Page 298 - Washington Nonprofit Handbook 2018 Edition

taken in order to dissolve the nonprofit corporation. This process is referred to as
voluntary dissolution and is summarized below.

(i) Resolution to Dissolve

The first step in a voluntary dissolution is the adoption of a resolution by the
board of directors supporting corporate dissolution. If the corporation has
members with voting rights, then the voting members must also adopt a resolution
to dissolve at either an annual or special meeting. Each member with voting rights
must be provided with notice of that meeting between 10 and 50 days in advance,
either personally or by mail, facsimile or electronic mail, subject to the
requirements of the Act. The resolution of dissolution must be approved by a two-
thirds vote of the members present or represented by proxy (if proxy voting is
permitted) at a meeting in which a quorum is present. If the corporation has no
members with voting rights, then a resolution adopted by a majority of the
directors in office suffices to dissolve the corporation.

(ii) Notice of Adoption of a Resolution to Dissolve

Once the dissolution resolution has been adopted, the corporation must
cease to conduct its affairs except as necessary to wind up. In addition, the Act
requires a notice of the proposed dissolution be provided to each known creditor
of the corporation, to the attorney general with regard to any assets held for a
charitable purpose, and to the Washington State Department of Revenue. This
notice should contain the plan of distribution described below. The notice to the
Department of Revenue must request a clearance certificate which certifies that the
corporation does not owe any taxes to the state.

(iii) Plan of Distribution

Once a resolution to dissolve has been approved, a plan, called the plan of
distribution, that details how the corporation’s assets will be distributed must be
prepared. Like the resolution to dissolve, the plan must be approved by the
members having voting rights, if any, or if there are no such members then by a
majority vote of the directors in office, in each case at a meeting in which a quorum
is present.

The Act outlines the order of distribution of a nonprofit corporation’s assets
upon dissolution. The plan of distribution must comply with these statutory
requirements. First, the corporation must apply its assets toward satisfying all of its
liabilities and obligations prior to distributing assets elsewhere. The corporation’s

WASHINGTON NONPROFIT HANDBOOK -287- 2018