A N     A C T

RELATING TO LIMITED LIABILITY COMPANIES AND LIMITED PARTNERSHIPS -- FORMATION, CONVERSION, AND CANCELLATION

Introduced By: Senator Roger R. Badeau

Date Introduced : February 9, 1999

It is enacted by the General Assembly as follows:

SECTION 1. Chapter 7-16 of the General Laws entitled "The Rhode Island Limited Liability Company Act" is hereby amended by adding thereto the following section:

{ADD 7-16-5.1. Conversion of certain entities to a limited liability company. -- ADD} {ADD (a) As used in this section, the term "other entity" means a business trust or association, a real estate investment trust, a common-law trust or any other unincorporated business, excluding a partnership (whether general or limited) or a foreign limited liability company. ADD}

{ADD (b) Any other entity may convert to a domestic limited liability company by complying with subsection (h) of this section and filing in the office of the secretary of state in accordance with section 7-16-8 of this title{DEL.DEL} {ADD, aADD} {DELADEL}rticles of organization that comply with section 7-16-6 of this title and have been executed by one or more authorized persons in accordance with section 7-16-7 of this title, accompanied by a certificate of conversion to a limited liability company. ADD}

{ADD (c). The certificate of conversion to limited liability company shall state: ADD}

{ADD (1) The date on which and jurisdiction where the other entity was first created, formed or otherwise came into being and, if it has changed, its jurisdiction immediately prior to its conversion to a domestic limited liability company; ADD}

{ADD (2) The name of the other entity immediately prior to the filing of the certificate of conversion to limited liability company; ADD}

{ADD (3) The name of the limited liability company as set forth in its articles of organization filed in accordance with subsection (b) of this section; and ADD}

{ADD (4) The future effective date or time (which shall be a date or time certain) of the conversion to a limited liability company if it is not to be effective upon the filing of the certificate of conversion to limited liability company and the articles of organization. ADD}

{ADD (d) Upon the filing in the office of the secretary of state of the certificate of conversion to limited liability company and the article of organization or upon the future effective date or time of the certificate of conversion to a limited liability company and the articles of organization, the other entity shall be converted into a domestic limited liability company and the limited liability company shall thereafter be subject to all of the provisions of this chapter, except that notwithstanding section 7-16-5 of this title, the existence of the limited liability company 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, or otherwise came into being. ADD}

{ADD (e) The conversion of any other entity into a domestic limited liability company shall not be deemed to affect any obligations or liabilities of the other entity incurred prior to its conversion to a domestic limited liability company or the personal liability of any person incurred prior to such conversion. ADD}

{ADD (f) When any conversion shall have become effective under this section, for all purposes of the laws of the state of Rhode Island, 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 be vested in the domestic limited liability company and shall thereafter be the property of the domestic limited liability company as they were of the other entity that has converted, and the title to any real property vested by deed or otherwise in such other entity shall not revert 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 thenceforth attach to the domestic limited liability company and may be enforced against it to the same extent as if said debts, liabilities and duties had been incurred or contracted by it. ADD}

{ADD (g) Unless otherwise agreed, 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 domestic limited liability company. ADD}

{ADD (h) Prior to filing a certificate of conversion to limited liability company the office of the secretary of state, the conversion shall be approved in the manner provided for by the document, 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 a limited liability company agreement shall be approved by the same authorization required to approve the conversion. ADD}

{ADD (i) The provisions of this section shall not be construed to limit the accomplishment of a change in the law governing, or the domicile of, an other entity to the state of Rhode Island by any other means provided for in a limited liability company agreement or other agreement or as otherwise permitted by law, including by the amendment of a limited liability company agreement or other agreement. ADD}

