If you ever find yourself needing to dissolve your company, you will want to familiarize yourself with the various ways of doing so. If you have a company registered under BC’s Business Corporations Act (the “Act”), you have options for carrying out the dissolution of your company and it is important to consider which method makes sense for you and your business.

First, we have Short Form Dissolution. This method can only be used in cases where a company is solvent and has no assets or liabilities. Therefore, for those looking to dissolve via this method, you will need to ensure that the company’s liabilities have been paid, and any remaining assets have been distributed.

If timing your company’s dissolution is important, you may want to consider this option. Short form dissolution allows you to determine the date in which your company will be dissolved. For example, this is often done in order to time the date of dissolution along with your company’s fiscal year end.

To carry out dissolution using voluntary or short form dissolution, you will need to obtain and file with the BC Registry the appropriate shareholder and director approvals, a dissolution request, and a director’s affidavit.

The second method is “letting it die” or “failure to file”. Failing to make the necessary annual filings under the Act for two consecutive years may result in your company being dissolved by the Registrar (but does not guarantee it or ensure it will occur in a specific period of time). Like the short form dissolution, this method should only be used when the company has no liabilities or assets. If a company dissolves using this method and does have assets, those assets will end up being absorbed by the government (also known as escheating to the government). Additionally, the Act states that the liability of every director, liquidator and shareholder of the company shall continue and may be enforced as if the company had not been dissolved. The limitation period for liability under the Income Tax Act runs from the time of resignation, not dissolution. Therefore, it is recommended that directors resign prior to dissolution.

The third option is Long Form Dissolution. This is a longer process and involves the shareholders appointing a liquidator. The liquidator would step in and manage the assets and liabilities in order to wind up the company. This option is typically reserved for those companies with complex or uncertain variables where another method of dissolution might not be readily available.

If you have questions about the various options or how they may apply to your circumstances, please do not hesitate to contact our office.

Author:  Bennett Liddycoat

This information is general in nature only. You should consult a lawyer before acting on any of this information. This information should not be considered as legal advice. To learn more about your legal needs, please contact our office at (250)448-2637 or any of our lawyers practicing in the area of business law at the following:

Una Kuzio: una@touchstone.law

Bennett Liddycoat: bennett@touchstone.law