H 4348 General Bill, By Harrison

Similar(S 737)
 A BILL TO AMEND THE CODE OF LAWS OF SOUTH CAROLINA, 1976, BY ADDING CHAPTER 9
 TO TITLE 33 SO AS TO PROVIDE FOR THE DOMESTICATION IN SOUTH CAROLINA OF A
 FOREIGN CORPORATION AND THE CONVERSION OF A DOMESTIC BUSINESS CORPORATION TO A
 DOMESTIC NONPROFIT CORPORATION, A FOREIGN NONPROFIT CORPORATION TO A DOMESTIC
 BUSINESS CORPORATION, AND A DOMESTIC BUSINESS CORPORATION TO A DOMESTIC
 UNINCORPORATED ENTITY, AND TO PROVIDE FOR IN EACH DOMESTICATION, CONVERSION,
 OR BOTH, FOR A PLAN, REQUIREMENTS FOR ACTION ON THE PLAN, ARTICLES, SURRENDER
 OF PREVIOUS CHARTER, EFFECT OF THE CHANGE, AND ABANDONMENT OF THE PLAN; TO
 AMEND SECTION 33-1-220, AS AMENDED, RELATING TO FILING, SERVICE, AND COPYING
 FEES COLLECTED BY THE SECRETARY OF STATE FOR DOCUMENTS IN CONNECTION WITH
 BUSINESS AND NONPROFIT CORPORATIONS AND UNINCORPORATED ENTITIES, SO AS TO
 INCLUDE FEES FOR THE FILING OF DOCUMENTS REQUIRED IN CONNECTION WITH
 DOMESTICATION AND CONVERSION; AND TO AMEND SECTION 33-1-400, AS AMENDED,
 RELATING TO DEFINITIONS IN CONNECTION WITH THE SOUTH CAROLINA BUSINESS
 CORPORATION ACT OF 1988, SO AS TO INCLUDE DEFINITIONS IN CONNECTION WITH
 DOMESTICATION AND CONVERSION.

   06/03/03  House  Introduced and read first time HJ-50
   06/03/03  House  Referred to Committee on Judiciary HJ-50

TO AMEND THE CODE OF LAWS OF SOUTH CAROLINA, 1976, BY ADDING CHAPTER 9 TO TITLE 33 SO AS TO PROVIDE FOR THE DOMESTICATION IN SOUTH CAROLINA OF A FOREIGN CORPORATION AND THE CONVERSION OF A DOMESTIC BUSINESS CORPORATION TO A DOMESTIC NONPROFIT CORPORATION, A FOREIGN NONPROFIT CORPORATION TO A DOMESTIC BUSINESS CORPORATION, AND A DOMESTIC BUSINESS CORPORATION TO A DOMESTIC UNINCORPORATED ENTITY, AND TO PROVIDE FOR IN EACH DOMESTICATION, CONVERSION, OR BOTH, FOR A PLAN, REQUIREMENTS FOR ACTION ON THE PLAN, ARTICLES, SURRENDER OF PREVIOUS CHARTER, EFFECT OF THE CHANGE, AND ABANDONMENT OF THE PLAN; TO AMEND SECTION 33-1-220, AS AMENDED, RELATING TO FILING, SERVICE, AND COPYING FEES COLLECTED BY THE SECRETARY OF STATE FOR DOCUMENTS IN CONNECTION WITH BUSINESS AND NONPROFIT CORPORATIONS AND UNINCORPORATED ENTITIES, SO AS TO INCLUDE FEES FOR THE FILING OF DOCUMENTS REQUIRED IN CONNECTION WITH DOMESTICATION AND CONVERSION; AND TO AMEND SECTION 33-1-400, AS AMENDED, RELATING TO DEFINITIONS IN CONNECTION WITH THE SOUTH CAROLINA BUSINESS CORPORATION ACT OF 1988, SO AS TO INCLUDE DEFINITIONS IN CONNECTION WITH DOMESTICATION AND CONVERSION.

Be it enacted by the General Assembly of the State of South Carolina:

SECTION    1.    Title 33 of the 1976 Code is amended by adding:

Section 33-9-100.    (A)    A foreign business corporation may become a domestic business corporation only if the domestication is permitted by the organic law of the foreign corporation.

(B)    A domestic business corporation may become a foreign business corporation if the domestication is permitted by the laws of the foreign jurisdiction. Regardless of whether the laws of the foreign jurisdiction require the adoption of a plan of domestication, the domestication must be approved by the adoption by the corporation of a plan of domestication in the manner provided in this article.

(C)    The plan of domestication must include:

(1)    a statement of the jurisdiction in which the corporation is to be domesticated;

(2)    the terms and conditions of the domestication;

(3)    the manner and basis of reclassifying the shares of the corporation following its domestication into shares or other securities, obligations, rights to acquire shares or other securities, cash, other property, or any combination of them; and

(4)    any desired amendments to the articles of incorporation of the corporation following its domestication.

(D)    The plan of domestication also may include a provision for amending the plan before filing the document required by the laws of this State or the other jurisdiction to consummate the domestication; except that, after approval of the plan by the shareholders, the plan may not be amended to change:

(1)    the amount or kind of shares or other securities, obligations, rights to acquire shares or other securities, cash, or other property to be received by the shareholders pursuant to the plan;

(2)    the articles of incorporation as they are in effect immediately following the domestication, except for changes permitted by Section 33-10-102 or by comparable provisions of the laws of the other jurisdiction; or

(3)    any of the other terms or conditions of the plan if the change would adversely affect any of the shareholders in any material respect.

(E)    If a debt security, note or similar evidence of indebtedness for money borrowed, whether secured or unsecured, or a contract of any kind, issued, incurred, or executed by a domestic business corporation before the effective date of this article contains a provision applying to a merger of the corporation and the document does not refer to a domestication of the corporation, the provision must be deemed to apply to a domestication of the corporation until the time the provision is amended after that date.

