Chapter 094

2007 -- H 6249

Enacted 06/27/07

 

A N A C T

RELATING TO CORPORATIONS, ASSOCIATIONS, PARTNERSHIPS -- CONVERSIONS

          

     Introduced By: Representatives Mattiello, DeSimone, Brien, Giannini, and Ucci

     Date Introduced: April 04, 2007

 

It is enacted by the General Assembly as follows:

 

     SECTION 1. Section 7-1.2-106 of the General Laws in Chapter 7-1.2 entitled "Rhode

Island Business Corporation Act" is hereby amended to read as follows:

 

     7-1.2-106. Definitions. -- As used in this chapter:

      (1) "Articles of incorporation" means the original or restated articles of incorporation and

all of their amendments including agreements of merger.

      (2) "Authorized shares" means the shares of all classes which the corporation is

authorized to issue.

      (3) "Corporation" or "domestic corporation" means a corporation for profit subject to the

provisions of this chapter, except a foreign corporation.

      (4) "Electronic transmission" means any form of communication, not directly involving

the physical transmission of paper, that creates a record that may be retained, retrieved, and

reviewed by a recipient thereof, and that may be directly reproduced in paper form by such a

recipient through an automated process.

      (5) "Employee" includes officers but not directors. A director may accept duties which

also make him or her an employee.

      (6) "Foreign corporation" means a corporation for profit organized under laws other than

the laws of this state for a purpose or purposes for which a corporation may be organized under

this chapter.

      (7) "Individual" means a natural person.

      (8) "Insolvent" means the inability of a corporation to pay its debts as they become due

in the usual course of its business.

      (9) "Person" means an individual or an entity. An entity includes domestic and foreign

business corporation, domestic and foreign nonprofit corporation; estate; trust; domestic and

foreign unincorporated entity; and a state, the United States and a foreign government.

      (10) "Shares" means the units into which the proprietary interests in a corporation are

divided.

      (11) "Subscriber" means one who subscribes for shares in a corporation, whether before

or after incorporation.

      (12) "Shareholder" means one who is a holder of record of shares in a corporation.

     (13) "State" means the state of Rhode Island and Providence Plantations.

      (13) (14) The singular shall be construed to include the plural, the plural the singular,

and the masculine the feminine, when consistent with the intent of this chapter.

 

     SECTION 2. Chapter 7-1.2 of the General Laws entitled "Rhode Island Business

Corporation Act" is hereby amended by adding thereto the following sections:

 

     7-1.2-1007. Conversion of other entities to a domestic corporation. (a) As used in

this section, the term "other entity" means 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) Any other entity may convert to a corporation of this state by complying with

subsection (h) of this section and filing in the office of the secretary of state:

     (1) A certificate of conversion to corporation that has been executed in accordance with

subsection (i) of this section and filed in accordance with section 7-1.2-105; and

     (2) Articles of incorporation that have been executed, acknowledged and filed in

accordance with section 7-1.2-105.

     (c) The certificate of conversion to corporation shall state:

     (1) The date on which and jurisdiction where the other entity was first created,

incorporated, formed or otherwise came into being and, if it has changed, its jurisdiction

immediately prior to its conversion to a domestic corporation;

     (2) The name and type of the other entity immediately prior to the filing of the certificate

of conversion to corporation; and

     (3) The name of the corporation as set forth in its articles of incorporation filed in

accordance with subsection (b) of this section.

     (d) Upon the effective time of the certificate of conversion to corporation and the articles

of incorporation, the other entity shall be converted to a corporation of this state and the

corporation shall thereafter be subject to all of the provisions of this title, except that

notwithstanding subsection 7-1.2-105(d) the existence of the corporation shall be deemed to have

commenced on the date the other entity commenced its existence in the jurisdiction in which the

other entity was first created, formed, incorporated or otherwise came into being.

     (e) The conversion of any other entity to a corporation of this state shall not be deemed

to affect any obligations or liabilities of the other entity incurred prior to its conversion to a

corporation of this state or the personal liability of any person incurred prior to such conversion.

