REPORT TITLE:
Business; Conversion


DESCRIPTION:
Establishes standard procedures for the conversion of a business
entity to another type of business entity. (SD1)  

 
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THE SENATE                              S.B. NO.           S.D. 1
TWENTIETH LEGISLATURE, 1999                                
STATE OF HAWAII                                            
                                                             
________________________________________________________________
________________________________________________________________


                   A  BILL  FOR  AN  ACT

RELATING TO THE CONVERSION OF BUSINESS ENTITIES. 



BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

 1      SECTION 1.  Chapter 415, Hawaii Revised Statutes, is amended
 
 2 by adding five new sections to be appropriately designated and to
 
 3 read as follows:
 
 4      "§415-    Conversion into and from corporations.  (a)  A
 
 5 domestic corporation may adopt a plan of conversion and convert
 
 6 to a foreign corporation or any other entity if:
 
 7      (1)  The board of directors and shareholders of the domestic
 
 8           corporation approve a plan of conversion in the manner
 
 9           prescribed by section 415-73 and the conversion is
 
10           treated as a merger to which the converting entity is a
 
11           party and not the surviving entity;
 
12      (2)  The conversion is permitted by, and complies with the
 
13           laws of the state or country in which the converted
 
14           entity is to be incorporated, formed, or organized; and
 
15           the incorporation, formation, or organization of the
 
16           converted entity complies with such laws;
 
17      (3)  At the time the conversion becomes effective, each
 
18           shareholder of the domestic corporation, unless
 
19           otherwise agreed to by that shareholder, shall own an
 

 
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 1           equity interest or other ownership interest in, and be
 
 2           a shareholder, partner, member, owner, or other
 
 3           security holder of, the converted entity;
 
 4      (4)  The shareholders of the domestic corporation shall not,
 
 5           as a result of the conversion, become personally
 
 6           liable, without the shareholders' consent, for the
 
 7           liabilities or obligations of the converted entity; and
 
 8      (5)  The converted entity is incorporated, formed, or
 
 9           organized as part of or pursuant to the plan of
 
10           conversion.
 
11      (b)  Any foreign corporation or other entity may adopt a
 
12 plan of conversion and convert to a domestic corporation if the
 
13 conversion is permitted by and complies with the laws of the
 
14 state or country in which the foreign corporation or other entity
 
15 is incorporated, formed, or organized.
 
16      (c)  A plan of conversion shall set forth:
 
17      (1)  The name of the converting entity and the converted
 
18           entity;
 
19      (2)  A statement that the converting entity is continuing
 
20           its existence in the organizational form of the
 
21           converted entity;
 
22      (3)  A statement describing the organizational form of the
 
23           converted entity and the state or country under the
 

 
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 1           laws of which the converted entity is to be
 
 2           incorporated, formed, or organized;
 
 3      (4)  The manner and basis of converting the shares or other
 
 4           forms of ownership of the converting entity into shares
 
 5           or other forms of ownership of the converted entity, or
 
 6           any combination thereof;
 
 7      (5)  If the converted entity is a domestic corporation, the
 
 8           articles of incorporation of the domestic corporation
 
 9           shall be attached; and
 
10      (6)  If the converted entity is not a domestic corporation,
 
11           proof that the converted entity is registered in this
 
12           State shall be attached.
 
13      (d)  A plan of conversion may set forth any other provisions
 
14 relating to the conversion that are not prohibited by law,
 
15 including without limitation the initial bylaws and officers of
 
16 the converted entity.
 
17      (e)  After a conversion of a domestic or foreign corporation
 
18 is approved, and at any time before the conversion becomes
 
19 effective, the plan of conversion may be abandoned by the
 
20 converting entity without shareholder action and in accordance
 
21 with the procedures set forth in the plan of conversion or, if
 
22 these procedures are not provided in the plan, in the manner
 
23 determined by the board of directors.  If articles of conversion
 

 
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 1 have been filed with the director but the conversion has not
 
 2 become effective, the conversion may be abandoned if a statement,
 
 3 executed on behalf of the converting entity by an officer or
 
 4 other duly authorized representative and stating that the plan of
 
 5 conversion has been abandoned in accordance with applicable law,
 
 6 is filed with the director prior to the effective date of the
 
 7 conversion.  If the director finds that the statement satisfies
 
 8 the requirements provided by law, the director shall, after all
 
 9 fees have been paid:
 
10      (1)  Stamp the word "Filed" on the statement and the date of
 
11           the filing;
 
12      (2)  File the document in the director's office; and
 
13      (3)  Issue a certificate of abandonment to the converting
 
14           entity or its authorized representatives.
 
15      (f)  Once the statement provided in subsection (e) is filed
 
16 with the director, the conversion shall be deemed abandoned and
 
17 shall not be effective.
 
18      §415-    Articles of conversion.  (a)  If a plan of
 
19 conversion has been approved in accordance with section 415-   
 
20 and has not been abandoned, articles of conversion shall be
 
21 executed by an officer or other duly authorized representative of
 
22 the converting entity and shall set forth:
 
23      (1)  A statement certifying the following:
 

 
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 1           (A)  The name, state, or country of incorporation,
 
 2                formation, or organization of the converting
 
 3                entity, and organizational form of the converting
 
 4                entity;
 
 5           (B)  That a plan of conversion has been approved in
 
 6                accordance with section 415-  ;
 
 7           (C)  That an executed plan of conversion is on file at
 
 8                the principal place of business of the converting
 
 9                entity and stating the address thereof; and
 
10           (D)  That a copy of the plan of conversion shall be
 
11                furnished by the converting entity prior to the
 
12                conversion or by the converted entity after the
 
13                conversion on written request and without cost, to
 
14                any shareholder, partner, member, or owner of the
 
15                converting entity or the converted entity;
 
16      (2)  If the converting entity is a domestic corporation, the
 
17           number of shares outstanding and, if the shares of any
 
18           class or series are entitled to vote as a class, the
 
19           designation and number of outstanding shares of each
 
20           such class or series;
 
21      (3)  If the converting entity is a domestic corporation, the
 
22           number of shares outstanding that voted for and against
 
23           the plan, and, if the shares of any class or series are
 

 
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 1           entitled to vote as a class, the number of shares of
 
 2           each such class or series that voted for and against
 
 3           the plan; and
 
 4      (4)  If the converting entity is a foreign corporation or
 
 5           other entity, a statement that the approval of the plan
 
 6           of conversion was duly authorized and complied with the
 
 7           laws under which it was incorporated, formed, or
 
 8           organized.
 
