Code Section Group

Corporations Code - CORP

TITLE 1. CORPORATIONS [100 - 14631]

  ( Title 1 enacted by Stats. 1947, Ch. 1038. )

DIVISION 1.5. CORPORATE FLEXIBILITY ACT OF 2011 [2500 - 3503]

  ( Division 1.5 added by Stats. 2011, Ch. 740, Sec. 12. )

CHAPTER 9. Conversions [3300 - 3306]
  ( Chapter 9 added by Stats. 2011, Ch. 740, Sec. 12. )

3300.
  

For purposes of this chapter, the following definitions shall apply:

(a) “Converted flexible purpose corporation” means a flexible purpose corporation that results from a conversion of an other business entity or a foreign other business entity or a foreign corporation pursuant to Section 1158.

(b) “Converted entity” means a domestic other business entity that results from a conversion of a flexible purpose corporation under this chapter.

(c) “Converting flexible purpose corporation” means a flexible purpose corporation that converts into a domestic or foreign other business entity pursuant to this chapter.

(d) “Converting entity” means an other business entity or a foreign other business entity or foreign corporation that converts into a flexible purpose corporation pursuant to Section 3607.

(e) “Domestic other business entity” has the meaning provided in Section 167.7.

(f) “Foreign other business entity” has the meaning provided in Section 171.05.

(g) “Other business entity” has the meaning provided in Section 174.5.

(Added by Stats. 2011, Ch. 740, Sec. 12. Effective January 1, 2012.)

3301.
  

(a) A flexible purpose corporation may be converted into a domestic other business entity pursuant to this chapter if, pursuant to the proposed conversion, each of the following conditions is met:

(1) Each share of the same class or series of the converting flexible purpose corporation shall, unless all the shareholders of the class or series consent, be treated equally with respect to any cash, rights, securities, or other property to be received by, or any obligations or restrictions to be imposed on, the holder of that share.

(2) The conversion is approved by an affirmative vote of at least two-thirds of the outstanding shares (Section 152) of each class, or a greater vote if required in the articles, regardless of whether that class is entitled to vote thereon by the provisions of the articles.

(3) Nonredeemable common shares of the converting flexible purpose corporation shall be converted only into nonredeemable equity securities of the converted entity unless all of the shareholders of the class consent.

(4) Paragraph (1) shall not restrict the ability of the shareholders of a converting flexible purpose corporation to appoint one or more managers, if the converted entity is a limited liability company, or one or more general partners, if the converted entity is a limited partnership, in the plan of conversion or in the converted entity’s governing documents.

(b)  Notwithstanding subdivision (a), the conversion of a flexible purpose corporation into a domestic other business entity may be effected only if both of the following conditions are met:

(1) The law under which the converted entity will exist expressly permits the formation of that entity pursuant to a conversion.

(2) The flexible purpose corporation complies with any and all other requirements of any other law that applies to conversion to the converted entity.

(Added by Stats. 2011, Ch. 740, Sec. 12. Effective January 1, 2012.)

3302.
  

(a) A flexible purpose corporation that desires to convert to a domestic other business entity shall approve a plan of conversion. The plan of conversion shall state all of the following:

(1) The terms and conditions of the conversion.

(2) The jurisdiction of the organization of the converted entity and of the converting flexible purpose corporation and the name of the converted entity after conversion.

(3) The manner of converting the shares of each of the shareholders of the converting flexible purpose corporation into securities of, or interests in, the converted entity.

(4) The provisions of the governing documents for the converted entity, including the articles and bylaws, partnership agreement or limited liability company articles of organization and operating agreement, to which the holders of interests in the converted entity are to be bound.

(5) Any other details or provisions that are required by the laws under which the converted entity is organized, or that are desired by the converting flexible purpose corporation.

(b) The plan of conversion shall be approved by the board of the converting flexible purpose corporation, and the principal terms of the plan of the conversion shall be approved by at least two-thirds of the outstanding shares of each class, or a greater vote if required in the articles, regardless of whether that class is entitled to vote thereon by the provisions of the articles of the converting flexible purpose corporation. The approval of the outstanding shares may be given before or after approval by the board.

(c) If the flexible purpose corporation is converting into a general or limited partnership or into a limited liability company, then in addition to the approval of the shareholders set forth in subdivision (b), the plan of conversion shall be approved by each shareholder who will become a general partner or manager, as applicable, of the converted entity pursuant to the plan of conversion unless the shareholders have dissenters’ rights pursuant to Section 3305 and Chapter 13 (commencing with Section 1300) of Division 1.

(d) Upon the effectiveness of the conversion, all shareholders of the converting flexible purpose corporation, except those that exercise dissenters’ rights as provided in Section 3305 and Chapter 13 (commencing with Section 1300) of Division 1, shall be deemed parties to any agreement or agreements constituting the governing documents for the converted entity adopted as part of the plan of conversion, regardless of whether a shareholder has executed the plan of conversion or those governing documents for the converted entity. Any adoption of governing documents made pursuant thereto shall be effective at the effective time or date of the conversion.

(e) Notwithstanding its prior approval by the board and the outstanding shares, or either of them, a plan of conversion may be amended before the conversion takes effect if the amendment is approved by the board and, if it changes any of the principal terms of the plan of conversion, by the shareholders of the converting flexible purpose corporation in the same manner and to the same extent as was required for approval of the original plan of conversion.

