Even though a corporation has dissolved, there may still be a need to take certain corporate actions.  For example, the corporation may need to continue to prosecute or defend lawsuits, file a final franchise tax return, or collect and dispose of assets.  The California Corporations Code makes it clear that a dissolved corporation continues to exist for these purposes.  For example, Section 1905(a)(6) provides tha the certificate of dissolution must state that “a final franchise tax return . . . has been or will be filed . . .”.  Section 2010(a), moreover, expressly states that a corporation that is dissolved “continues to exist “for the purpose of winding up its affairs, prosecuting and defending actions by or against it and enabling it to collect and discharge obligations, dispose of and convey its property and collect and divide its assets, but not for the purpose of continuing business except so far as necessary for the winding up thereof.”  Section 2011 makes further provision for actions against a dissolved corporation.

The Once And Future Board

These provisions make it clear that dissolution does not effect the complete extinction of a corporation under the General Corporation Law.  However, this leads to the question of who makes and implements decisions on behalf of a dissolved corporation.  Section 1903(b) provides a distressingly incomplete answer.  It states that when a voluntary proceeding for winding up has commenced, the board shall continue to act as a board and shall have full powers to wind up and settle its affairs, both before and after the filing of the certificate of dissolution.

Directorships Until Death?

As an initial matter, I think many directors would be surprised to find that they continue to be directors after dissolution.  Since there will never be any more elections, this service could continue, perhaps unwittingly, until death.  Directors wishing to avoid lifelong thralldom may therefore wish to resign.

Curiously, no equivalent provision is made with respect to officers.  Implicitly, therefore, their positions would appear to end with the death of the corporation.

A Will But No Way?

The Corporations Code also doesn’t explain how these directors may take action.  Perhaps it was assumed that the same rules governing call, notice, quorum and voting would continue to apply.  However, this assumes that the corporate bylaws survive the corporation’s demise.  It also assumes that there there is someone who can perform officer-like functions such as giving notice of meetings, recording minutes, and implement board decisions.

One Million Letters Later

Professors Lucian Bebchuk and Robert J. Jackson, Jr. published this post announcing that the Securities and Exchange Commission has now received over 1 million comment letters with respect to their rule making petition on corporate political spending disclosure.  That deluge of comments started with this letter that I submitted on August 6, 2011.  The professors subsequently published a law review article, Shining Light on Corporate Political Spending, that attempted (in my view, unsuccessfully) to refute my comments.