{ADD 7-16-5.2. Approval of conversion of a limited liability company. -- ADD} {ADDA domestic limited liability company may convert to a business trust or association, a real estate investment trust, a common-law trust, a general partnership or a limited partnership, organized, formed or created under the laws of the state of Rhode Island, upon the authorization of such conversion in accordance with this section. If the limited liability company agreement specified the manner of authorizing a conversion of the limited liability company, the conversion shall be authorized as specified in the limited liability company agreement. If the limited liability company agreement does not specify the manner of authorizing a conversion of the limited liability company and does not prohibit a conversion of the limited liability company, the conversion shall be authorized in the same manner as is specified in the limited liability company agreement for authorizing a merger or consolidation that involves the limited liability company as a constituent party to the merger or consolidation. If the limited liability company agreement does not specify the manner of authorizing a conversion of the limited liability company or a merger or consolidate that involves the limited liability company as a constituent party and does not prohibit a conversion of the limited liability company, the conversion shall be authorized by the approval by the members or, if there is more than one class or group of members, then by each class or group of members, in either case, by members who own more than fifty percent (50%) of the then current percentage or other interest in the profits of the domestic limited liability company owned by all of the members or by the members in each class or group, as appropriate. ADD}

SECTION 2. Chapter 7-13 of the General Laws entitled "Limited Partnerships" is hereby amended by adding thereto the following section:

{ADD 7-13-8.1. Conversion of certain entities to a limited partnership. -- ADD} {ADD (a) As used in this section, the term "other entity" means a business trust or association, a real estate investment trust, a common-law trust or any other unincorporated business, excluding a limited liability company. ADD}

{ADD (b) Any other entity may convert to a domestic limited partnership company by complying with subsection (h) of this section and filing in the office of the secretary of state in accordance with section 7-13-13 of this title: ADD}

{ADD (1) A certificate of conversion to limited partnership that has been executed by one or more authorized persons in accordance with section 7-13-11 of this title; and ADD}

{ADD (2) A certificate of limited partnership that complies with section 7-13-8 of this title and has been executed by in accordance with section 7-13-11 of this title. ADD}

{ADD (c) The certificate of conversion to a limited partnership shall state: ADD}

{ADD (1) The date on which and jurisdiction where the other entity was first created, formed or otherwise came into being and, if it has changed, its jurisdiction immediately prior to its conversion to a domestic limited partnership; ADD}

{ADD (2) The name of the other entity immediately prior to the filing of the certificate of conversion to limited partnership; ADD}

{ADD (3) The name of the limited partnership as set forth in its certificate of limited partnership filed in accordance with subsection (b) of this section; and ADD}

{ADD (4) The future effective date or time (which shall be a date or time certain) of the conversion to a limited partnership if it is not to be effective upon the filing of the certificate of conversion to limited partnership and the certificate of limited partnership. ADD}

{ADD (d) Upon the filing in the office of the secretary of state of the certificate of conversion to limited partnership and the certificate of formation or upon the future effective date or time of the certificate of conversion to limited partnership and the certificate of limited partnership, the other entity shall be converted into a domestic limited partnership and the limited partnership shall thereafter be subject to all of the provisions of this chapter, except that notwithstanding section 7-13-8 of this title, the existence of the limited partnership 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, or otherwise came into being. ADD}

{ADD (e) The conversion of any other entity into a domestic limited partnership shall not be deemed to affect any obligations or liabilities of the other entity incurred prior to its conversion to a domestic limited partnership or the personal liability of any person incurred prior to such conversion. ADD}

{ADD (f) When any conversion shall have become effective under this section, for all purposes of the laws of the state of Rhode Island, 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 be vested in the domestic limited partnership and shall thereafter be the property of the domestic limited partnership as they were of the other entity that has converted, and the title to any real property vested by deed or otherwise in such other entity shall not revert 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 thenceforth attach to the domestic limited partnership and may be enforced against it to the same extent as if said debts, liabilities and duties had been incurred or contracted by it. ADD}

{ADD (g) Unless otherwise agreed, 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 domestic limited partnership. ADD}

{ADD (h) Prior to filing a certificate of conversion to limited partnership with the office of the secretary of state, the conversion shall be approved in the manner provided for by the document, 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 a partnership agreement shall be approved by the same authorization required to approve the conversion. ADD}

{ADD (i) The provisions of this section shall not be construed to limit the accomplishment of a change in the law governing, or the domicile of, another entity to the state of Rhode Island by any other means provided for in a partnership agreement or other agreement or as otherwise permitted by law, including by the amendment of a partnership agreement or other agreement. ADD}

