FAQs - Simplified Dissolutions
Under Article 10 of the New York Not-For-Profit Corporation Law
Q: When can a dissolving corporation use the simplified dissolution procedure?
A: A dissolving corporation may utilize the simplified dissolution procedure if it has no more than $25,000 in a reserve fund to pay for the costs of winding up its affairs (e.g., legal and accounting fees), including liabilities which do not exceed $10,000.
Q: Can a corporation do a simplified dissolution if it has any remaining assets that require distribution to another tax-exempt organization?
A: No. In such cases, the dissolving corporation must follow the procedures for the dissolution of a corporation with assets and obtain court approval for the distribution of its remaining assets to a charitable organization with substantially similar activities and purposes, even if the amount to be distributed is less than $25,000.
Q: Can a dissolving corporation transfer or donate its remaining assets to another tax-exempt organization in order to qualify for a simplified dissolution?
A: No. If a dissolving corporation has remaining assets in excess of any reserve fund, it must either: (1) follow the procedures set forth in Article 10 of the N-PCL for the dissolution of a corporation with assets, or (2) seek court approval via N-PCL ''510 and 511 to sell or otherwise dispose of its remaining assets prior to filing a petition for a simplified dissolution. Grant-making private foundations can spend down their assets by making charitable grants to other tax-exempt organizations in the ordinary course of their operations. However, in order for a grant-making private foundation to transfer its assets to another private foundation, the dissolving foundation would need court approval either via an asset dissolution or a ''510/511 petition.
Q: Can a corporation do a simplified dissolution if its assets are insufficient to pay all of its liabilities?
A: No. A corporation must have sufficient funds to pay all liabilities, which cannot exceed $10,000, in order to do a simplified dissolution. If the dissolving corporation has arranged for the reduction and/or forgiveness of any debts and liabilities with its creditors and can thereby qualify for a simplified dissolution, it should attach a copy of any relevant agreements as exhibits to its petition. Insolvent corporations must follow the procedures for a judicial dissolution as outlined in Article 11 of the N-PCL.
Q: When should a corporation using the simplified dissolution procedure file its Plan of Dissolution with the Attorney General's Office?
A: A corporation doing a simplified dissolution should file its Plan of Dissolution with our office after it has already carried out such plan, satisfied any of its remaining debts, and prepared a final financial report indicating a zero balance. As opposed to the procedures for the dissolution of a corporation with assets, the Attorney General's Office does not need to review or approve the Plan of Dissolution prior to its execution for the dissolution of a corporation with no assets. There need be no reference to carrying out the Plan of Dissolution in the Certificate of Dissolution if the dissolving corporation had no assets or liabilities when it adopted such plan.
Q: After a corporation submits its petition for a simplified dissolution to the Charities Bureau, how long does it take for the Attorney General to endorse its Certificate of Dissolution?
A: The length of time of the Attorney General's review varies depending on the number and nature of the issues flagged by our office. We will contact you in writing or by telephone with any follow-up questions that we have.
Q: Are Type A not-for-profit corporations subject to the simplified dissolution procedure?
A: No. Generally, Type A corporations do not require court or Attorney General approval to dissolve and the simplified dissolution procedure is not applicable.However, dissolving Type A trade associations must get approval from the Attorney General's Antitrust Bureau. In addition, if a Type A corporation holds assets for Type B charitable purposes, or holds donor restricted funds, it must follow the procedures for an asset dissolution (see N-PCL ' 201(b) for descriptions of the different corporate types).
Q: Is the Attorney General's approval required for the dissolution of a religious corporation?
A: No. The dissolutions of religious corporations are governed solely by '18 of the Religious Corporations Law. Court approval is required but the Attorney General is not a party.
Q: Must a dissolving corporation pay any fees to the Attorney General's Office when it submits its petition for a simplified dissolution?
A: No. However, the dissolving corporation will need to submit a filing fee made payable to the New York Department of State when it files its original endorsed Certificate of Dissolution with the New York State Department of Taxation and Finance.