 9      (b)  The articles of conversion shall be delivered to the
 
10 director.  If the converted entity is a domestic corporation, the
 
11 articles of incorporation shall also be delivered to the director
 
12 with the articles of conversion.
 
13      (c)  If the director finds that the articles of conversion
 
14 satisfy the requirements provided by law, and that all required
 
15 documents are filed, the director, after all fees have been paid,
 
16 shall:
 
17      (1)  Stamp the word "Filed" on the articles of conversion
 
18           and the date of the filing;
 
19      (2)  File the document in the director's office; and
 
20      (3)  Issue a certificate of conversion to the converted
 
21           entity or its authorized representatives.
 
22      §415-    Effective date of the conversion.  Upon the
 
23 issuance of the certificate of conversion by the director, the
 

 
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 1 conversion shall be effective.
 
 2      §415-    Effect of conversion.  (a)  When a conversion
 
 3 becomes effective:
 
 4      (1)  The converting entity shall continue to exist without
 
 5           interruption, but in the organizational form of the
 
 6           converted entity;
 
 7      (2)  All rights, title, and interest in all real estate and
 
 8           other property owned by the converting entity shall
 
 9           automatically be owned by the converted entity without
 
10           reversion or impairment, subject to any existing liens
 
11           or other encumbrances thereon;
 
12      (3)  All liabilities and obligations of the converting
 
13           entity shall automatically be liabilities and
 
14           obligations of the converted entity without impairment
 
15           or diminution due to the conversion;
 
16      (4)  The rights of creditors of the converting entity shall
 
17           continue against the converted entity and shall not be
 
18           impaired or extinguished by the conversion;
 
19      (5)  Any action or proceeding pending by or against the
 
20           converting entity may be continued by or against the
 
21           converted entity without any need for substitution of
 
22           parties;
 
23      (6)  The shares and other forms of ownership in the
 

 
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 1           converting entity that are to be converted into shares,
 
 2           or other forms of ownership, in the converted entity as
 
 3           provided in the plan of conversion shall be converted,
 
 4           and if the converting entity is a domestic corporation,
 
 5           the shareholders of the domestic corporation shall be
 
 6           entitled only to the rights provided in the plan of
 
 7           conversion or to the rights to dissent under section
 
 8           415-80;
 
 9      (7)  A shareholder, partner, member, or other owner of the
 
10           converted entity shall be liable for the debts and
 
11           obligations of the converting entity that existed
 
12           before the conversion takes effect only to the extent
 
13           that such shareholder, partner, member, or other owner:
 
14           (A)  Agreed in writing to be liable for such debts or
 
15                obligations;
 
16           (B)  Was liable under applicable law prior to the
 
17                effective date of the conversion, for such debts
 
18                or obligations; or
 
19           (C)  Becomes liable under applicable law for existing
 
20                debts and obligations of the converted entity by
 
21                becoming a shareholder, partner, member, or other
 
22                owner of the converted entity;
 
23      (8)  If the converted entity is a foreign corporation or
 

 
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 1           other entity, the converted entity shall:
 
 2           (A)  Appoint a resident of this State, as its agent for
 
 3                service of process in a proceeding to enforce any
 
 4                obligation or the rights of dissenting
 
 5                shareholders of the converting domestic
 
 6                corporation; and
 
 7           (B)  Promptly pay the dissenting shareholders of the
 
 8                converting domestic corporation the amount, if
 
 9                any, to which they are entitled under section
 
10                415-81; and
 
11      (9)  If the converting entity is a domestic corporation,
 
12           sections 415-80 and 415-81 shall apply as if the
 
13           converted entity were the survivor of a merger with the
 
14           converting entity.
 
15      §415-    Definition of other entity.  For purposes of this
 
16 chapter, "other entity" means a domestic or foreign non-profit
 
17 corporation, limited liability company, general partnership,
 
18 limited partnership, limited liability partnership, or a domestic
 
19 professional corporation."
 
20      SECTION 2.  Chapter 415A, Hawaii Revised Statutes, is
 
21 amended by adding five new sections to be appropriately
 
22 designated and to read as follows:
 
23      "§415A-    Conversion in to and from professional
 

 
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 1 corporations.  (a)  A professional corporation may adopt a plan
 
 2 of conversion and convert to any other entity if:
 
 3      (1)  The board of directors and shareholders of the
 
 4           professional corporation approve a plan of conversion
 
 5           in the manner prescribed by section 415-73 and the
 
 6           conversion is treated as a merger to which the
 
 7           converting entity is a party and not the surviving
 
 8           entity;
 
 9      (2)  The conversion is permitted by, and complies with the
 
10           laws of the state or country in which the converted
 
11           entity is to be incorporated, formed, or organized; and
 
12           the incorporation, formation, or organization of the
 
13           converted entity complies with such laws;
 
14      (3)  At the time the conversion becomes effective, each
 
15           shareholder of the converting entity, unless otherwise
 
16           agreed to by that shareholder, shall own an equity
 
17           interest or other ownership interest in, and be a
 
18           shareholder, partner, member, owner, or other security
 
19           holder of, the converted entity;
 
20      (4)  The shareholders of the professional corporation shall
 
21           not, as a result of the conversion, become personally
 
22           liable without the shareholders' consent, for the
 
23           liabilities or obligations of the converted entity; and
 

 
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 1      (5)  The converted entity is incorporated, formed, or
 
 2           organized as part of or pursuant to the plan of
 
 3           conversion.
 
 4      (b)  Any other entity may adopt a plan of conversion and
 
 5 convert to a professional corporation if the conversion is
 
 6 permitted by and complies with the laws under which the other
 
 7 entity is incorporated, formed, or organized.
 
 8      (c)  A plan of conversion shall set forth:
 
 9      (1)  The name of the converting entity and the converted
 
10           entity;
 
11      (2)  A statement that the converting entity is continuing
 
12           its existence in the organizational form of the
 
13           converted entity;
 
14      (3)  A statement describing the organizational form of the
 
15           converted entity and the state or country under the
 
16           laws of which the converted entity is to be
 
17           incorporated, formed, or organized;
 
18      (4)  The manner and basis of converting the shares or other
 
19           forms of ownership of the converting entity into shares
 
20           or other forms of ownership of the converted entity, or
 
21           any combination thereof;
 
22      (5)  If the converted entity is a professional corporation,
 
23           the articles of incorporation of the professional
 

 
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 1           corporation shall be attached; and
 
 2      (6)  If the converted entity is not a professional
 
 3           corporation, proof that the converted entity is
 
 4           registered in this State shall be attached.
 
