Content Editor: Maryjo F. Pirages Reynolds
Original Author Credit: Allison M. Huntley
At the end of each year, business owners reflect on the viability of their organizations, and for a variety of reasons, they decide to discontinue operations. When shareholders decide to dissolve a corporation, questions about director and shareholder liability arise.
In Illinois, there is a statute to guide shareholders and directors on this important issue. Section 12.80 of the Business Corporation Act of 1983 provides that when a corporation is dissolved by filing articles of dissolution; by issuance of a certificate of dissolution; by judgment of a circuit court; or by expiration, the corporation (and its directors and shareholders) face civil liability “for any … claim existing, or any liability … incurred, either prior to, at the time of, or after such dissolution” if the action is filed within five years of the dissolution. 805 ILCS 5/12.80. The corporation (and its directors and shareholders) may also bring claims against wrongdoers within those parameters.
It is important to recognize that dissolution does not mean absolution. Shareholders and directors are liable for wrongdoing even when the corporation no longer exists as a going concern. Additionally, shareholders and directors may pursue claims against individuals and entities who have harmed the corporation.
Please contact our Corporate and Business Transactions Group with any questions regarding the dissolution of a corporation and the rights and liabilities you have as a shareholder or director.
Maryjo Pirages is an associate attorney of the firm and a member of the Employment & Labor Law, Trusts & Estates, and Corporate & Business Groups. Maryjo counsels and represents employers in a range of employment matters, including statutory and administrative regulations compliance, contracts, and employee handbooks and policies. Maryjo’s goal is to work hand-in-hand with employers so that they may proactively implement and stay up-to-date with their policies in order to limit their liability and exposure. Additionally, she assists individuals and families in their estate planning and administration.