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Is dissolving an existing c-corp and re-incorporating the only option if none of the corporate formalities have been followed?

San Francisco, CA |

Owner incorporated his company 3 years ago, but never implemented corp bylaws, issued shares, etc., and now wants to purchase shares for himself.

The corp. has been conducting biz as a software engineering startup; has 8-10 employees; has paid payroll taxes and filed corp tax returns every year. Assuming backdating anything is illegal, can we become compliant going forward if we observe all the required corporate formalities?

Attorney Answers 3


No. There are other options. This is a complicated matter because of the elapsed time. You need to retain a corporate/business attorney because there are many unanswered questions. Did the corp. do any business. Has the incorporated any funds in the corp.? Did the corp. have any employees, and pay its payroll taxes and/or file its corp. tax returns for the last three years (a deal breaker for a quick dissolution).

This information needs to be provided to a competent business attorney who can document the subsequent compliance by the corp. with all corporate formalities.

Hope this helps!

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THESE COMMENTS ARE NOT LEGAL ADVICE. They are provided for informational purposes only. Actual legal advice can only be provided after consultation by an attorney licensed in your jurisdiction. The answer to question does not create an attorney-client relationship or otherwise require further consultation. Mr. Smith is licensed to practice law throughout the state of California with offices in Los Angeles County. He is authorized to handle IRS matters throughout the United States, and is also licensed to practice before the United States Tax Court. His phone number is 323-292-4116 or his email address is

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Mr. Smith, as usual, gives a great answer.

Bylaws and issuance of securities can be "cured".

Certificates of Revivor can be obtained.

There are big tax implications to dissolving and re-incorporating.

You need a CPA/attorney/(probably insurance agent) check-up and probably major tune-up, but once you are on the right track, a corporation or an LLC is not difficult to maintain.

The above is general legal and business analysis. It is not "legal advice" but analysis, and different lawyers may analyse this matter differently, especially if there are additional facts not reflected in the question. I am not your attorney until retained by a written retainer agreement signed by both of us. I am only licensed in California. See also terms and conditions item 9, incorporated as if it was reprinted here.

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I agree with my colleagues:

It is highly likely that formation-related deficiencies can be cured. (Any business attorney who has been in practice for a while probably has helped clients with similar problems.)

The issues you have mentioned appear to be internal, thus subject to straightforward clean-up. Inappropriate actions toward third parties, on the other hand, could present greater problems.

in any event, you should retain a business lawyer to analyze the situation and recommend a course of action. Things probably aren't as bad as you fear.

This information does not constitute legal advice and does not establish an attorney-client relationship.

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