     (f) When an other entity has been converted to a corporation of this state pursuant to this

section, the corporation of this state shall, for all purposes of the laws of the state of Rhode

Island, be deemed to be the same entity as the converting other entity. 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 other entity that has converted, and all property,

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

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

which such other entity has converted and shall be the property of such domestic corporation and

that title to any real property vested by deed or otherwise in such other entity shall not revert to

such other entity or be in any way impaired by reason of this chapter: but all rights of creditors

and all liens upon any property of such other entity shall be preserved unimpaired, and all debts,

liabilities and duties of the other entity that has converted shall remain attached to the corporation

of this state to which such other entity 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 a corporation of this state. The rights, privileges, powers and interests in property of

the other entity, as well as the debts, liabilities and duties of the other entity, shall not be deemed,

as a consequence of the conversion, to have been transferred to the domestic corporation to which

such other entity has converted for any purpose of the laws of the state of Rhode Island.

     (g) Unless otherwise agreed for all purposes of the laws of the state of Rhode Island or as

required under applicable non-Rhode Island law, the converting other entity shall not be required

to wind up its affairs or pay its liabilities and distribute its assets, and the conversion shall not be

deemed to constitute a dissolution of such other entity and shall constitute a continuation of the

existence of the converting other entity in the form of a corporation of this state.

     (h) Prior to filing a certificate of conversion to corporation with the office of the secretary

of state, the conversion shall be approved in the manner provided for by the document,

instrument, agreement or other writing, as the case may be, governing the internal affairs of the

other entity and the conduct of its business or by applicable law, as appropriate, and articles of

incorporation shall be approved by the same authorization required to approve the conversion.

     (i) The certificate of conversion to corporation shall be signed by any person who is

authorized to sign the certificate of conversion to corporation on behalf of the other entity.

     (j) In connection with a conversion hereunder, rights or securities of, or interests in, the

other entity which is to be converted to a corporation of this state may be exchanged for or

converted into cash, property, or shares of stock, rights or securities of such corporation of this

state or, in addition to or in lieu thereof, may be exchanged for or converted into cash, property,

or shares of stock, rights or securities of or interests in another domestic corporation or other

entity or may be cancelled.

 

     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 which 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,

the corporation shall file with the secretary of state a certificate of conversion executed in

accordance with section 7-1.2-105 which 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

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 section 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 which 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

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.

 

     SECTION 3. Sections 7-13-8.1 and 7-13-8.2 of the General Laws in Chapter 7-13

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

 

     7-13-8.1. Conversion of certain entities to a limited partnership. -- (a) As used in this

section, the term "other entity" means a corporation, business trust or association, a real estate

investment trust, a common-law trust, or any other unincorporated business, excluding or entity

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

registered limited liability partnership).

      (b) Any other entity may convert to a domestic limited partnership company by

complying with subsection (h) of this section and filing in the office of the secretary of state in

accordance with section 7-13-13:

      (1) A certificate of conversion to limited partnership that has been executed by one or

more authorized persons by one or more authorized persons in accordance with section 7-13-11;

and

      (2) A certificate of limited partnership that complies with section 7-13-8 and has been

executed by one or more authorized persons in accordance with section 7-13-11.

      (c) The certificate of conversion to a limited partnership shall state:

      (1) The date on which and jurisdiction where the other entity was first created, formed,

or otherwise came into being and, if it has changed, its jurisdiction immediately prior to its

conversion to a domestic limited partnership;

      (2) The name and type of the other entity immediately prior to the filing of the certificate

of conversion to limited partnership;

      (3) The name of the limited partnership as set forth in its certificate of limited

partnership filed in accordance with subsection (b) of this section; and

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

conversion to a limited partnership if it is not to be effective upon the filing of the certificate of

conversion to limited partnership and the certificate of limited partnership.

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

limited partnership and the certificate of formation or upon the future effective date or time of the

certificate of conversion to limited partnership and the certificate of limited partnership, the other

entity shall be converted into a domestic limited partnership and the limited partnership shall

thereafter be subject to all of the provisions of this chapter, except that, notwithstanding section

7-13-8, the existence of the limited partnership shall be deemed to have commenced on the date

the other entity commenced its existence in the jurisdiction in which the other entity was first

created, formed, or otherwise came into being.

