To revive a suspended California corporation, first find out which agency suspended it. If the Secretary of State suspended it for failing to file a Statement of Information, the corporation generally files the overdue statement and pays any penalty. If the Franchise Tax Board (FTB) suspended it, the corporation must file all delinquent tax returns, pay all taxes, penalties, interest and fees, and apply to the FTB for a certificate of revivor. Revivor restores the corporation’s powers going forward, but it does not automatically cure every problem created during the suspension.
Many owners only learn their corporation is suspended when a bank, escrow officer, buyer or opposing lawyer points it out. Because a suspended corporation cannot lawfully exercise its corporate powers, the issue usually needs to be fixed quickly. Here is how suspension happens, what it means and how to restore good standing.
Why California Corporations Get Suspended
Two state agencies can suspend a California corporation (and a foreign corporation registered to do business in California).
Secretary of State suspension
Every California corporation must file a Statement of Information with the Secretary of State, listing its officers, directors, agent for service of process and addresses, each year during its filing period. If the statement is not filed, the Secretary of State can impose a penalty and, after notice, suspend the corporation.
Franchise Tax Board suspension
The FTB can suspend a corporation that fails to file required tax returns or fails to pay taxes, penalties or interest owed. California corporations are generally subject to an annual minimum franchise tax (currently $800) after their first taxable year, whether or not the business is active or profitable. A corporation that stopped operating but never formally dissolved will keep accruing these obligations, which is one of the most common paths to suspension.
What Suspension Means
A suspended corporation loses its corporate powers, rights and privileges. In practical terms:
- It cannot sue or defend in court. A suspended corporation generally cannot file a lawsuit or defend one, and a court may stay a case or allow a default until the corporation is revived.
- Its contracts may be voidable. Contracts the corporation makes while suspended for tax reasons can be voidable at the request of the other party. Revivor alone does not cure this; the corporation must separately ask the FTB for relief from contract voidability, which is available only in certain circumstances.
- Its name may be at risk. If another business takes a conflicting name while the corporation is suspended, the corporation may have to change its name to be revived.
- People acting for it can face penalties. Exercising or attempting to exercise the powers of a suspended corporation can carry criminal and civil penalties.
- It can weaken liability protection. Operating a suspended corporation can support claims that the owners did not respect the corporate form.
Suspension does not stop taxes from accruing. The FTB generally continues to require returns and the minimum tax, along with penalties and interest, for the years the corporation remains in existence.
How to Revive a Suspended California Corporation
Step 1: Confirm the status and the cause
Check the corporation’s status on the Secretary of State’s bizfile Online business search, and contact the FTB or review the corporation’s FTB account to learn what is owed. A corporation can be suspended by one agency or both, and each must be resolved.
Step 2: Cure a Secretary of State suspension
If the suspension is for a missing Statement of Information, the corporation generally files a current statement with the required fee and pays any penalty. Once processed, the Secretary of State restores active status, assuming the name is still available and the corporation is not also suspended by the FTB.
Step 3: Cure a Franchise Tax Board suspension
For an FTB suspension, the corporation generally must:
- File all delinquent tax returns, even for years with no income;
- Pay all taxes, penalties, interest and fees owed (or resolve them as the FTB allows);
- Submit an Application for Certificate of Revivor (FTB Form 3557); and
- File a current Statement of Information with the Secretary of State if one is also overdue.
When the FTB approves the application, it issues a certificate of revivor and the corporation returns to active status. Processing can take time. When a corporation needs to be revived quickly, for example because of a pending sale, loan closing or lawsuit, the FTB has offered an expedited “walk-through” revivor process at certain offices; confirm current availability before relying on it.
Step 4: Address the name, contracts and litigation
If the corporation’s name is no longer available, the board will need to approve a new name and file an amendment to the articles of incorporation as part of the revival. If the corporation entered contracts while suspended, consider whether to apply for relief from voidability. If there is pending litigation, coordinate the revival with litigation counsel, because revival can let the case proceed but may not undo every consequence of the suspension, such as missed deadlines.
Should You Revive or Dissolve?
If the business is no longer operating, reviving may not be the right goal. Owners sometimes revive a corporation only to dissolve it properly, because a suspended corporation must generally be brought current before it can file dissolution documents. California also has procedures that can allow certain long-suspended corporations to be administratively dissolved, and an abatement process for some inactive corporations. The right path depends on the corporation’s history, assets and liabilities, so get advice before paying years of back taxes.
How to Avoid Suspension
- Calendar the Statement of Information filing period and the corporation’s tax deadlines each year.
- Keep the agent for service of process and mailing addresses current so notices reach you.
- File returns and pay the minimum franchise tax even in years with no revenue.
- Formally dissolve corporations you no longer use rather than letting them lapse.
- Check entity status before signing major contracts, closing financing or filing litigation, and include it in your contract review checklist.
The Takeaway
A suspended corporation cannot lawfully do business, sue or defend itself, and its contracts may be at risk. Reviving it means identifying which agency suspended it, curing every missing filing and payment, and applying for revivor where required. Acting quickly, and addressing contracts and litigation along the way, limits the damage.
Frequently Asked Questions
How long does it take to revive a suspended California corporation?
It depends on what is owed and which agency suspended the corporation. A Secretary of State suspension for a missing Statement of Information can be cured relatively quickly, while an FTB revivor requires filing all delinquent returns and paying amounts due before the application is processed.
Can a suspended corporation still be sued?
Yes. A suspended corporation can be sued, but it generally cannot defend itself until it is revived, which can lead to a default judgment. That is why revival is urgent when litigation is pending.
Are contracts signed during suspension valid?
Contracts made while a corporation is suspended by the FTB may be voidable by the other party. Revival does not automatically fix this; the corporation must separately request relief from voidability, which is available only in certain situations.
What is FTB Form 3557?
Form 3557 is the Application for Certificate of Revivor that a corporation suspended by the Franchise Tax Board files after it has filed all required returns and paid the amounts owed.
How Sutter Law Can Help
Sutter Law helps California businesses restore good standing, clean up corporate records and decide whether to revive or wind down an entity, often working alongside the company’s tax adviser. Learn about our outside general counsel and business formation services, or contact us for a free consultation.
This article is general information, not legal advice. Reading it does not create an attorney-client relationship.
