2017 -- H 5646

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LC001758

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     STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2017

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A N   A C T

RELATING TO CORPORATIONS, ASSOCIATIONS, AND PARTNERSHIPS -- RHODE

ISLAND BUSINESS CORPORATION ACT

     Introduced By: Representatives Marszalkowski, McLaughlin, and Quattrocchi

     Date Introduced: March 01, 2017

     Referred To: House Corporations

     It is enacted by the General Assembly as follows:

     SECTION 1. Sections 7-1.2-1008, 7-1.2-1309 and 7-1.2-1413 of the General Laws in

Chapter 7-1.2 entitled "Rhode Island Business Corporation Act" are hereby amended to read as

follows:

     7-1.2-1008. Conversion of a domestic corporation to other entities.

     (a) A corporation of this state may, upon the authorization of such conversion in

accordance with this section, convert to a limited liability company, business trust or association,

real estate investment trust, common-law trust, or any other unincorporated business or entity,

including a partnership (whether general or limited, including a registered limited liability

partnership) or a foreign corporation.

     (b) The board of directors of the corporation that desires to convert under this section

shall adopt a resolution approving such conversion, specifying the type of entity into which the

corporation shall be converted and recommending the approval of such conversion by the

stockholders of the corporation. Such resolution shall be submitted to the stockholders of the

corporation at an annual or special meeting. Due notice of the time and purpose of the meeting

shall be mailed to each holder of stock, whether voting or nonvoting, of the corporation at the

address of the stockholder, as it appears on the records of the corporation, at least twenty (20)

days prior to the date of the meeting. At the meeting, the resolution shall be considered and a vote

taken for its adoption or rejection. If all outstanding shares of stock of the corporation, whether

voting or nonvoting, shall be voted for the adoption of the resolution, the conversion shall be

authorized.

     (c) If a corporation shall convert in accordance with this section to another entity

organized, formed, or created under the laws of a jurisdiction other than the state of Rhode Island

or to a Rhode Island unincorporated "other entity", upon payment of all fees and taxes by the

corporation, as evidenced by an appropriate certificate of good standing issued by the Rhode

Island division of taxation a certified public accountant (CPA) certifying, in writing, that no

outstanding taxes and/or fees are due to the Rhode Island division of taxation, the corporation

shall file with the secretary of state a certificate of conversion to non-Rhode Island entity,

executed in accordance with § 7-1.2-105, that certifies:

     (1) The name of the corporation, and if it has been changed, the name under which it was

originally incorporated;

     (2) The date of filing of its original articles of incorporation with the secretary of state;

     (3) The name and jurisdiction of the entity and type of entity to which the corporation

shall be converted;

     (4) That the conversion has been approved in accordance with the provisions of this

section;

     (5) The agreement of the corporation that it may be served with process in the state of

Rhode Island in any action, suit, or proceeding for enforcement of any obligation of the

corporation arising while it was a corporation of this state, and that it irrevocably appoints the

secretary of state as its agent to accept service of process in any such action, suit, or proceeding;

and

     (6) The address to which a copy of the process referred to in subsection (c)(5) of this

section shall be mailed to it by the secretary of state. In the event of such service upon the

secretary of state in accordance with subsection (c)(5) of this section, the secretary of state shall

forthwith notify such corporation that has converted out of the state of Rhode Island by letter,

certified mail, return receipt requested, directed to such corporation that has converted out of the

state of Rhode Island at the address so specified, unless such corporation shall have designated in

writing to the secretary of state a different address for such purpose, in which case it shall be

mailed to the last address designated. Such letter shall enclose a copy of the process and any other

papers served on the secretary of state pursuant to this subsection. It shall be the duty of the

plaintiff in the event of such service to serve process and any other papers in duplicate; to notify

the secretary of state that service is being affected pursuant to this subsection; and to pay the

secretary of state the sum of fifteen dollars ($15.00) for the use of the state, which sum shall be

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taxed as part of the costs in the proceeding, if the plaintiff shall prevail therein. The secretary of

state shall maintain an alphabetical record of any such service setting forth the name of the

plaintiff and the defendant; the title, docket number and nature of the proceeding in which process

has been served; the fact that service has been effected pursuant to this subsection; the return date

thereof; and the day and hour service was made. The secretary of state shall not be required to

retain such information longer than five (5) years from receipt of the service of process.