 5      (d)  A plan of conversion may set forth any other provisions
 
 6 relating to the conversion that are not prohibited by law,
 
 7 including without limitation the initial bylaws and officers of
 
 8 the converted entity.
 
 9      (e)  After a conversion of a professional corporation is
 
10 approved, and at any time before the conversion becomes
 
11 effective, the plan of conversion may be abandoned by the
 
12 professional corporation without shareholder action and in
 
13 accordance with the procedures set forth in the plan of
 
14 conversion or, if these procedures are not provided in the plan,
 
15 in the manner determined by the board of directors.  If articles
 
16 of conversion have been filed with the director but the
 
17 conversion has not become effective, the conversion may be
 
18 abandoned if a statement, executed on behalf of the converting
 
19 entity by an officer or other duly authorized representative and
 
20 stating that the plan of conversion has been abandoned in
 
21 accordance with applicable law, is filed with the director prior
 
22 to the effective date of the conversion.  If the director finds
 
23 that the statement satisfies the requirements provided by law,
 

 
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 1 the director shall, after all fees have been paid:
 
 2      (1)  Stamp the word "Filed" on the statement and the date of
 
 3           the filing;
 
 4      (2)  File the document in the director's office; and
 
 5      (3)  Issue a certificate of abandonment to the converting
 
 6           entity or its authorized representatives.
 
 7      (f)  Once the statement provided in subsection (e) is filed
 
 8 with the director, the conversion shall be deemed abandoned and
 
 9 shall not be effective.
 
10      §415A-    Articles of conversion.  (a)  If a plan of
 
11 conversion has been approved in accordance with section 415-66
 
12 and has not been abandoned, articles of conversion shall be
 
13 executed by an by officer or other duly authorized representative
 
14 of the converting entity and shall set forth:
 
15      (1)  A statement certifying the following:
 
16           (A)  The name, state, or country of incorporation,
 
17                formation, or organization of the converting
 
18                entity, and organizational form of the converting
 
19                entity;
 
20           (B)  That a plan of conversion has been approved in
 
21                accordance with section 415-  ;
 
22           (C)  That an executed plan of conversion is on file at
 
23                the principal place of business of the converting
 

 
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 1                entity and stating the address thereof; and
 
 2           (D)  That a copy of the plan of conversion shall be
 
 3                furnished by the converting entity prior to the
 
 4                conversion or by the converted entity after the
 
 5                conversion on written request and without cost, to
 
 6                any shareholder of the converting entity or the
 
 7                converted entity;
 
 8      (2)  If the converting entity is a professional corporation,
 
 9           the number of shares outstanding and, if the shares of
 
10           any class or series are entitled to vote as a class,
 
11           the designation and number of outstanding shares of
 
12           each such class or series;
 
13      (3)  If the converting entity is a professional corporation,
 
14           the number of shares outstanding, that voted for and
 
15           against the plan and, if the shares of any class or
 
16           series are entitled to vote as a class, the number of
 
17           shares of each such class or series that voted for and
 
18           against the plan; and
 
19      (4)  If the converting entity is another entity, a statement
 
20           that the approval of the plan of conversion was duly
 
21           authorized and complied with the laws under which it
 
22           was incorporated, formed, or organized.
 
23      (b)  The articles of conversion shall be delivered to the
 

 
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 1 director.  If the converted entity is a professional corporation,
 
 2 the articles of incorporation shall also be delivered to the
 
 3 director with the articles of conversion.
 
 4      (c)  If the director finds that the articles of conversion
 
 5 satisfy the requirements provided by law, and that all required
 
 6 documents are filed, the director shall, after all fees have been
 
 7 paid:
 
 8      (1)  Stamp the word "Filed" on the articles of conversion
 
 9           and the date of the filing;
 
10      (2)  File the document in the director's office; and
 
11      (3)  Issue a certificate of conversion to the converted
 
12           entity or its authorized representatives.
 
13      §415A-    Effective date of the conversion.  Upon the
 
14 issuance of the certificate of conversion by the director, the
 
15 conversion shall be effective.
 
16      §415A-    Effect of conversion.  (a)  When a conversion
 
17 becomes effective:
 
18      (1)  The converting entity shall continue to exist without
 
19           interruption but in the organizational form of the
 
20           converted entity;
 
21      (2)  All rights, title, and interest in all real estate and
 
22           other property owned by the converting entity shall
 
23           automatically be owned by the converted entity without
 

 
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 1           reversion or impairment, subject to any existing liens
 
 2           or other encumbrances thereon;
 
 3      (3)  All liabilities and obligations of the converting
 
 4           entity shall automatically be liabilities and
 
 5           obligations of the converted entity without impairment
 
 6           or diminution due to the conversion;
 
 7      (4)  The rights of creditors of the converting entity shall
 
 8           continue against the converted entity and shall not be
 
 9           impaired or extinguished by the conversion;
 
10      (5)  Any action or proceeding pending by or against the
 
11           converting entity may be continued by or against the
 
12           converted entity without any need for substitution of
 
13           parties;
 
14      (6)  The shares and other forms of ownership in the
 
15           converting entity that are to be converted into shares
 
16           or other forms of ownership in the converted entity as
 
17           provided in the plan of conversion shall be converted,
 
18           and if the converting entity is a professional
 
19           corporation, the former shareholders of the
 
20           professional corporation shall be entitled only to the
 
21           rights provided in the plan of conversion or to the
 
22           rights to dissent under section 415-80;
 
23      (7)  A shareholder, partner, member, or other owner of the
 

 
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 1           converted entity shall be liable for the debts and
 
 2           obligations of the converting entity that existed
 
 3           before the conversion takes effect only to the extent
 
 4           that such shareholder, partner, member, or other owner:
 
 5           (A)  Agreed in writing to be liable for such debts or
 
 6                obligations;
 
 7           (B)  Was liable under applicable law prior to the
 
 8                effective date of the conversion for such debts or
 
 9                obligations; or
 
10           (C)  Becomes liable under applicable law for existing
 
11                debts and obligations of the converted entity by
 
12                becoming a shareholder, partner, member, or other
 
13                owner of the converted entity;
 
14      (8)  If the converted entity is a foreign corporation or
 
15           other entity, the converted entity shall:
 
16           (A)  Appoint a resident of this State, as its agent for
 
17                service of process in a proceeding to enforce any
 
18                obligation or the rights of dissenting
 
19                shareholders of the converting domestic
 
20                corporation; and
 
21           (B)  Promptly pay the dissenting shareholders of the
 
22                converting domestic corporation the amount, if
 
23                any, to which they are entitled under section
 

 
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 1                415-81; and
 
 2      (9)  If the converting entity is a professional corporation,
 
 3           sections 415-80 and 415-81 shall apply as if the
 
 4           converted entity were the survivor of a merger with the
 
 5           converting entity.
 
