There are a few reasons you may need to reinstate a corporation, and for each state the process will look different. It’s important to know why the corporation was dissolved initially as this will inform your approach to reinstatement.
Why Would a Corporation Dissolve?
- Voluntary dissolution: As the name implies, a voluntary dissolution is when the corporation decides on its own to dissolve. In this case the shareholders or members will decide together to officially dissolve their business by filing Articles of Dissolution with the state. Each state has their own requirements for this, but in general a corporation will have to prove that they’ve paid off their creditors in full and paid shareholders before they can file.
- Involuntary dissolution: Involuntary dissolution (sometimes called Administrative Dissolution) is when the corporation is forced to dissolve for one reason or another. This could be because they have not paid their administrative fees with the state, failed to submit required paperwork, or renew their business license on time. Typically a state will send out notices of late payment or renewal to the registered agent before dissolving the business.
Are Corporations Allowed to be Reinstated after They Have Been Dissolved?
All states have some process for reinstating corporations after they have been dissolved, but it will depend on why and how the dissolution happened. Many states have time limits after the dissolution has taken place in which you have to reinstate. Most states will also require additional fees or penalties to be paid to get your business reinstated after it has been inactive. Since each state is different, you should contact your Secretary of State’s office to inquire about the specifics for your case.
Reinstatement after a voluntary dissolution:Typically, it’s easier to reinstate a corporation that has been voluntarily dissolved. In some cases, states offer a short window of time (around 90 days) in which you can withdraw your articles of dissolution and reinstate your corporation just as it was before. This allows shareholders and members time to look over the documents and change their minds if they can’t get a majority vote for dissolution.
Reinstatement after an involuntary dissolution: If a corporation has been involuntarily dissolved, there’s generally more steps to be reinstated which usually involve paying fines, administrative fees, and reinstatement fees. Most states will also impose a window of time after dissolution that you can reinstate which is up to five years in some states. Within this time, you can reinstate with the same name and file number if you’ve fulfilled all other requirements. If you exceed the time allotment, you may be able to form a new corporation with the same name, but you would be assigned a new file number.
Reasons a Corporation May Need to be Reinstated
It’s essential that business owners know the advantages and disadvantages of a non-profit corporation before starting one.
If you’ve recently dissolved a corporation, either voluntarily or involuntarily, it will now be in inactive status. If the company was dissolved voluntarily it’s possible the owner or shareholders changed their mind and now wish to reinstate the business. It’s also possible that there’s been a major change in management or ownership and you want your new corporate filing to reflect this.
If the corporation was involuntarily dissolved it’s usually because you failed to file paperwork on time, failed to pay administrative fees, or failed to pay taxes on time. All of these factors would cause your entity to be listed as “inactive.” In most cases, if not a lot of time has elapsed, you can get your corporation reinstated fairly easily.
How to Reinstate a Corporation in Delaware
The first thing you should do to reinstate your corporation is to contact the Secretary of State’s office to understand exactly why your business is listed as inactive, and what steps you’ll need to take to reinstate it. Below is the general process you’ll take, but it will be different for each state.
- Submit request of reinstatement: All states will have some formal method of reapplying for corporate filing, and this can usually be done online.
- Pay down any debts owed by the company: If your company was dissolved due to negligence of payment, you’ll first need to pay off any fines, debts, or taxes that are outstanding.
- Ensure your registered agent is secure: Since your registered agent is responsible for all correspondence between the state and the business, it’s essential you have someone in this position you can count on. It will be their responsibility to ensure you pay all fines and fees on time as well as respond to official letters that may warn of issues with taxes.
- Wait for approval and reopen for business: Once you take all the necessary steps for reinstatement, you’ll have to wait for the Secretary of State’s office to approve your request. This can take anywhere from one hour to two weeks, though most states can expedite your request for a fee. In this case you can expect a turnaround time of two to three days or even faster.
Costs Associated with Corporate Reinstatement in Delaware
The costs associated with reinstatement will differ based on the state you’re in and the reason for dissolution.
Common Costs Associated with Corporate Reinstatement:
- Penalties for late or missed payments
- Administrative or Reinstatement Fees
- Paying back taxes
- Filing fees
- Expediting fees
If you need help reinstating your Delaware corporation, an experienced business lawyer can help! Schedule a free consultation by contacting our team of business professionals today!