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CORPORATE DISSOLUTION PACKAGE STATE OF HAWAII Electronic Version STATUTORY REFERENCE Hawaii Statutes, Division 2: Business – Title 23: Corporations §414-381 to §414-387: Dissolution NOTE This package only covers voluntary dissolution of a corporation. This package does not cover administrative dissolution (forced dissolution by the Secretary of State) or judicial dissolution (forced/supervised dissolution by a court). SELECTIONS FROM STATUTES §414-381 - Dissolution by incorporators or initial directors A majority of the incorporators or initial directors of a corporation that has not issued shares or has not commenced business may dissolve the corporation by delivering to the department director for filing articles of dissolution that set forth: (SEE FORM 1, below) (1) The name of the corporation; (2) The date of its incorporation; (3) Either: (A) That none of the corporation's shares has been issued; or (B) That the corporation has not commenced business; (4) That no debt of the corporation remains unpaid; (5) That the net assets of the corporation remaining after winding up have been distributed to the shareholders, if shares were issued; and (6) That a majority of the incorporators or initial directors authorized the dissolution. §414-382 - Dissolution by board of directors and shareholders (a) A corporation's board of directors may propose dissolution for submission to the shareholders. (b) For a proposal to dissolve to be adopted: (1) The board of directors must recommend dissolution to the shareholders unless the board of directors determines that because of conflict of interest or other special circumstances it should make no recommendation and communicates the basis for its determination to the shareholders; and (2) The shareholders entitled to vote must approve the proposal to dissolve as provided in subsection (e) and (f). (c) The board of directors may condition its submission of the proposal for dissolution on any basis. (d) The corporation shall notify each shareholder, whether or not entitled to vote, of the proposed shareholders' meeting in accordance with section 414-125. The notice must also state that the purpose, or one of the purposes, of the meeting is to consider dissolving the corporation. (e) With respect to the corporations incorporated on or after July 1, 1987 , at the meeting a vote of shareholders entitled to vote thereat shall be taken on a resolution to dissolve the corporation. The resolution shall be adopted upon receiving the affirmative vote of the holders of a majority of the shares of the corporation entitled to vote thereon, unless any class of shares is entitled to vote thereon as a class, in which event the resolution shall be adopted upon receiving the affirmative vote of the holders of a majority of the shares of each class of shares entitled to vote thereon as a class and of the total shares entitled to vote thereon. (f) With respect to corporations incorporated before July 1, 1987 , at the meeting a vote of shareholders entitled to vote thereat shall be taken on a resolution to dissolve the corporation. The resolution shall be adopted upon receiving the affirmative vote of the holders of three-fourths of the shares of the corporation entitled to vote thereon, unless any class of shares is entitled to vote thereon as a class, in which event the resolution shall be adopted upon receiving the affirmative vote of the holders of three-fourths of the shares of each class of shares entitled to vote thereon as a class and of the total shares entitled to vote thereon. The articles of incorporation may be amended by the vote set forth in the preceding sentence to provide for a lesser proportion of shares, or of any class or series thereof, than is provided in the preceding sentence, in which case the articles of incorporation shall control; provided that the lesser proportion shall not be less than the proportion set forth in subsection (e). §414-383 - Articles of dissolution (a) At any time after dissolution is authorized, the corporation may dissolve by delivering to the department director for filing articles of dissolution setting forth: (1) The name of the corporation; (2) The date dissolution was authorized; (3) If dissolution was approved by the shareholders; (A) The number of votes entitled to be cast on the proposal to dissolve; and (B) Either the total number of votes cast for and against dissolution or the total number of undisputed votes cast for dissolution and a statement that the number cast for dissolution was sufficient for approval; and (4) If voting by voting groups was required, the information required by paragraph (3) must be separately provided for each voting group entitled to vote separately on the plan to dissolve. (b) A corporation is dissolved upon the effective date of its articles of dissolution. The articles of dissolution may specify a delayed effective time and date, and if it does so the document becomes effective at the time and date specified. If a delayed effective date