Bill Text: MS HB1403 | 2017 | Regular Session | Introduced
Bill Title: MS Entity Conversion and Domestication Act; revise provisions.
Spectrum: Partisan Bill (Republican 1-0)
Status: (Failed) 2017-01-31 - Died In Committee [HB1403 Detail]
Download: Mississippi-2017-HB1403-Introduced.html
MISSISSIPPI LEGISLATURE
2017 Regular Session
To: Judiciary A
By: Representative Wilson
House Bill 1403
AN ACT TO AMEND SECTIONS 79-37-102, 79-37-111, 79-37-114, 79-37-116, 79-37-401, 79-37-405, 79-37-406, 79-37-505 AND 79-37-506, MISSISSIPPI CODE OF 1972, WHICH COMPRISE THE MISSISSIPPI ENTITY CONVERSION AND DOMESTICATION ACT, TO REVISE THE PROCEDURES REGULATING HOW A FOREIGN ENTITY MAY APPLY TO BECOME A DOMESTIC ENTITY; AND FOR RELATED PURPOSES.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MISSISSIPPI:
SECTION 1. Section 79-37-102, Mississippi Code of 1972, is amended as follows:
79-37-102. As used in this chapter, unless the context otherwise requires:
(1) [Reserved]
(2) [Reserved]
(3) "Approve" means, in the case of an entity, for its governors and interest holders to take whatever steps are necessary under the entity's organic rules, organic law, and other law to:
(A) Propose a transaction subject to this chapter;
(B) Adopt and approve the terms and conditions of the transaction; and
(C) Conduct any required proceedings or otherwise obtain any required votes or consents of the governors or interest holders.
(4) "Conversion" means a transaction authorized by Article 4 of this chapter.
(5) "Converted entity" means the converting entity as it continues in existence after a conversion.
(6) "Converting entity" means the domestic entity that approves a plan of conversion pursuant to Section 79-37-403 or the foreign entity that approves a conversion pursuant to the law of its jurisdiction of formation.
(7) "Distributional interest" means the right under an unincorporated entity's organic law and organic rules to receive distributions from the entity.
(8) "Domestic," with respect to an entity, means governed as to its internal affairs by the law of this state.
(9) "Domesticated entity" means the domesticating entity as it continues in existence after a domestication.
(10) "Domesticating entity" means the domestic entity that approves a plan of domestication pursuant to Section 79-37-503 or the foreign entity that approves a domestication pursuant to the law of its jurisdiction of formation.
(11) "Domestication" means a transaction authorized by Article 5 of this chapter.
(12) "Entity":
(A) Means:
(i) A business corporation;
(ii) A nonprofit corporation, except that charitable organizations as defined under Section 79-11-501 et seq. may not convert pursuant to Article 4 of this chapter;
(iii) A general partnership, including a limited liability partnership;
(iv) A limited partnership, including a limited liability limited partnership;
(v) A limited liability company;
(vi) [Reserved];
(vii) [Reserved];
(viii) [Reserved];
(ix) A statutory trust, business trust, or common-law business trust;
(x) An agricultural association, including an agricultural co-operative marketing association; or
(xi) Any other person that has:
(I) A legal existence separate from any interest holder of that person; or
(II) The power to acquire an interest in real property in its own name; and
(B) Does not include:
(i) An individual;
(ii) A trust with a predominantly donative purpose or a charitable trust;
(iii) An association or relationship that is not an entity listed in subparagraph (A) and is not a partnership under the rules stated in Section 79-13-202(c) or a similar provision of the law of any other jurisdiction;
(iv) A decedent's estate; or
(v) A government or a governmental subdivision, agency, or instrumentality.
(13) "Filing entity" means an entity whose formation requires the filing of a public organic record. The term does not include a limited liability partnership.
(14) "Foreign," with respect to an entity, means an entity governed as to its internal affairs by the law of a jurisdiction other than this state.