      (e) The conversion of any other entity into a domestic limited partnership shall not be

deemed to affect any obligations or liabilities of the other entity incurred prior to its conversion to

a domestic limited partnership or the personal liability of any person incurred prior to the

conversion.

      (f) When any conversion becomes 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 other entity that

has converted, and all property, real, personal, and mixed, and all debts due to the other entity, as

well as all other things and causes of action belonging to the other entity, are vested in the

domestic limited partnership and are thereafter the property of the domestic limited partnership as

they were of the other entity that has converted, and the title to any real property vested by deed

or otherwise in the other entity shall not revert to such other entity or be in any way impaired by

reason of this chapter, but all rights of creditors and all liens upon any property of the other entity

shall be preserved unimpaired, and all debts, liabilities, and duties of the other entity that has

converted are attached to the domestic limited partnership and may be enforced against it to the

same extent as if those debts, liabilities, and duties were incurred or contracted by it.

      (g) Unless otherwise agreed, or as required under applicable non-Rhode Island law, the

converting other entity is not required to wind up its affairs or pay its liabilities and distribute its

assets, and the conversion shall not be deemed to constitute a dissolution of the other entity and

constitutes a continuation of the existence of the converting other entity in the form of a domestic

limited partnership.

      (h) Prior to filing a certificate of conversion to limited partnership with the office of the

secretary of state, the conversion shall be approved in the manner provided for by the document,

instrument, agreement, or other writing, as the case may be, governing the internal affairs of the

other entity and the conduct of its business or by applicable law, as appropriate, and a partnership

agreement shall be approved by the same authorization required to approve the conversion.

      (i) The provisions of this section shall not be construed to limit the accomplishment of a

change in the law governing, or the domicile of, another entity to the state of Rhode Island by any

other means provided for in a partnership agreement or other agreement or as otherwise permitted

by law, including by the amendment of a partnership agreement or other agreement.

 

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

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.

 

     SECTION 4. Sections 7-16-5.1 and 7-16-5.2 of the General Laws in Chapter 7-16

entitled "The Rhode Island Limited Liability Company Act" are hereby amended to read as

follows:

 

     7-16-5.1. Conversion of certain entities to a limited liability company. -- (a) As used

in this section, the term "other entity" means a corporation, a business trust, or association, a real

estate investment trust, a common-law trust, a sole proprietorship or any other unincorporated

business, excluding or entity including a partnership, (whether general or limited), (including a

registered limited liability partnership) or a foreign limited liability company.

      (b) Any other entity may convert to a domestic limited liability company by complying

with subsection (h) of this section and filing in the office of the secretary of state in accordance

with section 7-16-8 articles of organization that comply with section 7-16-6 and have been

executed by one or more authorized persons in accordance with section 7-16-7, accompanied by a

certificate of conversion to a limited liability company duly executed by one or more persons

authorized to act on behalf of the other entity and one or more persons authorized to sign a

certificate of conversion on behalf of the limited liability company.

      (c) The certificate of conversion to limited liability company shall state:

      (1) The date on which and jurisdiction where the other entity was first created, formed,

or otherwise came into being and, if it has changed, its jurisdiction immediately prior to its

conversion to a domestic limited liability company;

      (2) The name of the other entity immediately prior to the filing of the certificate of

conversion to limited liability company;

      (3) The name of the limited liability company as set forth in its articles of organization

filed in accordance with subsection (b) of this section; and

      (4) The future effective date or time (which is a date or time certain) of the conversion to

a limited liability company if it is not to be effective upon the filing of the certificate of

conversion to limited liability company and the articles of organization.

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

limited liability company and the articles of organization or upon the future effective date or time

of the certificate of conversion to a limited liability company and the articles of organization, the

other entity shall be converted into a domestic limited liability company and the limited liability

company shall thereafter be subject to all of the provisions of this chapter, except that,

notwithstanding section 7-16-5, the existence of the limited liability company shall be deemed to

have commenced on the date the other entity commenced its existence in the jurisdiction in which

the other entity was first created, formed, or otherwise came into being.

