Businesses can come to an end in a variety of ways but the best way for a business to end is on its own terms, which may be accomplished by a voluntary winding up.
A voluntary wind up is a process undertaken by the shareholders of a corporation when they have decided to cease operations and sell off the business assets. The shareholders do this through a special shareholder’s resolution that orders the directors to carry out a sale of the assets and to initiate the wind up. Assuming the business has a net positive value at the time, the excess money from the sale of assets would be distributed to shareholders.
The decision to cease operations is only the beginning of the process. The government of Ontario has established various rules and timelines that must be followed before the process of winding up can be legally completed.
Below you will find a flow chart explaining the general wind up process. This example is overly simplified and is purely for educational purposes and does not constitute legal advice. Winding up your business generally involves more steps and complexities than what is displayed below. Additionally, there are other legal matters that can prevent a wind up from occurring – those issues are beyond the scope of this article. Contact a lawyer if you need assistance.
Written by: Lucas Rotino
* Please note that the information in this article is not intended as legal advice, but rather as a general overview on the subject. If you are seeking legal advice, please consult with a lawyer.