Section 33-9-110.    In the case of a domestication of a domestic business corporation in a foreign jurisdiction:

(1)    The plan of domestication must be adopted by the board of directors.

(2)    After adopting the plan of domestication the board of directors shall submit the plan to the shareholders for their approval. The board of directors also shall transmit to the shareholders a recommendation that the shareholders approve the plan, unless the board of directors makes a determination that because of conflicts of interest or other special circumstances it does not make the recommendation, and then the board of directors shall transmit to the shareholders the basis for that determination.

(3)    The board of directors may condition its submission of the plan of domestication to the shareholders on any basis.

(4)    If the approval of the shareholders is to be given at a meeting, the corporation shall notify each shareholder, whether or not entitled to vote, of the meeting of shareholders at which the plan of domestication is to be submitted for approval. The notice must state that the purpose, or one of the purposes, of the meeting is to consider the plan and must contain or be accompanied by a copy or summary of the plan. The notice must include or be accompanied by a copy of the articles of incorporation to be in effect immediately after the domestication.

(5)    Unless the articles of incorporation, or the board of directors acting pursuant to paragraph (3), require a greater vote or a greater number of votes to be present, approval of the plan of domestication requires the approval of the shareholders at a meeting at which a quorum consisting of at least a majority of the votes entitled to be cast on the plan exists. If a class or series of shares is entitled to vote as a separate group on the plan, the approval is required of each separate voting group at a meeting at which a quorum of the voting group consisting of at least a majority of the votes entitled to be cast on the domestication by that voting group exists.

(6)    Separate voting by voting groups is required by each class or series of shares that:

(a)    are to be reclassified pursuant to the plan of domestication into other securities, obligations, rights to acquire shares or other securities, cash, other property, or any combination of them;

(b)    would be entitled to vote as a separate group on a provision of the plan that, if contained in a proposed amendment to articles of incorporation, would require action by separate voting groups pursuant to Section 33-10-104; or

(c)    is entitled pursuant to the articles of incorporation to vote as a voting group to approve an amendment of the articles.

(7)    If a provision of the articles of incorporation, the bylaws, or an agreement to which any of the directors or shareholders are parties, adopted or entered into before the effective date of this article, applies to a merger of the corporation and that document does not refer to a domestication of the corporation, the provision must be deemed to apply to a domestication of the corporation until the time the provision is amended that date.

Section 33-9-120.    (A)    After the domestication of a foreign business corporation has been authorized as required by the laws of the foreign jurisdiction, articles of domestication must be executed by an officer or other duly authorized representative. The articles must contain:

(1)    the name of the corporation immediately before the filing of the articles of domestication or, if that name is unavailable for use in this State or the corporation desires to change its name in connection with the domestication, a name that satisfies the requirements of Section 33-4-101;

(2)    the jurisdiction of incorporation of the corporation immediately before the filing of the articles of domestication and the date the corporation was incorporated in that jurisdiction; and

(3)    a statement that the domestication of the corporation in this State was duly authorized as required by the laws of the jurisdiction in which the corporation was incorporated immediately before its domestication in this State.

(B)    The articles of domestication must contain all of the provisions required by Section 33-2-102(a) to be set forth in articles of incorporation and other desired provisions that Section 33-2-102(b) permits to be included in articles of incorporation, or must have attached articles of incorporation. In either case, provisions that not otherwise required to be included in restated articles of incorporation may be omitted.

(C)    The articles of domestication must be delivered to the Secretary of State for filing, and take effect as provided in Section 33-1-230.

(D)    If the foreign corporation is authorized to transact business in this State pursuant to Chapter 15, its certificate of authority must be cancelled automatically on the effective date of its domestication.

Section 33-9-130.    (A)    A domestic business corporation that has adopted and approved, in the manner required by this article, a plan of domestication providing for the corporation to be domesticated in a foreign jurisdiction, shall have articles of charter surrender executed on its behalf by an officer or other duly authorized representative. The articles of charter surrender must contain:

(1)    the name of the corporation;

(2)    a statement that the articles of charter surrender are filed in connection with the domestication of the corporation in a foreign jurisdiction;

(3)    a statement that the domestication was duly approved by the shareholders and, if voting by any separate voting group was required, by each separate voting group, in the manner required by this article and the articles of incorporation; and

(4)    the corporation's new jurisdiction of incorporation.

(B)    The articles of charter surrender must be delivered by the corporation to the Secretary of State for filing. The articles of charter surrender take effect as provided in Section 33-1-230.

Section 33-9-140.    (A)    When a domestication becomes effective:

(1)    the title to all real and personal property, both tangible and intangible, of the corporation remains in the corporation without reversion or impairment;

(2)    the liabilities of the corporation remain the liabilities of the corporation;

(3)    an action or proceeding pending against the corporation continues against the corporation as if the domestication had not occurred;

(4)    the articles of domestication, or the articles of incorporation attached to the articles of domestication, constitute the articles of incorporation of a foreign corporation domesticating in this State;

(5)    the shares of the corporation are reclassified into shares, other securities, obligations, rights to acquire shares or other securities, or into cash or other property in accordance with the terms of the domestication, and the shareholders are entitled to the rights provided only by those terms and to appraisal rights they may have pursuant to the organic law of the domesticating corporation; and

(6)    the corporation is considered to:

(a)    be incorporated pursuant to and subject to the organic law of the domesticated corporation for all purposes;

(b)    be the same corporation without interruption as the domesticating corporation; and

(c)    have been incorporated on the date the domesticating corporation was originally incorporated.

(B)    When a domestication of a domestic business corporation in a foreign jurisdiction becomes effective, the foreign business corporation is considered to:

(1)    appoint the Secretary of State as its agent for service of process in a proceeding to enforce the rights of shareholders who exercise appraisal rights in connection with the domestication; and

(2)    agree that it will pay promptly an amount to which the shareholders are entitled by statute.

