If a company no longer has the legal authority to be a party to a contract, you can unmark it as a legal entity. However, if the company is currently assigned as the legal entity on any contracts, you will not be able to "unmark" it until you first reassign all its contracts to a different legal entity. An Administrator with the System Settings Admin permission can accomplish this reassignment using the Advanced Edit feature.

If you erroneously unmark as company as a legal entity, you can easily mark it as a legal entity.