     (d) Upon the filing in the office of the secretary of state of a certificate of conversion to

non-Rhode Island entity in accordance with subsection (c) of this section, or upon the future

effective date or time of the certificate of conversion to non-Rhode Island entity and payment to

the secretary of state of all fees prescribed under this title, the secretary of state shall certify that

the corporation has filed all documents and paid all fees required by this title, and thereupon the

corporation shall cease to exist as a corporation of this state at the time the certificate of

conversion becomes effective in accordance with § 7-1.2-105. Such certificate of the secretary of

state shall be prima facie evidence of the conversion by such corporation out of the state of Rhode

Island.

     (e) The conversion of a corporation out of the state of Rhode Island in accordance with

this section and the resulting cessation of its existence as a corporation of this state pursuant to a

certificate of conversion to non-Rhode Island entity shall not be deemed to affect any obligations

or liabilities of the corporation incurred prior to such conversion or the personal liability of any

person incurred prior to such conversion, nor shall it be deemed to affect the choice of law

applicable to the corporation with respect to matters arising prior to such conversion.

     (f) Unless otherwise provided in a resolution of conversion adopted in accordance with

this section, the converting corporation shall not be required to wind up its affairs or pay its

liabilities and distribute its assets, and the conversion shall not constitute a dissolution of such

corporation.

     (g) In connection with a conversion of a domestic corporation to another entity pursuant

to this section, shares of stock of the corporation of this state that is to be converted may be

exchanged for or converted into cash, property, rights or securities of, or interests in, the entity to

which the corporation of this state is being converted or, in addition to or in lieu thereof, may be

exchanged for or converted into cash, property, shares of stock, rights or securities of, or interests

in, another domestic corporation or other entity or may be cancelled.

     (h) When a corporation has been converted to another entity or business form pursuant to

this section, the other entity or business form shall, for all purposes of the laws of the state of

Rhode Island, be deemed to be the same entity as the corporation. When any conversion shall

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have become effective under this section, for all purposes of the laws of the state of Rhode Island,

all of the rights, privileges and powers of the corporation that has converted, and all property,

real, personal and mixed, and all debts due to such corporation, as well as all other things and

causes of action belonging to such corporation, shall remain vested in the other entity or business

form to which such corporation has converted and shall be the property of such other entity or

business form, and the title to any real property vested by deed or otherwise in such corporation

shall not revert to such corporation or be in any way impaired by reason of this chapter; but all

rights of creditors and all liens upon any property of such corporation shall be preserved

unimpaired, and all debts, liabilities and duties of the corporation that has converted shall remain

attached to the other entity or business form to which such corporation has converted, and may be

enforced against it to the same extent as if said debts, liabilities and duties had originally been

incurred or contracted by it in its capacity as such other entity or business form. The rights,

privileges, powers and interest in property of the corporation that has converted, as well as the

debts, liabilities and duties of such corporation, shall not be deemed, as a consequence of the

conversion, to have been transferred to the other entity or business form to which such

corporation has converted for any purposes of the laws of the state of Rhode Island.

     (i) No vote of stockholders of a corporation shall be necessary to authorize a conversion

if no shares of the stock of such corporation shall have been issued prior to the adopting by the

board of directors of the resolution approving the conversion.

     7-1.2-1309. Filing of articles of dissolution.

     (a) The articles of dissolution are delivered to the secretary of state. If the secretary of

state finds that the articles of dissolution conform to law, the secretary of state shall, when all fees

and taxes have been paid, as evidenced by an appropriate certificate of good standing issued by

the Rhode Island division of taxation a certified public accountant (CPA) certifying, in writing,

that no outstanding taxes and/or fees are due to the Rhode Island division of taxation:

     (1) Endorse on the original the word "Filed," and the month, day, and year of the filing.

     (2) File the original in his or her office.

     (3) Issue a certificate of dissolution.

     (b) The certificate of dissolution is delivered to the representative of the dissolved

corporation. Upon the issuance of the certificate of dissolution the existence of the corporation

ceases, except for the purpose of suits, other proceedings, and appropriate corporate action by

shareholders, directors, and officers as provided in this chapter.

     7-1.2-1413. Filing of application for withdrawal.

     (a) An original application for withdrawal must be delivered to the secretary of state. If

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the secretary of state finds that the application conforms to the provisions of this chapter, the

secretary of state shall, when all fees and taxes have been paid, as evidenced by an appropriate

certificate of good standing issued by the Rhode Island division of taxation a certified public

accountant (CPA) certifying, in writing, that no outstanding taxes and/or fees are due to the

Rhode Island division of taxation:

     (1) Endorse on the original the word "Filed," and the month, day, and year of the filing.

     (2) File the original in his or her office.

     (3) Issue a certificate of withdrawal.

