NAO is not authorized to give legal advice. If you wish to be certain about the proper course of action, please consult a licensed attorney.
Here is a suggested list of steps to follow when/if dissolving your nonprofit corporation. A. Develop a dissolution plan to liquidate or dispose of your assets. If you are a tax-exempt organization, specifically a 501(c)(3), you need to distribute any remaining assets after creditors are paid to another 501(c)(3). Check your Articles of Incorporation to see if you named another organization to receive your assets on dissolution. If you do not have a copy, you can request one from the Oregon Secretary of State's Corporation Division. B. Check your Articles of Incorporation and bylaws to determine if you have members entitled to vote on dissolution matters and whether anyone else’s approval is required. If your corporation does not have members entitled to vote on dissolution, dissolution must be approved by a vote of the majority of Directors in office at the time the plan is approved. If your corporation has members entitled to vote on dissolution, the Board must adopt the plan of dissolution and then submit it to your members for approval. C. Determine if you have any creditors or any claims against the corporation and then determine if you have sufficient assets to pay claims. Identifying and paying creditors is vital because it is possible for individual directors to be held responsible for organizational debts. Claims can include:
- Employees who may have claims for unpaid benefits, unemployment claims or other employee related claims;
- Your landlord, if you lease space, or whoever holds your mortgage, if you own your building;
- Funders who have restricted the use of assets purchased with the funds they provided;
- Any taxing authorities;
- Any creditors or vendors to whom you may owe money.
D. Notify known claimants of the dissolution in writing any time after its effective date. The written notice must describe the information you want the claimant to include in the claim, provide a mailing address where the claim can be sent, state a deadline by which the dissolved corporation must receive the claim (no fewer than 120 days from the date of the written notice), and state that the claim will be barred if not received by that deadline. E. Notify the DOJ of your dissolution in writing if you incorporated as a Public Benefit or Religious Corporation. The written notice should state that you are intending to dissolve and include a copy or summary of your dissolution plan. The dissolution form and instructions can be found here. Your corporation cannot transfer assets as part of the dissolution (see steps A and C above) until 20 days after it has given a written notice to the DOJ, or until the DOJ has consented in writing that it will take no action with respect to the transfer. Once all of the assets have been distributed, you need to deliver a list to the DOJ showing those, other than creditors, to whom the assets were transferred or conveyed, including the address of each person and what each person received. F. File your Articles of Dissolution with the Oregon Secretary of State. The dissolution is effective on the date it is filed by the Secretary of State, unless you specify a delayed effective date (no more than 90 days after the document is filed). G. Send a copy of the Articles of Dissolution to the IRS. If you file Form 990, 990-EZ or 990-N, you can attach a copy of the Articles of Dissolution to your final return. The IRS must be notified within 4 months and 15 days of the date of dissolution that the organization has been dissolved. More information about notifying the IRS can be found here.