Definition and Purpose of Form 652
Form 652, also known as the Certificate of Termination for a Domestic Nonprofit Corporation or Cooperative Association in Texas, serves as the official document for legally dissolving a nonprofit organization or cooperative in the state. This form confirms the discontinuation of operations and outlines the process to wind up affairs, ensuring compliance with Texas state laws. It is essential for protecting the organization and its members from future liability and ensuring that all legal obligations are appropriately settled.
Steps to Complete Form 652
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Entity Information: Begin by providing the legal name of the nonprofit corporation or cooperative, along with the file number assigned by the Texas Secretary of State.
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Governing Authority Details: Include names and addresses of the governing persons involved in the termination process, such as directors or officers.
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Termination Reasons: Clearly state the events or reasons necessitating the corporation's termination, such as the fulfillment of the organization's purpose or a decision by the board.
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Compliance Confirmation: Verify compliance with all applicable state legal requirements, including tax obligations and creditor notifications.
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Filing Requirements: Prepare for the final submission to the Secretary of State by ensuring that all documentation is complete, including required signatures from authorized individuals.
Who Typically Uses Form 652
Form 652 is primarily used by domestic nonprofit corporations and cooperative associations in Texas that need to officially terminate their operations. This group includes entities such as charitable organizations, membership clubs, and business cooperatives. Each organization must ensure that its specific conditions and governance documents are reviewed before submitting the form to ensure proper compliance with state regulations.
Important Terms Related to Form 652
- Winding-up: The process of settling the nonprofit's affairs, paying off debts, and distributing any remaining assets appropriately.
- Dissolution: The official legal closure of the nonprofit's existence, marked by the acceptance of Form 652.
- Governing Authority: The individuals or board responsible for decision-making within the nonprofit entity.
Legal Use and Compliance
Completing Form 652 is mandatory for legal dissolutions, as specified by Texas Business Organizations Code (BOC) Section 11. Certificate issuance serves as a legal proof of closure, offering protection from further liabilities. Noncompliance can result in unresolved legal obligations and potential liabilities for directors and officers if the form is not properly filed.
State-Specific Rules for Texas
In Texas, the filing of Form 652 requires compliance with state laws that govern nonprofit and cooperative operations. Organizations must:
- Settle all debts and liabilities.
- Fulfill all contractual and legal obligations.
- Submit equivalent forms if they have federal tax obligations or registrations.
- Comply with any unique provisions mandated by their articles of incorporation or state-specific regulations.
Required Documents for Submission
- Form 652: Completed with all necessary details and signatures.
- Proof of Compliance: Documentation supporting discharge of all organizational liabilities.
- Governing Authority Resolution: A resolution by the board authorizing the termination.
- Tax Clearance: If applicable, proof of clearance of state and federal tax obligations.
Submission Methods: Online, Mail, or In-Person
Form 652 can be submitted through:
- Online Filing: Via the Texas Secretary of State's official website for faster processing.
- Mail: Sending the completed form to the Secretary of State’s office.
- In-Person: Delivering the document directly to the office for immediate submission.
Each method has its own processing times, with online filing generally being the quickest. Organizations should choose the method that best fits their timeline and needs for confirmation of receipt.
Penalties for Non-Compliance
Failing to file Form 652 or improperly terminating the nonprofit entity can result in:
- Continued Liability for Debts: Unaddressed financial obligations remaining the responsibility of the governing persons.
- Legal Repercussions: Potential legal action being taken by creditors or members.
- Loss of Tax-Exempt Status: Failure to properly dissolve may affect the entity’s standing with tax authorities, leading to fines or penalties.
Organizations need to ensure thorough completion and timely submission of the form to avoid any such outcomes.
