2021 -- H 6064

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LC002129

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     STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2021

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A N   A C T

RELATING TO CORPORATIONS, ASSOCIATIONS, AND PARTNERSHIPS -- MERGER

AND CONSOLIDATION

     Introduced By: Representative Justine A. Caldwell

     Date Introduced: March 03, 2021

     Referred To: House Corporations

     (Secretary of State)

It is enacted by the General Assembly as follows:

     SECTION 1. Sections 7-6-2, 7-6-43, 7-6-44, 7-6-45, 7-6-46, 7-6-47 and 7-6-48 of the

General Laws in Chapter 7-6 entitled "Rhode Island Nonprofit Corporation Act" are hereby

amended to read as follows:

     7-6-2. Definitions.

     As used in this chapter, unless the context otherwise requires, the term:

     (1) "Articles of incorporation" means the original or restated articles of incorporation or

articles of consolidation and all amendments to it, including articles of merger and special acts of

the general assembly creating corporations and/or entities.

     (2) "Authorized representative" means a person who is duly authorized by a nonprofit

corporation's board of directors to act on behalf of the nonprofit corporation.

     (3) "Board of directors" means the group of persons vested with the management of the

affairs of the corporation (including, without being limited to, a board of trustees) regardless of the

name by which the group is designated.

     (4) "Bylaws" means the code or codes of rules adopted for the regulation or management

of the affairs of the corporation regardless of the name, or names, by which the rules are designated.

     (5) "Corporation" or "Domestic corporation" means a nonprofit corporation subject to the

provisions of this chapter, except a foreign corporation.

     (6) "Delivering/Delivered" means either physically transferring a paper document to the

secretary of state or transferring a document to the secretary of state by electronic transmission

through a medium provided and authorized by the secretary of state.

     (7) "Director" means a member of a board of directors.

     (8) "Electronic transmission" means any form of communication, not directly involving

the physical transmission of paper, that creates a record that may be retained, retrieved, and

reviewed by a recipient thereof and that may be directly reproduced in paper form by such a

recipient through an automated process.

     (9) “Entity” includes a domestic or foreign business corporation, domestic or foreign

nonprofit corporation, domestic or foreign unincorporated entity, estate, trust, state, the United

States, foreign government, or governmental subdivision.

     (9) (10) "Filing" means delivered to the secretary of state in either paper format or

electronic transmission through a medium provided and authorized by the secretary of state.

     (10) (11) "Foreign corporation" means a nonprofit corporation organized under laws other

than the laws of this state.

     (11) (12) "Insolvent" means inability of a corporation to pay its debts as they become due

in the usual course of its affairs.

     (12) (13) "Member" means one having membership rights in a corporation in accordance

with the provisions of its articles of incorporation or bylaws regardless of the name by which the

person is designated.

     (13) (14) "Nonprofit corporation" means a corporation of which no part of the income or

profit is distributable to its members, directors, or officers, except as otherwise expressly permitted

by this chapter.

     (14) (15) "Signature" or "signed" or "executed" means an original signature, facsimile, or

an electronically transmitted signature submitted through a medium provided and authorized by the

secretary of state.

     (16) “Unincorporated entity” means an organization or artificial legal person that either has

a separate legal existence or has the power to acquire an estate in real property in its own name and

that is not any of the following: a domestic or foreign business or nonprofit corporation, an estate,

a trust, a governmental subdivision, a state, the United States, or a foreign government. The term

includes a general partnership, limited liability company, limited partnership, business or statutory

trust, joint stock association, and unincorporated nonprofit association.

     (15) (17) "Volunteer" means an individual performing services for a nonprofit corporation

without compensation.

     7-6-43. Procedure for merger.

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     (a) Notwithstanding anything to the contrary contained in any general or public law, rule,

or regulation, any two (2) or more corporations entities whether defined in §§§ 7-6-2, or § 7-1.2-

106, 7-13-1, or 7-16-2, may merge into one of the corporations entities pursuant to a plan of merger

approved in the manner provided in this chapter. This section does not apply to insurance holding

company systems as defined in § 27-35-1.