      (e) The conversion of any other entity into a domestic limited liability company shall not

be deemed to affect any obligations or liabilities of the other entity incurred prior to its

conversion to a domestic limited liability company or the personal liability of any person incurred

prior to the conversion.

      (f) 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 other entity

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

entity, as well as all other things and causes of action belonging to the other entity, shall be vested

in the domestic limited liability company and shall thereafter be the property of the domestic

limited liability company as they were of the other entity that has converted, and the title to any

real property vested by deed or otherwise in the other entity shall not revert or be in any way

impaired by reason of this chapter, but all rights of creditors and all liens upon any property of

such other entity shall be preserved unimpaired, and all debts, liabilities, and duties of the other

entity that has converted shall thenceforth attach to the domestic limited liability company and

may be enforced against it to the same extent as if those debts, liabilities, and duties had been

incurred or contracted by it.

      (g) Unless otherwise agreed, or as required under applicable non-Rhode Island law, the

converting other entity shall not be required to wind up its affairs or pay its liabilities and

distribute its assets, and the conversion shall not be deemed to constitute a dissolution of the other

entity and shall constitute a continuation of the existence of the converting other entity in the

form of a domestic limited liability company.

      (h) Prior to filing a certificate of conversion to limited liability company the office of the

secretary of state, the conversion shall be approved in the manner provided for by the document,

instrument, agreement, or other writing, as the case may be, governing the internal affairs of the

other entity and the conduct of its business or by applicable law, as appropriate, and a limited

liability company agreement shall be approved by the same authorization required to approve the

conversion.

     (i) In connection with a conversion hereunder, rights or securities of or interests in the

other entity which is to be converted to a domestic limited liability company may be exchanged

for or converted into cash, property, or rights or securities of or interests in such domestic limited

liability company or, in addition to or in lieu thereof, may be exchanged for or converted into

cash, property, or rights or securities of or interests in such domestic limited liability company or,

in addition to or in lieu thereof, may be exchanged for or converted into cash, property, or rights

or securities of or interests in another domestic limited liability company or other entity or may be

cancelled.

      (i) (j) The provisions of this section shall not be construed to limit the accomplishment of

a change in the law governing, or the domicile of, an other entity to the state of Rhode Island by

any other means provided for in a limited liability company agreement or other agreement or as

otherwise permitted by law, including by the amendment of a limited liability company

agreement or other agreement.

 

     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 general partnership, (whether general or limited including a

registered limited liability partnership) or a limited partnership, organized, formed, or created

under the laws of the state of Rhode Island, 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 section 7-16-45 or pay its liabilities and distribute its assets

under section 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 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 which 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, 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 payment to the secretary of state of all fees prescribed in this

chapter, 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

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

 

     SECTION 5. Sections 7-16-5.3 and 7-16-5.4 of the General Laws in Chapter 7-16

entitled "The Rhode Island Limited Liability Company Act" are hereby repealed.

 

     7-16-5.3. Conversion of general partnership to a limited liability company. -- (a) Any

domestic or foreign general partnership (including registered limited liability partnerships) may

convert to a limited liability company by filing articles of organization that meet the requirements

of section 7-16-6 or by filing an amendment or restatement of articles of organization of an

existing limited liability company that meets the requirements of section 7-16-2, accompanied in

any case by a certificate of conversion to a limited liability company duly executed by one or

more partners of the former general partnership authorized to sign a certificate of conversion and

one or more persons authorized to sign a certificate of conversion on behalf of the limited liability

company, which shall include the following:

      (1) The name of the former general partnership and the name of the limited liability

company as set forth in its articles of organization;

      (2) The date of the initial partnership agreement of the former general partnership and all

amendments of the agreement, and the jurisdiction where the former general partnership was first

created, formed or otherwise came into being, and if it has changed, its jurisdiction immediately

prior to its conversion; and

      (3) A statement that the conversion has been approved by the partners in the manner

provided in the partnership agreement for amendments to the partnership agreement or, if no such

provision is made in the partnership agreement, by all partners.

      (b) Nothing in this section shall be construed to require, or be deemed to constitute, a

dissolution or termination of the general partnership prior to its conversion to a limited liability

company as permitted in this section.

