Administrative Dissolutions

As previously posted on this blog, California law was changed (AB 2503) to allow the state to dissolve entities administratively instead of allowing zombie entities to remain on the rolls permanently.

A word to the wise:  Abandoning the entity and awaiting an administrative dissolution is not a recommended alternative to affirmatively taking steps to dissolve an entity when it has reached the end of its useful life. An administrative dissolution can require years to take effect, and the failure to take steps to dissolve an entity might in some circumstances have an adverse effect on the owners.

The news here is that the Franchise Tax Board (FTB) has announced that, since January 1, 2019, when the FTB established the Voluntary Administrative Dissolution Program, the FTB has administratively dissolved 1,500 corporations and limited liability companies (LLCs). Given the large number of zombie corporations and LLCs, this seems like a small number for a two and one-half year period. One wonders whether the number of zombie corporations and LLCs has grown during the period since the inception of the program.

To see the original post on this topic, click this link.

This entry was posted in Alter Ego Liability, Corporate Law, Entity Law, Limited Liability Comanies (LLC's), Piercing the Corporate Veil, S corporations, Suspended Entity and tagged , . Bookmark the permalink.

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