47-25A-11. Effect of for-profit conversion--Liability of member of domestic nonprofit corporation that converts to domestic business corporation.
377 words·~2 min read·
/sd/title-47/chapter-47-25/47-25a-11·A research copy — for the controlling text, always check the official state or federal source. Not legal advice.
(a)Except as otherwise prohibited by law, when a conversion of a domestic nonprofit corporation to a domestic or foreign business corporation becomes effective:
(1)The title to all real and personal property, both tangible and intangible, of the corporation remains in the corporation without reversion or impairment;
(2)The liabilities of the corporation remain the liabilities of the corporation;
(3)An action or proceeding pending against the corporation continues against the corporation as if the conversion had not occurred;
(4)The articles of incorporation of the domestic or foreign business corporation become effective;
(5)The memberships of the corporation are reclassified into shares or other securities, obligations, rights to acquire shares or other securities, or into cash or other property in accordance with the plan of conversion, and the members are entitled only to the rights provided in the plan of for-profit conversion; and
(6)The corporation is deemed to:
(i)Be a domestic or foreign business corporation for all purposes; and
(ii)Be the same corporation without interruption as the nonprofit corporation.
(b)The personal liability of a member in a domestic nonprofit corporation that converts to a domestic business corporation is as follows:
(1)The conversion does not discharge any personal liability of the member as a member of the nonprofit corporation to the extent any such personal liability arose before the effective time of the articles of for-profit conversion;
(2)The member does not have personal liability for any debt, obligation, or liability of the business corporation that arises after the effective time of the articles of for-profit conversion;
(3)The laws of this state continue to apply to the collection or discharge of any personal liability preserved by subdivision (1), as if the conversion had not occurred;
(4)The member has whatever rights of contribution from other members are provided by the laws of this state with respect to any personal liability preserved by subdivision (1), as if the conversion had not occurred.
(c)A member who becomes subject to personal liability for some or all of the debts, obligations, or liabilities of the business corporation has personal liability only for those debts, obligations, or liabilities of the business corporation that arise after the effective time of the articles of for-profit conversion.