(15) "Governance interest" means a right under the organic law or organic rules of an unincorporated entity, other than as a governor, agent, assignee, or proxy, to:
(A) Receive or demand access to information concerning, or the books and records of, the entity;
(B) Vote for or consent to the election of the governors of the entity; or
(C) Receive notice of or vote on or consent to an issue involving the internal affairs of the entity.
(16) "Governor" means:
(A) A director of a business corporation;
(B) A director or trustee of a nonprofit corporation;
(C) A general partner of a general partnership;
(D) A general partner of a limited partnership;
(E) A manager of a manager-managed limited liability company;
(F) A member of a member-managed limited liability company;
(G) [Reserved];
(H) [Reserved];
(I) [Reserved];
(J) A trustee of a statutory trust, business trust, or common-law business trust; or
(K) Any other person under whose authority the powers of an entity are exercised and under whose direction the activities and affairs of the entity are managed pursuant to the organic law and organic rules of the entity.
(17) "Interest" means:
(A) A share in a business corporation;
(B) A membership in a nonprofit corporation;
(C) A partnership interest in a general partnership;
(D) A partnership interest in a limited partnership;
(E) A membership interest in a limited liability company;
(F) [Reserved];
(G) [Reserved];
(H) [Reserved];
(I) A beneficial interest in a statutory trust, business trust, or common-law business trust;
(J) A membership in an agricultural association, including an agricultural co-operative marketing association; or
(K) A governance interest or distributional interest in any other type of unincorporated entity.
(18) [Reserved]
(19) "Interest holder" means:
(A) A shareholder of a business corporation;
(B) A member of a nonprofit corporation;
(C) A general partner of a general partnership;
(D) A general partner of a limited partnership;
(E) A limited partner of a limited partnership;
(F) A member of a limited liability company;
(G) [Reserved];
(H) [Reserved];
(I) [Reserved];
(J) A beneficiary or beneficial owner of a statutory trust, business trust, or common-law business trust;
(K) A member of an agricultural association, including an agricultural co-operative marketing association; or
(L) Any other direct holder of an interest.
(20) "Interest holder liability" means:
(A) Personal liability for a liability of an entity that is imposed on a person:
(i) Solely by reason of the status of the person as an interest holder; or
(ii) By the organic rules of the entity which make one or more specified interest holders or categories of interest holders liable in their capacity as interest holders for all or specified liabilities of the entity; or
(B) An obligation of an interest holder under the organic rules of an entity to contribute to the entity.
(21) "Jurisdiction", used to refer to a political entity, means the United States, a state, a foreign country, or a political subdivision of a foreign country.
(22) "Jurisdiction of formation" means the jurisdiction whose law includes the organic law of an entity.
(23) [Reserved]
(24) [Reserved]
(25) "Organic law" means the law of an entity's jurisdiction of formation governing the internal affairs of the entity.
(26) "Organic rules" means the public organic record and private organic rules of an entity.
(27) "Person" means an individual, business corporation, nonprofit corporation, partnership, limited partnership, limited liability company, agricultural association, agricultural co-operative marketing association, statutory trust, business trust, common-law business trust, estate, trust, association, joint venture, public corporation, government or governmental subdivision, agency, or instrumentality, or any other legal or commercial entity.
(28) "Plan" means a plan of conversion or plan of domestication.
(29) "Plan of conversion" means a plan under Section 79-37-402.
(30) "Plan of domestication" means a plan under Section 79-37-502.
(31) [Reserved]
(32) [Reserved]
(33) "Private organic rules" mean the rules, whether or not in a record, that govern the internal affairs of an entity, are binding on all of its interest holders, and are not part of its public organic record, if any. The term includes:
(A) The bylaws of a business corporation;
(B) The bylaws of a nonprofit corporation;
(C) The partnership agreement of a general partnership;
(D) The partnership agreement of a limited partnership;
(E) The operating agreement of a limited liability company;
(F) [Reserved];
(G) [Reserved];
(H) [Reserved];
(I) The bylaws of an agricultural association, including an agricultural co-operative marketing association; and
(J) The trust instrument of a statutory trust or similar rules of a business trust or common-law business trust.
