My Delaware Corporation Was Voided. Now What?
Discovering that your Delaware corporation has been declared void can be a shock, especially if the company is still operating. In many cases, a corporation becomes void because it failed to file its Annual Report, pay its franchise tax, or resolve other compliance obligations. Although void status can create serious legal and administrative complications, it does not always mean the business is permanently closed.
Depending on your plans for the company, you may be able to revive the corporation and restore it to good standing. Alternatively, if the business is no longer needed, you may need to resolve its outstanding obligations before formally closing it.
What “Void” Means for a Delaware Company
When a Delaware corporation is listed as “void,” its Certificate of Incorporation is no longer active with the state. The corporation has not necessarily disappeared, but it has lost the legal rights and privileges that ordinarily come with maintaining an active Delaware corporation. This status is more serious than simply being late or not in good standing.
Void status is also different from voluntarily dissolving a corporation. Dissolution is an intentional process approved by the corporation and formally documented with the state. Void status occurs administratively when the corporation fails to remain compliant. The company may still have debts, contracts, assets, shareholders, and other unresolved responsibilities despite its inactive status.
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Why Entities Become Voided
A Delaware corporation generally becomes void after it remains out of compliance with the state’s annual requirements for an extended period. These obligations continue even when the company has earned no income or is no longer actively operating. Common reasons a corporation may become void include:
- Unpaid franchise tax
- Missing annual reports
- Incorrect or incomplete filings
- Missed state notices
Void status is not typically triggered by a single missed deadline. A corporation is first considered delinquent and may lose its good-standing status. If the required penalties remain unresolved, its Certificate of Incorporation can eventually become void under Delaware law.
What Happens to a Company That Is Voided?
A voided Delaware corporation can face consequences that extend beyond its status with the state. Because the corporation is no longer active, it loses its corporate rights, powers, and privileges provided under Delaware law until it is successfully revived. The business does not automatically disappear, however, and its obligations will remain unresolved. A few of the most common consequences of void status are:
- Loss of good standing
- Contract complications
- No legal authority to conduct business
- Banking challenges
- Continuing debts and liabilities
These consequences make it important to address void status as soon as possible.
How to Revive a Voided Delaware Corporation
For starters, don’t panic. The state will not pursue you personally for the outstanding Franchise Tax fees. The Franchise Tax Fees are imposed on the business entity itself, so it is the business entity that owes the state.
The actual process to restore the company is relatively simple. The first step should always be to contact your Delaware Registered Agent to determine what caused the void status and obtain a complete calculation of the amounts owed. To revive the corporation, the company will generally need to:
- File all missing Annual Reports.
- Pay outstanding franchise taxes (and interest).
- Authorize the revival through the corporation’s board.
- Pay the applicable revival and filing fees.
Once the filing is accepted, the corporation is revived, and its corporate rights and privileges are restored. The company can then request a Certificate of Good Standing to confirm that the revival has been completed.
Closing or Dissolving a Voided Entity
Revival may not make sense if the corporation is no longer operating and its owners do not plan to use it again. However, allowing the company to remain void is not the same as formally closing it.
To properly dissolve the corporation, the owners may first need to restore it to good standing by filing missing reports, paying outstanding franchise taxes, and completing the revival process. The corporation can then settle its affairs by distributing any remaining assets and filing a Certificate of Dissolution with the Delaware Division of Corporations.
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Create my corporationPreventing Delaware Corporation Void Status
Preventing void status is much easier and less expensive than reviving a corporation. Delaware corporations should maintain a reliable compliance process and address any errors as soon as they come up. A few helpful preventive steps include:
- File the annual report by March 1 each year
- Pay the full Delaware franchise tax on time
- Maintain an active Delaware Registered Agent
- Check your entity's status if you’re unsure
- Formally dissolve the corporation if it is no longer needed
FAQs
Is a void corporation the same as a dissolved corporation?
