(a)  When a conversion becomes effective:

(1)  The converted entity is:

(i)  Organized under and thereafter subject to the organic law of the converted entity; and

(ii)  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 the converted entity is a limited liability partnership, its statement of qualification becomes effective;

(7)  The provisions of the partnership agreement of the converted entity which are to be in a record, if any, approved as part of the plan of conversion become effective; and

(8)  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 § 7-12.1-1106.

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Terms Used In Rhode Island General Laws 7-12.1-1146

  • Appraisal: A determination of property value.
  • Business: includes every trade, occupation, and profession. See Rhode Island General Laws 7-12.1-102
  • Conversion: means a transaction authorized by Rhode Island General Laws 7-12.1-1101
  • Converted entity: means the converting entity as it continues in existence after a conversion. See Rhode Island General Laws 7-12.1-1101
  • Converting entity: means the domestic entity that approves a plan of conversion pursuant to Rhode Island General Laws 7-12.1-1101
  • Interest: means :

    (i)  A share in a business corporation;

    (ii)  A membership in a nonprofit corporation;

    (iii)  A partnership interest in a general partnership;

    (iv)  A partnership interest in a limited partnership;

    (v)  A membership interest in a limited liability company;

    (vi)  A share in a general cooperative association;

    (vii)  A member's interest in a limited cooperative association;

    (viii)  A membership in an unincorporated nonprofit association;

    (ix)  A beneficial interest in a statutory trust, business trust, or common-law business trust; or

    (x)  A governance interest or distributional interest in any other type of unincorporated entity. See Rhode Island General Laws 7-12.1-1101

  • Interest holder: means :

    (i)  A shareholder of a business corporation;

    (ii)  A member of a nonprofit corporation;

    (iii)  A general partner of a general partnership;

    (iv)  A general partner of a limited partnership;

    (v)  A limited partner of a limited partnership;

    (vi)  A member of a limited liability company;

    (vii)  A shareholder of a general cooperative association;

    (viii)  A member of a limited cooperative association;

    (ix)  A member of an unincorporated nonprofit association;

    (x)  A beneficiary or beneficial owner of a statutory trust, business trust, or common-law business trust; or

    (xi)  Any other direct holder of an interest. See Rhode Island General Laws 7-12.1-1101

  • Interest holder liability: means :

    (i)  Personal liability for a liability of an entity which is imposed on a person:

    (A)  Solely by reason of the status of the person as an interest holder; or

    (B)  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

    (ii)  An obligation of an interest holder under the organic rules of an entity to contribute to the entity. See Rhode Island General Laws 7-12.1-1101

  • Liabilities: The aggregate of all debts and other legal obligations of a particular person or legal entity.
  • Obligation: An order placed, contract awarded, service received, or similar transaction during a given period that will require payments during the same or a future period.
  • Organic law: means the law of an entity's jurisdiction of formation governing the internal affairs of the entity. See Rhode Island General Laws 7-12.1-1101
  • Organic rules: means the public organic record and private organic rules of an entity. See Rhode Island General Laws 7-12.1-1101
  • Partner: means a person that:

    (i)  Has become a partner in a partnership under Rhode Island General Laws 7-12.1-102

  • Partnership: A voluntary contract between two or more persons to pool some or all of their assets into a business, with the agreement that there will be a proportional sharing of profits and losses.
  • Partnership agreement: means the agreement, whether or not referred to as a partnership agreement and whether oral, implied, in a record, or in any combination thereof, of all the partners of a partnership concerning the matters described in Rhode Island General Laws 7-12.1-102
  • Person: means an individual, business corporation, nonprofit corporation, partnership, limited partnership, limited liability company, general cooperative association, limited cooperative association, unincorporated nonprofit 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. See Rhode Island General Laws 7-12.1-102
  • Plan: means a plan of merger, plan of interest exchange, plan of conversion, or plan of domestication. See Rhode Island General Laws 7-12.1-1101
  • Plan of conversion: means a plan under Rhode Island General Laws 7-12.1-1101
  • Property: means all property, whether real, personal, or mixed or tangible or intangible, or any right or interest therein. See Rhode Island General Laws 7-12.1-102
  • 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. See Rhode Island General Laws 7-12.1-1101
  • 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. See Rhode Island General Laws 7-12.1-102
  • Transfer: includes :

    (i)  An assignment;

    (ii)  A conveyance;

    (iii)  A sale;

    (iv)  A lease;

    (v)  An encumbrance, including a mortgage or security interest;

    (vi)  A gift; and

    (vii)  A transfer by operation of law. See Rhode Island General Laws 7-12.1-102

(b)  Except as otherwise provided in the partnership agreement of a domestic converting partnership, the conversion does not give rise to any rights that a partner 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 the 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 are incurred 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 partnership 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 this chapter to the extent the interest holder liability was incurred before the conversion became effective.

(2)  The person does not have interest holder liability under this chapter for any debt, obligation, or other liability that is incurred after the conversion becomes effective.

(3)  This chapter continues to apply to the release, collection, or discharge of any interest holder liability preserved under subsection (d)(1) of this section as if the conversion had not occurred.

(4)  The person has whatever rights of contribution from any other person as are provided by this chapter, law other than this chapter, or the organic rules of the converting entity with respect to any interest holder liability preserved under subsection (d)(1) of this section as if the conversion had not occurred.

(e)  When a conversion has become 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 as provided in § 7-12.1-119.

(f)  If the converting entity is a registered foreign entity, its registration to do business in this state is canceled 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.

History of Section.
P.L. 2022, ch. 123, § 2, effective January 1, 2023; P.L. 2022, ch. 124, § 2, effective January 1, 2023.