(34) "Property" means all property, whether real, personal, or mixed or tangible or intangible, or any right or interest therein.
(35) "Protected agreement" means:
(A) A record evidencing indebtedness and any related agreement in effect on January 1, 2015;
(B) An agreement that is binding on an entity on January 1, 2015;
(C) The organic rules of an entity in effect on January 1, 2015; or
(D) An agreement that is binding on any of the governors or interest holders of an entity on January 1, 2015.
(36) "Public organic record" means the record the filing of which by the Secretary of State is required to form an entity and any amendment to or restatement of that record. The term includes:
(A) The articles of incorporation of a business corporation;
(B) The articles of incorporation of a nonprofit corporation;
(C) The certificate of limited partnership of a limited partnership;
(D) The certificate of formation of a limited liability company;
(E) [Reserved];
(F) [Reserved];
(G) The articles of association of an agricultural association, including an agricultural co-operative marketing association; and
(H) The certificate of trust of a statutory trust or similar record of a business trust.
(37) "Record," used as a noun, means information that is inscribed on a tangible medium or that is stored in an electronic or other medium and is retrievable in perceivable form.
(38) "Registered foreign entity" means a foreign entity that is registered to do business in this state pursuant to a record filed by the Secretary of State.
(39) "Sign" means, with present intent to authenticate or adopt a record:
(A) To execute or adopt a tangible symbol; or
(B) To attach to or logically associate with the record an electronic symbol, sound, or process.
(40) "State" means a state of the United States, the District of Columbia, Puerto Rico, the United States Virgin Islands, or any territory or insular possession subject to the jurisdiction of the United States.
(41) "Statement of conversion" means a statement under Section 79-37-405.
(42) "Statement of domestication" means a statement under Section 79-37-505.
(43) [Reserved]
(44) [Reserved]
(45) [Reserved]
(46) "Transfer" includes:
(A) An assignment;
(B) A conveyance;
(C) A sale;
(D) A lease;
(E) An encumbrance, including a mortgage or security interest;
(F) A gift; and
(G) A transfer by operation of law.
(47) "Type of entity" means a generic form of entity:
(A) Recognized at common law; or
(B) Formed under an organic law, whether or not some entities formed under that law are subject to provisions of that law that create different categories of the form of entity.
SECTION 2. Section 79-37-111, Mississippi Code of 1972, is amended as follows:
79-37-111. (a) To be entitled to filing by the Secretary of State, a document must satisfy the following requirements and the requirements of any other provision of this chapter that adds to or varies these requirements:
(1) This chapter requires or permits filing the document in the Office of the Secretary of State.
(2) The document contains the information required by this chapter and may contain other information.
(3) The document is in a record.
(4) The document is in the English language, but the name of an entity need not be in English if written in English letters or Arabic or Roman numerals.
(5) The document is signed:
(A) By an officer or director of a domestic or foreign corporation;
(B) By a person authorized by a domestic or foreign entity that is not a corporation; or
(C) If the entity is in the hands of a receiver, trustee, or other court-appointed fiduciary, by that fiduciary.
(6) The document must state the name and capacity of the person that signed it.
(7) The document must be delivered to the Office of the Secretary of State for filing in the format and in the manner determined by the Secretary of State.
(b) When a document is delivered to the Office of the Secretary of State for filing, the correct filing fee must be paid or provision for payment made in a manner permitted by the Secretary of State.
SECTION 3. Section 79-37-114, Mississippi Code of 1972, is amended as follows:
79-37-114. (a) A
domestic or foreign entity may correct a document filed by the Secretary of
State within * * * one
hundred twenty (120) days of the filing if:
(1) The document contains an inaccuracy;
(2) The document was defectively signed; or
(3) The electronic transmission of the document to the Secretary of State was defective.
(b) A document is corrected by filing with the Secretary of State a statement of correction that:
(1) Describes the document to be corrected and states its filing date or has attached a copy of the document;
(2) Specifies the inaccuracy or defect to be corrected; and
(3) Corrects the inaccuracy or defect.