No. A corporation becomes void when it fails to meet Delaware requirements, such as paying franchise tax or maintaining a Registered Agent. Dissolution is a formal process used to intentionally close the corporation and wind up its affairs.
How long can a Delaware corporation remain void?
A Delaware corporation can remain void until it is revived or otherwise properly closed. However, unpaid franchise taxes, penalties, and interest may continue to create complications. Waiting can also make revival more expensive and increase the risk that the corporation’s name becomes unavailable.
Can I revive a corporation that has been void for several years?
Generally, yes. Delaware law allows corporations to be revived even after several years. The corporation must typically file the required revival documents, restore its Registered Agent, submit missing reports, and pay all back taxes and fees, often with interest.
*Disclaimer*: 91自拍, Inc. is neither a law firm nor an accounting firm and, even in cases where the author is an attorney, or a tax professional, nothing in this article constitutes legal or tax advice. This article provides general commentary on, and analysis of, the subject addressed. We strongly advise that you consult an attorney or tax professional to receive legal or tax guidance tailored to your specific circumstances. Any action taken or not taken based on this article is at your own risk. If an article cites or provides a link to third-party sources or websites, 91自拍, Inc. is not responsible for and makes no representations regarding such source鈥檚 content or accuracy. Opinions expressed in this article do not necessarily reflect those of 91自拍, Inc.
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There are 11 comments left for My Delaware Corporation Was Voided. Now What?
George deren said: Wednesday, April 7, 2021We formed a corporation in Delaware - SentryBlue Group, inc. It did no business but we paid the franchise taxes for several years and then we haven鈥檛 paid in several years because it had no income or revenues. The franchise taxes we did pay we鈥檙e the minimum required by Delaware. We now wish to restore its good standing and to do that we鈥檒l have to pay the minimum, etc. can you tell me what is necessary for you to represent us as our agent to get SentryBlue in good standing. Thank you.
HBS Staff replied: Thursday, April 8, 2021Hello George,
Thank you for reading our blog. We are happy to assist you with your request and will reach out to you to further assist.
Sandra Vrolij said: Wednesday, April 7, 2021From CSC I received this message: You are now VOID, ANNUAL REPORT AND FRANCHISE TAX DELINQUENT. I want to shut the company down, so can I just leave it at this or does this mean that I am now a tax delinquent myself and I can't visit the US anymore I am European. Thank you very much in advance!
HBS Staff replied: Thursday, April 8, 2021Hi Sandra,
A "void" status for a Delaware company means the company is no longer in Good Standing with the State of Delaware. It you wish to formally close the entity via a Certificate of Dissolution/Cancellation the company woud need to file a Certificate of Renewal and pay all the past due and current year Delaware Franchise Tax and simultaneously file the Certificate of Dissolution/Cancellation. We would be happy to provide a quote and will reach out to you.
Jack said: Sunday, March 28, 2021
My corporation was voided. If I form it again with the same name can I still use the same corporate bank accounts and treat its assets as property of the newly formed corporation with the same name and principals? If I delay longer and someone takes my corporation name can I still renew and restore it?
HBS Staff replied: Thursday, April 8, 2021Hello Jack,
For more information regarding your Bank Accounts & Assets it would be best to speak with your Bank and with your Accountant. You can only Renew or form a brand new company with the same name if the company name is available.
Victor Ariama said: Friday, March 26, 2021I had a Delaware company a few years ago and my account and stripe got closed because of my association with crypto. I need help knowing it's status and what my obligations are.
HBS Staff replied: Thursday, April 8, 2021Hello Victor,
Thank you for reading our blog. We are happy to reach out to you with more information on how to renew your company.
Eric White said: Sunday, March 22, 2020Haven't paid these fees in at least 5 yrars. Should we just start a new one?
HBS Staff replied: Monday, March 23, 2020Our clients typically make that decision based on the needs and future plans of their businesses. It may be best to speak with your accountant or attorney about which is a better decision for you, but we are happy to assist with renewing your existing or helping you form a new company.