Does your business operate as a Missouri Corporation? Corporations were the preferred way to organize a business until the emergence of Limited Liability Companies (LLCs).
Missouri law requires corporations to file a registration report with the Secretary of State website in order to maintain good standing, either annually or biennially. This generally requires the corporation to produce corporate minutes and pay reoccurring fees with the Secretary of State. Corporations often have a Board of Directors, and are required to have a Chairman or President, a Secretary and a Treasurer, at minimum. These officers are elected for a stated period of time until re-election. However, with an LLC not only are you not required to file registration reports with associated fees, LLCs also do not require a Board of Directors, Officers, corporate meetings and minutes, etc., and LLCs may still enjoy the benefits of corporate taxation by electing to be taxed as a corporation. If you have an active Missouri corporation, there may be compelling reasons to operate as a corporation, but it may be beneficial to discuss with an attorney whether converting to an LLC makes sense.
Additionally, if you have an inactive corporation, it may make sense to do away with the corporation. To do so in Missouri, it requires a two-step process – i.e. you must dissolve and terminate. The corporation may be voluntarily dissolved in one of three ways: first, the corporation may be dissolved by written consent of all shareholders (entitled to vote); second, the Board of Directors may submit plans to dissolve to the shareholders who then shall conduct a vote to approve the dissolution; and third, if no shares of stock have been issued, then a majority of the original incorporators or initial directors may file to dissolve the corporation.
Corporations may be involuntarily dissolved either by administrative dissolution, where the Secretary of State acts to dissolve the corporation pursuant to Missouri law, generally where the corporation has failed to file annual registration reports, income tax returns, pay corporate income tax or failed to have a registered agent on file with the Secretary of State. Also, a Missouri corporation may be dissolved by a legal proceeding if the court of jurisdiction finds that said dissolution is warranted for legal reasoning.
Once dissolution of a corporation has occurred, the corporation remains as a legal entity, but is not allowed to conduct any business, except to wind up it’s affairs, and liquidate it’s assets. The winding up process includes sending notice to creditors and settling such claims. After all creditors are satisfied, remaining corporate assets will be distributed to the shareholders. After winding up, the corporation may be terminated by filing a request for termination with the Secretary of State. Subject to its approval, the corporation will be terminated. However, winding up may be a lengthy process based on the corporation's obligations and corporate assets. It is best to consult an attorney before dissolving and terminating a Missouri corporation.
There may be benefits in saving time and money by doing away with your corporation or converting it to a LLC, the staff at Schmidt, Kirby & Sullivan, P.C. can assist you with this process. Please contact our firm to set up a consultation with an attorney to discuss whether it would be beneficial for your corporation to do so.