(c) A statement of correction is effective on the effective date of the document it corrects except as to persons relying on the uncorrected document and adversely affected by the correction. As to those persons, a statement of correction is effective when filed.
SECTION 4. Section 79-37-116, Mississippi Code of 1972, is amended as follows:
79-37-116. (a) If the
Secretary of State refuses to file a document delivered for filing, the
domestic or foreign entity that submitted the document for filing may appeal
the refusal within thirty (30) days after the return of the document to * * *
the Chancery Court of the First Judicial District of Hinds County, Mississippi * * *. The appeal is commenced by petitioning the court to
compel filing the document and by attaching to the petition the document and
the explanation of the Secretary of State for the refusal to file.
(b) The court may summarily order the Secretary of State to file the document or take other action the court considers appropriate.
(c) The court's final decision may be appealed as in other civil proceedings.
SECTION 5. Section 79-37-401, Mississippi Code of 1972, is amended as follows:
79-37-401. (a) By complying with this article, a domestic entity may become:
(1) A domestic entity that is a different type of entity; or
(2) A foreign entity that is a different type of entity, if the conversion is authorized by the law of the foreign entity's jurisdiction of formation and the domestic entity has complied with Article 5 of this chapter.
(b) By complying with the provisions of this article applicable to foreign entities, a foreign entity may become a domestic entity that is a different type of entity if the conversion is authorized by the law of the foreign entity's jurisdiction of formation and the foreign entity has first domesticated to this state pursuant to Article 5 of this chapter.
(c) If a protected agreement contains a provision that applies to a merger of a domestic entity but does not refer to a conversion, the provision applies to a conversion of the entity as if the conversion were a merger until the provision is amended after January 1, 2015.
SECTION 6. Section 79-37-405, Mississippi Code of 1972, is amended as follows:
79-37-405. (a) A statement of conversion must be signed on behalf of the converting entity and delivered to the Secretary of State for filing.
(b) A statement of conversion must contain:
(1) The name, jurisdiction of formation, and type of entity of the converting entity;
(2) The name, jurisdiction of formation, and type of entity of the converted entity;
(3) If the statement of conversion is not to be effective upon filing, the later date and time on which it will become effective, which may not be more than ninety (90) days after the date of filing;
(4) If the converting entity is a domestic entity, a statement that the plan of conversion was approved in accordance with this article or, if the converting entity is a foreign entity, a statement that the conversion was approved by the foreign entity in accordance with the law of its jurisdiction of formation and filed copies of the conversion documents from its jurisdiction of formation, as an attachment;
(5) If the converted entity is a domestic filing entity, its public organic record, as an attachment;
(6) If the converted entity is a domestic limited liability partnership, its statement of qualification, as an attachment; and
(7) If the converted entity is a foreign entity, a mailing address to which the Secretary of State may send any process served on the Secretary of State pursuant to Section 79-37-406(e).
(c) In addition to the requirements of subsection (b), a statement of conversion may contain any other provision not prohibited by law.
(d) If the converted entity is a domestic entity, its public organic record, if any, must satisfy the requirements of the law of this state, except that the public organic record does not need to be signed and may omit any provision that is not required to be included in a restatement of the public organic record.
* * *
( * * *e) A statement of conversion is
effective on the date and time of filing or the later date and time specified
in the statement of conversion.
( * * *f) If the converted entity is a
domestic entity, the conversion is effective when the statement of conversion
is effective. If the converted entity is a foreign entity, the conversion is
effective on the later of:
(1) The date and time provided by the organic law of the converted entity; or
(2) When the statement is effective.
