Virginia Code 13.1-722.11: Action on plan of conversion
A. In the case of a conversion of a domestic corporation to a domestic or foreign eligible entity, the plan of conversion shall be adopted in the following manner:
Terms Used In Virginia Code 13.1-722.11
- Articles of incorporation: means all documents constituting, at any particular time, the charter of a corporation. See Virginia Code 13.1-603
- Conversion: means a transaction pursuant to this article. See Virginia Code 13.1-722.8
- Converted entity: means the converting entity as it continues in existence after a conversion. See Virginia Code 13.1-722.8
- 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.
- domestic corporation: means a corporation authorized by law to issue shares, irrespective of the nature of the business to be transacted, organized under this chapter or existing pursuant to the laws of the Commonwealth on January 1, 1986, or which, by virtue of articles of incorporation, amendment, or merger, has become a domestic corporation of the Commonwealth, even though also being a corporation organized under laws other than the laws of the Commonwealth, or that has become a domestic corporation of the Commonwealth pursuant to Article 12. See Virginia Code 13.1-603
- Eligible entity: means a domestic or foreign unincorporated entity or a domestic or foreign nonstock corporation. See Virginia Code 13.1-603
- Entity: includes any domestic or foreign corporation; any domestic or foreign nonstock corporation; any domestic or foreign unincorporated entity; any estate or trust; and any state, the United States and any foreign government. See Virginia Code 13.1-603
- in writing: include any representation of words, letters, symbols, numbers, or figures, whether (i) printed or inscribed on a tangible medium or (ii) stored in an electronic or other medium and retrievable in a perceivable form and whether an electronic signature authorized by Chapter 42. See Virginia Code 1-257
- Interest: means either or both of the following rights under the organic law governing an unincorporated entity:
1. See Virginia Code 13.1-603
- Interest holder: means a person who holds of record an interest. See Virginia Code 13.1-603
- Interest holder liability: means :
1. See Virginia Code 13.1-603
- Organic rules: means the public organic record and private organic rules of a domestic or foreign corporation or eligible entity. See Virginia Code 13.1-603
- Quorum: The number of legislators that must be present to do business.
- Shareholder: means a record shareholder. See Virginia Code 13.1-603
- Shares: means the units into which the proprietary interests in a corporation are divided. See Virginia Code 13.1-603
- State: when applied to a part of the United States, includes any of the 50 states, the District of Columbia, the Commonwealth of Puerto Rico, Guam, the Northern Mariana Islands, and the United States Virgin Islands. See Virginia Code 1-245
- Voting group: means all shares of one or more classes or series that under the articles of incorporation or this chapter are entitled to vote and be counted together collectively on a matter at a meeting of shareholders. See Virginia Code 13.1-603
- written: means any information in the form of a document. See Virginia Code 13.1-603
1. The plan of conversion shall first be adopted by the board of directors.
2. After adopting the plan of conversion, the board of directors shall submit the plan to the shareholders for their approval. 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 the board of directors makes a determination that because of conflicts of interest or other special circumstances it should not make such a recommendation, in which case the board of directors shall inform the shareholders of the basis for that determination.
3. The board of directors may set conditions for approval of the plan of conversion by the shareholders or the effectiveness of the plan of conversion.
4. If the approval of the shareholders is to be sought at a shareholders 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 shall state that the purpose, or one of the purposes, of the meeting is to consider the plan of conversion and shall 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 are to 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 subdivision 3, requires a greater vote, approval of the plan of conversion requires (i) the approval of the shareholders at a meeting at which a quorum exists consisting of more than two thirds of the votes entitled to be cast on the plan and (ii) the approval of each class or series of shares voting as a separate voting group at a meeting at which a quorum of the voting group exists consisting of more than two thirds of the votes entitled to be cast on the plan by that voting group. The articles of incorporation may provide for a greater or lesser vote than that provided in this subsection or a vote by separate voting groups so long as the vote provided for is not less than a majority of all votes cast on the plan by each voting group entitled to vote on the plan at a meeting at which a quorum of the voting group exists.
B. In the case of a conversion of a domestic eligible entity to a domestic corporation, the plan of conversion shall be adopted in accordance with subsection B of § 13.1-722.9.
C. 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 shall require the signing in connection with the transaction, by each such shareholder, of a separate written consent to become subject to such interest holder liability.
2001, c. 545; 2002, c. 1; 2012, c. 130; 2016, c. 288; 2019, c. 734; 2020, c. 1226.