     (b) Each corporation entity shall adopt a plan of merger setting forth:

     (1) The names of the corporations entities proposing to merge, and the name of the

corporations entity into which they propose to merge, which is subsequently designated as the

surviving corporations entity;

     (2) The terms and conditions of the proposed merger;

     (3) A statement of any changes in the articles of incorporation of the surviving corporations

entity to be effected by the merger; and

     (4) Such other provisions regarding the proposed merger that are deemed necessary or

desirable.

     7-6-44. Procedure for consolidation.

     (a) Notwithstanding anything to the contrary contained in any general or public law, rule,

or regulation, any two (2) or more corporations entities, whether defined in §§§ 7-6-2 or, § 7-1.2-

106, 7-13-1, or 7-13-2 may consolidate into one of the corporations entities pursuant to a plan of

consolidation approved in the manner provided in this chapter. This section does not apply to

insurance holding company systems as defined in § 27-35-1.

     (b) Each corporation entity shall adopt a plan of consolidation setting forth:

     (1) The names of the corporations entities proposing to consolidate, and the name of the

new corporation entity into which they propose to consolidate, which is subsequently designated

as the new corporation entity;

     (2) The terms and conditions of the proposed consolidation;

     (3) Regarding the new corporation entity, all of the statements required to be set forth in

articles of incorporation for corporations entities organized under this chapter; and

     (4) Any other provisions regarding the proposed consolidation that are deemed necessary

or desirable.

     7-6-45. Approval of merger or consolidation.

     (a) A plan of merger or consolidation is adopted in the following manner:

     (1) If the members of any merging or consolidating corporation are entitled to vote on it,

the board of directors of the corporation shall adopt a resolution approving the proposed plan and

directing that it be submitted to a vote at a meeting of members entitled to vote on it, which may

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be either an annual or a special meeting. Written notice setting forth the proposed plan or a summary

of the plan shall be given to each member entitled to vote at the meeting within the time and in the

manner provided in this chapter for the giving of notice of meetings of members. The proposed

plan shall be adopted upon receiving at least a majority of the votes that members present at each

meeting or represented by proxy are entitled to cast.

     (2) If any merging or consolidating corporation has no members, or no members entitled

to vote on it, a plan of merger or consolidation shall be adopted at a meeting of the board of directors

of the corporation upon receiving the vote of a majority of the directors in office.

     (3) A limited-liability company party to a proposed merger or consolidation shall have the

plan of merger or consolidation authorized and approved in the manner and by the vote required

by § 7-16-21;

     (4) A domestic limited partnership party to a proposed merger or consolidation shall have

the plan of merger or consolidation, unless otherwise provided in the limited partnership agreement,

authorized and approved in the manner and by the vote required by the laws of this state for mergers

or consolidations of a domestic limited partnership with other limited partnerships or other business

entities.

     (b) After approval, and at any time prior to the filing of the articles of merger or

consolidation, the merger or consolidation may be abandoned pursuant to any provisions for

abandonment set forth in the plan of merger or consolidation.

     7-6-46. Articles of merger or consolidation.

     (a) Upon approval, articles of merger or articles of consolidation shall duly be executed by

each corporation by its president or a vice president and by its secretary or an assistant secretary,

and shall set forth:

     (1) The plan of merger or the plan of consolidation;

     (2) If the members of any merging or consolidating corporation are entitled to vote on the

plan, then as to each corporation:

     (i) A statement setting forth the date of the meeting of members at which the plan was

adopted, that a quorum was present at the meeting, and that the plan received at least a majority of

the votes that members present at the meeting or represented by proxy were entitled to cast; or

     (ii) A statement that the plan was adopted by a consent in writing signed by all members

entitled to vote on it;

     (3) If any merging or consolidating corporation has no members, or no members entitled

to vote on the plan, then as to each corporation a statement of the fact, the date of the meeting of

the board of directors at which the plan was adopted, and a statement of the fact that the plan

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received the vote of a majority of the directors in office.