SECTION 7. Section 79-37-406, Mississippi Code of 1972, is amended as follows:
79-37-406. (a) When a conversion becomes effective:
(1) The converted entity is:
(A) Organized under and subject to the organic law of the converted entity; and
(B) The same entity without interruption as the converting entity;
(2) All property of the converting entity continues to be vested in the converted entity without transfer, reversion, or impairment;
(3) All debts, obligations, and other liabilities of the converting entity continue as debts, obligations, and other liabilities of the converted entity;
(4) Except as otherwise provided by law or the plan of conversion, all the rights, privileges, immunities, powers, and purposes of the converting entity remain in the converted entity;
(5) The name of the converted entity may be substituted for the name of the converting entity in any pending action or proceeding;
(6) If a converted entity is a filing entity, its public organic record is effective;
(7) If the converted entity is a limited liability partnership, its statement of qualification is effective;
(8) The private organic rules of the converted entity which are to be in a record, if any, approved as part of the plan of conversion are effective; and
(9) The interests in the converting entity are converted, and the interest holders of the converting entity are entitled only to the rights provided to them under the plan of conversion and to any appraisal rights they have under Section 79-37-109 and the converting entity's organic law.
(b) Except as otherwise provided in the organic law or organic rules of the converting entity, the conversion does not give rise to any rights that an interest holder, governor, or third party would have upon a dissolution, liquidation, or winding up of the converting entity.
(c) When a conversion becomes effective, a person that did not have interest holder liability with respect to the converting entity and becomes subject to interest holder liability with respect to a domestic entity as a result of a conversion has interest holder liability only to the extent provided by the organic law of the entity and only for those debts, obligations, and other liabilities that arise after the conversion becomes effective.
(d) When a conversion becomes effective, the interest holder liability of a person that ceases to hold an interest in a domestic converting entity with respect to which the person had interest holder liability is subject to the following rules:
(1) The conversion does not discharge any interest holder liability under the organic law of a domestic converting entity to the extent the interest holder liability arose before the conversion became effective.
(2) The person does not have interest holder liability under the organic law of the domestic converting entity for any debt, obligation, or other liability that arises after the conversion becomes effective.
(3) The organic law of the domestic converting entity continues to apply to the release, collection, or discharge of any interest holder liability preserved under paragraph (1) as if the conversion had not occurred.
(4) The person has whatever rights of contribution from any other person as are provided by other law or the organic rules of the domestic converting entity with respect to any interest holder liability preserved under paragraph (1) as if the conversion had not occurred.
(e) When a conversion becomes effective, a foreign entity that is the converted entity may be served with process in this state for the collection and enforcement of any of its debts, obligations, and other liabilities in accordance with applicable law.
(f) If the converting
entity is a registered foreign entity, its registration to do business in this
state is * * * amended to reflect its new status when the conversion
becomes effective.
(g) A conversion does not require the entity to wind up its affairs and does not constitute or cause the dissolution of the entity.
SECTION 8. Section 79-37-505, Mississippi Code of 1972, is amended as follows:
79-37-505. (a) A statement of domestication must be signed by the domesticating entity and delivered to the Secretary of State for filing.
(b) A statement of domestication must contain:
(1) The name, jurisdiction of formation, and type of entity of the domesticating entity;
(2) The name and jurisdiction of formation of the domesticated entity;
(3) If the statement of domestication is not to be effective upon filing, the later date and time on which it will become effective, which may not be more than ninety (90) days after the date of filing;
(4) If the domesticating entity is a domestic entity, a statement that the plan of domestication was approved in accordance with this article or, if the domesticating entity is a foreign entity, a statement that the domestication was approved in accordance with the law of its jurisdiction of formation;
(5) If the domesticated entity is a domestic filing entity, its public organic record, as an attachment;
(6) If the domesticated entity is a domestic limited liability partnership, its statement of qualification, as an attachment; and
(7) If the domesticated entity is a foreign entity that is not a registered foreign entity, a mailing address to which the Secretary of State may send any process served on the Secretary of State pursuant to Section 79-37-506(e).
(8) If the domesticated entity is a foreign entity, a copy of filed domestication documents from the new jurisdiction as an attachment.
(9) If the domesticated entity is a domestic entity, a certificate of good standing or certificate of existence issued less than one-hundred and eighty (180) days before, from its jurisdiction of formation, as an attachment.
