Part A. Voluntary Dissolution.
§ 29–412.01. Dissolution by incorporators or directors.
A majority of the incorporators or directors of a nonprofit corporation that has not commenced activity, or of a membership corporation that has not admitted any members, may dissolve the corporation by delivering to the Mayor for filing articles of dissolution that set forth:
(1) The name of the corporation;
(2) The date of its incorporation;
(3)(A) That the corporation has not commenced activity; or
(B) That the corporation is a membership corporation and has not admitted any members;
(4) That no debt of the corporation remains unpaid;
(5) That, except as otherwise provided in the articles of incorporation or bylaws, the net assets of the corporation remaining after winding up have been distributed to the members, if members were admitted; and
(6) That a majority of the incorporators or directors authorized the dissolution.
§ 29–412.02. Approval of dissolution.
(a) The board of directors of a membership corporation may propose dissolution for submission to the members.
(b) For a proposal to dissolve to be adopted:
(1) The board of directors shall recommend dissolution to the members unless the board of directors determines that because of conflict of interest or other special circumstances, it should make no recommendation and communicates the basis for its determination to the members; and
(2) The members entitled to vote must approve the proposal to dissolve as provided in subsection (e) of this section.
(c) The board of directors may condition its submission of the proposal for dissolution on any basis.
(d) The nonprofit corporation shall give notice to each member, whether or not entitled to vote, of the proposed meeting of members. The notice shall also state:
(1) That the purpose, or one of the purposes, of the meeting is to consider dissolving the corporation; and
(2) How the assets of the corporation will be distributed after all creditors have been paid or how the distribution of assets will be determined.
(e) Unless the articles of incorporation, the bylaws, or the board of directors acting pursuant to subsection (c) of this section, requires a greater vote or a greater number of members to be present, the adoption of the proposal to dissolve by the members shall require the approval of the members at a meeting at which a quorum exists, and, if any class of members is entitled to vote as a separate group on the proposal, the approval of each such separate voting group at a meeting at which a quorum of the voting group exists.
(f) If the nonprofit corporation does not have any members entitled to vote on its dissolution, a proposal to dissolve shall be adopted by the corporation when it has been adopted by the board of directors.
(g) A charitable corporation shall give the Attorney General for the District of Columbia notice in the form of a record that it intends to dissolve before the time it delivers articles of dissolution to the Mayor. Notice to the Attorney General under this section shall not delay or otherwise affect the dissolution process.
§ 29–412.03. Articles of dissolution.
(a) At any time after dissolution is authorized, the nonprofit corporation may dissolve by delivering to the Mayor for filing articles of dissolution setting forth:
(1) The name of the corporation;
(2) The date dissolution was authorized; and
(3) That the dissolution was approved in the manner required by this chapter and by the articles of incorporation and bylaws.
(b) A nonprofit corporation shall be dissolved upon the effective date of its articles of dissolution.
(c) For purposes of this part, the term “dissolved corporation” means a nonprofit corporation whose articles of dissolution have become effective and includes a successor entity to which the remaining assets of the corporation are transferred subject to its liabilities for purposes of liquidation.
§ 29–412.04. Revocation of dissolution.
(a) A nonprofit corporation may revoke its dissolution within 120 days of its effective date.
(b) Revocation of dissolution shall be authorized in the same manner as the dissolution was authorized unless that authorization permitted revocation by action of the board of directors alone, in which event the board of directors may revoke the dissolution without action by the members.
(c) After the revocation of dissolution is authorized, the nonprofit corporation may revoke the dissolution by delivering to the Mayor for filing articles of revocation of dissolution, together with a copy of its articles of dissolution, that set forth:
(1) The name of the corporation;
(2) The effective date of the dissolution that was revoked;
(3) The date that the revocation of dissolution was authorized; and
(4) That the revocation of dissolution was approved in the manner required by this chapter and by the articles of incorporation and bylaws.
(d) Revocation of dissolution shall be effective upon the effective date of the articles of revocation of dissolution.
(e) When the revocation of dissolution is effective, it relates back to and takes effect as of the effective date of the dissolution and the nonprofit corporation resumes carrying on its activities as if dissolution had never occurred.