 6      §415A-    Definition of other entity.  For purposes of this
 
 7 chapter, "other entity" means a domestic or foreign corporation,
 
 8 whether organized for profit or not, a domestic or foreign
 
 9 limited liability company, general partnership, limited
 
10 partnership, or limited liability partnership."
 
11      SECTION 3.  Chapter 415B, Part IV, Hawaii Revised Statutes,
 
12 is amended as follows:
 
13      1.  By amending the title of part IV to read as follows:
 
14     "PART IV.  MERGERS [AND], CONSOLIDATIONS AND CONVERSIONS"
 
15      2.  By adding five new sections to be appropriately
 
16 designated and to read as follows:
 
17      "§415B-    Conversions into and from corporations.  (a)  A
 
18 domestic corporation may adopt a plan of conversion and convert
 
19 to a foreign corporation or any other entity if:
 
20      (1)  The board of directors and members of the domestic
 
21           corporation approve a plan of conversion in the manner
 
22           prescribed by section 415B-83 and if the conversion is
 
23           treated as a merger to which the converting entity is a
 

 
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 1           party and not the surviving entity;
 
 2      (2)  The conversion is permitted by and complies with the
 
 3           laws of the state or country in which the converted
 
 4           entity is to be incorporated, formed, or organized; and
 
 5           the incorporation, formation, or organization of the
 
 6           converted entity complies with such laws;
 
 7      (3)  At the time the conversion becomes effective, each
 
 8           member of the converting entity, unless otherwise
 
 9           agreed to by the member, or directors, shall own an
 
10           equity interest or other ownership interest in, and be
 
11           a shareholder, partner, member, owner, or other
 
12           security holder of, the converted entity;
 
13      (4)  The members of the domestic corporation shall not, as a
 
14           result of the conversion, become personally liable
 
15           without the members' consent, for the liabilities or
 
16           obligations of the converted entity; and
 
17      (5)  The converted entity is incorporated, formed, or
 
18           organized as part of or pursuant to the plan of
 
19           conversion.
 
20      (b)  Any foreign corporation or other entity may adopt a
 
21 plan of conversion and convert to a domestic corporation if the
 
22 conversion is permitted by and complies with the laws of the
 
23 state or country in which the foreign corporation or other entity
 

 
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 1 is incorporated, formed, or organized.
 
 2      (c)  A plan of conversion shall set forth:
 
 3      (1)  The name of the converting entity and the converted
 
 4           entity;
 
 5      (2)  A statement that the converting entity is continuing
 
 6           its existence in the organizational form of the
 
 7           converted entity;
 
 8      (3)  A statement describing the organizational form of the
 
 9           converted entity and the state or country under the
 
10           laws of which the converted entity is to be
 
11           incorporated, formed, or organized;
 
12      (4)  The manner and basis of converting the shares or other
 
13           forms of ownership, of the converting entity into
 
14           shares or other forms of ownership, of the converted
 
15           entity, or any combination thereof;
 
16      (5)  If the converted entity is a domestic corporation, the
 
17           articles of incorporation of the domestic corporation
 
18           shall be attached; and
 
19      (6)  If the converted entity is not a domestic corporation,
 
20           proof that the converted entity is registered in this
 
21           State shall be attached.
 
22      (d)  A plan of conversion may set forth any other provisions
 
23 relating to the conversion that are not prohibited by law,
 

 
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 1 including without limitation the initial bylaws and officers of
 
 2 the converted entity.
 
 3      (e)  After a conversion of a domestic corporation is
 
 4 approved, and at any time before the conversion becomes
 
 5 effective, the plan of conversion may be abandoned by the
 
 6 domestic corporation in accordance with the procedures set forth
 
 7 in the plan of conversion or, if these procedures are not
 
 8 provided in the plan, in the manner determined by the board of
 
 9 directors.  If articles of conversion have been filed with the
 
10 director but the conversion has not become effective, the
 
11 conversion may be abandoned if a statement, executed on behalf of
 
12 the converting entity by an officer or other duly authorized
 
13 representative and stating that the plan of conversion has been
 
14 abandoned in accordance with applicable law, is filed with the
 
15 director prior to the effective date of the conversion.  If the
 
16 director finds that the statement satisfies the requirements
 
17 provided by law, the director shall, after all fees have been
 
18 paid:
 
19      (1)  Stamp the word "Filed" on the statement and the date of
 
20           the filing;
 
21      (2)  File the document in the director's office; and
 
22      (3)  Issue a certificate of abandonment to the converting
 
23           entity or its authorized representatives.
 

 
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 1      (f)  Once the statement provided in subsection (e) is filed
 
 2 with the director, the conversion shall be deemed abandoned and
 
 3 shall not be effective.
 
 4      §415B-    Articles of conversion.  (a)  If a plan of
 
 5 conversion has been approved in accordance with section 415B- 83
 
 6 and has not been abandoned, articles of conversion shall be
 
 7 executed by an officer or other duly authorized representative of
 
 8 the converting entity and shall set forth:
 
 9      (1)  A statement certifying the following:
 
10           (A)  The name, state, or country of incorporation,
 
11                formation, or organization of the converting
 
12                entity, and organizational form of the converting
 
13                entity;
 
14           (B)  That a plan of conversion has been approved;
 
15           (C)  That an executed plan of conversion is on file at
 
16                the principal place of business of the converting
 
17                entity and stating the address thereof; and
 
18           (D)  That a copy of the plan of conversion shall be
 
19                furnished by the converting entity prior to the
 
20                conversion or by the converted entity after the
 
21                conversion on written request and without cost, to
 
22                any member or director, as the case may be, of the
 
23                converting entity or the converted entity;
 

 
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 1      (2)  If the converting entity is a domestic or foreign
 
 2           corporation or other entity, a statement that the
 
 3           approval of the plan of conversion was duly authorized
 
 4           and complied with the laws under which it was
 
 5           incorporated, formed, or organized.
 