(c) In addition to the requirements of subsection (b), a statement of domestication may contain any other provision not prohibited by law.
(d) If the domesticated entity is a domestic entity, its public organic record, if any, must satisfy the requirements of the law of this state, but the public organic record does not need to be signed and may omit any provision that is not required to be included in a restatement of the public organic record.
* * *
( * * *e) A statement of domestication is
effective on the date and time of filing or the later date and time specified
in the statement of domestication.
( * * *f) A domestication in which the
domesticated entity is a domestic entity is effective when the statement of
domestication is effective. A domestication in which the domesticated entity
is a foreign entity is effective on the later of:
(1) The date and time provided by the organic law of the domesticated entity; or
(2) When the statement is effective.
SECTION 9. Section 79-37-506, Mississippi Code of 1972, is amended as follows:
79-37-506. (a) When a domestication becomes effective:
(1) The domesticated entity is:
(A) Organized under and subject to the organic law of the domesticated entity; and
(B) The same entity without interruption as the domesticating entity;
(2) All property of the domesticating entity continues to be vested in the domesticated entity without transfer, reversion, or impairment;
(3) All debts, obligations, and other liabilities of the domesticating entity continue as debts, obligations, and other liabilities of the domesticated entity;
(4) Except as otherwise provided by law or the plan of domestication, all of the rights, privileges, immunities, powers, and purposes of the domesticating entity remain in the domesticated entity;
(5) The name of the domesticated entity may be substituted for the name of the domesticating entity in any pending action or proceeding;
(6) If the domesticated entity is a filing entity, its public organic record is effective;
(7) If the domesticated entity is a limited liability partnership, its statement of qualification is effective simultaneously;
(8) The private organic rules of the domesticated entity that are to be in a record, if any, approved as part of the plan of domestication are effective; and
(9) The interests in the domesticating entity are converted to the extent and as approved in connection with the domestication, and the interest holders of the domesticating entity are entitled only to the rights provided to them under the plan of domestication and to any appraisal rights they have under Section 79-37-109 and the domesticating entity's organic law.
(b) Except as otherwise provided in the organic law or organic rules of the domesticating entity, the domestication does not give rise to any rights that an interest holder, governor, or third party would have upon a dissolution, liquidation, or winding-up of the domesticating entity.
(c) When a domestication becomes effective, a person that did not have interest holder liability with respect to the domesticating entity and that becomes subject to interest holder liability with respect to a domestic entity as a result of the domestication has interest holder liability only to the extent provided by the organic law of the entity and only for those debts, obligations, and other liabilities that arise after the domestication becomes effective.
(d) When a domestication becomes effective, the interest holder liability of a person that ceases to hold an interest in a domestic domesticating entity with respect to which the person had interest holder liability is subject to the following rules:
(1) The domestication does not discharge any interest holder liability under the organic law of a domesticating domestic entity to the extent the interest holder liability arose before the domestication became effective.
(2) A person does not have interest holder liability under the organic law of the domestic domesticating entity for any debt, obligation, or other liability that arises after the domestication becomes effective.
(3) The organic law of a domestic domesticating entity continues to apply to the release, collection, or discharge of any interest holder liability preserved under paragraph (1) as if the domestication had not occurred.
(4) A person has whatever rights of contribution from any other person as are provided by other law or the organic rules of the domestic domesticating entity with respect to any interest holder liability preserved under paragraph (1) as if the domestication had not occurred.
(e) When a domestication becomes effective, a foreign entity that is the domesticated entity may be served with process in this state for the collection and enforcement of any of its debts, obligations, and other liabilities in accordance with applicable law.
(f) If a domesticating
entity is a registered foreign entity, the registration to do business in this
state of the domesticating entity is * * * amended to reflect its new status
when the domestication becomes effective.
(g) A domestication does not require the entity to wind up its affairs and does not constitute or cause the dissolution of the entity.
SECTION 10. This act shall take effect and be in force from and after July 1, 2017.