     (4) A statement that the plan of merger was authorized and approved by each other

constituent entity;

     (5) The effective date of the merger or consolidation if later than the date of filing of the

articles of merger or consolidation;

     (6) The identity of the surviving entity or the new entity by name, type and state or other

jurisdiction under whose laws it is organized or formed; and

     (b) The articles of merger or articles of consolidation shall be delivered to the secretary of

state. If the secretary of state finds that the articles conform to law, he or she shall, when all fees

have been paid as prescribed in this chapter:

     (1) Endorse on the original the word "Filed", and the month, day, and year of the filing;

     (2) File the original in the secretary of state's office;

     (3) Issue a certificate of merger or a certificate of consolidation.

     (c) The certificate of merger or certificate of consolidation shall be delivered to the

surviving or new corporation entity, as the case may be, or its representative.

     (d) The articles of merger or consolidation shall act as a certificate of cancellation for each

party to the merger or consolidation that is not the surviving entity or the new entity.

     7-6-47. Effect of merger or consolidation.

     (a) Upon the issuance of the certificate of merger, or the certificate of consolidation by the

secretary of state, the merger or consolidation is effected.

     (b) When the merger or consolidation has been effected:

     (1) The several corporations parties to the plan of merger or consolidation are a single

corporation entity, which, in the case of a merger, is that corporation entity designated in the plan

of merger as the surviving corporation entity, and, in the case of a consolidation, is the new

corporation entity provided for in the plan of consolidation.

     (2) The separate existence of all corporations parties to the plan of merger or consolidation,

except the surviving or new corporation entity, ceases.

     (3) The surviving or new corporation entity has all the rights, privileges, immunities, and

powers and is subject to all the duties and liabilities of a corporation an entity organized under this

chapter.

     (4) The surviving or new corporation entity at that time and subsequently possesses all the

rights, privileges, immunities, and franchises, of a public as well as of a private nature, of each of

the merging or consolidating corporations entities; and all property, real, personal, and mixed, and

all debts due on any account, and all other choses in action. Every other interest, of or belonging to

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or due to each of the corporations entities merged or consolidated, is deemed to be transferred to

and vested in the single corporation entity without further act or deed. The title to any real estate,

or any interest in it, vested in any of the corporations entities does not revert or become in any way

impaired because of the merger or consolidation.

     (5) The surviving or new corporation entity is from that time on responsible and liable for

all the liabilities and obligations of each of the corporations entities merged or consolidated. Any

claim existing or action or proceeding pending by or against any of the corporations entities may

be prosecuted as if the merger or consolidation had not taken place, or the surviving or new

corporation entity may be substituted in its place. Neither the rights of creditors nor any liens upon

the property of any corporation entity is impaired by the merger or consolidation.

     (6) In the case of a merger, the articles of incorporation of the surviving corporation entity

are deemed to be amended to the extent that changes in its articles of incorporation formation are

stated in the plan of merger. In the case of a consolidation, the statements set forth in the articles of

consolidation and that are required or permitted to be set forth in the articles of incorporation of

corporations entities organized under this chapter are deemed to be the articles of incorporation of

the new corporation entity.

     7-6-48. Merger or consolidation of domestic and foreign corporations.

     (a) Notwithstanding anything to the contrary contained in any general or public law, rule,

or regulation, any two (2) or more corporations entities, whether defined in §§§ 7-6-2, or § 7-1.2-

106, 7-13-1, or 7-16-2 may be merged or consolidated in the following manner, if the merger or

consolidation is permitted by the laws of the state under which each foreign corporation entity is

organized:

     (1) Each domestic corporation entity shall comply with the provisions of this chapter

regarding the merger or consolidation of domestic corporations entities and each foreign

corporation entity shall comply with the applicable provisions of the laws of the state under which

it is organized.

     (2) If the surviving or new corporation entity is to be governed by the laws of any state

other than this state, it shall comply with the provisions of this chapter with respect to foreign

corporations entities if it is to conduct affairs in this state, and in every case it shall file with the

secretary of state of this state:

     (i) An agreement that it may be served with process in this state in any proceeding for the

enforcement of any obligation of any domestic corporation entity that is a party to the merger or

consolidation; and

     (ii) An irrevocable appointment of the secretary of state of this state as its agent to accept

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service of process in any proceeding.

