What does the term "dissolution" refer to in corporate law?

In corporate law, the term "dissolution" specifically refers to the termination of a corporation's existence. When a corporation is dissolved, it ceases to operate as a legal entity, which means it will no longer carry out business activities, enter into contracts, or engage in other actions typical of a corporation. This process can occur for various reasons, such as the completion of a specific purpose for which the corporation was created, voluntary decision by the shareholders or directors, or a court order due to legal issues.

Dissolution involves settling the corporation's affairs, which includes settling debts and liabilities, distributing remaining assets to shareholders, and formally notifying the appropriate governmental bodies and other stakeholders. Once the corporation is dissolved, any remaining legal rights and obligations are extinguished, and the entity formally ceases to exist in the eyes of the law.

The other choices do not accurately reflect the meaning of dissolution in the corporate context. Mergers involve combining companies, increasing corporate assets refers to actions taken to enhance the financial strength of a corporation, and establishing partnerships pertains to different forms of business relationships entirely.