     (b) The secretary of state shall deliver the certificate of withdrawal to the corporation or

its representative. Upon the issuance of the certificate of withdrawal, the authority of the

corporation to transact business in this state ceases.

     SECTION 2. Sections 7-13-8.2 and 7-13-10 of the General Laws in Chapter 7-13 entitled

"Limited Partnerships" are hereby amended to read as follows:

     7-13-8.2. Approval of conversion of a limited partnership.

     (a) A domestic limited partnership may convert to a corporation, a business trust or

association, a real estate investment trust, a common-law trust, or any other unincorporated

business or entity including a partnership, whether general or limited (including a registered

limited liability partnership) or a limited liability company, organized, formed, or created under

the laws of the state of Rhode Island, upon the authorization of that conversion in accordance

with this section. If the partnership agreement specified the manner of authorizing a conversion of

the limited partnership, the conversion shall be authorized as specified in the partnership

agreement. If the partnership agreement does not specify the manner of authorizing a conversion

of the limited partnership and does not prohibit a conversion of the limited partnership, the

conversion shall be authorized in the same manner as is specified in the partnership agreement for

authorizing a merger or consolidation that involves the limited partnership as a constituent party

to the merger or consolidation. If the partnership agreement does not specify the manner of

authorizing a conversion of the limited partnership or a merger or consolidation that involved the

limited partnership as a constituent party and does not prohibit a conversion of the limited

partnership, the conversion shall be authorized by the approval (1) by all general partners, and (2)

by the limited partners or, if there is more than one class or group of limited partners, then by

each class or group of limited partners, in either case, by limited partners who own more than

fifty percent (50%) of the then current percentage or other interest in the profits of the domestic

limited partnership owned by all of the limited partners or by the limited partners in each class or

group, as appropriate.

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     (b) If a limited partnership shall convert in accordance with this section to another entity

or business form organized, formed, or created under the laws of a jurisdiction other than the state

of Rhode Island or to a Rhode Island unincorporated "other entity", a certificate of conversion to

a non-Rhode Island entity shall be filed in the office of the secretary of state. The certificate of

conversion to a non-Rhode Island entity shall state:

     (1) The name of the limited partnership and, if it has been changed, the name under

which its certificate of formation was originally filed;

     (2) The date of filing of its original certificate of formation with the secretary of state;

     (3) The jurisdiction in which the entity or business form, to which the limited partnership

shall be converted, is organized, formed, or created, and the name and type of such entity or

business form;

     (4) The future effective date or time, which shall be a date or time certain, of the

conversion if it is not to be effective upon the filing of the certificate of conversion to a non-

Rhode Island entity;

     (5) That the conversion has been approved in accordance with this section; and

     (6) The agreement of the limited partnership that it may be served with process in the

state of Rhode Island in any action, suit, or proceeding for enforcement of any obligation to the

limited partnership arising while it was a limited partnership of the state of Rhode Island, and that

it irrevocably appoints the secretary of state as its agent to accept service of process in any such

action, suit, or proceeding.

     (c) Upon the filing in the office of the secretary of state of the certificate of conversion to

a non-Rhode Island entity or upon the future effective date or time of the certificate of conversion

to a non-Rhode Island entity and upon payment of all fees due by the limited partnership, as

evidenced by an appropriate certificate of good standing issued by the Rhode Island division of

taxation a certified public accountant (CPA) certifying, in writing, that no outstanding taxes

and/or fees are due to the Rhode Island division of taxation, the secretary of state shall certify that

the limited partnership has filed all documents and paid all fees required by this chapter, and

thereupon the limited partnership shall cease to exist as a limited partnership of the state of Rhode

Island. Such certificate of the secretary of state shall be prima facie evidence of the conversion by

such limited partnership out of the state of Rhode Island.

     (d) The conversion of a limited partnership out of the state of Rhode Island in accordance

with this section and the resulting cessation of its existence as a limited partnership of the state of

Rhode Island pursuant to a certificate of conversion to a non-Rhode Island entity shall not be

deemed to affect any obligations or liabilities of the limited partnership incurred prior to such

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conversion or the personal liability of any person incurred prior to such conversion, nor shall it be

deemed to affect the choice of laws applicable to the limited partnership with respect to matters

arising prior to such conversion.