(C)    The owner liability of a shareholder in a foreign corporation that is domesticated in this State is as follows:

(1)    The domestication does not discharge any owner liability pursuant to the laws of the foreign jurisdiction to the extent the owner liability arose before the effective time of the articles of domestication.

(2)    The shareholder does not have owner liability pursuant to the laws of the foreign jurisdiction for any debt, obligation, or liability of the corporation that arises after the effective time of the articles of domestication.

(3)    The provisions of the laws of the foreign jurisdiction continue to apply to the collection or discharge of owner liability preserved by item (1), as if the domestication had not occurred.

(4)    The shareholder has the right of contribution from other shareholders as provided by the laws of the foreign jurisdiction with respect to owner liability preserved by item (1), as if the domestication had not occurred.

(D)    A shareholder who becomes subject to owner liability for some or all of the debts, obligations, or liabilities of the corporation as a result of its domestication in this State has owner liability only for those debts, obligations, or liabilities of the corporation that arise after the effective time of the articles of domestication.

Section 33-9-150.    (A)    Unless otherwise provided in a plan of domestication of a domestic business corporation, a plan that has been adopted and approved as required by this article may be abandoned by the board of directors without action by the shareholders at any time before the domestication becomes effective.

(B)    If a domestication is abandoned pursuant to subsection (A) after articles of charter surrender have been filed with the Secretary of State but before the domestication is effective, a statement that the domestication has been abandoned in accordance with this section, executed by an officer or other duly authorized representative, must be delivered to the Secretary of State for filing before the effective date of the domestication. The statement takes effect upon filing and the domestication is considered abandoned and does not become effective.

(C)    If the domestication of a foreign business corporation in this State is abandoned in accordance with the laws of the foreign jurisdiction after articles of domestication have been filed with the Secretary of State, a statement that the domestication has been abandoned, executed by an officer or other duly authorized representative, must be delivered to the Secretary of State for filing. The statement takes effect upon filing and the domestication is considered abandoned and does not become effective.

Section 33-9-200.    (A) A domestic business corporation may become a domestic nonprofit corporation pursuant to a plan of nonprofit conversion.

(B)    A domestic business corporation may become a foreign nonprofit corporation if the nonprofit conversion is permitted by the laws of the foreign jurisdiction. The foreign nonprofit conversion must be approved by the adoption by the domestic business corporation of a plan of nonprofit conversion in the manner provided in this article, even if the adoption of the plan is not required by the foreign jurisdiction.

(C)    The plan of nonprofit conversion must include:

(1)    the terms and conditions of the conversion;

(2)    the manner and basis of reclassifying the shares of the corporation following its conversion into memberships, if any, or securities, obligations, rights to acquire memberships or securities, cash, other property, or any combination of the foregoing;

(3)    desired amendments to the articles of incorporation of the corporation following its conversion; and

(4)    if the domestic business corporation is to be converted to a foreign nonprofit corporation, a statement of the jurisdiction of incorporation after the conversion.

(D)    The plan of nonprofit conversion also may include a provision that the plan may be amended before filing articles of nonprofit conversion, except that the plan may not be amended after shareholder approval to change: (1)    the amount or kind of memberships or securities, obligations, rights to acquire memberships or securities, cash, or other property to be received by the shareholders pursuant to the plan;

(2)    the articles of incorporation as they will be in effect immediately following the conversion, except for changes permitted by Section 33-10-105; or

(3)    any of the other terms or conditions of the plan if the change would affect adversely any of the shareholders in any material respect.

(E)    If debt security, note or similar evidence of indebtedness for money borrowed, whether secured or unsecured, or a contract of any kind, issued, incurred, or executed by a domestic business corporation before the effective date of this article contains a provision applying to a merger of the corporation and the document does not refer to a nonprofit conversion of the corporation, the provision is considered to apply to a nonprofit conversion of the corporation until the time the provision is amended after that date.

Section 33-9-210.    In the case of a conversion of a domestic business corporation to a domestic or foreign nonprofit corporation:

(1)    The plan of nonprofit conversion must be adopted by the board of directors.

(2)    After adopting the plan of nonprofit conversion, the board of directors shall submit the plan to the shareholders for their approval. The board of directors also shall transmit to the shareholders a recommendation that the shareholders approve the plan, unless the board of directors makes a determination that because of conflicts of interest or other special circumstances it does not make the recommendation, and then the board of directors shall transmit to the shareholders the basis for that determination.

(3)    The board of directors may condition its submission of the plan of nonprofit conversion to the shareholders on any basis.

(4)    If the approval of the shareholders is to be given at a meeting, the corporation shall notify each shareholder of the meeting of shareholders at which the plan of nonprofit conversion is to be submitted for approval. The notice must state that the purpose, or one of the purposes, of the meeting is to consider the plan and must contain or be accompanied by a copy or summary of the plan. The notice must include or be accompanied by a copy of the articles of incorporation as they will be in effect immediately after the nonprofit conversion.

(5)    Unless the articles of incorporation, or the board of directors acting pursuant to item (3), require a greater vote or a greater number of votes to be present, approval of the plan of nonprofit conversion requires the approval of each class or series of shares of the corporation voting as a separate voting group at a meeting at which a quorum of the voting group consisting of at least a majority of the votes entitled to be cast on the nonprofit conversion by that voting group exists.

(6)    If any provision of the articles of incorporation, bylaws, or an agreement to which any of the directors or shareholders are parties, and which was adopted or entered into before the effective date of this article, applies to a merger of the corporation and the document does not refer to a nonprofit conversion of the corporation, the provision must be deemed to apply to a nonprofit conversion of the corporation until the time the provision is amended after that date.

