders but no property or liabilities
If the corporation has shareholders but no property or liabilities, shareholders can approve the dissolution by special resolution. If there is more than one class or group of shareholders, each class or group must pass a special resolution to authorize the dissolution even if these shareholders are not otherwise entitled to vote.
Approval when the corporation has no shareholders
If the corporation has no shareholders because no shares were issued, the directors can pass a resolution to authorize its dissolution.
Steps to dissolve a corporation with property or liabilities
A corporation can be dissolved only when its property has been distributed and its liabilities have been discharged.
There are two ways to proceed.
- Liquidation before starting the dissolution process: The shareholders can pass a special resolution authorizing the directors to distribute any property and discharge any liabilities in accordance with the articles of the corporation and the requirements under the CBCA. If there is more than one class or group of shareholders, each class or group must pass a special resolution to authorize the dissolution even if these shareholders are not otherwise entitled to vote. The directors must then dispose of any property and liabilities before applying for a certificate of dissolution.
- Starting the dissolution process before the liquidation process: If the corporation will cease carrying on business while it is in the process of liquidation, it can apply for a certificate of intent to dissolve. Shareholders must authorize the liquidation and dissolution of the corporation by special resolution. If there is more than one class or group of shareholders, each class or group must pass a special resolution to authorize the dissolution even if these shareholders are not otherwise entitled to vote. The certificate of intent to dissolve serves as public notice that the corporation is no longer carrying on its activities, except to the extent necessary for the liquidation.
When a certificate of intent to dissolve is issued, the corporation must cease to carry on its activities except to the extent needed for the liquidation. It must also:
- notify creditors of its intent to dissolve
- give notice of the intent to dissolve in each province in Canada where the corporation is carrying on activities at the time it sends the statement of intent to dissolve to Corporations Canada
- perform all the acts required for the dissolution; for example, collect the corporation's property, dispose of the property that is not to be distributed in kind to shareholders and discharge all the corporation's obligations
- distribute the corporation's remaining property among the shareholders according to their respective rights and the provisions of the CBCA.
Once the liquidation process is completed, you can apply for a certificate of dissolution.
Reversing a decision to dissolve after a certificate of intent to dissolve is issued
A corporation can decide not to dissolve once a Certificate of Intent to dissolve is issued. To stop the dissolution process, the corporation has to apply for a certificate of revocation of intent to dissolve by submitting a completed and signed Form 20 – Statement of Revocation of Intent to Dissolve (see Federal incorporation forms). There is a filing fee (see Services, fees and turnaround times – CBCA).
Once the certificate of revocation of intent to dissolve has been issued, the corporation can resume carrying on its activities.
If the certificate of dissolution has already been issued, Corporations Canada cannot revoke the certificate of intent to dissolve. However, reviving the corporation is possible.
Documents to file to dissolve or provide notice to dissolve a corporation
To obtain a certificate of dissolution, complete and sign Form 17 – Articles of Dissolution (see Federal incorporation forms) and submit it to Corporations Canada.
To obtain a certificate of intent to dissolve, complete and sign Form 19 – Statement of Intent to Dissolve (see Federal incorporation forms) and submit it to Corporations Canada.
Do not submit copies of the directors' resolution or shareholders' special resolution with the applications.
Corporations Canada offers several methods of filing requests for certificates (see How do I file my application under the Canada Business Corporations Act (CBCA)?). There is no filing fee for either certificate.
Bankrupt and insolvent corporations
A corporation that is bankrupt, that has a trustee under a proposal, or that has an interim receiver under the Bankruptcy and Insolvency Act (BIA) cannot voluntarily dissolve.
A corporation is bankrupt under the BIA if it has made an assignment into bankruptcy or if a bankruptcy order has been made against it.
A corporation is insolvent under the BIA if:
- it is unable to meet its obligations as they generally become due
- it has ceased paying current obligations in the ordinary course of activities as they become due, or
- the corporation's property is not sufficient, at a fair valuation, to allow payment of all obligations (meaning that even if all of the property was to be disposed of, there would not be sufficient cash to allow payment of all obligations, whether they are due or will soon become due).
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