- Anmol Trehin
How to Dissolve Your Corporation in Quebec
Updated: Jan 27
What does it mean to dissolve your corporation?
Dissolving your company means to end its commercial activities. After this procedure, your company will legally cease to exist. Before concluding this process, the shareholders and directors must distribute the company’s assets, pay off liabilities and satisfy any pending obligations.
A company can be dissolved voluntarily or involuntarily. A voluntary dissolution occurs when the shareholders or directors decide to end their activities and close the corporation. An involuntary dissolution happens when a court orders the dissolution. This occurs for various reasons, including the failure of the corporation to hold a shareholders’ meeting for two or more consecutive years or because it carried on activities in violation of its articles. When the court decides to dissolve the business, a copy of the judgment will be sent to the Registraire des entreprises (the "Registraire") and the corporation will be dissolved as of the indicated date.
What happens if you don’t dissolve the company?
Annually, a business must file updating declarations and tax returns. If your business isn’t dissolved, these requirements will continue to apply resulting in an accumulation of penalties and fines if left unresolved. Dissolving is a way to end these obligations by informing the government that you are no longer operating.
When can you voluntarily dissolve your business?
Your company can be dissolved if the following conditions have been met:
The liabilities are paid
All of the required tax forms are filed
The company distributed all its property and assets
The corporation is in good standing, i.e. there is no bankruptcy.
The shareholders/directors have the authority to consent to the dissolution.
What steps do you need to take for a voluntary dissolution?
The shareholders, through a special resolution, authorize the dissolution of a company. The directors can authorize the dissolution if there are no obligations, no debts, and no shareholders left.
Once the shareholders authorize the dissolution, the directors proceed to liquidate the business by distributing the assets and settling liabilities. This is a good time to inform creditors, employees, and clients the business is dissolving.
File the necessary documents with the Registraire. For corporations that do not need to liquidate, file a declaration of dissolution. Those subject to liquidation must send a notice of liquidation and a notice of closure of liquidation.
Once the documents are accepted, the Registraire will issue a certificate of dissolution.
Upon receiving the certificate of dissolution, file the final tax return for the corporate fiscal year.
What other formalities do you need to consider?
Before filing for a dissolution with the Registraire, there are various formalities to fulfil. You must pay any unpaid annual registration fees, which may include the fees for the current year.
If you had employees, then your business must file its final remittance with Revenu Quebec and request a cancellation of the registration for the source deductions.
Next, the person in charge of dissolution must apply for a cancellation of the GST/QST tax numbers, and if the income tax is filed then request a cancellation of the registration for the corporate income tax.
Additionally, the person authorized by the business to sign the declaration of dissolution must keep the corporate books for five years that follow the date on the certificate of dissolution issued by the Registrar.
Depending on your company's history, there may be other formalities to execute. Get in touch with our lawyer today to properly wind up your business affairs.
This blog post is not legal advice and is for general informational purposes only. Always speak with a lawyer before acting on any of the information contained herein.