Section 10A-1-8.01

Conversion of business and nonprofit entities.

(a) A conversion of an entity to any other form of entity may be accomplished as provided in this section:

(1) CORPORATIONS.

a. A corporation may be converted to any other form of entity pursuant to this subsection.

b. The terms and conditions of a conversion of a corporation other than a nonprofit corporation to another entity must be approved by all of the corporation's shareholders except as otherwise provided in the corporation's articles of incorporation; but in no case may the vote required for shareholder approval be set at less than a majority of the votes entitled to be cast by each voting group entitled by law to vote separately on the conversion. If the articles of incorporation provide for approval of a conversion by less than all of a corporation's shareholders, approval of the conversion shall constitute corporate action subject to dissenter's rights pursuant to Article 13 of Chapter 2 of the Alabama Business Corporation Law. No conversion of a corporation to a general or limited partnership may be effected without the consent in writing of each shareholder who is to be a general partner in the converted entity, notwithstanding any provision in the articles of incorporation of the converting corporation providing for less than unanimous shareholder approval for the conversion.

c. The terms and conditions of a conversion of a nonprofit corporation to another form of entity must be approved by all the corporation's members entitled to vote thereon, if it is a nonprofit corporation with members with voting rights, except as otherwise provided in the corporation's certificate of formation; but in no case may the certificate of formation provide for approval by less than a majority of the members entitled to vote thereon. If the converting nonprofit corporation has no members, or no members entitled to vote thereon, the terms and conditions of the conversion must be approved by a unanimous vote of the board of directors of the converting nonprofit corporation, except as otherwise provided in the certificate of formation; but in no case may the certificate of formation provide for approval by less than a majority of the board of directors.

(2) LIMITED PARTNERSHIPS.

a. A limited partnership may be converted to any other form of entity pursuant to this subsection.

b. The terms and conditions of a conversion of a limited partnership to another entity must be approved by all of the partners or as otherwise provided in the partnership agreement. No conversion of a limited partnership to a general partnership may be effected without the consent in writing of each limited partner who is to be a general partner in the converted entity, notwithstanding any provision in the limited partnership agreement of the converting limited partnership providing for approval of the conversion by less than all partners.

(3) LIMITED LIABILITY COMPANIES.

a. A limited liability company may be converted to any other form of entity pursuant to this subsection.

b. The terms and conditions of a conversion of a limited liability company to another entity must be approved by all of the limited liability company's members or as otherwise provided in the limited liability company's governing documents. No conversion of a limited liability company to a general or limited partnership may be effected without the consent in writing of each member who is to be a general partner in the converted entity, notwithstanding any provision in the governing documents of the converting limited liability company providing for less than unanimous member approval for the conversion.

(4) GENERAL PARTNERSHIPS, INCLUDING REGISTERED LIMITED LIABILITY PARTNERSHIPS.

a. A general partnership, including a registered limited liability partnership, may be converted to any other form of entity pursuant to this subsection.

b. The terms and conditions of a conversion of a general partnership to another entity must be approved by all of the partners or as otherwise provided in the partnership agreement. No conversion of a registered limited liability partnership to a general or limited partnership may be effected without the consent in writing of each partner who is to be a general partner without limited liability in the converted entity, notwithstanding any provision in the partnership agreement of the converting registered limited liability partnership providing for less than unanimous partner approval for the conversion.

(5) REAL ESTATE INVESTMENT TRUST.

a. A real estate investment trust may be converted to any other form of entity pursuant to this subsection.

b. The terms and conditions of a conversion of a real estate investment trust to another entity must be approved by all of the trust's shareholders except as otherwise provided in the trust's declaration of trust; but in no case may the vote required for shareholder approval be set at less than two-thirds of all the votes entitled to be cast. No conversion of a real estate investment trust to a general or limited partnership may be effected without the consent in writing of each shareholder who is to be a general partner in the converted entity, notwithstanding any provision in the declaration of trust of the converting real estate investment trust providing for less than unanimous shareholder approval for the conversion.

(6) OTHER ENTITY.

a. Any entity not otherwise specified above may be converted to any other form of entity pursuant to this subsection.

b. The terms and conditions of a conversion of the entity into any other form of entity must be approved by all owners of the converting entity. No conversion of any entity shall be effected without the consent in writing of any owner of the converting entity who has limited liability and who shall become an owner without limited liability protection of the converted entity.

c. If the converting entity does not have owners, the terms and conditions of the conversion must be unanimously approved by the governing authority of the converting entity.

(b) After the conversion is approved by the shareholders, partners, members, owners, directors, or other governing authority of the converting entity pursuant to subsection (a), the following documentation and filing requirements apply:

(1) If the conversion is to a corporation, limited liability company, limited partnership, real estate investment trust, or other entity required to file a certificate of formation, the appropriate certificate of formation for the converted entity shall be filed in the office in which filing is required for the formation of the converted entity in accordance with Article 4. In addition to any information or statements otherwise required by law to be included in the certificate of formation, any certificate of formation shall include the following:

a. A statement that the corporation, limited liability company, limited partnership, real estate investment trust, or other converted entity required to file a certificate of formation was converted from another entity.

b. The former name of the converting entity.

c. The public office where the certificate of formation and certificate of termination, if any, of the converting entity is filed.

d. If the converted entity is one in which one or more owners lack limited liability protection, a statement that each owner of the converting entity who is to become an owner without limited liability protection of the resulting entity has consented in writing to the conversion as required by this section.

e. A statement that the conversion was approved pursuant to this section.

