May 11, 2021

Volume XI, Number 131

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May 11, 2021

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May 10, 2021

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How To Erase A Business Entity's Cancellation

Sometimes people get confused and will file a certificate of cancellation or dissolution with the California Secretary of State when the entity has not dissolved, much less completely wound up its affairs.  The challenge then becomes how to resurrect an entity that is dead as far as the State of California is concerned.  Indeed, the Corporations Code provides no means for revivifying the entity.

The solution lies in Article 6, Chapter 3, Part 2, Division 3, Title 2 of the California Government Code, Cal. Gov't Code §§ 12260-12263.  Pursuant to these statutes, the Secretary of State is required to reinstate a business entity to active status in either of the following two circumstances:

  • The factual representations by a shareholder, member, partner, or other person that are contained in the termination document are materially false; or

  • The submission of the termination document to the Secretary of State for filing is fraudulent.

There is no point in trying to convince the Secretary of State of either of these facts.  The Secretary of State is required to reinstate the entity only if a court makes the finding.   There are two ways to to obtain the required court order:  (i) submitting a petition to the Superior Court containing the legal and factual basis for reinstatement; or (ii) as part of a civil action for damages or equitable relief.  Reinstatement is effective from the date of the filing of the court order with the Secretary of State.  Thus, it is possible that the cancelled entity could lose the ability to be reinstated under its name if another entity has made a supervening filing under the cancelled entity's name.

The word "cancel" is derived from the Latin word cancellus, which refers to grid or lattice.  Thus, cancellation involves blotting something with a lattice-work of lines.

 

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© 2010-2021 Allen Matkins Leck Gamble Mallory & Natsis LLP National Law Review, Volume XI, Number 99
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About this Author

Keith Paul Bishop, Corporate Transactions Lawyer, finance securities attorney, Allen Matkins Law Firm
Partner

Keith Bishop works with privately held and publicly traded companies on federal and state corporate and securities transactions, compliance, and governance matters. He is highly-regarded for his in-depth knowledge of the distinctive corporate and regulatory requirements faced by corporations in the state of California.

While many law firms have a great deal of expertise in federal or Delaware corporate law, Keith’s specific focus on California corporate and securities law is uncommon. A former California state regulator of securities and financial institutions, Keith has decades of...

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