      (c) Following the conversion of the general partnership to a limited liability company:

      (1) The limited liability company shall upon and after conversion possess all the rights,

privileges, immunities, powers, and franchises, of a public as well as a private nature, of the

former general partnership and shall be subject to all the restrictions, disabilities, and duties of the

former general partnership to the extent those rights, privileges, immunities, powers, franchises,

restrictions, disabilities, and duties were applicable to the former general partnership and to the

extent those rights, privileges, immunities, powers, franchises, restrictions, disabilities, and duties

are applicable to the limited liability company after the conversion.

      (2) All property, real, personal and mixed, and all debts due on whatever account,

including promises to make capital contributions, and all other choices in action and all and every

other interest of or belonging to the former general partnership shall be vested in the limited

liability company after the conversion without further act or deed;

      (3) The title to all real estate and any interest in it vested in any former general

partnership and the limited liability company shall not revert or be in any way impaired by reason

of the conversion;

      (4) The limited liability company shall be responsible and liable for all liabilities and

obligations of the former general partnership, and any claim existing or action or proceeding

pending by or against the former general partnership may be prosecuted as if the conversion had

not taken place, or the limited liability company may be substituted in the action;

      (5) Neither the rights of creditors nor any liens on the property of the former general

partnership shall be impaired by the conversion;

      (6) Nothing in this section shall abridge or impair any rights that may otherwise be

available to the partners under the partnership agreement of the former general partnership,

except as amended in connection with the conversion, and under applicable law; and

      (7) The limited liability company shall be deemed to be the successor of the general

partnership and to have succeeded by operation of law to the interest in all property, real, personal

and mixed or any interest therein of the former general partnership.

 

     7-16-5.4. Conversion of sole proprietorship to a limited liability company. -- (a) Any

sole proprietorship owned by a Rhode Island resident may convert to a limited liability company

by filing articles of organization that meet the requirements of section 7-16-6 or by filing an

amendment or restatement of articles of organization of an existing limited liability company that

meets the requirements of section 7-16-2, accompanied in any case by a certificate of conversion

to a limited liability company, which shall include the following:

      (1) The name of the former sole proprietorship and the name of the limited liability

company as set forth in its articles of organization; and

      (2) The date the sole proprietor commenced his or her business.

      (b) Following the conversion of the sole proprietorship to a limited liability company:

      (1) The limited liability company shall upon and after conversion possess all the rights,

privileges, immunities, powers, and franchises, of a public as well as a private nature, of the

former sole proprietorship and shall be subject to all the restrictions, disabilities, and duties of the

former sole proprietorship to the extent those rights, privileges, immunities, powers, franchises,

restrictions, disabilities and duties were applicable to the former sole proprietorship and to the

extent those rights, privileges, immunities, powers, franchises, restrictions, disabilities, and duties

are applicable to the limited company after the conversion;

      (2) All property, real, personal and mixed, and all debts due on whatever account and all

other choices in action and all and every other interest of or belonging to the former sole

proprietorship shall be vested in the limited liability company after the conversion without further

act or deed;

      (3) The title to all real estate and any interest in it vested in the former sole

proprietorship and in the certificate of conversion identified as being part of the conversion and in

the limited liability company shall not revert or be in any way impaired by reason of the

conversion;

      (4) The limited liability company shall be responsible and liable for all liabilities and

obligations of the former sole proprietorship, and any claim existing or action or proceeding

pending by or against the former sole proprietorship may be prosecuted as if the conversion had

not taken place, or the limited liability company may be substituted in the action;

      (5) Neither the rights of creditors nor any liens on the property of the former sole

proprietorship shall be impaired by the conversion;

      (6) Nothing in this section shall abridge or impair any rights that may otherwise be

available to the owner of the former sole proprietorship, except as amended in connection with

the conversion, and under applicable law; and

      (7) The limited liability company shall be deemed to be the successor of the sole

proprietorship and to have succeeded by operation of law to the interest in all property, real,

personal and mixed or any interest therein of the former sole proprietorship.

 

     SECTION 6. This act shall take effect upon passage.

     

=======

LC02833

=======