California Certificate of Election to Wind Up and Dissolve

To formally close a California corporation, you file the California Certificate of Election to Wind Up and Dissolve with the Secretary of State after shareholders or the board have voted to end the business. Stock corporations use Form ELEC STK; nonprofits use Form ELEC NP. There is no filing fee. The certificate opens the winding-up period during which the corporation settles debts, notifies creditors, distributes assets, and prepares for the final Certificate of Dissolution.

When You Need to File This Certificate

California Corporations Code Section 1900 sets out who can authorize dissolution. The common route is a shareholder vote: holders of at least 50 percent of the corporation’s voting power must approve.¹ Once that vote passes, Section 1901 requires the corporation to file the Certificate of Election “forthwith.”²

The board of directors can act on its own, without shareholders, in only three situations: the corporation has entered Chapter 7 bankruptcy, it has disposed of all assets and done no business for five consecutive years, or it has never issued any shares.¹ If the board uses one of these grounds, the certificate must identify which one applies.²

If you don’t file, the corporation stays active on state records. The Franchise Tax Board will continue to assess the $800 minimum franchise tax every year.³

When You Can Skip This Certificate

Two situations let you bypass the Certificate of Election and go straight to the Certificate of Dissolution:

Unanimous shareholder vote. If every outstanding share votes in favor, the corporation can skip the election certificate entirely. This is the common path for closely held companies with one or two owners.⁴
Short Form Dissolution. A corporation formed within the past 12 months that never conducted business, never issued shares, and has no debts (other than tax liabilities being assumed or satisfied by another entity) can file a Short Form Dissolution Certificate instead.⁴⁵

Everyone else must file the Certificate of Election first.

What Goes on the Form

Before you start, pull two pieces of information from state records: the corporation’s exact legal name and its seven-digit entity number from incorporation.⁶

The form contains one mandatory statement that cannot be altered: “The corporation has elected to wind up and dissolve.”⁷ You then identify whether the election came from a shareholder vote or a board resolution. For a shareholder vote, state the number of shares voting in favor (not a percentage) and confirm those shares represent at least 50 percent of the voting power.⁶ For a board resolution, spell out which of the three qualifying circumstances applies.²

Signing Requirements

For a stock corporation where shareholders made the election, the certificate needs two signatures: one from the chairperson, president, or a vice president, and a second from the secretary, chief financial officer, treasurer, assistant secretary, or assistant treasurer.⁶ Each signer prints their typed name and title. If the officers on your form don’t match the Secretary of State’s records, the filing will be rejected.

For nonprofit corporations, a majority of the directors currently in office must sign and verify, or the sole director if there is only one.⁸

How to File

The fastest route is the BizFile California online portal. You create an account on the Secretary of State’s website and upload the completed form as a PDF, which gives immediate confirmation of receipt.⁴ You can also mail the signed form to the Secretary of State in Sacramento; standard processing by mail ranges from several days to a few weeks depending on volume.

There is no filing fee for the Certificate of Election. A certified copy, if you want one, costs $5.00.⁹

Three expedited tiers are available if you need faster turnaround:

24-hour service (Class C): $350
4-hour service (Class A): $500, drop-off only in Sacramento, requires preclearance
Same-day service (Class B): $750, document must arrive by 9:30 a.m. for a response by 4:00 p.m.¹⁰

What Happens After You File

Once accepted, the corporation’s status changes to “Active – Pending Termination.” Regular business must stop, though the corporation can keep operating to the extent needed to wind up: settling contracts, collecting what it is owed, and selling assets. The board can also keep the business running temporarily if that preserves goodwill or going-concern value for a sale.

The board must send written notice of the winding-up process by mail to all shareholders who did not vote for dissolution and to every known creditor whose address appears in the corporation’s records. Shareholders who voted in favor don’t need this notice. Creditors use the notice to submit claims before assets are distributed.

If a shareholder or creditor believes the winding up isn’t being handled properly, California Corporations Code Section 1904 lets a shareholder holding at least 5 percent of any class of outstanding shares, any shareholder of a close corporation, or three or more creditors petition the superior court to supervise the process.¹¹

Tax Deadlines That Start With the Vote

Several tax deadlines run from the dissolution vote itself, not from your Secretary of State filing. Missing them creates penalties that can outlive the corporation.