Section 33-9-220.    (A)    After a plan of nonprofit conversion providing for the conversion of a domestic business corporation to a domestic nonprofit corporation is adopted and approved as required by this article, articles of nonprofit conversion must be executed on behalf of the corporation by an officer or other duly authorized representative. The articles must contain:

(1)    the name of the corporation immediately before the filing of the articles of nonprofit conversion, or if that name does not satisfy the requirements of the Nonprofit Corporation Act, or the corporation desires to change its name in connection with the conversion, a name that satisfies the requirements of the Nonprofit Corporation Act; and

(2)    a statement that the plan of nonprofit conversion was duly approved by the shareholders in the manner required by this article and the articles of incorporation.

(B)    The articles of nonprofit conversion must contain all of the provisions that the Nonprofit Corporation Act requires to be set forth in articles of incorporation of a domestic nonprofit corporation and any other desired provisions permitted by the Nonprofit Corporation Act, or must have attached articles of incorporation that satisfy the requirements of the Nonprofit Corporation Act. In either case, provisions that are not required to be included in restated articles of incorporation of a domestic nonprofit corporation may be omitted.

(C)    The articles of nonprofit conversion must be delivered to the Secretary of State for filing, and take effect at the effective time provided in Section 33-1-230.

Section 33-9-230.    (A)    A domestic business corporation that has adopted and approved, in the manner required by this article, a plan of nonprofit conversion providing for the corporation to be converted to a foreign nonprofit corporation, shall have articles of charter surrender executed on its corporation by an officer or other duly authorized representative. The articles of charter surrender must contain:

(1)    the name of the corporation;

(2)    a statement that the articles of charter surrender are being filed in connection with the conversion of the corporation to a foreign nonprofit corporation;

(3)    a statement that the foreign nonprofit conversion was duly approved by the shareholders in the manner required by this article and the articles of incorporation; and

(4)    the corporation's new jurisdiction of incorporation.

(B)    The articles of charter surrender must be delivered by the corporation to the Secretary of State for filing. The articles of charter surrender take effect as provided in Section 33-1-230.

Section    33-9-240.        (A)    When a conversion of a domestic business corporation to a domestic or foreign nonprofit corporation becomes effective:

(1) the title to all real and personal property, both tangible and intangible, of the corporation remains in the corporation without reversion or impairment;

(2)    the liabilities of the corporation remain the liabilities of the corporation;

(3)    an action or proceeding pending against the corporation continues against the corporation as if the conversion had not occurred;

(4)    the articles of incorporation of the domestic or foreign nonprofit corporation become effective;

(5)    the shares of the corporation are reclassified into memberships, securities, obligations, rights to acquire memberships or securities, or into cash or other property in accordance with the plan of conversion, and the shareholders are entitled only to the rights provided in the plan of nonprofit conversion or pursuant to Chapter 13; and

(6)    the corporation is considered to:

(a)    be a domestic or foreign nonprofit corporation for all purposes;

(b) be the same corporation without interruption as the business corporation; and

(c) have been incorporated on the date that it was originally incorporated as a domestic business corporation.

(B)    When a conversion of a domestic business corporation to a foreign nonprofit corporation becomes effective, the foreign nonprofit corporation is considered to:

(1)    appoint the Secretary of State as its agent for service of process in a proceeding to enforce the rights of shareholders who exercise appraisal rights in connection with the conversion; and

(2)    agree that it will pay promptly the amount to which the shareholders are entitled pursuant to Chapter 13.

(C)    The owner liability of a shareholder in a domestic business corporation that converts to a domestic nonprofit corporation is as follows:

(1)    The conversion does not discharge owner liability of the shareholder as a shareholder of the business corporation to the extent the owner liability arose before the effective time of the articles of nonprofit conversion.

(2)    The shareholder does not have owner liability for any debt, obligation, or liability of the nonprofit corporation that arises after the effective time of the articles of nonprofit conversion.

(3)    The laws of this State continue to apply to the collection of discharge of owner liability preserved by item (1), as if the conversion had not occurred.

(4)    The shareholder has the right of contribution from other shareholders provided by the laws of this State with respect to any owner liability preserved by item (1), as if the conversion had not occurred.

(D)    A shareholder who becomes subject to owner liability for some or all of the debts, obligations, or liabilities of the nonprofit corporation has owner liability only for those debts, obligations, or liabilities of the nonprofit corporation that arise after the effective time of the articles of nonprofit conversion.

Section 33-9-250.    (A)    Unless otherwise provided in a plan of nonprofit conversion of a domestic business corporation, after the plan is adopted and approved as required by this article, it may be abandoned by the board of directors without action by the shareholders at any time before the nonprofit conversion has become effective.

(B)    If a nonprofit conversion is abandoned pursuant to subsection (A) after articles of nonprofit conversion or articles of charter surrender have been filed with the Secretary of State but before the nonprofit conversion is effective, a statement that the nonprofit conversion has been abandoned in accordance with this section, executed by an officer or other duly authorized representative, must be delivered to the Secretary of State for filing before the effective date of the nonprofit conversion. The statement takes effect upon filing and the nonprofit conversion is considered abandoned and does not become effective.

Section 33-9-300.    A foreign nonprofit corporation may become a domestic business corporation if the domestication and conversion are permitted by the organic law of the foreign nonprofit corporation.

Section 33-9-310.    (A)    After the conversion of a foreign nonprofit corporation to a domestic business corporation has been authorized as required by the laws of the foreign jurisdiction, articles of domestication and conversion must be executed by an officer or other duly authorized representative. The articles must contain:

(1)    the name of the corporation immediately before the filing of the articles of domestication and conversion, or, if that name is unavailable for use in this State or the corporation desires to change its name in connection with the domestication and conversion, a name that satisfies the requirements of Section 33-4-101;

(2)    the jurisdiction of incorporation of the corporation immediately before the filing of the articles of domestication and conversion and the date the corporation was incorporated in that jurisdiction; and

(3)    a statement that the domestication and conversion of the corporation in this State were duly authorized as required by the laws of the jurisdiction in which the corporation was incorporated immediately before its domestication and conversion in this State.