     (b) The effect of the merger or consolidation shall be the same as in the case of the merger

or consolidation of domestic corporations entities, if the surviving or new corporation entity is to

be governed by the laws of this state. If the surviving or new corporation entity is to be governed

by the laws of any state other than this state, the effect of the merger or consolidation is the same

as in the case of the merger or consolidation of domestic corporations entities except insofar as the

laws of the other state provide otherwise.

     (c) After approval by the members or, if there are no members entitled to vote on it, by the

board of directors, and at any time prior to the filing of the articles of merger or consolidation, the

merger or consolidation may be abandoned pursuant to provisions for abandonment set forth in the

plan of merger or consolidation.

     (d) This section does not apply to insurance holding company systems as defined in § 27-

35-1.

     SECTION 2. Chapter 7-6 of the General Laws entitled "Rhode Island Nonprofit

Corporation Act" is hereby amended by adding thereto the following sections:

     7-6-48.1. Conversion of other entities to a domestic nonprofit corporation.

     (a) As used in this section, the term "other entity" means a foreign corporation or domestic

or foreign unincorporated entity no part of the income or profit of which is distributable to its

members, directors, or officers.

     (b) Any other entity may convert to a nonprofit corporation of this state by complying with

subsection (h) of this section and filing in the office of the secretary of state:

     (1) A certificate of conversion to corporation (nonprofit) that has been executed in

accordance with subsection (i) of this section and filed in the office of the secretary of state in

accordance with § 7-6-48.2; and

     (2) Articles of incorporation that have been executed, acknowledged and filed in

accordance with § 7-6-35.

     (c) The certificate of conversion to corporation (nonprofit) shall state:

     (1) The date on which, and the jurisdiction where the other entity was first created,

incorporated, formed or otherwise came into being and, if it has changed, its jurisdiction

immediately prior to its conversion to a domestic corporation;

     (2) The name and type of the other entity immediately prior to the filing of the certificate

of conversion to corporation (nonprofit); and

     (3) The name of the corporation as set forth in its articles of incorporation filed in

accordance with subsection (b) of this section.

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     (d) Upon the effective time of the certificate of conversion to corporation (nonprofit) and

the articles of incorporation, the other entity shall be converted to a corporation of this state and the

corporation shall thereafter be subject to all of the provisions of this title, except that

notwithstanding § 7-6-36, the existence of the corporation shall be deemed to have commenced on

the date the other entity commenced its existence in the jurisdiction in which the other entity was

first created, formed, incorporated or otherwise came into being.

     (e) The conversion of any other entity to a corporation of this state shall not be deemed to

affect any obligations or liabilities of the other entity incurred prior to its conversion to a

corporation of this state or the personal liability of any person incurred prior to such conversion.

     (f) When another entity has been converted to a corporation of this state pursuant to this

section, the corporation of this state shall, for all purposes of the laws of the state, be deemed to be

the same entity as the converting other entity. When any conversion shall have become effective

under this section, for all purposes of the laws of the state, all of the rights, privileges and powers

of the other entity that has converted, and all property, real, personal and mixed, and all debts due

to such other entity, as well as all other things and causes of action belonging to such other entity,

shall remain vested in the domestic corporation to which such other entity has converted and shall

be the property of such domestic corporation and that title to any real property vested by deed or

otherwise in such other entity shall not revert to such other entity or be in any way impaired by

reason of this chapter; but all rights of creditors and all liens upon any property of such other entity

shall be preserved unimpaired, and all debts, liabilities and duties of the other entity that has

converted shall remain attached to the corporation of this state to which such other entity has

converted, and may be enforced against it to the same extent as if said debts, liabilities and duties

had originally been incurred or contracted by it in its capacity as a corporation of this state. The

rights, privileges, powers and interests in property of the other entity, as well as the debts, liabilities

and duties of the other entity, shall not be deemed, as a consequence of the conversion, to have

been transferred to the domestic corporation to which such other entity has converted for any

purpose of the laws of the state.

     (g) Unless otherwise agreed for all purposes of the laws of the state, or as required under

applicable non-Rhode Island law, the converting other entity shall not be required to wind up its

affairs or pay its liabilities and distribute its assets, and the conversion shall not be deemed to

constitute a dissolution of such other entity and shall constitute a continuation of the existence of

the converting other entity in the form of a corporation of this state.

