ADMINISTRATIVELY DISSOLVED CORPORATIONS

In the case of Columbus Cheer Company vs. City of Columbus, Mississippi, et al, the Mississippi Supreme Court recently addressed the question of whether a dissolved corporation may pursue legal action.

The Plaintiff in the case, Columbus Cheer Company was administratively dissolved at the time the lawsuit was filed. The Plaintiff argued that because of the administrative dissolution, Columbus Cheer Company was transformed into a sole proprietorship. The Mississippi Supreme Court rejected this argument.

According to Mississippi Code Section 79-4-14.21(f), a “corporation that has been administratively dissolved may not maintain any action, suit or proceeding in any court of this state until the corporation is reinstated” (emphasis added). The Mississippi Supreme Court stated that under a plain reading of this statute, administratively dissolved corporations continue to exist regarding agreements established prior to dissolution and for the purposes of defending the corporation in actions stemming from such agreements. However, the dissolved corporation may not maintain a legal action. Individual stockholders of the corporation are also precluded from maintaining any action seeking redress for injuries to the corporation, whether arising in contract or in tort.

The opinion also discusses the fact that an administratively dissolved corporation is incapable of contracting. The only action an administratively dissolved corporation can take is that which is necessary to wind up and liquidate its business. This limitation on an administratively dissolved corporation is one of the reasons why it can be important to follow the statutory procedures when attempting to dissolve a corporation.

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