Franchise Tax Board

Before the Secretary of State will accept the final Certificate of Dissolution, the corporation must be in good standing with the FTB: all delinquent returns filed, outstanding balances (including penalties and interest) paid, and a final-year return filed with “Final Return” checked and “FINAL” written at the top of the first page. If the FTB has suspended or forfeited the corporation, you must obtain a Certificate of Revivor and be reinstated before any dissolution documents will be processed.¹²

You can avoid the $800 minimum franchise tax for the final year and any years that follow while paperwork is pending if you timely file the final tax return for the preceding year (including any extension), stop doing business in California after the last day of that preceding year, and file the dissolution documents within 12 months of filing that final return.¹² Dragging the dissolution past that 12-month window means another $800 bill.

IRS Form 966 and the Final Return

The corporation must file IRS Form 966 (Corporate Dissolution or Liquidation) within 30 days of adopting the resolution to dissolve. The clock runs from the vote, not from your California filing. Attach a certified copy of the dissolution resolution. If the plan is later amended, file an updated Form 966 within 30 days of each amendment.¹³ Qualified subchapter S subsidiaries and tax-exempt organizations are exempt; regular S corporations are not.

You also file a final income tax return (Form 1120 for C corporations or Form 1120-S for S corporations) with the “final return” box checked. S corporations should mark “final K-1” on each shareholder’s Schedule K-1. If the corporation sells property during winding up, Form 4797 may also be required.¹⁴

Employment Development Department

If the corporation has employees, the final payroll tax return, wage report, and payment are due to the EDD within 10 days of ceasing operations, not at the usual quarterly deadline. You must also close the employer payroll tax account. The same 10-day deadline applies if you are selling the business rather than shutting it down.¹⁵

Extra Step for Nonprofits: Attorney General Waiver

Any nonprofit public benefit corporation, nonprofit mutual benefit corporation holding assets in charitable trust, or nonprofit religious corporation must obtain a written waiver of objections to its asset distribution from the California Attorney General before the Secretary of State will finalize the dissolution.¹⁶ This applies even if the nonprofit never operated or obtained tax-exempt status.

The waiver request goes to the Registry of Charities and Fundraisers with a package that includes a request letter, three years of balance sheets, documentation of planned asset distribution, the Articles of Incorporation, the Certificate of Election, and the executed Certificate of Dissolution. The Attorney General charges no fee for the review, though delinquent filings can add charges. Normal turnaround is about one month.¹⁶

A nonprofit cannot distribute any assets before receiving the Attorney General’s waiver.¹⁶ If the nonprofit plans to sell or transfer all or substantially all of its assets, it must also give the Attorney General 20 days’ advance notice before the transfer, unless the Attorney General waives that notice in writing.

Changing Your Mind: Revoking the Election

If you file the Certificate of Election but haven’t completed the final dissolution, you can reverse course. The Secretary of State provides a Revocation of Election to Terminate (Form REV-ELE-STK) for stock corporations in “Active – Pending Termination” status.¹⁷

Shareholders holding a majority of the voting power must approve, and two conditions must hold: the corporation must confirm it has revoked its election to wind up and dissolve, and no assets can have been distributed as part of the dissolution. Once assets have gone out, revocation is no longer available. The filing fee is $30.¹⁷

The Final Step: Certificate of Dissolution

The Certificate of Election is the opening of the winding-up window, not the end of it. After the corporation has settled debts, notified creditors, distributed remaining assets, and squared its state and federal tax obligations, you file a Certificate of Dissolution with the Secretary of State.⁷ That second filing terminates the corporation’s legal existence. Until it posts, the corporation stays in pending-termination status, and the FTB can keep assessing taxes.

1
California Legislative Information. California Code CORP 1900
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California Legislative Information. California Code Corporations Code 1901
3
Franchise Tax Board. Corporations
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California Secretary of State. Frequently Asked Questions – Business Entities
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California Secretary of State. Short Form Dissolution Certificate – Form DSF STK
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California Secretary of State. Instructions for Completing the Certificate of Election to Wind Up and Dissolve – Form ELEC STK
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California Secretary of State. Certificate of Election to Wind Up and Dissolve
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California Secretary of State. Nonprofit Certificate of Dissolution – Form DISS NP
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California Secretary of State. Business Entities Fee Schedule
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California Secretary of State. Service Options
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California Legislative Information. California Code Corporations Code 1904
12
Franchise Tax Board. FTB Publication 1038
13
Internal Revenue Service. Form 966 – Corporate Dissolution or Liquidation
14
Internal Revenue Service. Closing a Business
15
Employment Development Department. Changes to Your Business
16
State of California – Department of Justice – Office of the Attorney General. Dissolution
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California Secretary of State. Revocation of Election to Terminate – Stock Corporations