(B)    The articles of domestication and conversion must contain all of the provisions that Section 33-2-102(a) requires to be in articles of incorporation and other desired provisions that Section 33-2-102(b) permits to be included in articles of incorporation, or must have attached articles of incorporation. In either case, provisions that are not required to be included in restated articles of incorporation may be omitted.

(C)    The articles of domestication and conversion must be delivered to the Secretary of State for filing, and take effect provided in Section 33-1-230.

(D)    If the foreign nonprofit corporation is authorized to transact business in this State, its certificate of authority must be cancelled automatically on the effective date of its domestication and conversion.

Section 33-9-320.    (A)    When the domestication and conversion of a foreign nonprofit corporation to a domestic business corporation become effective:

(1)    the title to all real and personal property, both tangible and intangible, of the corporation remains in the corporation without reversion or impairment;

(2)    the liabilities of the corporation remain the liabilities of the corporation;

(3)    an action or proceeding pending against the corporation continues against the corporation as if the domestication and conversion had not occurred;

(4)    the articles of domestication and conversion, or the articles of incorporation attached to the articles of domestication and conversion, constitute the articles of incorporation of the corporation;

(5)    shares, other securities, obligations, rights to acquire shares or other securities of the corporation, or cash or other property must be issued or paid as provided pursuant to the laws of the foreign jurisdiction, so long as at least one share is outstanding immediately after the effective time; and

(6)    the corporation is considered to:

(a)    be a domestic corporation for all purposes;

(b)    be the same corporation without interruption as the foreign nonprofit corporation; and

(c)    have been incorporated on the date the foreign nonprofit corporation was originally incorporated.

(B)    The owner liability of a member of a foreign nonprofit corporation that domesticates and converts to a domestic business corporation is as follows:

(1)    The domestication and conversion do not discharge owner liability under the laws of the foreign jurisdiction to the extent the owner liability arose before the effective time of the articles of domestication and conversion.

(2)    The member does not have owner liability under the laws of the foreign jurisdiction for any debt, obligation, or liability of the corporation that arises after the effective time of the articles of domestication and conversion.

(3)    The provisions of the laws of the foreign jurisdiction continue to apply to the collection or discharge of owner liability preserved by item (1), as if the domestication and conversion had not occurred.

(4)    The member has the right of contribution from other members as provided by the laws of the foreign jurisdiction with respect to owner liability preserved by item (1), as if the domestication and conversion had not occurred.

(C)    A member of a foreign nonprofit corporation who becomes subject to owner liability for some or all of the debts, obligations, or liabilities of the corporation as a result of its domestication and conversion in this State has owner liability only for those debts, obligations, or liabilities of the corporation that arise after the effective time of the articles of domestication and conversion.

Section 33-9-330.    If the domestication and conversion of a foreign nonprofit corporation to a domestic business corporation are abandoned in accordance with the laws of the foreign jurisdiction after articles of domestication and conversion have been filed with the Secretary of State, a statement that the domestication and conversion are abandoned, executed by an officer or other duly authorized representative, must be delivered to the Secretary of State for filing. The statement takes effect upon filing and the domestication and conversion are considered abandoned and do not become effective.

Section 33-9-400.    (a)    A domestic business corporation may become a domestic unincorporated entity pursuant to a plan of entity conversion.

(B)    Domestic business corporation may become a foreign unincorporated entity if the entity conversion is permitted by the laws of the foreign jurisdiction.

(C)    A domestic unincorporated entity may become a domestic business corporation. If the organic law of a domestic unincorporated entity does not provide procedures for the approval of an entity conversion, the conversion must be adopted and approved, and the entity conversion effectuated, in the same manner as a merger of the unincorporated entity, and its interest holders are entitled to appraisal rights if appraisal rights are available upon any type of merger under the organic law of the unincorporated entity. If the organic law of a domestic unincorporated entity does not provide procedures for the approval of either an entity conversion or a merger, a plan of entity conversion must be adopted and approved, the entity conversion effectuated, and appraisal rights exercised, in accordance with the procedures in this article and Chapter 13. Without limiting the provisions of this subsection, a domestic unincorporated entity whose organic law does not provide procedures for the approval of an entity conversion is subject to subsection (E) and Section 33-9-420(7). For purposes of applying this article and Chapter 13:

(1)    the unincorporated entity, its interest holders, interests, and organic documents taken together, are considered to be a domestic business corporation, shareholders, shares, and articles of incorporation, respectively and vice versa, as the context may require; and

(2)    if the business and affairs of the unincorporated entity are managed by a group of persons that is not identical to the interest holders, that group is considered to be the board of directors.

(D)    A foreign unincorporated entity may become a domestic business corporation if the organic law of the foreign unincorporated entity authorizes it to become a corporation in another jurisdiction.

(E)    If a debt security, note or similar evidence of indebtedness for money borrowed, whether secured or unsecured, or a contract of any kind, issued, incurred, or executed by a domestic business corporation before the effective date of this article, applies to a merger of the corporation and the document does not refer to an entity conversion of the corporation, the provision is considered to apply to an entity conversion of the corporation until the time the provision is amended after that date.

(F)    As used in this article:

(1)    'converting entity' means the domestic business corporation or domestic unincorporated entity that adopts a plan of entity conversion or the foreign unincorporated entity converting to a domestic business corporation; and

(2)    'surviving entity' means the corporation or unincorporated entity as it continues in existence immediately after consummation of an entity conversion pursuant to this article.

