What are the consequences when an Oklahoma corporation is suspended by the Oklahoma Secretary of State?


In a previous Blog Post, I talked about why a corporation ends up being suspended by the Oklahoma Secretary of State.  This Post discusses some of the consequences for a suspended corporation.

The Oklahoma Tax Code provides for multiple penalties if a corporation’s charter is suspended:

  • The directors and officers become liable for any and all debts of the corporation incurred or created with their knowledge, approval, and consent as if the directors and officers were partners;
  • Any contract entered into by the corporation during the suspension is voidable;
  • A court cannot grant to the corporation any legal relief in a lawsuit until the corporation is “reinstated” (meaning back in good standing); and
  • The corporation loses its right to sue or defend in any court of this state, except in a suit for forfeiture of its charter.
    MONCRIEFF-YEATES v. KANE 

 

The upshot of these penalties is that you may lose the protection from the Wall of Separation I mentioned in this Blog Post. Needless to say, if you do business through a suspended corporation, you lose a lot of the protection the corporation normally provides and subject yourself to substantial but unnecessary legal risk.

Posted by Shawn Roberts

On this blog, I write about and try to answer practical Oklahoma legal questions. My focus and most experience is in estate planning and business issues including Oklahoma non-compete law. I make a living as an attorney in the law firm I founded, Cazes Roberts, PLLC in Oklahoma City. I live in Edmond with wife Amy and my two children, Sam (17) and David (9). We live precisely in the path of where the "wind comes sweeping down the plains."