2023 District of Columbia Code › Title 29 - Business Organizations. [Enacted title] › Chapter 2 - Entity Transactions › Subchapter IV - Conversion › § 29–204.06. Effect of conversion

§ 29–204.06. Effect of conversion.
(a) When a conversion becomes effective:
(1) The converted entity shall be:
(A) Formed 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 shall continue to be vested in the converted entity without transfer, reversion, or impairment;
(3) All liabilities of the converting entity shall continue as debts, obligations, or other liabilities of the converted entity;
(4) Except as otherwise provided by law other than this chapter or the plan of conversion, all of the rights, privileges, immunities, powers, and purposes of the converting entity shall 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 shall be effective and shall be binding on its interest holders;
(7) If the converted entity is a limited liability partnership, its statement of qualification shall be effective simultaneously;
(8) The private organic rules of the converted entity that are to be in a record, if any, approved as part of the plan of conversion shall be effective and shall be binding on and enforceable by:
(A) Its interest holders; and
(B) In the case of a converted entity that is not a business corporation or nonprofit corporation, any other person that is a party to an agreement that is part of the entity’s private organic rules; and
(9) The interests in the converting entity shall be converted, and the interest holders of the converting entity shall be entitled only to the rights provided to them under the plan of conversion, and to any appraisal rights they have under § 29-201.09 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 shall not give rise to any rights that an interest holder, governor, or third party would otherwise 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 that becomes subject to interest holder liability with respect to a domestic entity as a result of a conversion shall have interest holder liability only to the extent provided by the organic law of the entity and only for those liabilities that arise after the conversion becomes effective.
(d) When a conversion becomes effective:
(1) The conversion shall 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) A person shall not have interest holder liability under the organic law of a domestic converting entity for any liability that arises after the conversion becomes effective;
(3) The organic law of a domestic converting entity shall continue to apply to the release, collection, or discharge of any interest holder liability preserved under paragraph (1) of this subsection as if the conversion had not occurred; and
(4) A person has whatever rights of contribution from any other person as are provided by the organic law or organic rules of the domestic converting entity with respect to any interest holder liability preserved under paragraph (1) of this subsection 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 the District for the collection and enforcement of any of its liabilities in the manner provided in § 29-104.12.
(f) If the converting entity is a registered foreign entity, the certificate of registration or other foreign qualification of the converting entity shall be canceled when the conversion becomes effective.
(g) A conversion shall not require the entity to wind up its affairs and shall not constitute or cause the dissolution of the entity.
(h) When a conversion becomes effective, the following rules apply:
(1) Subject to paragraph (3) of this subsection, the recordation tax imposed by section 303 of the District of Columbia Deed Recordation Tax Act, approved March 2, 1962 (76 Stat. 12; D.C. Official Code § 42-1103), or the transfer tax imposed by § 47-903, shall not be imposed, in connection with the conversion of a converting entity to a converted entity, upon the following:
(A) The filing of the public organic document of the converted entity;
(B) The recordation of a deed reflecting that the converted entity has become the legal title holder; or
(C) The transfer of title or other interest in real property from the converting entity to the converted entity.
(2) The tax exemptions enumerated in paragraph (1) of this subsection shall only be applicable if:
(A) The interest holders of the converted entity are identical to the interest holders of the converting entity;
(B) Each interest holder’s allocation of the profits and losses of the converted entity is identical to the interest holder’s allocation of the profits and losses of the converting entity; and
(C) There is no change in the interest holders of the converted entity or in the allocation to any interest holder in the profits and losses of the converted entity during the 12-month period following the effective date of the conversion, other than by reason of the death of an interest holder or the involuntary dissolution of the converted entity.
(3) The tax exemptions enumerated in paragraph (1) of this subsection shall be effective regardless of whether the deed or transfer to the converted entity is from nominees or trustees for the converting entity or from the converting entity itself.
(July 2, 2011, D.C. Law 18-378, § 2, 58 DCR 1720; Mar. 5, 2013, D.C. Law 19-210, § 2(b)(22), 59 DCR 13171.)
Section References
This section is referenced in § 29-204.05, § 29-406.58, § 42-1102, § 42-3404.02, and § 47-902.
Effect of Amendments
The 2013 amendment by D.C. Law 19-210 substituted “Formed” for “Organized” in (a)(1)(A); substituted “transfer” for “assignment” in (a)(2); substituted “continue as debts, obligations, or other liabilities” for “continue as liabilities” in (a)(3); substituted “record” for “document” in (a)(6); substituted “registered” for “qualified” in (f); and added (h).
Editor's Notes
Application of Law 19-210: Section 7 of D.C. Law 19-210 provided that the act shall apply as of January 1, 2012.