ADMINISTRATIVE DISSOLUTION Meaning and
Definition
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Administrative dissolution is a legal term that refers to the process by which a government entity or regulatory agency terminates the legal existence of a corporation or business entity. This action is typically taken when the corporation or business has failed to comply with certain legal requirements or obligations.
Administrative dissolution is usually initiated by the government entity responsible for overseeing corporate entities, such as the Secretary of State or Department of Corporations. The grounds for administrative dissolution may vary by jurisdiction, but common reasons include failure to file annual reports, failure to pay certain fees or taxes, or failure to maintain a registered agent or office.
The administrative dissolution process typically involves notifying the corporation or business entity of its non-compliance and providing an opportunity to rectify the issue or provide a defense. If the corporation fails to respond within a specified period or continues to be non-compliant, the government entity may proceed with the dissolution. This may involve revoking the corporation's legal existence, cancelling its articles of incorporation, and removing it from the official register.
Administrative dissolution can have serious consequences for a corporation or business entity, including the loss of limited liability protection and the inability to engage in legal transactions. In some cases, the corporation or business may be required to wind up its affairs and liquidate its assets. To reinstate their legal status, the corporation or business entity may need to rectify the issue that led to dissolution, such as paying outstanding fees or penalties, and file necessary documents with the appropriate government entity.
Etymology of ADMINISTRATIVE DISSOLUTION
The word "administrative" originates from the Latin word "administrare", which means to manage or to govern. The word "dissolution" also has Latin roots, derived from the word "dissolvere", meaning to loosen or break apart.
In the context of "administrative dissolution", the term refers to the formal process of terminating the legal existence of a business entity, such as a corporation or limited liability company (LLC), by the state government. This administrative action can occur when a business entity fails to comply with certain obligations, such as filing required documents or paying taxes. The etymology of "administrative dissolution" combines the idea of governing or managing (administrative) with the act of breaking apart or terminating (dissolution), illustrating the formal process undertaken by the government to dissolve a business entity deemed non-compliant.
