Election to become corporation

(a) A foreign corporation, domestic limited partnership, foreign limited partnership, domestic general partnership, foreign general partnership, domestic limited liability company, or foreign limited liability company may elect to become a corporation. Such election shall require the approval of all of the electing entity’s partners, members, or shareholders, or such other approval or compliance as may be sufficient under applicable law or the governing documents of the electing entity to authorize such election. (b) Such election shall be made by delivering a certificate of conversion to the Secretary of State for filing. The certificate shall set forth: (1) The name and jurisdiction of organization of the entity making the election; (2) That the entity elects to become a corporation; (3) The effective date, or the effective date and time, of such conversion if later than the date and time the certificate of conversion is filed; (4) That the election has been approved as required by subsection (a) of this Code section; (5) That filed with the certificate of conversion are articles of incorporation that are in the form required by Code Section 14-2-202, setting forth a name for the corporation that satisfies the require415 14-2-1109.2 CORPORATIONS & PARTNERSHIPS 14-2-1109.2 ments of Code Section 14-2-401, and stating that such articles of incorporation shall be the articles of incorporation of the corporation formed pursuant to such election unless and until modified in accordance with this chapter; and (6) If not provided for in the articles of incorporation required by paragraph (5) of this subsection, a statement setting forth the manner and basis for converting the ownership interests in the entity making the election into shares of the corporation formed pursuant to such election. (c) Upon the election becoming effective: (1) The electing entity shall become a corporation formed under this chapter by such election, except that the existence of the corporation so formed shall be deemed to have commenced on the date the entity making the election commenced its existence in the jurisdiction in which such entity was first created, formed, incorporated, or otherwise came into being; (2) The ownership interests in the entity making the conversion shall be converted on the basis stated or referred to in the certificate of conversion in accordance with paragraph (6) of subsection (b) of this Code section; (3) The articles of incorporation filed with the certificate of conversion shall be the articles of incorporation of the corporation formed pursuant to such election unless and until amended in accordance with this chapter; (4) The governing documents of the entity making the election shall be of no further force or effect; (5) The corporation formed by such election shall thereupon and thereafter possess all of the rights, privileges, immunities, franchises, and powers of the entity making the election; all property, real, personal, and mixed, all contract rights, and all debts due to such entity, as well as all other choses in action, and each and every other interest of or belonging to or due to the entity making the election shall be taken and deemed to be vested in the corporation formed by such election without further act or deed; the title to any real estate, or any interest therein, vested in the entity making the election shall not revert or be in any way impaired by reason of such election; and none of such items shall be deemed to have been conveyed, transferred, or assigned by reason of such election for any purpose; and (6) The corporation formed by such election shall thereupon and thereafter be responsible and liable for all the liabilities and obligations of the entity making the election, and any claim existing or 416 14-2-1109.2 BUSINESS CORPORATIONS 14-2-1109.3 action or proceeding pending by or against such entity may be prosecuted as if such election had not become effective. Neither the rights of creditors nor any liens upon the property of the entity making such election shall be impaired by such election. (d) A conversion pursuant to this Code section shall not be deemed to constitute a dissolution of the entity making the election and shall constitute a continuation of the existence of the entity making the election in the form of a corporation. A corporation formed by an election pursuant to this Code section shall for all purposes be deemed to be the same entity as the entity making such election. (e) A corporation formed by an election pursuant to this Code section may file a copy of such certificate of conversion, certified by the Secretary of State, in the office of the clerk of the superior court of the county where any real property owned by such corporation is located and record such certified copy of the certificate of conversion in the books kept by such clerk for recordation of deeds in such county with the entity electing to become a corporation indexed as the grantor and the corporation indexed as the grantee. No real estate transfer tax under Code Section 48-6-1 shall be due with respect to the recordation of such election. (Code 1981, § 14-2-1109.2, enacted by Ga. L. 2006, p. 825, § 14/SB 469.) COMMENT New Code Section 14-2-1109.2 authorizes the conversion of a limited liability company, general partnership and limited partnership organized under the laws of Georgia, and a business corporation, limited liability company, general partnership and limited partnership organized under the laws of a jurisdiction other than Georgia, into a Georgia business corporation. Subsection (b) provides that such a conversion is to be effectuated by delivery of a certificate of conversion to the Secretary of State. The effects and consequences of such an election to convert are specified in subsection (c), which provides, among other things, that while the electing entity shall become a Georgia business corporation, the existence of the corporation so formed shall be deemed to have commenced on the date that the entity making such election commenced its existence under the laws of the jurisdiction in which such entity was created, formed, incorporated, organized or otherwise came into being. Subsection (d) expressly provides that a conversion pursuant to Code Section 14-2-1109.2 shall not be deemed to constitute a dissolution of the entity making the election and that a corporation formed by an election to convert shall for all purposes be deemed to be the same entity as the entity making such election. 14-2-1109.3. Conversion to foreign limited liability company, foreign limited partnership, or foreign corporation; requirements. (a) A corporation may elect to become a foreign limited liability company, a foreign limited partnership, or a foreign corporation, if such a conversion is permitted by the law of the state or jurisdiction under whose law the resulting entity would be formed. 