2009 Alabama Code
Title 10 — CORPORATIONS, PARTNERSHIPS AND ASSOCIATIONS.
Chapter 15 — Alabama Business Entities Conversion and Merger Act.
Section 10-15-3 Conversions of business entities; documentation and filing requirements; effective date of conversion; effects of conversion.

Section 10-15-3

Conversions of business entities; documentation and filing requirements; effective date of conversion; effects of conversion.

(a) A conversion of the following business entities may be accomplished as provided in this section:

(1) CORPORATIONS.

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

b. The terms and conditions of a conversion of a corporation to another business 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 the Alabama Business Corporation Act. 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 resulting business entity, notwithstanding any provision in the articles of incorporation of the converting corporation providing for less than unanimous shareholder approval for such conversion.

(2) LIMITED PARTNERSHIPS.

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

b. The terms and conditions of a conversion of a limited partnership to another business 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 resulting business entity, notwithstanding any provision in the limited partnership agreement of the converting limited partnership providing for approval of such conversion by less than all partners.

(3) LIMITED LIABILITY COMPANIES.

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

b. The terms and conditions of a conversion of a limited liability company to another business entity must be approved by all of the limited liability company's members or as otherwise provided in the limited liability company's articles of organization or operating agreement. 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 resulting entity, notwithstanding any provision in the articles of organization or operating agreement of the converting limited liability company providing for less than unanimous member approval for such 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 business entity pursuant to this subsection.

b. The terms and conditions of a conversion of a general partnership to another business 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 resulting business entity, notwithstanding any provision in the partnership agreement of the converting registered limited liability partnership providing for less than unanimous partner approval for such conversion.

(5) REAL ESTATE INVESTMENT TRUST.

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

b. The terms and conditions of a conversion of a real estate investment trust to another business 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 resulting business entity, notwithstanding any provision in the declaration of trust of the converting real estate investment trust providing for less than unanimous shareholder approval for such conversion.

(6) OTHER BUSINESS ENTITY.

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

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

(b) After the conversion is approved by the shareholders, partners, members, or other equity owners of the converting business 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 business entity required to file a formation document, the appropriate formation document for the resulting entity shall be filed in the office in which filing is required for the formation of the resulting entity. In addition to any information or statements otherwise required by law to be included in such formation document, any such formation document shall include the following:

a. A statement that such corporation, limited liability company, limited partnership, real estate investment trust, or other resulting business entity required to file a formation document was converted from another business entity.

b. The former name of the converting entity.

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

d. If the resulting entity is one in which one or more equity owners lack limited liability protection, a statement that each equity owner with limited liability protection of the converting entity who is to become an equity 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 business entity formed without filing a formation document, 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 termination document with respect to the end of its existence shall file such termination document in the office in which such document is required by law to be filed. In addition to any information otherwise required by law to be included in such termination document, such document shall include the following:

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

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

(4) A general partnership, or other business entity not required to file a termination document, converting to another business entity is not required to file any instrument under subdivision (3) but the business entity to which such general partnership or other business entity not required to file a termination document 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 formation document and a termination document are required to be filed, upon the filing of the later to be filed of the formation document of the resulting business entity and the termination document of the converting business entity. If any formation document is required to be filed pursuant to subdivision (1) of subsection (b), any termination document required to be filed pursuant to subdivision (3) of subsection (b) shall not be deemed effective until the filing of such formation document.

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

(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 formation and termination document, if both are required to be filed, but only if the identical date is specified in both documents, or if only a formation document or termination document is required to be filed, a delayed effective date is specified in that document.

b. The formation or termination document, if only one is required, is filed, or the formation and termination documents, 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 formation document or termination document 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 business entity that has been converted pursuant to this chapter is for all purposes the same business entity that existed before the conversion.

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

(3) The resulting business entity shall be responsible and liable for all the liabilities and obligations of the converting business entity. Neither the rights of creditors, nor any liens upon the property of the converting entity, shall be impaired by the conversion, and an equity owner of the converted business entity shall be liable for all obligations of the converting entity for which the equity 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 business entity may be prosecuted or continued as if the conversion had not occurred, or the resulting business entity may be substituted in the action or proceeding for the converted business entity.

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

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

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

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

(Act 2000-211, p. 279, §2.)