Conversion Is Not So Easy, And So Smooth A Thing . . .

Entity conversions are a relatively new phenomena.  The legislature first provided for conversion in 1999 when it enacted AB 197 (Ackerman).  The conversion of partnerships and limited liability companies to other types of business entities.  However, it wasn’t until the new millennium that the legislature permitted corporations to convert to other types of entities by enacting  SB 399 (Ackerman).

Alas, as John Bunyan once observed (albeit in an entirely different context): “conversion is not so easy, and so smooth a thing, as some would have men believe it is.”   For example, I recently worked with a company that had converted from a limited liability company to a corporation.  Several California county recorders offices refused to record certificates of  on the basis that they had no statutory authority to do so.  Happily, all of these counties eventually relented after I pointed out that Corporations Code Section 1156 expressly provides for the recording of a certificate of conversion.  However, success was achieved in one case only after repeated remonstrations.


DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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