417 14-2-1109.3 CORPORATIONS & PARTNERSHIPS 14-2-1109.3 (b) To effect a conversion under this Code section, the corporation must adopt a plan of conversion that sets forth the manner and basis of converting the shares of the corporation into interests, shares, obligations, or other securities, as the case may be, of the resulting entity. The plan of conversion may set forth other provisions relating to the conversion. (c) For the plan of conversion to be adopted: (1) The board of directors shall submit the plan of conversion for approval by the shareholders and shall recommend the plan of conversion to the shareholders in the same manner and subject to the same exceptions as provided in paragraph (1) of subsection (b) of Code Section 14-2-1103, and may condition its submission and provide notice to each shareholder entitled to vote in the same manner as provided in subsections (c) and (d) of Code Section 14-2-1103; and (2) All of the shareholders must approve the plan of conversion. (d) The plan of conversion may set forth other provisions relating to the conversion, including a provision that the plan may be amended prior to the time that the conversion has become effective, but subsequent to approval of the plan by shareholders the plan may not be amended to change in any respect not expressly authorized by such shareholders in connection with the approval of the plan: (1) The amount or kind of interests, shares or other securities, obligations, or rights to acquire interests, shares or other securities to be received under the plan by the shareholders if the change would adversely affect such shareholders; or (2) Any of the other terms or conditions of the plan if the change would adversely affect such shareholders in any material respect; and in the event that the plan of conversion is amended after a certificate of conversion has been filed with the Secretary of State but before the conversion has become effective, a certificate of amendment of conversion executed by an officer or other duly authorized representative shall be delivered to the Secretary of State for filing prior to the effectiveness of the conversion. (e) Any of the terms of the plan of conversion may be made dependent upon facts ascertainable outside of the plan of conversion, provided that the manner in which such facts shall operate upon the terms of the conversion is clearly and expressly set forth in the plan of conversion. As used in this subsection, the term ‘‘facts’’ includes, but is not limited to, the occurrence of any event, including a determination or action by any person or body, including the corporation. 418 14-2-1109.3 BUSINESS CORPORATIONS 14-2-1109.3 (f ) After a conversion is authorized, unless the plan of conversion provides otherwise, and at any time before the conversion has become effective, the planned conversion may be abandoned, subject to any contractual rights, without further shareholder action, in accordance with the procedure set forth in the plan of conversion or, if none is set forth, in the manner determined by the board of directors. (g) The conversion shall be effected as provided in, and shall have the effects provided by, the law of the state or jurisdiction under whose law the resulting entity is formed and by the plan of conversion, to the extent not inconsistent with such law. (h) If the resulting entity is required to obtain a certificate of authority to transact business in this state by the provisions of this title governing foreign corporations, foreign limited partnerships, or foreign limited liability companies, it shall do so pursuant to Code Section 14-2-1501, 14-9-902, or 14-11-705. (i) After a plan of conversion is approved by the shareholders, the corporation shall deliver to the Secretary of State for filing a certificate of conversion setting forth: (1) The name of the corporation; (2) The name and jurisdiction of the entity to which the corporation shall be converted; (3) The effective date, or the effective date and time, of such conversion if later than the date and time the certificate of conversion is filed; (4) A statement that the plan of conversion has been adopted as required by subsection (c) of this Code section; (5) A statement that the authority of its registered agent to accept service on its behalf is revoked as of the effective time of such conversion and that the Secretary of State is irrevocably appointed as the agent for service of process on the resulting entity in any proceeding to enforce an obligation of the corporation arising prior to the effective time of such conversion; (6) A mailing address to which a copy of any process served on the Secretary of State under paragraph (5) of this subsection may be mailed as provided in subsection (j) of this Code section; and (7) A statement that the Secretary of State shall be notified of any change in the resulting entity’s mailing address. (j) Upon the conversion’s taking effect, the resulting entity is deemed to appoint the Secretary of State as its agent for service of process in a proceeding to enforce any of its obligations arising prior to the effective 419 14-2-1109.3 CORPORATIONS & PARTNERSHIPS T.14, C.2, A.11, P.2 time of such conversion. Any party that serves process upon the Secretary of State in accordance with this subsection also shall mail a copy of the process to the chief executive officer, chief financial officer, or the secretary of the resulting entity, or a person holding a comparable position, at the mailing address provided in subsection (i) of this Code section. (k) A converting corporation pursuant to this Code section may file a copy of its certificate of conversion, certified by the Secretary of State, in the office of the clerk of the superior court of the county where any real property owned by such corporation is located and record such certified copy of the certificate of conversion in the books kept by such clerk for recordation of deeds in such county with the corporation indexed as the grantor and the foreign entity indexed as the grantee. No real estate transfer tax otherwise required by Code Section 48-6-1 shall be due with respect to recordation of such certificate of conversion. (Code 1981, § 14-2-1109.3, enacted by Ga. L. 2006, p. 825, § 14/SB 469; Ga. L. 2007, p. 455, § 2/SB 234.) COMMENT New Code Section 14-2-1109.3, which authorizes the conversion of a Georgia business corporation into a limited liability company, a limited partnership, or a corporation organized under the laws of a jurisdiction other than Georgia, generally specifies the contents of a plan of conversion and procedural rules for the adoption and approval thereof. Note to 2007 Amendment Under new subsection (i) of Code Section 14-2-1109.3, a corporation electing to become a foreign corporation, foreign limited liability company, or foreign limited partnership is now required to make such a change in form a matter of public record by filing a certificate of conversion with the Secretary of State. Upon the effectiveness of such a conversion, the resulting entity is deemed to have appointed the Secretary of State as its agent for service of process in proceedings to enforce any of its obligations arising prior to the effective time of such conversion pursuant to new subsection (j). If such a converting corporation owns real estate in Georgia, it may file a certified copy of its certificate of conversion for recording in the office of the clerk of the superior court of any county in which such real property is located pursuant to the provisions of new subsection (k), which also clarifies that no Georgia real estate transfer tax shall be due with respect to recordation of such certificate of conversion. PART 2 FAIR PRICE REQUIREMENTS