§ 29–412.05. Effect of dissolution.
(a) A dissolved nonprofit corporation continues its corporate existence but shall not carry on any activities except those appropriate to wind up and liquidate its affairs, including:
(1) Collecting its assets;
(2) Disposing of its properties that will not be distributed in kind;
(3) Discharging or making provision for discharging its liabilities;
(4) Distributing its remaining property as required by law and its articles of incorporation and bylaws, and otherwise as approved when the dissolution was approved or among the members per capita; and
(5) Doing every other act necessary to wind up and liquidate its activities and affairs.
(b) Dissolution of a nonprofit corporation shall not:
(1) Transfer title to the corporation’s property;
(2) Subject its directors, members of a designated body, or officers to standards of conduct different from those prescribed in subchapter VI of this chapter;
(A) Quorum or voting requirements for its board of directors or members;
(B) Provisions for selection, resignation, or removal of its directors or officers, or both;
(C) Provisions for amending its bylaws;
(4) Prevent commencement of a proceeding by or against the corporation in its corporate name;
(5) Abate or suspend a proceeding pending by or against the corporation on the effective date of dissolution; or
(6) Terminate the authority of the registered agent of the corporation.
(c) Property held in trust or otherwise dedicated to a charitable purpose shall not be diverted from its purpose by the dissolution of a nonprofit corporation unless and until the corporation obtains an order of the Superior Court to the extent required by and pursuant to the law of the District on cy pres or otherwise dealing with the nondiversion of charitable assets.
(d) A person that is a member or otherwise affiliated with a charitable corporation shall not receive a direct or indirect financial benefit in connection with the dissolution of the corporation unless the person is a charitable corporation or an unincorporated entity that has a charitable purpose. This subsection shall not apply to the receipt of reasonable compensation for services rendered.
This section is referenced in § 29-412.23.
§ 29–412.06. Known claims against dissolved corporation.
(a) A dissolved nonprofit corporation may dispose of the known claims against it by delivering notice to its known claimants of the dissolution at any time after its effective date.
(b) The notice shall be in the form of a record and:
(1) Describe information that shall be included in a claim;
(2) Provide a mailing address where a claim may be sent;
(3) State the deadline, which may not be fewer than 120 days from the effective date of the notice, by which the dissolved nonprofit corporation must receive the claim; and
(4) State that the claim will be barred if not received by the deadline.
(c) A claim against the dissolved nonprofit corporation shall be barred if the claimant:
(1) That was given notice under subsection (b) of this section does not deliver the claim to the dissolved corporation by the deadline; or
(2) Whose claim was rejected by the dissolved corporation does not commence a proceeding to enforce the claim within 90 days from the effective date of the rejection notice.
(d) For purposes of this section, the term “claim” does not include a contingent liability or a claim based on an event occurring after the effective date of dissolution.
§ 29–412.07. Other claims against dissolved corporation.
(a) A dissolved nonprofit corporation may publish notice of its dissolution and request that persons with claims against the dissolved corporation present them in accordance with the notice.
(b) The notice shall:
(1) Be published one time in a newspaper of general circulation in the District, or, if there was no office in the District, where its principal office is or was last located;
(2) Describe the information that must be included in a claim and provide a mailing address where the claim must be sent; and
(3) State that a claim against the dissolved corporation will be barred unless a proceeding to enforce the claim is commenced within 3 years after the publication of the notice.
(c) If the dissolved nonprofit corporation publishes a newspaper notice in accordance with subsection (b) of this section, the claim of each of the following claimants shall be barred unless the claimant commences a proceeding to enforce the claim against the dissolved corporation within 3 years after the publication date of the newspaper notice:
(1) A claimant that was not given notice under § 29-412.06;
(2) A claimant whose claim was timely sent to the dissolved corporation but not acted on; or
(3) A claimant whose claim is contingent or based on an event occurring after the effective date of dissolution.
(1) Against the dissolved nonprofit corporation, to the extent of its undistributed assets; or
(2) Except as otherwise provided in § 29-412.08(d), if the assets have been distributed in liquidation, against any person, other than a creditor of the dissolved corporation, to whom the corporation distributed its property to the extent of the distributee’s pro rata share of the claim or the corporate assets distributed to the distributee in liquidation, whichever is less, but a distributee’s total liability for all claims under this section shall not exceed the total amount of assets distributed to the distributee.
