Connecticut General Statutes 34-626 – Effect of interest exchange
(a) When an interest exchange becomes effective:
Terms Used In Connecticut General Statutes 34-626
- Acquired entity: means the entity, all of one or more classes or series of interests of which are acquired in an interest exchange. See Connecticut General Statutes 34-600
- Acquiring entity: means the entity that acquires all of one or more classes or series of interests of the acquired entity in an interest exchange. See Connecticut General Statutes 34-600
- Appraisal: A determination of property value.
- Corporation: A legal entity owned by the holders of shares of stock that have been issued, and that can own, receive, and transfer property, and carry on business in its own name.
- Governor: means a person by or under whose authority the powers of an entity are exercised and under whose direction the business and affairs of the entity are managed pursuant to the organic law and organic rules of the entity. See Connecticut General Statutes 34-600
- Interest exchange: means a transaction authorized by part III of this chapter. See Connecticut General Statutes 34-600
- Interest holder: means a direct holder of an interest. See Connecticut General Statutes 34-600
- Interest holder liability: means (A) personal liability for a liability of an entity that is imposed on a person (i) solely by reason of the status of the person as an interest holder, or (ii) by the organic rules of the entity pursuant to a provision of the organic law authorizing the organic rules to make one or more specified interest holders or categories of interest holders liable in their capacity as interest holders for all or specified liabilities of the entity. See Connecticut General Statutes 34-600
- Liabilities: The aggregate of all debts and other legal obligations of a particular person or legal entity.
- Liability: means a debt, obligation or any other liability arising in any manner, regardless of whether it is secured or contingent. See Connecticut General Statutes 34-600
- Organic law: means the section of the general statutes, if any, other than this section and sections 34-601 to 34-646, inclusive, governing the internal affairs of an entity. See Connecticut General Statutes 34-600
- Organic rules: means the public organic document and private organic rules of an entity. See Connecticut General Statutes 34-600
- Person: means an individual, corporation, estate, trust, partnership, limited liability company, business or similar trust, association, joint venture, public corporation, government or governmental subdivision, agency or instrumentality, or any other legal or commercial entity. See Connecticut General Statutes 34-600
- Plan: means a plan of merger, interest exchange, conversion or domestication. See Connecticut General Statutes 34-600
- Private organic rules: means the rules, whether or not in a record, that govern the internal affairs of an entity, are binding on all of its interest holders and are not part of its public organic document, if any. See Connecticut General Statutes 34-600
- Public organic document: means the public record, the filing of which creates an entity and any amendment to or restatement of such record. See Connecticut General Statutes 34-600
- Record: means information that is inscribed on a tangible medium or that is stored in an electronic or other medium and is retrievable in perceivable form. See Connecticut General Statutes 34-600
(1) The interests in the acquired entity that are the subject of the interest exchange shall cease to exist or shall be converted or exchanged, and the interest holders of those interests shall be entitled only to the rights provided to them under the plan of interest exchange and to any appraisal rights they have under § 34-607 and the acquired entity’s organic law;
(2) The acquiring entity shall become the interest holder of the interests in the acquired entity stated in the plan of interest exchange to be acquired by the acquiring entity;
(3) The public organic document, if any, of the acquired entity shall be amended as provided in the certificate of interest exchange and shall be binding on its interest holders; and
(4) The private organic rules of the acquired entity that are to be in a record, if any, shall be amended to the extent provided in the plan of interest exchange and be binding on and enforceable by (A) its interest holders; and (B) in the case of an acquired entity that is not a corporation, any other person that is a party to an agreement that is part of the acquired entity’s private organic rules.
(b) Except as otherwise provided in the organic law or organic rules of the acquired entity, the interest exchange 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 acquired entity.
(c) When an interest exchange becomes effective, a person that did not have interest holder liability with respect to the acquired entity and that becomes subject to interest holder liability with respect to a domestic entity as a result of the interest exchange 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 interest exchange becomes effective.
(d) When an interest exchange becomes effective, the interest holder liability of a person that ceases to hold an interest in a domestic acquired entity with respect to which such person had interest holder liability shall be as follows:
(1) The interest exchange shall not discharge any interest holder liability under the organic law of the domestic acquired entity to the extent the interest holder liability arose before the interest exchange became effective;
(2) Such person shall not have interest holder liability under the organic law of the domestic acquired entity for any liability that arises after the interest exchange becomes effective;
(3) The organic law of the domestic acquired entity shall continue to apply to the release, collection or discharge of any interest holder liability preserved under subdivision (1) of this subsection as if the interest exchange had not occurred; and
(4) Such person shall have whatever rights of contribution from any other person are provided by the organic law or organic rules of the domestic acquired entity with respect to any interest holder liability preserved under subdivision (1) of this subsection as if the interest exchange had not occurred.