Section 33-9-410.    (A)    A plan of entity conversion must include:

(1)    a statement of the type of unincorporated entity the surviving entity will be and, if it survives as a foreign unincorporated entity, its jurisdiction of organization;

(2)    the terms and conditions of the conversion;

(3)    the manner and basis of converting the shares of the domestic business corporation following its conversion into interests or other securities, obligations, rights to acquire interests or other securities, cash, other property, or any combination of them; and

(4)    the full text, in effect immediately following the conversion, of the organic documents of the surviving entity.

(B)    The plan of entity conversion also may provide that the plan be amended before filing articles of entity conversion, except that after approval of the plan by the shareholders, the plan may not be amended to change:

(1)    the amount or kind of shares or other securities, interests, obligations, rights to acquire shares, other securities or interests, cash, or other property to be received under the plan by the shareholders;

(2)    the organic documents in effect immediately following the conversion, except for changes permitted by a provision of the organic law of the surviving entity comparable to Section 33-10-102; or

(3)    other terms or conditions of the plan if the change would affect adversely a shareholder in a material respect.

Section 33-9-420.    In the case of an entity conversion of a domestic business corporation to a domestic or foreign unincorporated entity:

(1)    The plan of entity conversion must be adopted by the board of directors.

(2)    After adopting the plan of entity conversion, the board of directors shall submit the plan to the shareholders for their approval. The board of directors also shall transmit to the shareholders a recommendation that the shareholders approve the plan, unless the board of directors makes a determination that because of conflicts of interest or other special circumstances it does not make a recommendation, and then the board of directors shall transmit to the shareholders the basis for that determination.

(3)    The board of directors may condition its submission of the plan of entity conversion to the shareholders on any basis.

(4)    If the approval of the shareholders is to be given at a meeting, the corporation shall notify each shareholder, whether or not entitled to vote, of the meeting of shareholders at which the plan of entity conversion is to be submitted for approval. The notice must state that the purpose, or one of the purposes, of the meeting is to consider the plan and must contain or be accompanied by a copy or summary of the plan. The notice shall include or be accompanied by a copy of the organic documents as they will be in effect immediately after the entity conversion.

(5)    Unless the articles of incorporation, or the board of directors acting pursuant to item (3), require a greater vote or a greater number of votes to be present, approval of the plan of entity conversion requires the approval of each class or series of shares of the corporation voting as a separate voting group at a meeting at which a quorum of the voting group consisting of at least a majority of the votes entitled to be cast on the conversion by that voting group exists.

(6)    If a provision of the articles of incorporation, the bylaws, or an agreement to which a director or shareholder is a party, adopted or entered into before the effective date of this article, applies to a merger of the corporation and the document does not refer to an entity conversion of the corporation, the provision is considered to apply to an entity conversion of the corporation until the time as the provision is later amended.

(7)    If as a result of the conversion one or more shareholders of the corporation becomes subject to owner liability for the debts, obligations, or liabilities of another person or entity, approval of the plan of conversion requires the execution, by each shareholder, of a separate written consent to become subject to the owner liability.

Section 33-9-430.    (A)    After the conversion of a domestic business corporation to a domestic unincorporated entity is adopted and approved as required by this article, articles of entity conversion must be executed on behalf of the corporation by an officer or other duly authorized representative. The articles must:

(1)    set forth the name of the corporation immediately before the filing of the articles of entity conversion and the name to which the name of the corporation is to be changed, which name must satisfy the organic law of the surviving entity;

(2)    state the type of unincorporated entity that the surviving entity will be;

(3)    set forth a statement that the plan of entity conversion was duly approved by the shareholders in the manner required by this article and the articles of incorporation; and

(4)    if the surviving entity is a filing entity, contain all of the provisions required in its public organic document and other desired provisions that are permitted, or have attached a public organic document; except that, in either case, provisions that are not required to be included in a restated public organic document may be omitted.

(B)    After the conversion of a domestic unincorporated entity to a domestic business corporation is adopted and approved as required by the organic law of the unincorporated entity, articles of entity conversion must be executed on behalf of the unincorporated entity by an officer or other duly authorized representative. The articles must contain:

(1)    the name of the unincorporated entity immediately before the filing of the articles of entity conversion and the name to which the name of the unincorporated entity is to be changed, which name must satisfy the requirements of Section 33-4-101;

(2)    a statement that the plan of entity conversion was duly approved in accordance with the organic law of the unincorporated entity; and

(3)    all the provisions that Section 33-2-102(a) requires in articles of incorporation and other desired provisions that Section 33-2-102(b) permits to be included in articles of incorporation, or have attached articles of incorporation; except that, in either case, provisions that are not required to be included in restated articles of incorporation of a domestic business corporation may be omitted.

(C)    After the conversion of a foreign unincorporated entity to a domestic business corporation is authorized as required by the laws of the foreign jurisdiction, articles of entity conversion must be executed on behalf of the foreign unincorporated entity by an officer or other duly authorized representative. The articles must contain:

(1)    the name of the unincorporated entity immediately before the filing of the articles of entity conversion and the name to which the name of the unincorporated entity is to be changed, which name must satisfy the requirements of Section 33-4-101;

(2)    the jurisdiction under the laws of which the unincorporated entity was organized immediately before the filing of the articles of entity conversion and the date on which the unincorporated entity was organized in that jurisdiction;

(3)    a statement that the conversion of the unincorporated entity was duly approved in the manner required by its organic law; and

(4)    all the provisions that Section 33-2-102(a) requires in articles of incorporation and other desired provisions that Section 33-2-102(b) permits to be included in articles of incorporation, or have attached articles of incorporation; except that, in either case, provisions that are not required in restated articles of incorporation of a domestic business corporation may be omitted.

(D)    The articles of entity conversion must be delivered to the Secretary of State for filing, and must take effect as provided in Section 33-1-230. Articles of entity conversion filed under Section 33-9-430(A) or (B) may be combined with a required conversion filing under the organic law of the domestic unincorporated entity if the combined filing satisfies the requirements of both this section and the other organic law.

