After reading Involuntary Dissolution Of A Corporation, read also Voluntary Dissolution of a Corporation Where No Creditors are Affected
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A corporation may be dissolved by the Securities and Exchange Commission
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A corporation may be dissolved when it subsequently becomes inoperative
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The assets of a dissolved corporation may be forfeited in favor of the government
A corporation may be dissolved by the Securities and Exchange Commission (SEC) on its own initiative or upon the filing of a verified complaint by any interested party.
What are the grounds for dissolution of a corporation?
The law says:
- Non-use of corporate charter;
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If a corporation does not formally organize and commence its business within five (5) years from the date of its incorporation, its certificate of incorporation shall be deemed revoked as of the day following the end of the five (5)-year period.
2. Continuous inoperation of a corporation;
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If a corporation has commenced its business but subsequently becomes inoperative for a period of at least five (5) consecutive years, the SEC may, after due notice and hearing, place the corporation under delinquent status.
3. Upon receipt of a lawful court order dissolving the corporation;
4. Upon finding by the final judgment that the corporation procured its incorporation through fraud;
5. Upon finding by final judgment that the corporation:
- was created for the purpose of committing, concealing or adding the commission of securities violation, smuggling, tax evasion, money laundering, or graft and corrupt practices;
- committed or aided in the commission of securities violations, smuggling, tax evasion, money laundering, or graft and corrupt practices, and its stockholders knew of the same; and
- Repeatedly and knowingly tolerated the commission of graft and corrupt practices or other fraudulent or illegal acts by its directors, trustees, officers, or employees.
Note that if a corporation is ordered dissolved by final judgment pursuant to grounds set forth under number five (5) above, its assets, after payment of its liabilities, shall upon the petition of the SEC with the appropriate courts, be forfeited in favor of the national government. Such forfeiture shall be without prejudice to the rights of innocent stockholders and employees for services rendered, and to the application for other penalty or sanction under the Revised Corporation Code.
Alburo Alburo and Associates Law Offices specializes in business law and labor law consulting. For inquiries, you may reach us at info@alburolaw.com, or dial us at (02)7745-4391/0917-5772207.
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