     (h) Prior to filing a certificate of conversion to corporation (nonprofit) with the office of

the secretary of state, the conversion shall be approved in the manner provided for by the document,

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instrument, agreement or other writing, as the case may be, governing the internal affairs of the

other entity and the conduct of its business or by applicable law, as appropriate, and articles of

incorporation shall be approved by the same authorization required to approve the conversion.

     (i) The certificate of conversion to corporation (nonprofit) shall be signed by any person

who is authorized to sign the certificate of conversion to corporation (nonprofit) on behalf of the

other entity.

     7-6-48.2. Filing of certificate of conversion to corporation (nonprofit).

     (a) The certificate of conversion to corporation (nonprofit) shall be delivered to the

secretary of state. If the secretary of state finds that the certificate of conversion to corporation

(nonprofit) conforms to law, the secretary of state shall, when all fees have been paid as prescribed

in subsection (b) of this section:

     (1) Endorse on the original the word "Filed", and the month, day, and year of the filing;

     (2) File the original in the secretary of state's office; and

     (3) Issue a certificate of conversion to corporation (nonprofit).

     (b) The secretary of state shall charge and collect for filing a certificate of conversion

(nonprofit), twenty-five dollars ($25.00).

     (c) The certificate of conversion to corporation (nonprofit) shall be delivered to the

corporation.

     7-6-48.3. Conversion of a domestic nonprofit corporation to other entities.

     (a) A nonprofit corporation of this state may, upon the authorization of such conversion in

accordance with this section, convert to a limited-liability company, business trust or association,

real estate investment trust, common-law trust, or any other unincorporated business or entity,

including a partnership (whether general or limited, including a registered limited-liability

partnership) or a foreign corporation.

     (b) If the members of the converting corporation are entitled to vote on it, the board of

directors of the corporation shall adopt a resolution, specifying the type of entity into which the

corporation shall be converted, the terms and conditions of the conversion, and recommending the

approval of such conversion by directing that it be submitted to a vote at a meeting of members

entitled to vote on it, which may be either an annual or a special meeting. Written notice setting

forth the proposed conversion shall be given to each member entitled to vote at the meeting within

the time and in the manner provided in this chapter for the giving of notice of meetings of members.

The conversion shall be adopted upon receiving at least a majority of the votes that members present

at each meeting or represented by proxy are entitled to cast.

     (c) If any converting corporation has no members, or no members entitled to vote on it, a

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resolution for conversion shall be adopted at a meeting of the board of directors of the corporation

upon receiving the vote of a majority of the directors in office.

     (d) The corporation shall file with the secretary of state a certificate of conversion to non-

Rhode Island entity, executed by its president and vice president and by its secretary or an assistant

secretary, that certifies:

     (1) The name of the corporation, and if it has been changed, the name under which it was

originally incorporated;

     (2) The date of filing of its original articles of incorporation with the secretary of state;

     (3) The name and jurisdiction of the entity and type of entity to which the corporation shall

be converted;

     (4) That the conversion has been approved in accordance with the provisions of this

section;

     (5) The agreement of the corporation that it may be served with process in the state of

Rhode Island in any action, suit, or proceeding for enforcement of any obligation of the corporation

arising while it was a corporation of this state, and that it irrevocably appoints the secretary of state

as its agent to accept service of process in any such action, suit, or proceeding; and

     (6) The address to which a copy of the process referred to in subsection (d)(5) of this section

shall be mailed to it by the secretary of state. In the event of such service upon the secretary of state

in accordance with subsection (d)(5) of this section, the secretary of state shall forthwith notify

such corporation that has converted out of the state of Rhode Island by letter, certified mail, return

receipt requested, directed to such corporation that has converted out of the state of Rhode Island

at the address so specified, unless such corporation shall have designated in writing to the secretary

of state a different address for such purpose, in which case it shall be mailed to the last address

designated. Such letter shall enclose a copy of the process and any other papers served on the

secretary of state pursuant to this subsection. It shall be the duty of the plaintiff in the event of such

service to serve process and any other papers in duplicate; to notify the secretary of state that service

is being effected pursuant to this subsection; and to pay the secretary of state the sum of fifteen

dollars ($15.00) for the use of the state, which sum shall be taxed as part of the costs in the

proceeding, if the plaintiff shall prevail therein. The secretary of state shall maintain an alphabetical

record of any such service setting forth the name of the plaintiff and the defendant; the title, docket

number and nature of the proceeding in which process has been served; the fact that service has

been effected pursuant to this subsection; the return date thereof; and the day and hour service was

made. The secretary of state shall not be required to retain such information longer than five (5)

years from receipt of the service of process.

