What Does Admin Dissolved Mean?

what does admin dissolved mean

Admin dissolved or administrative dissolution refers to the act of a governing body removing the legal rights, abilities, assets and authority of a corporate entity, either for violation of certain laws or a similar form of transgression performed by the company and its constituent members.

This is usually considered the worst case scenario for any company or business, and is generally avoided at all costs. Fortunately, it is rather uncommon, so long as the company performs their legal and ethical duties in the proper manner.

Admin dissolved and administrative dissolution will usually spell the end of a company and its operations in its entirety – however, not all hope is lost, as not only can administrative dissolution be reversed, but it may also be cancelled or prevented prior to ever occurring.

Is Admin Dissolved the Same as Administrative Dissolution?

The term admin dissolved is simply another form of business entity administrative dissolution, wherein a company is dissolved and thereby loses their rights and abilities as a legal corporate entity, with their assets even being seized in certain cases, such as insolvency or unethical financial actions.

This is not to say that a company that has been administratively dissolved no longer exists, as a company tagged as admin dissolved may still exist in certain legal capacities but may not transact or trade publicly without serious legal ramifications occurring.

Why is a Company Administratively Dissolved?

closed business

A company or similar corporate entity may be administratively dissolved for a variety of reasons, usually concerning a failure or intentional avoidance to fulfill certain requirements asked for by the administrating body itself.

The most common among the reasons behind a company’s administrative dissolution are the failure to pay the proper taxes within their designated tax period – especially those concerning franchise businesses.

In terms of informational disclosure, certain companies are at risk of being administratively dissolved if they fail to disclose information regarding their annual financial report, certain internal workings, and financial records if said company is publicly traded.

A corporate entity may also be served an administrative dissolution notice if they fail to renew their business license or are unable to maintain a registered agent with the respective governmental departments in a specified period of time.

While the above are the most common reasons why a company would reach a point of admin dissolution, they are not the sole reason, and administrative dissolution may occur for matters entirely unrelated to such purposes.

Is Administrative Dissolution the Same as Voluntary Dissolution?

No.

Administrative dissolution is quite distinct from voluntary dissolution due to the fact that administrative dissolution is compulsory and not usually a choice by the company’s shareholders or acting board of directors.

Voluntary dissolution is generally performed by a company and its constituent members so as to wind up the affairs and cease the operations of said company in a legal and tidy manner – allowing its assets to be liquidated and its creditors to be paid back with little fuss.

This is not the case in administrative dissolution wherein a notice is sent to the business address of the offending company for transgressional reasons either unknown or intentionally ignored by the directors, employees and shareholders of the company.

Administrative dissolution may even be unintentional in the manner of a corporate entity’s owners abandoning it, making the subsequent closure and forfeiture of the company and its vested abilities inevitable as it practically ceases to function prior to its actual dissolution.

Who Enforces Administrative Dissolution?

Administrative dissolution is most often enforced either by the companies house in the UK, the secretary of state in the US, in a court of law, or by any other form of governmental administrative body directly concerning the freedoms and registration of a company.

Other departments of the government such as that of law enforcement and internal revenue departments may also come into play depending on the type and severity of the transgressions the dissolved corporate entity has committed, both before and after its subsequent administrative dissolution.

How is Administrative Dissolution Performed?

In most geographical areas and cases of administrative dissolution, the governing body responsible for enforcing the administrative dissolution must first follow a process of making the company and its members aware of the pending dissolution procedure.

This will entail both physically and digitally notifying the company executives or directors of the violations their company has committed as well as the potential administrative dissolution should they not correct such violations.

A suitably long enough grace period will ensue after the notices have been sent out, giving the company enough time to rectify the violations if they so desire – otherwise, once this period has elapsed, the company will be administratively dissolved.

Can a Company Continue to Operate After Administrative Dissolution?

Once a company has been definitely administratively dissolved, any further actions that do not directly relate to the liquidating of its assets, the settling of debts or other matters involved in the winding up of its affairs are legally prohibited and punishable.

winding up company

These permitted functions are generally scrutinized by the governing body so as to ensure that no illegal or violative activity is occurring.

If the company to be dissolved is discovered to still be operating in a normal capacity – whether intentionally or not – serious legal and financial ramifications may come to fruition, both for the company itself and its constituent members.

Should a Company Continue to Operate After Administrative Dissolution?

In all possible situations, it is most advisable for a company that has reached the point of administrative dissolution to cease their operations entirely.

This is due to the fact that the legal ramifications of being caught operating in the same manner while in a dissolved state can be quite severe, not only for the company itself but also for its board of directors and shareholders.

However, this of course does not apply to matters concerning the winding up of said dissolved company’s affairs, as these matters are vital to the administrative dissolution procedure and the proper course of the law.

Otherwise, the sort of ramifications involved in an admin dissolved company are usually in concerns to the validity and capacity of the actions performed by the company or its individual members therein.

Members of the company may be held legally liable for debts, damages and fines incurred while the company is in a dissolved state, as well as the fact that proceedings and actions performed under said dissolved state will be considered invalid.

Can Administrative Dissolution be Reversed?

open sign

Otherwise referred to as reinstatement, a reversal of the administrative dissolution procedure is possible in certain situations for companies that have failed to comply with the governing body and as such have been dissolved in a compulsory manner.

Generally, reinstatement of a dissolved company will require that said company rectify the violations that lead to its subsequent dissolution, as well as that it settles all monetary accounts with the respective governing bodies.

Once these requirements have been fulfilled and the dissolved company is confident that they are not in violation or in debt towards any administrative body, they may then file a petition for reinstatement with the same governing entity that initiated the administrative dissolution.

Works Cited

1. Sandra Feldman. (August 11, 2020) “Business Entity Administrative Dissolution & Reinstatement” Wolters Kluwer Retrieved on 10 Feb 2022 from (https://www.wolterskluwer.com/en/expert-insights/the-administrative-dissolution-and-reinstatement-of-business-entities)

2. James D. Cox, Thomas Lee Hazen. (2003) “Cox & Hazen on Corporations: Including Unincorporated Forms of Doing Business, Volume 2 Aspen’s introduction to law series Cox & Hazen on Corporations: Including Unincorporated Forms of Doing Business” Revised ed. Wolters Kluwer Retrieved via Google Books Corporate Section ISBN 0735530548, 9780735530546