 6      (b)  The articles of conversion shall be delivered to the
 
 7 director.  If the converted entity is a domestic corporation the
 
 8 articles of incorporation shall also be delivered to the director
 
 9 with the articles of conversion.
 
10      (c)  If the director finds that the articles of conversion
 
11 satisfy the requirements provided by law, and that all required
 
12 documents are filed, the director shall, after all fees have been
 
13 paid:
 
14      (1)  Stamp the word "Filed" on the articles of conversion
 
15           and the date of the filing;
 
16      (2)  File the document in the director's office; and
 
17      (3)  Issue a certificate of conversion to the converted
 
18           entity or its authorized representatives.
 
19      §415B-    Effective date of the conversion.  Upon the
 
20 issuance of the certificate of conversion by the director, the
 
21 conversion shall be effective.
 
22      §415B-    Effect of conversion.  (a)  When a conversion
 
23 becomes effective:
 

 
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 1      (1)  The converting entity shall continue to exist without
 
 2           interruption, but in the organizational form of the
 
 3           converted entity;
 
 4      (2)  All rights, title, and interest in all real estate and
 
 5           other property owned by the converting entity shall
 
 6           automatically be owned by the converted entity without
 
 7           reversion or impairment, subject to any existing liens
 
 8           or other encumbrances thereon;
 
 9      (3)  All liabilities and obligations of the converting
 
10           entity shall automatically be liabilities and
 
11           obligations of the converted entity without impairment
 
12           or diminution due to the conversion;
 
13      (4)  The rights of creditors of the converting entity shall
 
14           continue against the converted entity and shall not be
 
15           impaired or extinguished by the conversion;
 
16      (5)  Any action or proceeding pending by or against the
 
17           converting entity may be continued by or against the
 
18           converted entity without any need for substitution of
 
19           parties;
 
20      (6)  The shares and other forms of ownership in the
 
21           converting entity that are to be converted into shares,
 
22           or other forms of ownership in the converted entity as
 
23           provided in the plan of conversion shall be converted.
 

 
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                                     S.B. NO.           S.D. 1
                                                        
                                                        

 
 1      (7)  A shareholder, partner, member, or other owner of the
 
 2           converted entity shall be liable for the debts and
 
 3           obligations of the converting entity that existed
 
 4           before the conversion takes effect only to the extent
 
 5           that such shareholder, partner, member, or other owner:
 
 6           (A)  Agreed in writing to be liable for such debts or
 
 7                obligations;
 
 8           (B)  Was liable under applicable law prior to the
 
 9                effective date of the conversion for such debts or
 
10                obligations; or
 
11           (C)  Becomes liable under applicable law for existing
 
12                debts and obligations of the converted entity by
 
13                becoming a shareholder, partner, member, or other
 
14                owner of the converted entity.
 
15      §415B-    Definition of other entity.  For purposes of this
 
16 chapter, "other entity" means a domestic or foreign corporation,
 
17 whether organized for profit or not, a domestic or foreign
 
18 limited liability company, general partnership, limited
 
19 partnership, limited liability partnership, or a domestic
 
20 professional corporation."
 
21      SECTION 4.  Chapter 425, Part VI, Hawaii Revised Statutes,
 
22 is amended by adding five new sections to be appropriately
 
23 designated and to read as follows:
 

 
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                                     S.B. NO.           S.D. 1
                                                        
                                                        

 
 1      "§425-    Conversion into and from partnerships or limited
 
 2 liability partnerships.  (a)  A domestic partnership or limited
 
 3 liability partnership may adopt a plan of conversion and convert
 
 4 to a foreign partnership, limited liability partnership, or any
 
 5 other entity if:
 
 6      (1)  The domestic partnership or limited liability
 
 7           partnership acts on and its partners approve a plan of
 
 8           conversion in the manner prescribed by sections 425-191
 
 9           and 428-904 to 428-906 and the conversion is treated as
 
10           a merger to which the converting entity is a party and
 
11           not the surviving entity;
 
12      (2)  The conversion is permitted by and complies with the
 
13           laws of the state or country in which the converted
 
14           entity is to be incorporated, formed, or organized; and
 
15           the incorporation, formation, or organization of the
 
16           converted entity complies with such laws;
 
17      (3)  At the time the conversion becomes effective, each
 
18           partner of the converting entity, unless otherwise
 
19           agreed to by that partner, shall own an equity interest
 
20           or other ownership interest in, and be a shareholder,
 
21           partner, member, owner, or other security holder of,
 
22           the converted entity; and
 
23      (4)  The converted entity shall be incorporated, formed, or
 

 
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                                     S.B. NO.           S.D. 1
                                                        
                                                        

 
 1           organized as part of or pursuant to the plan of
 
 2           conversion.
 
 3      (b)  Any foreign partnership, limited liability partnership,
 
 4 or other entity may adopt a plan of conversion and convert to a
 
 5 domestic partnership or limited liability partnership if the
 
 6 conversion is permitted by and complies with the laws of the
 
 7 state or country in which the foreign partnership, limited
 
 8 liability partnership, or other entity is incorporated, formed,
 
 9 or organized.
 
10      (c)  A plan of conversion shall set forth:
 
11      (1)  The name of the converting entity and the converted
 
12           entity;
 
13      (2)  A statement that the converting entity is continuing
 
14           its existence in the organizational form of the
 
15           converted entity;
 
16      (3)  A statement describing the organizational form of the
 
17           converted entity and the state or country under the
 
18           laws of which the converted entity is to be
 
19           incorporated, formed, or organized;
 
20      (4)  The manner and basis of converting the partnership
 
21           interests, or other forms of ownership of the
 
22           converting entity into partnership interests, or other
 
23           forms of ownership of the converted entity, or any
 

 
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                                     S.B. NO.           S.D. 1
                                                        
                                                        

 
 1           combination thereof;
 
 2      (5)  If the converted entity is a domestic partnership or
 
 3           limited liability partnership, the registration
 
 4           statement of the domestic partnership or limited
 
 5           liability partnership shall be attached; and
 
 6      (6)  If the converted entity is not a domestic partnership,
 
 7           or limited liability partnership, proof that the
 
 8           converted entity is registered in this state shall be
 
 9           attached.
 
