35-14-932. Action on plan of conversion. In the case of a conversion of a domestic corporation to a domestic or foreign eligible entity, the plan of conversion must be adopted in the following manner:

(1) The plan of conversion must first be adopted by the board of directors.

(2) (a) The plan of conversion must then be approved by the shareholders. In submitting the plan of conversion to the shareholders for their approval, the board of directors shall recommend that the shareholders approve the plan unless:

(i) the board of directors makes a determination that because of conflicts of interest or other special circumstances it should not make the recommendation; or

(ii) 35-14-826 applies.

(b) If either subsection (2)(a)(i) or (2)(a)(ii) applies, the board of directors shall inform the shareholders of the basis for its determination.

(3) The board of directors may set conditions for approval of the plan of conversion by the shareholders or for the effectiveness of the plan of conversion.

(4) If the approval of the shareholders is to be given at a meeting, the corporation shall notify each shareholder, regardless of whether entitled to vote, of the meeting of shareholders at which the plan of conversion is to be submitted for approval. The notice must state that the purpose or one of the purposes of the meeting is to consider the plan of conversion and must contain or be accompanied by a copy or summary of the plan. The notice must include or be accompanied by a copy of the organic rules of the converted entity, which must be in writing as they will be in effect immediately after the conversion.

(5) Unless the articles of incorporation or the board of directors acting pursuant to subsection (3) requires a greater vote or a lesser vote, approval of the plan of conversion requires the approval of a majority of the votes entitled to be cast on the plan and, if any class or series of shares is entitled to vote as a separate group on the plan, the approval of a majority of the votes entitled to be cast on the plan by that voting group. The articles of incorporation may not provide a lower quorum for a voting group than shares representing a majority of the votes entitled to be cast on the matter by the voting group or a lesser vote for a voting group than is provided for in 35-14-725(3).

(6) If as a result of the conversion one or more shareholders of the converting domestic corporation would become subject to interest holder liability, approval of the plan of conversion must require the signing in connection with the transaction, by each affected shareholder, of a separate written consent to become subject to the interest holder liability.

History: En. Sec. 145, Ch. 271, L. 2019.