{ADD 7-13-8.2. Approval of conversion of a limited partnership. -- ADD} {ADDA domestic limited partnership may convert to a business trust or association, a real estate investment trust, a common-law trust, a general partnership or a limited liability company, organized, formed or created under the laws of the state of Rhode Island, upon the authorization of such conversion in accordance with this section. If the partnership agreement specified the manner of authorizing a conversion of the limited partnership, the conversion shall be authorized as specified in the partnership agreement. If the partnership agreement does not specify the manner of authorizing a conversion of the limited partnership and does not prohibit a conversion of the limited partnership, the conversion shall be authorized in the same manner as is specified in the partnership agreement for authorizing a merger or consolidation that involves the limited partnership as a constituent party to the merger or consolidation. If the partnership agreement does not specify the manner of authorizing a conversion of the limited partnership or a merger or consolidation that involved the limited partnership as a constituent party and does not prohibit a conversion of the limited partnership, the conversion shall be authorized by the approval (1) by all general partners, and (2) by the limited partners or, if there is more than one class or group of limited partners, then by each class or group of limited partners, in either case, by limited partners who own more than fifty percent (50%) of the then current percentage or other interest in the profits of the domestic limited partnership owned by all of the limited partners or by the limited partners in each class or group, as appropriate. ADD}

SECTION 3. Sections 7-13-10, 7-13-11 and 7-13-13 of the General Laws in Chapter 7-13 entitled "Limited Partnerships" are hereby amended to read as follows:

7-13-10. Cancellation of certificate. -- A certificate of limited partnership shall be canceled upon the dissolution and the commencement of winding up of the partnership or at any other time there are no limited partners {ADD , or upon the conversion of a limited partnership to a limited liability company ADD}. A certificate of cancellation shall be filed in the office of the secretary of state and set forth:

(1) The name of the limited partnership;

(2) The date of filing of its certificate of limited partnership {DEL ; DEL} {ADD or certificate of conversion from a limited partnership to a limited liability company, as the case may be; ADD}

(3) The reason for filing the certificate of cancellation;

(4) The effective date (which shall be a date certain) of cancellation if it is not to be effective upon the filing of the certificate; and

(5) Any other information the general partners filing the certificate determine.

7-13-11. Execution of certificates. -- (a) Each certificate required by this chapter to be filed in the office of the secretary of state shall be executed in the following manner:

(1) An original certificate of limited partnership {ADD , a certificate of cancellation, and a certificate of conversion to a limited partnership ADD} must be signed by all general partners {DEL named therein DEL};

(2) A certificate of amendment must be signed by at least one general partner and by each other general partner designated in the certificate as a new general partner; and

{DEL (3) A certificate of cancellation must be signed by all general partners; DEL}

(b) Any person may sign a certificate by an attorney in fact, but a power of attorney to sign a certificate relating to the admission, of a general partner must specifically describe the admission or increase.

(c) The execution of a certificate by a general partner constitutes an affirmation under the penalties of perjury that the facts stated therein are true.

7-13-13. {DEL Filing in office of secretary of state DEL} {ADD . -- Filing in office of secretary of state -- The certificate of conversion to a limited partnership ADD}. -- (a) Two (2) signed copies of the certificate of limited partnership and of any certificates of amendments or cancellation (or of any judicial decree of amendment or cancellation) shall be delivered to the secretary of state. A person who executes a certificate as an agent, attorney in fact, or fiduciary need not exhibit evidence of his or her authority as a prerequisite to filing. Any signature on any certificate authorized to be filed with the secretary of state under any provision of this chapter may be a facsimile. Unless the secretary of state finds that any certificate does not conform to law, upon receipt of all filing fees required by law the secretary shall:

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

(2) File one duplicate original in his or her office; and

(3) Return the other duplicate original to the person who filed it or the person's representative.

(b) Upon the filing of a certificate of amendment (or judicial decree of amendment) in the office of the secretary of state, the certificate of limited partnership {ADD or certificate of conversion as the case may be ADD} shall be amended as set forth therein, and upon the effective date of a certificate of cancellation (or a judicial decree thereof), the certificate of limited partnership {ADD or certificate of conversion to a limited partnership ADD} is canceled.

SECTION 4. This act shall take effect upon passage.