but no time is specified, the document shall be effective at the close of business on that date. A delayed effective date for a document may not be later than the thirtieth day after the date it is filed. §414-385 - Effect of dissolution (a) A dissolved corporation continues its corporate existence but may not carry on any business except that appropriate to wind up and liquidate its business and affairs, including: (1) Collecting its assets, (2) Disposing of its properties that will not be distributed in kind to its shareholders, (3) Discharging or making provision for discharging its liabilities, (4) Distributing its remaining property among its shareholders according to their interests, and (5) Doing every other act necessary to wind up and liquidate its business and affairs. (b) Dissolution of a corporation does not: (1) Transfer title to the corporation's property, (2) Prevent transfer of its shares or securities, although the authorization to dissolve may provide for closing the corporation's share transfer records, (3) Subject its directors or officers to standards of conduct different from those prescribed in part IX, (4) Change quorum or voting requirements for its board of directors or shareholders; change provisions for selection, resignation, or removal of its directors or officers or both; or change provisions for amending its bylaws, (5) Prevent commencement of a proceeding by or against the corporation in its corporate name, (6) Abate or suspend a proceeding pending by or against the corporation on the effective date of dissolution, or (7) Terminate the authority of the registered agent of the corporation. §414-386 - Known claims against dissolved corporation (a) A dissolved corporation may dispose of the known claims against it by following the procedure described in this section. (b) The dissolved corporation shall notify its known claimants in writing of the dissolution at any time after its effective date. The written notice must: (1) Describe information that must be included in a claim, (2) Provide a mailing address where a claim may be sent, (3) State the deadline, which may not be fewer [than] one hundred twenty days from the effective date of the written notice, by which the dissolved corporation must receive the claim; and (4) State that the claim will be barred if not received by the deadline. (c) A claim against the dissolved corporation is barred: (1) If a claimant who was given written notice under subsection (b) does not deliver the claim to the dissolved corporation by the deadline; (2) If a claimant whose claim was rejected by the dissolved corporation does not commence a proceeding to enforce the claim within ninety days from the effective date of the rejection notice. (d) For purposes of this section, "claim" does not include a contingent liability or a claim based on an event occurring after the effective date of dissolution. §414-387 - Unknown claims against dissolved corporation (a) A dissolved corporation may also publish notice of its dissolution and request that persons with claims against the corporation present them in accordance with the notice. (b) The notice must: (1) Be published one time in a newspaper of general circulation in the county where the dissolved corporation's principal office (or, if none in this State, its registered office) is or was last located; (2) Describe the information that must be included in a claim and provide a mailing address where the claim may be sent; and (3) State that a claim against the corporation will be barred unless a proceeding to enforce the claim is commenced within five years after the publication of the notice. (c) If the dissolved corporation publishes a newspaper notice in accordance with subsection (b), the claim of each of the following claimants is barred unless the claimant commences a proceeding to enforce the claim against the dissolved corporation within five years after the publication date of the newspaper notice: (1) A claimant who did not receive written notice under section 414-386; (2) A claimant whose claim was timely sent to the dissolved corporation but not acted on; (3) A claimant whose claim is contingent or based on an event occurring after the effective date of dissolution. (d) A claim may be enforced under this section: (1) Against the dissolved corporation, to the extent of its undistributed assets; or (2) If the assets have been distributed in liquidation, against a shareholder of the dissolved corporation to the extent of the shareholder's pro rata share of the shareholder claim or the corporate assets distributed to the shareholder in liquidation, whichever is less, but a shareholder's total liability for all claims under this section may not exceed the total amount of assets distributed to such shareholder. INSTRUCTIONS There are two ways to voluntarily dissolve a business corporation in the State of Hawaii: (1) If the corporation has not issued shares OR has not commenced business , the board of directors (or if the corporation has no directors, a majority of the