IX. Title 1. Chapter 11: Winding Up and Termination
A. Winding Up
The process of winding up of the business of a domestic entity is triggered as a result of the occurrence of certain events. Chapter 11 of the BOC and the applicable spokes govern the winding up of a domestic entity.
- Section 11.051 of the BOC sets forth five events that require the winding up of a domestic entity. These five events are: 1) the expiration of an entity’s duration; 2) a voluntary decision to wind up the business of the entity by a vote of the persons authorized under the BOC to approve the winding up of the entity; 3) the occurrence of an event provided for in the governing documents of the entity that requires the winding up of the entity; 4) the occurrence of an event specified in the BOC as requiring the winding up of the domestic entity; and 5) a judicial decree that requires the winding up or dissolution of the entity.
- There are also supplemental provisions that require the winding up of a limited liability company (sec. 11.056), a general partnership (sec. 11.057) and a limited partnership (sec. 11.058).
- Unless the event requiring the winding up of the domestic entity is revoked (sec. 11.151) or canceled (sec. 11.152), the governing persons, or other persons authorized by the BOC, are required to wind up the business of the domestic entity as soon as reasonably practicable. Look to chapter 11 and the specific title governing the domestic entity for requirements and procedures relating to a revocation or cancellation of an event requiring the winding up of a domestic entity.
B. Certificate of Termination
A domestic filing entity must file a certificate of termination after the process of winding up is completed.
- A certificate of termination must include the following:
- the name and address of the filing entity;
- the name and address of each governing person
- the nature of the event that requires the filing entity’s winding up;
- a statement that the entity has complied with the provisions of the BOC governing its winding up;
- any other information that may be required of the entity under the BOC; and
- a certificate of account status, if applicable.
- Supplemental information is required of nonprofit corporations and limited partnerships. SOS form 651 may be used for the termination of a domestic entity, other than a nonprofit corporation or cooperative association (these entities use SOS form 652).
C. Involuntary Termination or Revocation by the Secretary of State
The authority of the secretary of state to involuntarily terminate or revoke certain entities was expanded by the BOC.
- The following circumstances give rise to an involuntary termination of a domestic filing entity by the secretary of state:
- Failure to file a report within the period required by law;
- Failure to pay a fee or penalty prescribed by law when due and payable;
- Failure to pay a filing fee, or payment of the fee was dishonored when presented by the state for payment; and
- Failure to maintain a registered agent or registered office.
- Prior law did not authorize the involuntary termination of a domestic or foreign limited partnership or foreign limited liability partnership for its failure to maintain a registered agent or registered office address. Under the BOC, a domestic or foreign limited partnership or foreign limited liability partnership may face involuntary termination or revocation for its failure to maintain a registered agent or registered office.
- The grounds giving rise to the revocation of a foreign filing entity’s registration may be found in section 9.101 of the BOC. In addition to the circumstances described above, the secretary of state may revoke the registration of a foreign filing entity if the entity fails to amend its registration when required to do so by law.