§ 29–412.08. Court proceedings.
(a) A dissolved nonprofit corporation that has published a notice under § 29-412.07 may file an application with the Superior Court for a determination of the amount and form of security to be provided for payment of claims that are contingent or have not been made known to the dissolved corporation or that are based on an event occurring after the effective date of dissolution but that, based on the facts known to the dissolved corporation, are reasonably estimated to arise after the effective date of dissolution. Provision need not be made for any claim that is or is reasonably anticipated to be barred under § 29-412.07(c).
(b) Within 10 days after the filing of the application, notice of the proceeding must be given by the dissolved nonprofit corporation to each claimant holding a contingent claim whose contingent claim is shown on the records of the dissolved corporation.
(c) The Superior Court may appoint a guardian ad litem to represent all claimants whose identities are unknown in any proceeding brought under this section. The reasonable fees and expenses of the guardian, including all reasonable expert witness fees, shall be paid by the dissolved nonprofit corporation.
(d) Provision by the dissolved nonprofit corporation for security in the amount and the form ordered by the Superior Court under subsection (a) of this section shall satisfy the dissolved corporation’s obligations with respect to claims that are contingent, have not been made known to the dissolved corporation, or are based on an event occurring after the effective date of dissolution, and such claims shall not be enforced against a person that received assets in liquidation.
Effect of Amendments
The 2013 amendment by D.C. Law 19-210 substituted “Court” for “Judicial” in the section heading.
Application of Law 19-210: Section 7 of D.C. Law 19-210 provided that the act shall apply as of January 1, 2012.
§ 29–412.09. Directors’ duties.
(a) Directors shall cause the dissolved nonprofit corporation to discharge or make reasonable provision for the payment of claims and make distributions of assets after payment or provision for claims.
(b) Directors of a dissolved nonprofit corporation that has disposed of claims under § 29-412.06, § 29-412.07, or § 29-412.08 shall not be liable for breach of § 29-412.09(a) with respect to claims against the dissolved corporation that are barred or satisfied under § 29-412.06, § 29-412.07, or § 29-412.08.
Part B. Judicial Dissolution or Other Equitable Relief.
§ 29–412.20. Grounds for judicial dissolution or other equitable relief.
(a) The Superior Court may dissolve a nonprofit corporation, place a corporation in receivership, impose a constructive trust on compensation paid to a corporation’s director, officer, or manager, or grant other injunctive or equitable relief with respect to a corporation:
(1) In a proceeding by the Attorney General for the District of Columbia if it is established that:
(A) The corporation obtained its articles of incorporation through fraud;
(B) The corporation has exceeded or abused and is continuing to exceed or abuse the authority conferred upon it by law; or
(C) The corporation has continued to act contrary to its nonprofit purposes;
(2) Except as otherwise provided in the articles of incorporation or bylaws, in a proceeding by 50 members or members holding at least 5% of the voting power, whichever is less, or by a director or member of a designated body, if it is established that:
(A) The directors or a designated body are deadlocked in the management of the corporate affairs, the members, if any, are unable to break the deadlock, and irreparable injury to the corporation or its mission is threatened or being suffered because of the deadlock;
(B) The directors or those in control of the corporation have acted, are acting, or will act in a manner that is illegal, oppressive, or fraudulent;
(C) The members are deadlocked in voting power and have failed, for a period that includes at least 2 consecutive annual meeting dates, to elect successors to directors whose terms have, or otherwise would have, expired;
(D) The corporate assets are being misapplied or wasted; or
(E) The corporation has insufficient assets to continue its activities and it is no longer able to assemble a quorum of directors or members;
(3) In a proceeding by a creditor, if it is established that:
(A) The creditor’s claim has been reduced to judgment, the execution on the judgment returned unsatisfied, and the corporation is insolvent; or
(B) The corporation has admitted in a record that the creditor’s claim is due and owing and the corporation is insolvent; or
(4) In a proceeding by the corporation to have its voluntary dissolution continued under court supervision.