10      (d)  A plan of conversion may set forth any other provisions
 
11 relating to the conversion that are not prohibited by law,
 
12 including without limitation the initial partnership or limited
 
13 liability partnership agreement of the converted entity if the
 
14 converted entity is a partnership or limited liability
 
15 partnership.
 
16      §425-    Articles of conversion.  (a)  If a plan of
 
17 conversion has been approved in accordance with the section
 
18 425-    and has not been abandoned, articles of conversion shall
 
19 be executed by a partner, officer, or other duly authorized
 
20 representative of the converting entity and shall set forth:
 
21      (1)  A statement certifying the following:
 
22           (A)  The name, state, or country of incorporation,
 
23                formation, or organization of the converting
 

 
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                                     S.B. NO.           S.D. 1
                                                        
                                                        

 
 1                entity and the organizational form of the
 
 2                converting entity;
 
 3           (B)  That a plan of conversion has been approved in
 
 4                accordance with section 425-  ;
 
 5           (C)  That an executed plan of conversion is on file at
 
 6                the principal place of business of the converting
 
 7                entity and stating the address thereof; and
 
 8           (D)  That a copy of the plan of conversion shall be
 
 9                furnished by the converting entity prior to the
 
10                conversion or the converted entity after the
 
11                conversion on written request and without cost, to
 
12                any partner, shareholder, owner, or member of the
 
13                converting entity or the converted entity; and
 
14      (2)  A statement that the approval of the plan of conversion
 
15           was duly authorized by all action required by the laws
 
16           under which the converting entity was incorporated,
 
17           formed, or organized.
 
18      (b)  The articles of conversion shall be delivered to the
 
19 director.
 
20      (c)  If the converted entity is a domestic partnership, the
 
21 registration statement of the domestic partnership or limited
 
22 liability partnership shall also be delivered to the director
 
23 with the articles of conversion.
 

 
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 1      §425-    Effective date of the conversion.  Upon the
 
 2 issuance of a certificate of conversion by the director, the
 
 3 conversion shall be effective.
 
 4      §425-    Effect of conversion.  (a)  When a conversion
 
 5 becomes effective:
 
 6      (1)  The converting entity shall continue to exist without
 
 7           interruption, but in the organizational form of the
 
 8           converted entity;
 
 9      (2)  All rights, title, and interest in all real estate and
 
10           other property owned by the converting entity shall
 
11           automatically be owned by the converted entity without
 
12           reversion or impairment, subject to any existing liens
 
13           or other encumbrances thereon;
 
14      (3)  All liabilities and obligations of the converting
 
15           entity shall automatically be liabilities and
 
16           obligations of the converted entity without impairment
 
17           or diminution due to the conversion;
 
18      (4)  The rights of creditors of the converting party shall
 
19           continue against the converted entity and shall not be
 
20           impaired or extinguished by the conversion;
 
21      (5)  Any action or proceeding pending by or against the
 
22           converting entity may be continued by or against the
 
23           converted entity, without any need for substitution of
 

 
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 1           parties;
 
 2      (6)  The partnership interests, and other forms of ownership
 
 3           in the converting entity that are to be converted into
 
 4           partnership interests, or other forms of ownership, in
 
 5           the converted entity as provided in the plan of
 
 6           conversion shall be converted;
 
 7      (7)  A shareholder, partner, member, or other owner of the
 
 8           converted entity, shall be liable for the debts and
 
 9           obligations of the converting entity that existed
 
10           before the conversion takes effect only to the extent
 
11           that such shareholder, partner, member, or other owner:
 
12           (A)  Agreed in writing to be liable for such debts or
 
13                obligations;
 
14           (B)  Was liable under applicable law prior to the
 
15                effective date of the conversion for such debts or
 
16                obligations; or
 
17           (C)  Becomes liable under applicable law for existing
 
18                debts and obligations of the converted entity by
 
19                becoming a shareholder, partner, member, or other
 
20                owner of the converted entity;
 
21      (8)  If the converted entity is a foreign partnership,
 
22           limited liability partnership or other entity, the
 
23           converted entity shall appoint a resident of the State
 

 
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                                     S.B. NO.           S.D. 1
                                                        
                                                        

 
 1           as its agent, for service of process in a proceeding to
 
 2           enforce any obligation or rights of dissenting partners
 
 3           of the converting domestic partnership or limited
 
 4           liability partnership; and
 
 5      (9)  If the converting partnership is a domestic partnership
 
 6           or limited liability partnership, section 425-191 shall
 
 7           apply as if the converted entity were the survivor of a
 
 8           merger with the converting entity.
 
 9      §425-    Definition of other entity.  For purposes of this
 
10 chapter, "other entity" means a domestic or foreign corporation,
 
11 whether organized for profit or not, a domestic or foreign
 
12 limited partnership, limited liability company, or domestic
 
13 professional corporation."
 
14       SECTION 5.  Chapter 425D, Article 11, Hawaii Revised
 
15 Statutes, is amended by adding five new sections to be
 
16 appropriately designated and to read as follows:
 
17      "§425D-    Conversion into or from limited partnerships.
 
18 (a)  A domestic limited partnership may adopt a plan of
 
19 conversion and convert to a foreign limited partnership or any
 
20 other entity if:
 
21      (1)  The domestic limited partnership acts on and its
 
22           partners approve a plan of conversion in the manner
 
23           prescribed by sections 425-191, 428-904 to 428-906, as
 

 
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 1           if the conversion is treated as a merger to which the
 
 2           converting entity is a party and not the surviving
 
 3           entity;
 
 4      (2)  The conversion is permitted by and complies with the
 
 5           laws of the state or country in which the converted
 
 6           entity is to be incorporated, formed, or organized; and
 
 7           the incorporation, formation, or organization of the
 
 8           converted entity complies with such laws;
 
 9      (3)  At the time the conversion becomes effective, each
 
10           partner of the converting entity, unless otherwise
 
11           agreed to by that partner, shall own an equity interest
 
12           or other ownership  interest in, and be a shareholder,
 
13           partner, member, owner, or other security holder of,
 
14           the converted entity; and
 
15      (4)  The converted entity shall be incorporated, formed, or
 
16           organized as part of or pursuant to the plan of
 
17           conversion.
 