(2) If the conversion is to a general partnership or other entity formed without filing a certificate of formation, no instrument is required to be filed under subdivision (1), but the converting entity must comply with the filing requirements of subdivision (3).

(3) Any converting entity required to file a certificate of termination with respect to the end of its existence shall file the certificate of termination in accordance with Article 4 in the office in which the certificate is required by law to be filed. In addition to any information otherwise required by law to be included in the certificate of termination, the certificate of termination shall include the following:

a. A statement that the converting entity was converted to another entity.

b. The name of the entity to which the converting entity is converted, and the public office where the converted entity's certificate of formation, if any, is being filed.

(4) A general partnership, or other business entity not required to file a certificate of termination, converting to another entity is not required to file any instrument under subdivision (3) but the entity to which the general partnership or other entity not required to file a certificate of termination is converted is required to comply with the filing requirements, if any, of subdivision (1).

(c) A conversion takes effect as follows:

(1) If both a certificate of formation and a certificate of termination are required to be filed, upon the filing of the later to be filed of the certificate of formation of the converted entity and the certificate of termination of the converting entity, if both are required to be filed. If any certificate of formation is required to be filed pursuant to subdivision (1) of subsection (b), any certificate of termination required to be filed pursuant to subdivision (3) of subsection (b) shall not be deemed effective until the filing of the certificate of formation.

(2) If only a certificate of formation of the converted entity or a certificate of termination of the converting entity is required to be filed, upon the filing of the certificate of formation or certificate of termination.

(3) Upon any delayed effective date if, but only if, each of the following requirements is satisfied:

a. A delayed effective date is specified in both the certificate of formation and certificate of termination, if both are required to be filed, but only if the identical date is specified in both certificates, or if only a certificate of formation or certificate of termination is required to be filed, a delayed effective date and time is specified in that certificate; and

b. The certificate of formation or certificate of termination, if only one is required, is filed, or the certificate of formation and certificate of termination, if both are required, are filed before the effective date specified.

(4) If a delayed effective date is specified, and the conditions of subdivision (3) are met, the conversion is effective at the close of business, unless a different hour is specified, on that date.

(5) If no certificate of formation or certificate of termination is required to be filed, the conversion takes effect as designated by the converting entity.

(d) Conversion has the following effects:

(1) A limited partnership, general partnership, corporation, limited liability company, real estate investment trust, or other entity that has been converted pursuant to this article is for all purposes the same entity that existed before the conversion;

(2) All property, real, personal, and mixed owned by the converting entity; all rights, immunities, and franchises of the converting entity, of a public as well as a private nature; and all debts or obligations due the converting entity, are taken and deemed to be transferred and vested in the converted entity without the necessity of any deed or other instrument of conveyance to the converted entity and without payment and without collection by any filing officer of any deed or other transfer tax or fee. A certified copy of any certificate of termination of the converting entity, or in the case of a converting entity that is not required to file a certificate of termination, a statement containing the information specified in subdivision (3) of subsection (b), may be filed in the office of the judge of probate in any county in which the converting entity owned real property, to be recorded without payment and without collection by the judge of probate of any deed or other transfer tax or fee. The judge of probate shall, however, be entitled to collect the filing fees prescribed in this title. Any filing shall evidence chain of title, but lack of filing shall not affect the converted entity's title to the real property.

(3) The converted entity shall be responsible and liable for all the liabilities and obligations of the converting entity. Neither the rights of creditors, nor any liens upon the property of the converting entity, shall be impaired by the conversion, and an owner of the converted entity shall be liable for all obligations of the converting entity for which the owner was personally liable before the conversion.

(4) Any claim existing or any action or proceeding of any kind pending by or against the converting entity may be prosecuted or continued as if the conversion had not occurred, or the converted entity may be substituted in the action or proceeding for the converting entity.

(5) a. No owner of an entity with limited liability protection shall, as a result of a conversion, become an owner of an entity without limited liability protection unless the owner with limited liability protection has given approval in writing for the conversion.

b. An owner with limited liability protection remains liable, if at all, for an obligation incurred by the converting entity before the conversion takes effect only to the extent, if any, the owner would have been liable if the conversion had not occurred.

c. An owner with limited liability protection who becomes an owner without limited liability protection is liable for an obligation of the converted entity incurred after conversion to the extent provided for by the laws applicable to the converted entity.

(6) An owner without limited liability protection who as a result of a conversion becomes an owner of a converted entity with limited liability protection remains liable for an obligation incurred by the converting entity before the conversion takes effect only to the extent, if any, the owner would have been liable if the conversion had not occurred.

(Act 2000-211, p. 279, §2; §10-15-3; amended and renumbered by Act 2009-513, p. 967, §71.)