Let’s say a corporation has had it’s run, but changing times have caused it to no longer be viable. The Stockholders vote not to elect any new officers to start to close the company, and the company runs out of assets. Everyone leaves, including the elected officials as there is no compensation to have them stay.
What happens here? There is no one to officially file any form dissolving the corporation. There is no one even to file a final ‘tax’ return - thought out of curtacy it was filed, there is no one able to speak for the corporation - so no one to allow power of attorney to file . What happens if there is a corporate tax debt of $52.32, which $0 is tax owed, $50 penalty and $2.32 interest?
If a company goes out of business, and nobody from the company bothers to wind up the company’s affairs, then the creditors of the company will sue and a judge will oversee the dissolution of the company. If the company name itself is worth anything that can be seized and distributed to the creditors. That is why we still have a company called “K-Mart”. K-Mart went broke, and a judge ordered the company seized and the new K-Mart was a new company owned by the former K-Mart’s creditors.
And I always thought Sears purchased KMart. But in reality, the holding company that purchased Kmart as it emerged from bankruptcy later purchased Sears. That explains a lot about both chains.
If someone at the company doesn’t take care of things like final tax filings, they can find themselves in some very hot water. With Washington state sales tax, it’s even possible for a shareholder or an officer to be held personally liable for the unpaid tax. (The condition is that they had to know of the obligation and have had authority to choose not to meet it.)
In any event, the other poster is right that creditors can force a company into a bankruptcy proceeding and the trustee of the bankruptcy estate would then be in charge of making sure that final returns were filed. The bankruptcy process would make sure assets were liquidated and determine which debts were to be paid.
Also, most states have some kind of a provision for an “administrative dissolution” for corporations that don’t file their annual renewals. So even a company that ends up with no debts and no assets (and thus no bankruptcy or unfiled tax obligations) would still find itself eventually terminated by an act of the state. In Washington, being four months late with the renewal results in an administrative dissolution. For a time, the company could be brought back into current standing by paying late fees and filing the right forms. After three years, you’re stuck starting a new company (I think).
Thats not how it works. Some people have to be down on paper as the Company directors. Those people are responsible for the affairs of the company until it is formally closed whether they get paid or not. If a company has no debts and no assets you can just file paperwork to close it, and those people are no longer company Directors.
If the company has debts you can’t just close it, you need to instead file for bankruptcy of the company and the creditors get to seize any remaining assets including intellectual property.
It’s not like congress, the directors, CEO etc. don’t walk away after a fixed term. They are “officers of the corporation” until replaced.
As others mentioned, corporations - like people - might sometimes incur some obligations just for still being there, like filing state tax or the penalties for not doing so. I suppose the officers of the company could escape the need to do anything by dropping dead, but then the ownership of the corporation still resides in the shareholder(s).
I suppose the heirs of the shareholders could refuse to accept the shares, especially if it sticks them with unknown liabilities (but generally, that’s why there are companies and the word “limited” is typically attached - so the shareholders have no additional obligations.) Then the shares might be auctioned off if there are any takers. After all, the paperwork to assemble a corporation is worth something, assuming it has no looming debacle to deal with.
If a corporation has no debts or other obligations, no assets, if nobody exercises the rights of shareholders or duties of officers, nobody holds the titles of the officers - then what difference does it make? Basically, if a tree falls in the forest and nobody hears it…
So that brings us around to the crux of the OP’s question - does a corporation eventually expire if it is not in any way active? I imagine at very least most jurisdictions require a renewal of registration with the state that created them, or some such act every few years - if that is not done, the right to be a corporation lapses?
In Australia you have to pay a fee of around $200 a year to the the official registrar of companies, just to keep your company on the books. If that fee isn’t paid, eventually they’ll declare the company bankrupt and seize any assets it has.
I imagine its the same everywhere, I’d be very surprised if there was any jurisdiction that doesn’t at least some minimal yearly company registration fee.