18      (b)  Any foreign limited partnership or other entity may
 
19 adopt a plan of conversion and convert to a domestic limited
 
20 partnership if the conversion is permitted by and complies with
 
21 the laws of the state or country in which the foreign limited
 
22 partnership or other entity is incorporated, formed, or
 
23 organized.
 

 
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                                     S.B. NO.           S.D. 1
                                                        
                                                        

 
 1      (c)  A plan of conversion shall set forth:
 
 2      (1)  The name of the converting entity and the converted
 
 3           entity;
 
 4      (2)  A statement that the converting entity is continuing
 
 5           its existence in the organizational form of the
 
 6           converted entity;
 
 7      (3)  A statement describing the organizational form of the
 
 8           converted entity and the state or country under the
 
 9           laws of which the converted entity is to be
 
10           incorporated, formed, or organized;
 
11      (4)  The manner and basis of converting the partnership
 
12           interests, or other forms of ownership of the
 
13           converting entity into partnership interests, or other
 
14           forms of ownership of the converted entity, or any
 
15           combination thereof;
 
16      (5)  If the converted entity is a domestic limited
 
17           partnership, the certificate of limited partnership
 
18           shall be attached; and
 
19      (6)  If the converted entity is not a domestic limited
 
20           partnership, proof that the converted entity is
 
21           registered in this State shall be attached.
 
22      (d)  A plan of conversion may set forth any other provisions
 
23 relating to the conversion that are not prohibited by law,
 

 
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                                     S.B. NO.           S.D. 1
                                                        
                                                        

 
 1 including without limitation the initial partnership agreement of
 
 2 the converted entity.
 
 3      §425D-    Articles of conversion.  (a)  If a plan of
 
 4 conversion has been approved in accordance with the section
 
 5 425D-    and has not been abandoned, articles of conversion shall
 
 6 be executed by the a partner, officer, or other duly authorized
 
 7 representative of the converting entity and shall set forth:
 
 8      (1)  A statement certifying the following:
 
 9           (A)  The name, state, or country of incorporation,
 
10                formation, or organization of the converting
 
11                entity, and the organizational form of the
 
12                converting entity;
 
13           (B)  That a plan of conversion has been approved in
 
14                accordance with section 425D-  ;
 
15           (C)  That an executed plan of conversion is on file at
 
16                the principal place of business of the converting
 
17                entity and stating the address thereof;
 
18           (D)  That a copy of the plan of conversion shall be
 
19                furnished by the converting entity prior to the
 
20                conversion or the converted entity after the
 
21                conversion, on written request and without cost,
 
22                to any limited partner of the converting entity or
 
23                the converted entity; and
 

 
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                                     S.B. NO.           S.D. 1
                                                        
                                                        

 
 1      (2)  A statement that the approval of the plan of conversion
 
 2           was duly authorized by all action required by the laws
 
 3           under which the converting entity was incorporated,
 
 4           formed, or organized.
 
 5      (b)  The articles of conversion shall be delivered to the
 
 6 director.
 
 7      (c)  If the converted entity is a domestic limited
 
 8 partnership, the certificate of limited partnership shall also be
 
 9 delivered to the director with the articles of conversion.
 
10      §425D-    Effective date of the conversion.  Upon the
 
11 issuance of a certificate of conversion by the director, the
 
12 conversion shall be effective.
 
13      §425D-    Effect of conversion.  (a)  When a conversion
 
14 becomes effective:
 
15      (1)  The converting entity shall continue to exist without
 
16           interruption, but in the organizational form of the
 
17           converted entity;
 
18      (2)  All rights, title, and interest in all real estate and
 
19           other property owned by the converting entity shall
 
20           automatically be owned by the converted entity without
 
21           reversion or impairment, subject to any existing liens
 
22           or other encumbrances thereon;
 
23      (3)  All liabilities and obligations of the converting
 

 
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                                     S.B. NO.           S.D. 1
                                                        
                                                        

 
 1           entity shall automatically be liabilities and
 
 2           obligations of the converted entity without impairment
 
 3           or diminution due to the conversion;
 
 4      (4)  The rights of creditors of the converting party shall
 
 5           against the converted party and shall not be impaired
 
 6           or extinguished by the conversion;
 
 7      (5)  Any action or proceeding pending by or against the
 
 8           converting entity may be continued by or against the
 
 9           converted entity without any need for substitution of
 
10           parties;
 
11      (6)  The partnership interests and other forms of ownership
 
12           in the converting entity that are to be converted into
 
13           partnership interests, and other forms of ownership, in
 
14           the converted entity as provided in the plan of
 
15           conversion shall be converted;
 
16      (7)  A shareholder, partner, member, or other owner of the
 
17           converted entity shall be liable for the debts and
 
18           obligations of the converting entity that existed
 
19           before the conversion takes effect only to the extent
 
20           that such shareholder, partner, member, or other owner:
 
21           (A)  Agreed in writing to be liable for such debts or
 
22                obligations;
 
23           (B)  Was liable under applicable law prior to the
 

 
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                                     S.B. NO.           S.D. 1
                                                        
                                                        

 
 1                effective date of the conversion for such debts or
 
 2                obligations; or
 
 3           (C)  Becomes liable under applicable law for existing
 
 4                debts and obligations of the converted entity by
 
 5                becoming a shareholder, partner, member, or other
 
 6                owner of the converted entity;
 
 7      (8)  If the converted entity is a foreign limited
 
 8           partnership or other entity, the converted entity shall
 
 9           appoint a resident of this State as its agent for
 
10           service of process in a proceeding to enforce any
 
11           obligation or rights of dissenting limited partners of
 
12           the converting domestic limited partnership; and
 
13      (9)  If the converting partnership is a domestic limited
 
14           partnership, section 425D-1109 shall apply as if the
 
15           converted entity were the survivor of a merger with the
 
16           converting entity.
 
17      §425D-    Definitions of other entity.  For purposes of this
 
18 chapter; "other entity" means a domestic or foreign corporation,
 
19 whether organized for profit or not, a domestic or foreign
 
20 partnership, limited liability partnership, limited liability
 
21 company, or a professional corporation."
 