     (e) When a limited partnership has been converted to another entity or business form

pursuant to this section, the other entity or business form shall, for all purposes of the laws of the

state of Rhode Island, be deemed to be the same entity as the limited partnership. When any

conversion shall have become effective under this section, for all purposes of the laws of the state

of Rhode Island, all of the rights, privileges, and powers of the limited partnership that has

converted, and all property, real, personal, and mixed, and all such debts due to such limited

partnership, as well as all other things and causes of action belonging to such limited partnership,

shall remain vested in the other entity or business form to which such limited partnership has

converted and shall be the property of such other entity or business form, and the title to any real

property vested by deed or otherwise in such limited partnership shall not revert to such limited

partnership or be in any way impaired by reason of this chapter, but all rights of creditors and all

liens upon any property of such limited partnership shall be preserved unimpaired, and all debts,

liabilities, and duties of the limited partnership that has converted shall remain attached to the

other entity or business form to which such limited partnership has converted, and may be

enforced against it to the same extent as if said debts, liabilities, and duties had originally been

incurred or contracted by it in its capacity as such other entity or business form. The rights,

privileges, powers, and interests in property of the limited partnership that has converted, as well

as the debts, liabilities and duties of such limited partnership, shall not be deemed, as a

consequence of the conversion, to have been transferred to the other entity or business form to

which such limited partnership has converted for any purpose of the laws of the state of Rhode

Island.

     7-13-10. Cancellation of certificate.

     A certificate of limited partnership is cancelled upon the dissolution and the

commencement of winding up of the partnership or at any other time there are no limited

partners, or upon the conversion of a limited partnership to a limited liability company. When all

fees and taxes have been paid to the tax administrator, as evidenced by an appropriate certificate

of good standing issued by the Rhode Island division of taxation a certified public accountant

(CPA) certifying, in writing, that no outstanding taxes and/or fees are due to the Rhode Island

division of taxation, a certificate of cancellation shall be filed in the office of the secretary of state

and state:

     (1) The name of the limited partnership;

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     (2) The date of filing of its certificate of limited partnership or certificate of conversion

from a limited partnership to a limited liability company, as the case may be;

     (3) The reason for filing the certificate of cancellation;

     (4) The effective date (which shall be a date certain) of cancellation if it is not to be

effective upon the filing of the certificate; and

     (5) Any other information the general partners filing the certificate determine.

     SECTION 3. Section 7-16-5.2 of the General Laws in Chapter 7-16 entitled "The Rhode

Island Limited Liability Company Act" is hereby amended to read as follows:

     7-16-5.2. Approval of conversion of a limited liability company.

     (a) A domestic limited liability company may convert to a corporation, a business trust,

or association, a real estate investment trust, a common law trust, a sole proprietorship, or any

other unincorporated business or entity including a partnership, (whether general or limited,

including a registered limited liability partnership), or a foreign limited liability company upon

the authorization of the conversion in accordance with this section.

     (b) If the limited liability company agreement specified the manner of authorizing a

conversion of the limited liability company, the conversion shall be authorized as specified in the

limited liability company agreement. If the limited liability company agreement does not specify

the manner of authorizing a conversion of the limited liability company and does not prohibit a

conversion of the limited liability company, the conversion shall be authorized in the same

manner as is specified in the limited liability company agreement for authorizing a merger or

consolidation that involves the limited liability company as a constituent party to the merger or

consolidation. If the limited liability company agreement does not specify the manner of

authorizing a conversion of the limited liability company or a merger or consolidate that involves

the limited liability company as a constituent party and does not prohibit a conversion of the

limited liability company, the conversion shall be authorized by the approval by the members or,

if there is more than one class or group of members, then by each class or group of members, in

either case, by members who own more than fifty percent (50%) of the then-current percentage or

other interest in the profits of the domestic limited liability company owned by all of the members

or by the members in each class or group, as appropriate.

     (c) Unless otherwise agreed, the conversion of a domestic limited liability company to

another entity or business form pursuant to this section shall not require such limited liability

company to wind up its affairs under § 7-16-45 or pay its liabilities and distribute its assets under

§ 7-16-46, and the conversion shall not constitute a dissolution of such limited liability company.

When a limited liability company has converted to another entity or business form pursuant to

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this section, for all purposes of the laws of the state of Rhode Island, the other entity or business

form shall be deemed to be the same entity as the converting limited liability company and

conversion shall constitute a continuation of the existence of the limited liability company in the

form of such other entity or business form.

     (d) In connection with a conversion of a domestic limited liability company to another

entity or business form pursuant to this section, rights or securities of or interests in the domestic

limited liability company that is to be converted may be exchanged for or converted into cash,

property, rights or securities of or interests in the entity or business form into which the domestic

limited liability company is being converted or, in addition to or in lieu thereof, may be

exchanged for or converted into cash, property, rights or securities of or interests in another entity

or business form or may be cancelled.