(E)    If the converting entity is a foreign unincorporated entity that is authorized to transact business in this State under a provision of law similar to Chapter 15, its certificate of authority or other type of foreign qualification must be cancelled automatically on the effective date of its conversion.

Section 33-9-440.    (A)    A domestic business corporation that has adopted and approved, in the manner required by this article, a plan of entity conversion providing for the corporation to be converted to a foreign unincorporated entity, it must have articles of charter surrender executed on its behalf by an officer or other duly authorized representative. The articles of charter surrender must contain:

(1)    the name of the corporation;

(2)    a statement that the articles of charter surrender are being filed in connection with the conversion of the corporation to a foreign unincorporated entity;

(3)    a statement that the conversion was duly approved by the shareholders in the manner required by this article and the articles of incorporation;

(4)    the jurisdiction in which the surviving entity will be organized; and

(5)    if the surviving entity is a nonfiling entity, the address of its executive office immediately after the conversion.

(B)    The articles of charter surrender must be delivered by the corporation to the Secretary of State for filing. The articles of charter surrender take effect as provided in Section 33-1-230.

Section 33-9-450.    (A)    When a conversion pursuant to this article becomes effective:

(1)    the title to all real and personal property, both tangible and intangible, of the converting entity remains in the surviving entity without reversion or impairment;

(2)    the liabilities of the converting entity remain the liabilities of the surviving entity;

(3)    an action or proceeding pending against the converting entity continues against the surviving entity as if the conversion had not occurred;

(4)    in the case of a surviving entity that is a filing entity, its articles of incorporation or public organic document and its private organic document become effective;

(5)    in the case of a surviving entity that is a nonfiling entity, its private organic document becomes effective;

(6)    the shares or interests of the converting entity are reclassified into shares, interests, other securities, obligations, rights to acquire shares, interests or other securities, or into cash or other property in accordance with the plan of conversion; and the shareholders or interest holders of the converting entity are entitled only to the rights provided to them under the terms of the conversion and to any appraisal rights they may have under the organic law of the converting entity; and

(7)    the surviving entity is deemed to:

(a)    be incorporated or organized under and subject to the organic law of the converting entity for all purposes;

(b)    be the same corporation or unincorporated entity without interruption as the converting entity; and

(c)    have been incorporated or otherwise organized on the date that the converting entity was originally incorporated or organized.

(B)    When a conversion of a domestic business corporation to a foreign unincorporated entity becomes effective, the surviving entity is considered to:

(1)    appoint the Secretary of State as its agent for service of process in a proceeding to enforce the rights of shareholders who exercise appraisal rights in connection with the conversion; and

(2)    agree that it will promptly pay an amount to which the shareholders are entitled pursuant to Chapter 13.

(C)    A shareholder who becomes subject to owner liability for some or all of the debts, obligations, or liabilities of the surviving entity has owner liability only for those debts, obligations, or liabilities of the surviving entity that arise after the effective time of the articles of entity conversion.

(D)    The owner liability of an interest holder in an unincorporated entity that converts to a domestic business corporation is as follows:

(1)    The conversion does not discharge any owner liability under the organic law of the unincorporated entity to the extent the owner liability arose before the effective time of the articles of entity conversion.

(2) The interest holder does not have owner liability under the organic law of the unincorporated entity for any debt, obligation, or liability of the corporation that arises after the effective time of the articles of entity conversion.

(3)    The provisions of the organic law of the unincorporated entity continue to apply to the collection or discharge of owner liability preserved by item (1), as if the conversion had not occurred.

(4) The interest holder has whatever rights of contribution from other interest holders are provided by the organic law of the unincorporated entity with respect to owner liability preserved by item (1), as if the conversion had not occurred.

Section 33-9-460.    (A)    Unless otherwise provided in a plan of entity conversion of a domestic business corporation, after the plan has been adopted and approved as required by this article, it may be abandoned by the board of directors without action by the shareholders and at any time before the entity conversion has become effective.

(B)    If an entity conversion is abandoned after articles of entity conversion or articles of charter surrender are filed with the Secretary of State but before the entity conversion is effective, a statement that the entity conversion has been abandoned in accordance with this section, executed by an officer or other duly authorized representative, must be delivered to the Secretary of State for filing before the effective date of the entity conversion. Upon filing, the statement takes effect and the entity conversion is considered abandoned and does not become effective."

SECTION    2.    Section 33-1-220(a) of the 1976 Code is amended by adding an appropriately numbered item to read:

"( )    Any document required to be

filed in connection with a

corporate domestication

or conversion                                                $10.00."

SECTION    3.    Section 33-1-400 of the 1976 Code, as last amended by Act 371 of 2000, is further amended to read:

"Section 33-1-400.    As used in Chapters 1 through 19 of this title:

(1)    'Agreement' includes a valid agreement, written or oral, of the shareholders or between any of the shareholders and the corporation as to the affairs of the corporation and the conduct of its business.    The bylaws of a corporation are an agreement.

(2)    'Articles of incorporation' includes amended and restated articles of incorporation and articles of merger means the original articles of incorporation, all amendments to them, and other documents filed with the Secretary of State in connection with a domestic business corporation, except as filed pursuant to Section 33-16-220. If a filed document restates the articles in their entirety, the articles do not include previously filed documents.

(3)    'Authorized shares' means the shares of all classes a domestic or foreign corporation is authorized to issue.

(4)    'Corporation', or 'domestic corporation', or 'domestic business corporation' means a corporation for profit, which is not a foreign corporation, incorporated pursuant or subject to the provisions of Chapters 1 through 20 of this title. 'Corporation', or 'domestic corporation', or 'domestic business corporation' also may include a 'nonprofit' corporation to the extent permitted by the provisions of Section 33-20-103.

(5)    'Conspicuous' means written so that a reasonable person against whom the writing is to operate should notice it. For example, printing in italics, boldface, or contrasting color, or typing in capitals or underlined is conspicuous.

