Dissolution – Part Two (California)

The California Attorney General’s Publication CT–603 (12/06) – "General Guide for Dissolving A California Nonprofit Corporation" – outlines the basic process required by a California nonprofit corporation after its board of directors or its membership votes to cease operations but before any remaining assets are distributed:

  1. A vote by board of directors or majority of corporation to dissolve and prepare a certificate of election to wind up and dissolve (if applicable) and/or a certificate of dissolution.
  2. Prepare final state tax return and verify current status with Franchise Tax Board.
  3. Obtain dissolution waiver from the Attorney General’s Office before disposing of any remaining assets.
  4. Submit final dissolution package to the Secretary of the State’s Office.
  5. Submit final notice of submission to the Attorney General’s Office.

Failure to complete these requirements in compliance or accurately may result in potential director liability for unauthorized distributions of remaining assets, certain outstanding debts or obligations, and breach of fiduciary duty to creditors. To help avoid these problems, organizations should keep accurate documents (e.g. meeting minutes and financial statements) and consider developing a plan of dissolution, describing in detail how debts and obligations will be paid or satisfied as well as the distribution of any remaining assets.

The "General Guide to Dissolving A California Nonprofit Corporation" is available here.

Instructions for completing the Certificate of Election to Wind Up and Dissolve and the Certificate of Dissolution, and additional filing requirements can be found on the Secretary of State’s "Dissolution Filing Requirements.”

– Emily Chan