incorporators) may dissolve the corporation by majority vote. (2) If the corporation has issued shares and commenced business, its board of directors may propose dissolution for submission to the shareholders. We discuss these two methods in order, below. Use the method that applies to your situation. METHOD (1) If the corporation has not issued shares OR has not commenced business , the board of directors (or if the corporation has no directors, a majority of the incorporators) may dissolve the corporation by majority vote. 1. Complete FORM 1, “ARTICLES OF DISSOLUTION - INITIAL” (below), and follow the instructions on the form. METHOD (2) If the corporation has issued shares and commenced business, its board of directors may propose dissolution for submission to the shareholders. This is the second method for dissolving a corporation in Hawaii. Because the corporation has issued shares and commenced business, method (2) is slightly more complex than method (1). 1. The board of directors must propose dissolution, and submit this proposal to the shareholders for a vote. The board must either recommend dissolution, or (due to a conflict of interest or other special circumstances) tell the shareholders about the conflict of interest or special circumstances, and submit the proposed dissolution to the shareholders for a vote without recommending whether or not the shareholders should approve the proposal. (See below: Form 3, PROPOSAL) The corporation shall notify each shareholder, whether or not entitled to vote, of the proposed shareholders’ meeting. Each shareholder must be notified of the date, time, and place of the meeting, no fewer than ten nor more than sixty days before the meeting date. The notice must state that the purpose, or one of the purposes, of the meeting is to consider dissolving the corporation. (See below: Form 4, NOTICE OF MEETING) The shareholders will vote at the meeting, and must approve or disapprove the dissolution by the amount of votes described in §414-382, above. If all shareholders (whether entitled to vote or not) consent to the dissolution, formalities of notice and voting can be dispensed with if ALL shareholders sign the WRITTEN CONSENT OF ALL SHAREHOLDERS (See below: Form 5). 2. If dissolution is approved by vote of the shareholders (or by unanimous written consent), the corporation must complete FORM 2, “ARTICLES OF DISSOLUTION” (below). Follow the instructions on the form. 3. Dispose of known claims by notifying known claimants/creditors of the dissolution in writing, at any time after the effective date of the dissolution. (Of course, you may simply pay all of your known bills and skip this step.) SEE FORM 6, below. 4. Reject or accept (pay) claims. SEE FORM 7, REJECTION OF CLAIM, below. 5. Dispose of unknown claims by publishing notice of dissolution once in a newspaper of general circulation in the county where the dissolved corporation’s principal office (or if none in this state, its registered office) is or was last located. SEE FORM 8, below. FORM 1 ARTICLES OF DISSOLUTION - INITIAL Download the form by clicking the link below, or copying the link into the address window of your web browser. http://www.uslegalforms.com/dissolution/HI/HI-Diss-initial.pdf The form is in .pdf format and you will need the free Adobe Acrobat Reader to view the form. In the unlikely circumstance that the Adobe Acrobat Reader is not installed on your computer, you can download it free from http://www.adobe.com/products/acrobat/readstep2.html . The download is quick and easy. Fill out this form, and mail it in as directed. FOLLOW THE INSTRUCTIONS ON THE FORM. FORM 2 ARTICLES OF DISSOLUTION Download the form by clicking the link below, or copying the link into the address window of your web browser. http://www.uslegalforms.com/dissolution/HI/HI-Diss.pdf The form is in .pdf format and you will need the free Adobe Acrobat Reader to view the form. In the unlikely circumstance that the Adobe Acrobat Reader is not installed on your computer, you can download it free from http://www.adobe.com/products/acrobat/readstep2.html . The download is quick and easy. Fill out this form, and mail it in as directed. FOLLOW THE INSTRUCTIONS ON THE FORM. FORM 3 PROPOSAL OF THE BOARD OF DIRECTORS FOR DISSOLUTION PROPOSAL OF THE BOARD OF DIRECTORS OF ___________________________________ Pursuant to Notice or Waiver of Notice, at a regular or special meeting of the Directors of ___________________________________ , a Hawaii corporation, upon motion duly made and seconded, it was resolved to submit the following proposal to the shareholders for a vote thereon: PROPOSAL: To take all action necessary to dissolve the corporation and resolve all matters related to said dissolution. The Board of Directors: Recommends that the shareholders vote in favor of dissolution. Is silent regarding recommendation due to the following conflicts of interest or special circumstances: [describe]       Dated this the _____ day of ___________________, 20____. _____________________________________ Director _____________________________________ Director _____________________________________ Director Attest: _____________________________________ Secretary FORM 4 NOTICE OF SPECIAL MEETING NOTICE OF SPECIAL MEETING OF STOCKHOLDERS OF ___________________________________ Pursuant to the By-Laws of the Corporation, a special meeting of the Shareholders of ___________________________________ , a Hawaii corporation is called for the _____ day of _______________ , 20 _____ , at _____ o’clock, _ .m., to be held at the following address: ___________________________________ ___________________________________ ___________________________________ ___________________________________ The Purpose of the meeting is to seek stockholder approval of the Proposal to Dissolve Corporation heretofore adopted by resolution of the Board of Directors. This Notice given on this the _____ day of _______________ , 20 _____ , by the Secretary of the Corporation at the direction of the Board of Directors, by mailing a true and correct copy of this Notice to the address of each shareholder on the records of the Corporation at least 10 days prior to, but not more than 60 days prior to, such special meeting. _________________________________ Secretary FORM 5 WRITTEN CONSENT OF ALL SHAREHOLDERS WRITTEN CONSENT OF THE SHAREHOLDERS OF ___________________________________ The undersigned, being all the shareholders of ____________________________ , a Hawaii corporation, hereby consent to the dissolution of the corporation. Dated this the _____ day of _______________ , 20 _____ . ____________________________________ Shareholder ____________________________________ Shareholder ____________________________________ Shareholder ____________________________________ Shareholder ____________________________________ Shareholder ____________________________________ Shareholder FORM 6 NOTICE TO KNOWN CLAIMANTS/CREDITORS NOTICE TO CLAIMANT TO: _______________________________ _______________________________ _______________________________ _______________________________ You are hereby notified that on the _____ day of _______________ , 20 _____ , _______________________________ , a Hawaii corporation, filed Articles of Dissolution with the Secretary of State. You may be able to assert the following claim against the corporation. In order to assert a claim, you must confirm your claim by submitting the following information: [describe all info that must be submitted to verify claim] Your claim must be received by the _____ day of _______________ , 20 _____ , [cannot be less than 120 days from the date of this notice]. Claims must be sent to: _______________________________ _______________________________ _______________________________ _______________________________ YOU MUST MAIL CONFIRMATION OF YOUR CLAIM TO THE CORPORATION. YOUR CLAIM WILL BE BARRED IF WRITTEN NOTICE OF YOUR CLAIM IS NOT RECEIVED BY THE DEADLINE. Issued by: _____________________________________ Title: _______________________________ Date: _______________________________ FORM 7 NOTICE OF REJECTION OF CLAIM NOTICE OF REJECTION OF CLAIM TO: _______________________________ _______________________________ _______________________________ _______________________________ You are hereby notified that on the _____ day of _______________ , 20 _____ , _______________________________ , a Hawaii Corporation rejected all or part of the claim you submitted to the corporation. _____ ALL OF YOUR CLAIM WAS REJECTED. _____ A PORTION OF YOUR CLAIM WAS REJECTED. The part of your claim that was rejected is: [describe] IF YOU WISH TO ATTEMPT TO ENFORCE YOUR CLAIM, PROCEEDINGS TO ENFORCE THE CLAIM MUST BE COMMENCED WITHIN 90 DAYS. IF YOU FAIL TO COMMENCE PROCEEDINGS, YOUR CLAIM WILL BE BARRED. Issued by: _____________________________________ Title: _______________________________ Date: _______________________________ FORM 8 NOTICE TO UNKNOWN CLAIMANTS Publish once in a newspaper of general circulation in the county where the dissolved corporation’s principal office (or if none in this state, its registered office) is or was last located. NOTICE TO UNKNOWN CLAIMANTS You are hereby notified that on the _____ day of _______________ , 20 _____ , _______________________________ , a Hawaii Corporation, filed Articles of Dissolution with the Secretary of State. The corporation has notified all known claimants. This Notice is for the benefit of any unknown claimants that may exist. If you have a claim against the corporation, describe the claim and mail it to the following address: _______________________________ _______________________________ _______________________________ _______________________________ YOU MUST MAIL CONFIRMATION OF YOUR CLAIM TO THE CORPORATION. TO CONFIRM YOUR CLAIM, SEND THE FOLLOWING INFORMATION: [describe] YOUR CLAIM WILL BE BARRED UNLESS A PROCEEDING TO ENFORCE THE CLAIM IS COMMENCED WITHIN FIVE YEARS AFTER THE PUBLICATION DATE OF THIS NOTICE. Name of Corporation: _______________________________ By: _______________________________ Title: _______________________________ Date: _______________________________