     (e) If a limited liability company shall convert in accordance with this section to another

entity or business form organized, formed, or created under the laws of a jurisdiction other than

the state of Rhode Island or to a Rhode Island unincorporated "other entity", a certificate of

conversion to non-Rhode Island entity shall be filed in the office of the secretary of state. The

certificate of conversion to non-Rhode Island entity shall state:

     (1) The name of the limited liability company and, if it has been changed, the name under

which its certificate of formation was originally filed;

     (2) The date of filing of its original certificate of formation with the secretary of state;

     (3) The jurisdiction in which the entity or business form, to which the limited liability

company shall be converted, is organized, formed, or created, and the name and type of such

entity or business form;

     (4) The future effective date or time (which shall be a date or time certain) of the

conversion if it is not to be effective upon the filing of the certificate of conversion to non-Rhode

Island entity;

     (5) That the conversion has been approved in accordance with this section;

     (6) The agreement of the limited liability company that it may be served with process in

the state of Rhode Island in any action, suit, or proceeding for enforcement of any obligation to

the limited liability company arising while it was a limited liability company of the state of Rhode

Island, and that it irrevocably appoints the secretary of state as its agent to accept service of

process in any such action, suit, or proceeding;

     (f) Upon the filing in the office of the secretary of state of the certificate of conversion to

non-Rhode Island entity or upon the future effective date or time of the certificate of conversion

to non-Rhode Island entity and upon payment of all fees due by the limited liability company, as

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evidenced by an appropriate certificate of good standing issued by the Rhode Island division of

taxation a certified public accountant (CPA) certifying, in writing, that no outstanding taxes

and/or fees are due to the Rhode Island division of taxation, the secretary of state shall certify that

the limited liability company has filed all documents and paid all fees required by this chapter,

and thereupon the limited liability company shall cease to exist as a limited liability company of

the state of Rhode Island. Such certificate of the secretary of state shall be prima facie evidence of

the conversion by such limited liability company out of the state of Rhode Island.

     (g) The conversion of a limited liability company out of the state of Rhode Island in

accordance with this section and the resulting cessation of its existence as a limited liability

company of the state of Rhode Island pursuant to a certificate of conversion to non-Rhode Island

entity shall not be deemed to affect any obligations or liabilities of the limited liability company

incurred prior to such conversion or the personal liability of any person incurred prior to such

conversion, nor shall it be deemed to affect the choice of laws applicable to the limited liability

company with respect to matters arising prior to such conversion.

     (h) When a limited liability company has been converted to another entity or business

form pursuant to this section, the other entity or business form shall, for all purposes of the laws

of the state of Rhode Island, be deemed to be the same entity as the limited liability company.

When any conversion shall have become effective under this section, for all purposes of the laws

of the state of Rhode Island, all of the rights, privileges, and powers of the limited liability

company that has converted, and all property, real, personal, and mixed, and all such debts due to

such limited liability company, as well as all other things and causes of action belonging to such

limited liability company, shall remain vested in the other entity or business form to which such

limited liability company has converted and shall be the property of such other entity or business

form, and the title to any real property vested by deed or otherwise in such limited liability

company shall not revert to such limited liability company or be in any way impaired by reason

of this chapter; but all rights of creditors and all liens upon any property of such limited liability

company shall be preserved unimpaired, and all debts, liabilities, and duties of the limited

liability company that has converted shall remain attached to the other entity or business form to

which such limited liability company has converted, and may be enforced against it to the same

extent as if said debts, liabilities, and duties had originally been incurred or contracted by it in its

capacity as such other entity or business form. The rights, privileges, powers, and interests in

property of the limited liability company that has converted, as well as the debts, liabilities, and

duties of such limited liability company, shall not be deemed, as a consequence of the conversion,

to have been transferred to the other entity or business form to which such limited liability

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company has converted for any purpose of the laws of the state of Rhode Island.

     SECTION 4. This act shall take effect upon passage.

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LC001758

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N   A C T

RELATING TO CORPORATIONS, ASSOCIATIONS, AND PARTNERSHIPS -- RHODE

ISLAND BUSINESS CORPORATION ACT

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     This act would substitute a certification of a certified public accountant (CPA) that a

corporation, limited partnership or limited liability company owes no taxes or fees to the division

of taxation in place of the need to obtain a certificate of good standing from the division for

conversions, dissolutions, withdrawals, or cancellations.

     This act would take effect upon passage.

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LC001758

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