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     (e) Upon the filing in the office of the secretary of state of a certificate of conversion to

non-Rhode Island entity in accordance with subsection (d) of this section, or upon the future

effective date or time of the certificate of conversion to non-Rhode Island entity and payment to

the secretary of state of all fees prescribed under this title, the secretary of state shall certify that

the corporation has filed all documents and paid all fees required by this title, and thereupon the

corporation shall cease to exist as a corporation of this state at the time the certificate of conversion

becomes effective. Such certificate of the secretary of state shall be prima facie evidence of the

conversion by such corporation out of the state.

     (f) The conversion of a corporation out of the state in accordance with this section and the

resulting cessation of its existence as a corporation of this state pursuant to a certificate of

conversion to non-Rhode Island entity shall not be deemed to affect any obligations or liabilities of

the corporation incurred prior to such conversion or the personal liability of any person incurred

prior to such conversion, nor shall it be deemed to affect the choice of law applicable to the

corporation with respect to matters arising prior to such conversion.

     (g) Unless otherwise provided in a resolution of conversion adopted in accordance with

this section, the converting corporation shall not be required to wind up its affairs or pay its

liabilities and distribute its assets, and the conversion shall not constitute a dissolution of such

corporation.

     (h) When a corporation has been converted to another entity or business form pursuant to

this section, the other entity or business form shall, for all purposes of the laws of the state, be

deemed to be the same entity as the corporation. When any conversion shall have become effective

under this section, for all purposes of the laws of the state, all of the rights, privileges and powers

of the corporation that has converted, and all property, real, personal and mixed, and all debts due

to such corporation, as well as all other things and causes of action belonging to such corporation,

shall remain vested in the other entity or business form to which such corporation has converted

and shall be the property of such other entity or business form, and the title to any real property

vested by deed or otherwise in such corporation shall not revert to such corporation or be in any

way impaired by reason of this chapter; but all rights of creditors and all liens upon any property

of such corporation shall be preserved unimpaired, and all debts, liabilities and duties of the

corporation that has converted shall remain attached to the other entity or business form to which

such corporation has converted, and may be enforced against it to the same extent as if said debts,

liabilities and duties had originally been incurred or contracted by it in its capacity as such other

entity or business form. The rights, privileges, powers and interest in property of the corporation

that has converted, as well as the debts, liabilities and duties of such corporation, shall not be

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deemed, as a consequence of the conversion, to have been transferred to the other entity or business

form to which such corporation has converted for any purposes of the laws of the state.

     7-6-48.4. Filing of certificate of conversion to corporation (nonprofit).

     (a) The certificate of conversion to corporation (nonprofit) shall be delivered to the

secretary of state. If the secretary of state finds that the certificate of conversion to corporation

(nonprofit) conforms to law, the secretary of state shall, when all fees have been paid as prescribed

in subsection (b) of this section:

     (1) Endorse on the original the word "Filed", and the month, day, and year of the filing;

     (2) File the original in the secretary of state’s office; and

     (3) Issue a certificate of conversion to corporation (nonprofit).

     (b) The secretary of state shall charge and collect for filing a certificate of conversion

(nonprofit), twenty-five dollars ($25.00).

     (c) The certificate of conversion to corporation (nonprofit) shall be delivered to the

corporation.

     SECTION 3. This act shall take effect upon passage.

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N   A C T

RELATING TO CORPORATIONS, ASSOCIATIONS, AND PARTNERSHIPS -- MERGER

AND CONSOLIDATION

***

     This act would amend the Rhode Island nonprofit corporation act regarding consolidation

and merger.

     This act would take effect upon passage.

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