Plan of Conversion
An LLC plan of conversion is a document that an LLC creates as part of the LLC conversion process. An LLC conversion—called an LLC domestication in some states—is a legal procedure that officially moves an LLC to a new home state. An LLC that converts into a new state must complete a multi-step process that includes the creation of several documents. Creating the plan of conversion is the first formal step in the conversion process.
Plan of Conversion Requirements
Requirements for an LLC’s plan of conversion are set by state law. While state laws can vary, the Revised Uniform Limited Liability Company Act (a model act that is used as the basis of most LLC domestication statutes) requires the plan of conversion (called a plan of domestication in RULLCA) to be in writing and include the following:
- the name of the LLC before the domestication (the domesticating limited liability company);
- the name and jurisdiction of formation of the LLC after the domestication (the domesticated limited liability company);
- the manner of converting the interests in the domesticating limited liability company into interests, securities, obligations, money, other property, rights to acquire interests or securities, or any combination of the foregoing;
- the proposed formation document (certificate of organization) of the domesticated limited liability company;
- the full text of the provisions of the operating agreement of the domesticated limited liability company that are proposed to be in a record;
- the other terms and conditions of the domestication; and
- any other provision required by the law of this state or the operating agreement of the domesticating limited liability company.1
A plan of conversion should comply with the laws of both states—the LLC’s current state and its new state. In some states, a plan of conversion incorporates the terms of the LLC’s certificate of formation (or equivalent formation document) and LLC operating agreement that will govern the company in the new state.
A plan of conversion is an internal company document that ordinarily need not be filed with the state business filing office (usually the secretary of state). The LLC files a different conversion document—often called a certificate of conversion or articles of domestication—to create a public record of the conversion.
States That Use LLC Plans of Conversion?
States that authorize LLCs to transfer into the state—or from in-state into another state—ordinarily require the LLC to create a written document that describes how the conversion or domestication will occur. The following states call the process LLC conversion and call the document a plan of conversion:
- North Carolina;
- Texas; and
The most common other name for the initial written document is a plan of domestication. Other names for the equivalent document include agreement of domestication (in Kansas) and declaration of conversion (in Ohio).