Learn how to dissolve a nonprofit company in your state.
This article solely discusses the most fundamental kind of voluntary dissolution of an existing Georgia 501(c)(3) nonprofit company. Other forms of nonprofits have distinct regulations and processes, as do other circumstances such as forced dissolution.
Table of Contents
Dissolution Authorization
Closing begins with dissolution, and you will require a proposal to dissolve that contains a plan of dissolution to dissolve your organization. The plan will specify how the remaining assets of the organization will be allocated, including who will get assets once all creditors have been paid. With the proposal and plan in hand, Georgia law allows for voluntary dissolution in the following manner:
If your nonprofit has members, by action of the directors followed by a vote or other permission of the members; otherwise, by a vote of the directors.
The first way requires the board to first accept the proposal and plan of dissolution before submitting it to the members. Members then gather and vote to ratify the dissolution. Members may also authorize dissolution with written approval.
The request and plan of dissolution must be approved by the board alone under the second procedure. In general, the plan must be approved by a majority vote of the directors who are in office at the time.
Make careful to correctly document the request to dissolve, the plan of dissolution, the votes of the directors, and, if required, the votes or written consents of the members. This information will be required for filings with the state and the IRS.
Notifications of Intention to Dissolve
You must submit a notice of intent to dissolve with the Secretary of State immediately after your nonprofit has authorized dissolution (“upon approval”) (SOS). The notification must include the following information:
the name of your nonprofit, the date of dissolution, and, if member consent was necessary for dissolution, a declaration indicating dissolution was lawfully approved by the members in accordance with Georgia Code Section 14-3-1402.
The SOS website has a blank form for the notification of intent to dissolve (Form CD 525) that may be downloaded.
A notice of intent to dissolve must also be published in a newspaper. The needed material for the newspaper notice differs from that required for the SOS notification. Georgia law requires it to have the following shape:
NOTICE OF INTENT TO DISSOLVED A CORPORATION VOLUNTARILY
Notice is given that, in accordance with the Georgia Nonprofit Corporation Code, a notice of intent to dissolve ______________________ (name of corporation), a Georgia nonprofit corporation with its registered office at ______________________ (address of registered office), will be delivered to the Secretary of State for filing.
Additional information may also be required. After arranging for publishing, you must notify the SOS in writing that the notice was published.
First Notice to the Attorney General
You must ultimately file articles of dissolution for your nonprofit, but you must notify the Attorney General of the dissolution on or before that date (AG). You are not permitted to transfer any of your nonprofit’s assets until 30 days after you have given the AG notice.
Winding Down
After your nonprofit has filed its notice of intent to dissolve, it only exists to take care of some last tasks known collectively as “winding up” the corporation. Winding up is primarily concerned with paying off any obligations and then distributing any leftover assets, although additional responsibilities may be included.
In general, you may distribute money and property only after you’ve paid off all of your nonprofit’s obligations. Then there are certain regulations to follow when it comes to asset distributions. For example, your nonprofit is required to return any things leased to it on the condition that they be returned upon dissolution. A dissolving 501(c)(3) organization must also disperse its remaining assets for tax-exempt purposes after paying off obligations and repaying borrowed assets. In reality, this generally entails donating assets to another 501(c)(3) charity or organizations. Other asset distribution obligations, such as those in your dissolution plan, may also apply. If you have any concerns, you should speak with a lawyer.
Creditors and Other Claimants Should Be Warned
Another aspect of winding up your disbanded charity is notifying known creditors and other claims. It is not required to provide notification. However, doing so will assist reduce your obligation and enable you to make final dispositions of residual assets more securely. After dissolution, you may send notification to known claims. (Unknown claimants are notified by the publishing of the aforementioned notice of intent to dissolve.)
Dissolution Articles
You must submit articles of dissolution with the SOS once your organization has paid off all known debts, liabilities, and commitments and appropriately dispersed residual assets—in other words, when you’ve done winding up. The articles of dissolution must include the following:
the name of your organization, the date a notice of intent to dissolve was submitted, and a confirmation that it has not been revoked
a declaration that all known debts, liabilities, and obligations of your organization have been paid and discharged, or that reasonable provision has been made for their payment and discharge
a declaration indicating all of the nonprofit’s remaining property and assets have been dispersed in accordance with the plan of dissolution, or that such property and assets have been deposited with the Office of the State Treasurer as required by Georgia Nonprofit Corporation Code Section 14-3-1440.
a statement that no actions are pending against your nonprofit in any court, or that adequate provision has been made for the satisfaction of any judgment, order, or decree entered against it in any pending action; and a statement that your nonprofit notified the Attorney General of its intention to dissolve.
The SOS website has a blank form for the articles of dissolution (Form CD 530) that may be downloaded. The SOS website also has a separate set of instructions for completing the form. There is a $20 filing fee.
Notice to the Attorney General
After “all or nearly all” of your nonprofit’s assets have been transferred, you must notify the AG of who got assets other than creditors. The list must include an address for each asset receiver as well as the assets received.
Note on Federal Taxation
You must submit IRS Form 990 or IRS Form 990-EZ for federal tax reasons. Schedule N (Liquidation, Termination, Dissolution, or Significant Disposition of Assets) must be completed, as well as copies of your articles of dissolution, proposal to dissolve, and plan of dissolution. When filling out Form 990 or Form 990-EZ, tick the “Terminated” box in the header section on Page 1 of the return.
Further Information
The SOS website has further information such as forms, postal addresses, phone numbers, and filing costs.
Be careful that dissolving your organization will not put an end to any litigation initiated by or against it prior to dissolution. Furthermore, for some claims or liabilities, you may be able to file fresh legal proceedings against your organization up to five years after it has been dissolved.
This article only covers the most fundamental procedures of voluntary dissolution once your organization has begun operations. There are several further, more specialized regulations that address topics such as:
uninvited dissolution
dissolution prior to beginning operations
dissolution of unusual nonprofits
what specific items should be included in a plan of dissolution providing proper advance notice of member and director meetings the required number of member or director votes to approve dissolution steps to approve dissolution in writing without a meeting when and how to deposit remaining assets with the state what types of newspapers must be used to publish a notice of intent to dissolve
Furthermore, your articles of incorporation or bylaws may incorporate restrictions that apply instead of or in addition to state law. You are highly advised to speak with a lawyer for further information on these and other issues.