(b)(1) If the Attorney General, in the course of an investigation to determine whether to bring a court action under this section, has reason to believe that a person may have information, or may be in possession, custody, or control of documentary material, relevant to the investigation, the Attorney General may issue in writing, and cause to be served upon the person, a subpoena requiring the person to give oral testimony under oath, or to produce records, books, papers, contracts, electronically-stored data, and other documentary material for inspection and copying.
(2) Information obtained pursuant to this authority to subpoena shall not be admissible in a later criminal proceeding against the person who provided the information.
(3) The Attorney General may petition the Superior Court for an order compelling compliance with a subpoena issued pursuant to this authority to subpoena.
For temporary (90 days) amendment of this section, see § 3 of the Public Charter School Priority Enrollment Emergency Amendment Act of 2015 (D.C. Act 21-26, Mar. 27, 2015, 62 DCR 4525, 21 DCSTAT 860).
For temporary (225 days) amendment of this section, see § 3 of the Public Charter School Priority Enrollment Temporary Amendment Act of 2015 (D.C. Law 21-3, June 4, 2015, 62 DCR 4556).
§ 29–412.21. Procedure for judicial dissolution.
(a) It shall not be necessary to make directors or members parties to a proceeding to dissolve a nonprofit corporation unless relief is sought against them individually.
(b) The Superior Court, in a proceeding brought to dissolve a nonprofit corporation, may issue injunctions, appoint a receiver or custodian pendente lite with all powers and duties the court directs, take other action required to preserve the corporate assets wherever located, and carry on the activities of the corporation until a full hearing can be held.
§ 29–412.22. Receivership or custodianship.
(a) The Superior Court in a judicial proceeding brought to dissolve a nonprofit corporation may appoint one or more receivers to wind up and liquidate, or one or more custodians to manage, the affairs of the corporation. The court shall hold a hearing, after giving notice to all parties to the proceeding and any interested persons designated by the court, before appointing a receiver or custodian. The court appointing a receiver or custodian has exclusive jurisdiction over the corporation and all of its property wherever located.
(b) The Superior Court may require the receiver or custodian to post bond, with or without sureties, in an amount the court directs.
(c) The Superior Court shall describe the powers and duties of the receiver or custodian in its appointing order, which may be amended. Among other powers:
(1) The receiver:
(A) May dispose of all or any part of the assets of the nonprofit corporation wherever located, at a public or private sale, if authorized by the court; and
(B) May sue and defend in his or her own name as receiver of the corporation;
(2) The custodian may exercise all of the powers of the corporation, through or in place of its board of directors and any designated body, to the extent necessary to manage the affairs of the corporation consistent with its mission and in the best interests of its members, if any, and creditors.
(d) During a receivership, the Superior Court may redesignate the receiver a custodian, and during a custodianship may redesignate the custodian a receiver, if doing so is consistent with the mission of the nonprofit corporation and in the best interests of the corporation, its members, and creditors.
(e) The Superior Court during the receivership or custodianship may order compensation paid and expense disbursements or reimbursements made to the receiver or custodian and counsel from the assets of the nonprofit corporation or proceeds from the sale of the assets.
(f) This section does not apply to a religious corporation.
§ 29–412.23. Decree of dissolution.
(a) If, after a hearing, the Superior Court determines that one or more grounds for judicial dissolution described in § 29-412.20 exist, it may enter a decree dissolving the nonprofit corporation and specifying the effective date of the dissolution, and the clerk of the court shall deliver a certified copy of the decree to the Mayor, who shall file it.
(b) After entering the decree of dissolution, the Superior Court shall direct the winding-up and liquidation of the nonprofit corporation’s affairs in accordance with § 29-412.05 and the notification of claimants in accordance with §§ 29-412.06 and 29-412.07.
Part C. Miscellaneous.
§ 29–412.30. Deposit with Mayor.
Assets of a dissolved nonprofit corporation that should be transferred to a creditor, claimant, or member of the corporation who cannot be found or who is not competent to receive them shall be reduced to cash and deposited with the Mayor for safekeeping. When the creditor, claimant, or member furnishes satisfactory proof of entitlement to the amount deposited, the Mayor shall pay the amount held.