(6)    'Deliver' includes mail.

(7)    'Distribution' means a direct or indirect transfer of money or other property, except its own shares, or incurring of indebtedness by a corporation to or for the benefit of its shareholders in respect to its shares. A distribution may be in the form of a declaration or payment of a dividend, a purchase, redemption, or other acquisition of shares, a distribution of indebtedness, or other distribution.

(7A)    'Domestic unincorporated entity' means an unincorporated entity whose internal affairs are governed by the laws of this State.

(8)    'Effective date of notice' is defined in Section 33-1-410.

(9)    'Electronic transmission' or 'electronically transmitted' means a process of communication not directly involving the physical transfer of paper that is suitable for the retention, retrieval, and reproduction of information by the recipient.

(9A)    'Eligible entity' means a domestic or foreign unincorporated entity or a domestic or foreign nonprofit corporation.

(9B)    'Eligible interests' means interests or memberships.

(10)    'Employee' includes an officer but not a director, unless a director accepts duties that make him also an employee.

(11)    'Entity' includes a domestic corporation and foreign business corporation; domestic and foreign not-for-profit nonprofit corporation; profit and not-for-profit unincorporated association; business trust, estate, partnership, trust, and two or more persons having a joint or common economic interest; domestic and foreign unincorporated entity; and state, United States, and foreign government.

(11A)    'Filing entity' means an unincorporated entity that is created by filing a public organic document.

(12)    'Foreign corporation' or foreign business corporation means a corporation for profit incorporated pursuant to a law other than the law of this State and which would be a business corporation if incorporated pursuant to the laws of this State.

(12A)    'Foreign nonprofit corporation' means a corporation incorporated under a law other than the law of this State, which would be a nonprofit corporation if incorporated under the laws of this State.

(12B)    'Foreign unincorporated entity' means an unincorporated entity whose internal affairs are governed by an organic law of a jurisdiction other than this State.

(13)    'Governmental subdivision' includes authority, county, district, and municipality.

(14)    'Includes' denotes a partial definition.

(15)    'Individual' includes the estate of an incompetent or deceased individual means a natural person.

(15A)    'Interest' means either or both of the following rights under the organic law of an unincorporated entity:

(i)    the right to receive distributions from the entity either in the ordinary course or upon liquidation; or

(ii)    the right to receive notice or vote on issues involving its internal affairs, other than as an agent, assignee, proxy, or person responsible for managing its business and affairs.

(16)    'Means' denotes an exhaustive definition.

(16A)    'Membership' means the rights of a member in a domestic or foreign nonprofit corporation.

(16B)    'Nonfiling entity' means an unincorporated entity that is not created by filing a public organic document.

(16C)    'Nonprofit corporation' or 'domestic nonprofit corporation' means a corporation incorporated under the laws of this State and subject to the provisions of the Nonprofit Corporation Act.

(17)    'Notice' is defined in Section 33-1-410.

(17A)    'Organic document' means a public organic document or a private organic document.

(17B)    'Organic law' means the statute governing the internal affairs of a domestic or foreign business or nonprofit corporation or unincorporated entity.

(17C)    'Owner liability' means personal liability for a debt, obligation, or liability of a domestic or foreign business or nonprofit corporation or unincorporated entity that is imposed on a person:

(i)    solely by reason of the person's status as a shareholder, member, or interest holder; or

(ii)    by the articles of incorporation, bylaws, or an organic document pursuant to a provision of the organic law authorizing the articles of incorporation, bylaws, or an organic document to make one or more specified shareholders, members, or interest holders liable in their capacity as shareholders, members, or interest holders for all or specified debts, obligations, or liabilities of the entity.

(18)    'Person' includes individual and entity.

(19)    'Principal office' means the in-state or out-of-state location of the principal executive offices of a domestic or foreign corporation as designated in the annual report.

(19A)    'Private organic document' means a document, other than the public organic document, that determines the internal governance of an unincorporated entity. If a private organic document has been amended or restated, the term means the private organic document as last amended or restated.

(19B)    'Public organic document' means the document that is filed of public record to create an unincorporated entity. If a public organic document has been amended or restated, the term means the public organic document as last amended or restated.

(20)    'Proceeding' includes civil suit and criminal, administrative, and investigatory action, and formal or informal arbitration.

(21)    'Record date' means the date established by Chapter 6 or 7 on which a corporation determines the identity of its shareholders for purposes of Chapters 1 through 20 of this title.

(22)    'Secretary' means the corporate officer to whom the board of directors has delegated responsibility pursuant to Section 33-8-400(c) for custody of the minutes of the meetings of the board of directors and of the shareholders and for authenticating records of the corporation.

(23)    'Shares' means the units into which the proprietary interests in a corporation are divided.

(24)    'Shareholder' means the person in whose name shares are registered in the records of a corporation or the beneficial owner of shares to the extent rights granted by a nominee certificate are on file with a corporation. Creditors of a corporation may have the rights of a shareholder as allowed in the corporation's articles of incorporation.

(25)    'State' includes a state, commonwealth, territory, and insular possession, and their agencies and governmental subdivisions, of the United States and the District of Columbia.

(26)    'Subscriber' means a person who subscribes for shares in a corporation before or after incorporation.

(27)    'United States' includes district, authority, bureau, commission, department, and other agency of the United States.

(28)    'Voting group' means all shares of one or more classes or series that may vote and be counted together collectively on a matter at a meeting of shareholders pursuant to the articles of incorporation or Chapters 1 through 20 of this title. Shares entitled to vote generally on the matter are for that purpose a single voting group.

(29)    'Public corporation' means a corporation that has a class of equity securities registered with a federal agency pursuant to the Securities Exchange Act of 1934 or a successor act to the Securities Exchange Act of 1934."

SECTION    2.    This act takes effect upon approval by the Governor.