REVIVING a DISSOLVED CORPORATION
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You need to take immediate action when your corporation has been dissolved. When a corporation has been dissolved, it will be necessary to revive the dissolved corporation to legally continue its business operations, as dissolution (whether voluntary or involuntary) has significant consequences that can hinder ongoing business, legal, or financial matters. A dissolved corporation's revival is exceedingly important for a number of critical reasons, including:
A. To Resume Business Operations
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If a business was dissolved unintentionally (e.g., due to forgetting to file annual reports or pay fees) but is still operational, or if the owners decide to restart the business under the same corporate entity, revival is essential to regain legal standing.
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Without revival, the "business" would effectively be operating as a sole proprietorship or partnership, negating the limited liability protection and other benefits of incorporation.
B. To Deal with Assets and Liabilities
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A dissolved corporation cannot legally own or deal with property, land, or other assets. If the corporation still has assets (like real estate, bank accounts, or intellectual property), these can become "escheated" to the Crown (government) upon dissolution.
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Revival allows the corporation to reclaim its property, sell it, transfer it, or otherwise manage its remaining assets and liabilities. This is particularly crucial for winding up affairs properly, settling debts, or distributing remaining assets to shareholders.
C. For Litigation Purposes
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A dissolved corporation cannot sue or be sued. If the corporation is involved in ongoing legal proceedings, or if there's a need to initiate or defend against a lawsuit, it must be revived to be a proper party to the action.
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This is common in cases like construction deficiency matters, where a dissolved company might have held insurance coverage that needs to be accessed.
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Revival also allows for the assessment of tax liabilities, as tax authorities like the Canada Revenue Agency may seek to revive a dissolved corporation to issue assessments or pursue claims against former shareholders.
D. To Maintain Legal and Compliance Continuity
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Revival helps maintain existing contracts, licenses, and permits, saving the time and effort required to re-establish all legal documents.
E. To Preserve Brand Identity
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If the dissolved corporation had an established brand name, reputation, or goodwill, reviving it allows the business to continue operating under that identity rather than starting anew.
F. To Access Tax Benefits (e.g., Losses)
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In some jurisdictions, if a corporation with accumulated losses is dissolved and then revived, the losses may be restored and available for use, depending on the specifics of corporate and tax law.
Consequences of Not Reviving a Dissolved Corporation
If a dissolved corporation is not revived when it should be, the following risks may arise:
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Loss of limited liability: Owners/directors may become personally liable for business debts and obligations.
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Loss of assets: Corporate assets may become property of the Crown.
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Inability to conduct business: The entity cannot legally operate, enter contracts, or hold property.
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Loss of legal standing: Cannot sue or be sued.
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Loss of tax benefits.
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Difficulty in resolving outstanding financial or legal matters.
Providing corporate-commercial legal advice and strategic direction to business enterprises engaged as Alberta provincial corporations or federal corporations, from business formation to corporate governance to contracts and business transactions. Contact our law firm at Chris@NeufeldLegal.com or 403-400-4092 to schedule a confidential initial consultation for your business.
