Ohio LLC Declaration of Conversion
An out-of-state LLC can become an Ohio LLC using a legal procedure called an LLC conversion.1 Ohio’s LLC conversion process also allows an Ohio LLC to change its legal home state—its state of formation or domicile—to another state. An LLC that transfers into Ohio or from Ohio to another state is still considered the same company—with the same property, debts, contractual rights, and tax identity—after completing a conversion.2
Some states use the name domestication for the legal process that changes an LLC’s domicile to another state. In those states, a conversion is usually a process that changes a business from one entity form to another—conversion of a corporation to an LLC, for example. Ohio has one process (called conversion) that can change an LLC’s domicile or change another entity into an Ohio LLC. Ohio does not authorize a procedure called an Ohio LLC domestication—though that term is sometimes used informally for conversions that turn out-of-state LLCs into Ohio LLCs.
The Ohio LLC conversion process requires an LLC to complete multiple steps and prepare several conversion documents. An LLC’s first step in a conversion is to prepare and approve a document called a declaration of conversion.
What is an Ohio LLC Declaration of Conversion?
An LLC’s Ohio declaration of conversion a written business document that sets forth the terms of an Ohio LLC conversion and describes how the conversion will affect the company.3 Preparing the declaration of conversion is an LLC’s first formal step when converting into Ohio or from Ohio to another state.4 The declaration of conversion is an internal company document that an LLC ordinarily need not file with the Ohio Secretary of State’s office.
A declaration of conversion under Ohio law is the equivalent of what most states call a plan of conversion or a plan of domestication.
What Information Must an Ohio LLC Declaration of Conversion Contain?
Ohio’s LLC conversion law sets forth a list of items that an LLC’s declaration of conversion must include:5
- The LLC’s name and entity form before the conversion;
- The LLC’s name and entity form after the conversion;
- The terms and conditions of the conversion—including the manner and basis for converting ownership interests in the LLC before conversion into interests in the LLC after conversion, money, or other consideration (or a combination);
- The articles of organization and operating agreement (or equivalent organizational documents) that will govern the LLC after the conversion.
The declaration of conversion must also include any information that the other state’s conversion or domestication law requires. The other state typically uses the name plan of conversion or plan of domestication for its equivalent of an Ohio declaration of conversion.
How Does an LLC Approve an Ohio Declaration of Conversion?
After preparing a written declaration of conversion, the LLC members and/or managers must approve the declaration of conversion to officially adopt it as the company’s act.6 The approval standard depends on whether the LLC is converting into Ohio or from Ohio to another state.
- Conversion into Ohio. An out-of-state LLC converting into an Ohio LLC must approve the declaration of conversion under the approval standard in the current state’s conversion or domestication law.
- Conversion from Ohio. An Ohio LLC converting to another state must approve the declaration of conversion by the consent of all of the company’s members.
A converting LLC must also consider its operating agreement when approving the declaration of conversion. If the operating agreement sets an approval standard that applies to the conversion, the operating agreement’s standard may take precedence over the statutory approval standard.7
Does an LLC File its Ohio Declaration of Conversion?
An Ohio declaration of conversion is an internal company document that is not filed with the Ohio Secretary of State’s office. Ohio’s conversion law requires a converting LLC to submit to the secretary of state a different document—called an Ohio certificate of conversion.8 The LLC must maintain the declaration of conversion as a record of the company—which members may review upon reasonable request.9
What Other Steps are Needed to Move an Out-of-State LLC to Ohio?
Preparing and approving the declaration of conversion is a vital first step in the Ohio LLC conversion process, but the declaration of conversion by itself does not transfer an LLC to a new state. An LLC must complete each of the following steps to accomplish a successful conversion to Ohio:
- Prepare and approve the declaration of conversion in compliance with Ohio law and the current state’s law;
- Prepare the Ohio certificate of conversion, the new Ohio articles of organization with the signed acceptance of the statutory agent (called registered agent in most states), and the new Ohio operating agreement;
- Prepare the current state’s equivalent of the certificate of conversion (it may be called articles of domestication, articles of conversion, statement of domestication, or a similar name);
- File the Ohio certificate of conversion and articles of organization with the Ohio Secretary of State’s office;
- File the current state’s equivalent document with that state’s business filing office (usually the secretary of state); and
- Officially adopt the new Ohio operating agreement and any corporate resolution needed for the transaction.