Dissolution and Liquidation

An organization’s activities come to an end through formal dissolution.  A notice of dissolution must be provided to all members of the association.  Generally, the mode of dissolution is provided in the by-laws or constitution of the organization.  In the absence of such stipulation, an organization may be dissolved after obtaining the unanimous consent of its members.

An organization may also be dissolved by the decision of a superior organization or through the decree of a court of law.  In the event of dissolution by court, the court will declare the organization dissolved and distribute its assets according to the by-laws of the organization.  Generally, the assets are distributed among the members on a pro rata basis.

In the case of dissolution of a subordinate association, the assets shall devolve to the parent organization.  Thus, if the by-laws specifically provide that funds and property of a defunct or dissolved subordinate unit shall become the property of the parent organization, courts will uphold such stipulation.


Inside Dissolution and Liquidation