(f) A plan of conversion may be abandoned by the board of a converting flexible purpose corporation, or by the shareholders of a converting flexible purpose corporation if the abandonment is approved by the outstanding shares, in each case in the same manner as required for approval of the plan of conversion, subject to the contractual rights of third parties, at any time before the conversion is effective.

(g) The converted entity shall keep the plan of conversion at the principal place of business of the converted entity if the converted entity is a domestic partnership, or at the office at which records are to be kept under Section 15901.14 if the converted entity is a domestic limited partnership, or at the office at which records are to be kept under Section 17057 if the converted entity is a domestic limited liability company. Upon the request of a shareholder of a converting flexible purpose corporation, the authorized person on behalf of the converted entity shall promptly deliver to the shareholder, at the expense of the converted entity, a copy of the plan of conversion. A waiver by a shareholder of the rights provided in this subdivision shall be unenforceable.

(Added by Stats. 2011, Ch. 740, Sec. 12. Effective January 1, 2012.)

3303.
  

(a) After the approval, as provided in Section 3302, of a plan of conversion by the board and the outstanding shares of a flexible purpose corporation converting into a domestic other business entity, the converting flexible purpose corporation shall cause the filing of all documents required by law to effect the conversion and create the converted entity, which documents shall include a certificate of conversion or a statement of conversion as required by Section 3304, and the conversion shall thereupon be effective.

(b) A copy of the statement of partnership authority, certificate of limited partnership, or articles of organization complying with Section 1156, duly certified by the Secretary of State on or after the effective date, shall be conclusive evidence of the conversion of the flexible purpose corporation.

(Added by Stats. 2011, Ch. 740, Sec. 12. Effective January 1, 2012.)

3304.
  

(a) To convert a flexible purpose corporation:

(1) If the flexible purpose corporation is converting into a domestic limited partnership, a statement of conversion shall be completed on the certificate of limited partnership for the converted entity.

(2) If the flexible purpose corporation is converting into a domestic partnership, a statement of conversion shall be completed on the statement of partnership authority for the converted entity, or if no statement of partnership authority is filed, then a certificate of conversion shall be filed separately.

(3) If the flexible purpose corporation is converting into a domestic limited liability company, a statement of conversion shall be completed on the articles of organization for the converted entity.

(4) If the flexible purpose corporation is converting into a domestic corporation, a statement of conversion shall be completed on the articles for the converted entity.

(b) Any statement or certificate of conversion of a converting flexible purpose corporation shall be executed and acknowledged by those officers of the converting flexible purpose corporation as would be required to sign an officers’ certificate, and shall set forth all of the following:

(1) The name and the Secretary of State’s file number of the converting flexible purpose corporation.

(2) A statement of the total number of outstanding shares of each class entitled to vote on the conversion, that the principal terms of the plan of conversion were approved by a vote of the number of shares of each class which equaled or exceeded the vote required under Section 3602, specifying each class entitled to vote and the percentage vote required of each class.

(3) The name, form, and jurisdiction of organization of the converted entity.

(c) The certificate of conversion shall be on a form prescribed by the Secretary of State.

(d) The filing with the Secretary of State of a statement of conversion on an organizational document or a certificate of conversion as set forth in subdivision (a) shall have the effect of the filing of a certificate of dissolution by the converting flexible purpose corporation and no converting flexible purpose corporation that has made the filing is required to file a certificate of election under Section 1901 or a certificate of dissolution under Section 1905 as a result of that conversion.

(e)  Upon the effectiveness of a conversion pursuant to this chapter, a converted entity that is a domestic partnership, domestic limited partnership or domestic limited liability company shall be deemed to have assumed the liability of the converting flexible purpose corporation to prepare and file or cause to be prepared and filed all tax and information returns otherwise required of the converting flexible purpose corporation under the Corporation Tax Law (Part 11 (commencing with Section 23001) of Division 2 of the Revenue and Taxation Code) and to pay any tax liability determined to be due pursuant to that law.

(Added by Stats. 2011, Ch. 740, Sec. 12. Effective January 1, 2012.)

3305.
  

The shareholders of a converting flexible purpose corporation shall have all of the rights under Chapter 13 (commencing with Section 1300) of Division 1 of the shareholders of a corporation involved in a reorganization requiring the approval of its outstanding shares, and the converting flexible purpose corporation shall have all of the obligations under Chapter 13 (commencing with Section 1300) of Division 1 of a corporation involved in the reorganization. Solely for purposes of applying the provisions of Chapter 13 (commencing with Section 1300) of Division 1, and not for purposes of this chapter, a conversion pursuant to Section 3301 or 1158 shall be deemed to constitute a reorganization.

(Added by Stats. 2011, Ch. 740, Sec. 12. Effective January 1, 2012.)

3306.
  

Notwithstanding any other provision of law, the Secretary of State shall charge an entity a fee not to exceed one hundred fifty dollars ($150) for its conversion made under this chapter.

(Added by Stats. 2011, Ch. 740, Sec. 12. Effective January 1, 2012.)

CORPCorporations Code - CORP