22      SECTION 6.  Chapter 428, Part IX, Hawaii Revised Statutes,
 
23 is amended by adding two new sections to be appropriately
 

 
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                                     S.B. NO.           S.D. 1
                                                        
                                                        

 
 1 designated and to read as follows:
 
 2      "§428-    Conversion into and from limited liability
 
 3 companies.  (a)  A domestic limited liability company may adopt a
 
 4 plan of conversion and convert to a foreign limited liability
 
 5 company or any other entity if:
 
 6      (1)  The domestic limited liability company acts on and its
 
 7           members approve a plan of conversion in the manner
 
 8           prescribed by sections 428-904 to 428-906 and the
 
 9           conversion is treated as a merger to which the
 
10           converting entity is a party and not the surviving
 
11           entity;
 
12      (2)  The conversion is permitted by, and complies with with,
 
13           the laws of the state or country in which the converted
 
14           entity is to be incorporated, formed, or organized; and
 
15           the incorporation, formation, or organization of the
 
16           converted entity complies with such laws;
 
17      (3)  At the time the conversion becomes effective, each
 
18           member of the converting entity will, unless otherwise
 
19           agreed to by that member, own an equity interest or
 
20           other ownership interest in, and be a shareholder,
 
21           partner, member, owner, or other security holder of,
 
22           the converted entity;
 
23      (4)  The members of the domestic limited liability company
 

 
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                                     S.B. NO.           S.D. 1
                                                        
                                                        

 
 1           shall not, as a result of the conversion, become
 
 2           personally liable without the members' consent, for the
 
 3           liabilities or obligations of the converted entity; and
 
 4      (5)  The converted entity is incorporated, formed, or
 
 5           organized as part of or pursuant to the plan of
 
 6           conversion.
 
 7      (b)  Any foreign limited liability company or other entity
 
 8 may adopt a plan of conversion and convert to a domestic limited
 
 9 liability company if the conversion is permitted by and complies
 
10 with the laws of the state or country in which the foreign
 
11 corporation is incorporated, formed or organized;
 
12      (c)  A plan of conversion shall set forth:
 
13      (1)  The name of the converting entity and the converted
 
14           entity;
 
15      (2)  A statement that the converting entity is continuing
 
16           its existence in the organizational form of the
 
17           converted entity;
 
18      (3)  A statement describing the organizational form of the
 
19           converted entity and the state or country under the
 
20           laws of which the converted entity is to be
 
21           incorporated, formed, or organized;
 
22      (4)  The manner and basis of converting the shares or other
 
23           forms of ownership of the converting entity into shares
 

 
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                                     S.B. NO.           S.D. 1
                                                        
                                                        

 
 1           or other forms of ownership of the converted entity, or
 
 2           any combination thereof;
 
 3      (5)  If the converted entity is a domestic limited liability
 
 4           company, the articles of organization of the domestic
 
 5           limited liability company shall be attached; and
 
 6      (6)  If the converted entity is not a domestic limited
 
 7           liability company, proof that the converted entity is
 
 8           registered in this State shall be attached.
 
 9      (d)  A plan of conversion may set forth any other provisions
 
10 relating to the conversion that are not prohibited by law,
 
11 including without limitation the initial bylaws and officers of
 
12 the converted entity.
 
13      (e)  After a conversion of a limited liability company is
 
14 approved, and at any time before the conversion becomes
 
15 effective, the plan of conversion may be abandoned by the
 
16 converting entity without member action and in accordance with
 
17 the procedures set forth in the plan of conversion or, if these
 
18 procedures are not provided in the plan of conversion, in the
 
19 manner determined by the members.  If articles of conversion have
 
20 been filed with the director but the conversion has not become
 
21 effective, the conversion may be abandoned if a statement,
 
22 executed on behalf of the converting entity by an officer or
 
23 other duly authorized representative and stating that the plan of
 

 
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                                     S.B. NO.           S.D. 1
                                                        
                                                        

 
 1 conversion has been abandoned in accordance with applicable law,
 
 2 is filed with the director prior to the effective date of the
 
 3 conversion.  If the director finds that the statement satisfies
 
 4 the requirements provided by law, the director shall, after all
 
 5 fees have been paid:
 
 6      (1)  Stamp the word "Filed" on the statement and the date of
 
 7           the filing;
 
 8      (2)  File the document in the director's office; and
 
 9      (3)  Issue a certificate of abandonment to the converting
 
10           entity or its authorized representatives.
 
11      (f)  Once the statement provided in subsection (e) is filed
 
12 with the director, the conversion shall be deemed abandoned and
 
13 shall not be effective.
 
14      §428-    Articles of conversion.  (a)  If a plan of
 
15 conversion has been approved in accordance with section 428-   
 
16 and has not been abandoned, articles of conversion shall be
 
17 executed by an officer or other duly authorized representative of
 
18 the converting entity by and shall set forth:
 
19      (1)  A statement certifying the following:
 
20           (A)  The name, state, or country of incorporation,
 
21                formation, or organization of the converting
 
22                entity, and organizational form of the converting
 
23                entity;
 

 
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 1           (B)  That a plan of conversion has been approved;
 
 2           (C)  That an executed plan of conversion is on file at
 
 3                the principal place of business of the converting
 
 4                entity and stating the address thereof; and
 
 5           (D)  That a copy of the plan of conversion shall be
 
 6                furnished by the converting entity prior to the
 
 7                conversion or by the converted entity after the
 
 8                conversion on written request and without cost, to
 
 9                any member, shareholder, partner, or owner of the
 
10                converting entity or the converted entity;
 
11      (2)  If the converting entity is a domestic limited
 
12           liability company, the total number of authorized
 
13           votes, and the number voted for and against the plan;
 
14           and
 
15      (3)  If the converting entity is a foreign limited liability
 
16           company or other entity, a statement that the approval
 
17           of the plan of conversion was duly authorized and
 
18           complied with the laws under which it was incorporated,
 
19           formed, or organized.
 
20      (b)  The articles of conversion shall be delivered to the
 
21 director.  If the converted entity is a domestic limited
 
22 liability company, the articles of organization of the domestic
 
23 limited liability company, shall also be delivered to the
 

 
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                                     S.B. NO.           S.D. 1
                                                        
                                                        

 
 1 director with the articles of conversion.
 
 2      (c)  If the director finds that the articles of conversion
 
 3 satisfy the requirements provided by law, and that all required
 
 4 documents are filed, the director shall, after all fees have been
 
 5 paid:
 
 6      (1)  Stamp the word "Filed" on the articles of conversion
 
 7           and the date of the filing;
 
 8      (2)  File the document in the director's office; and
 
 9      (3)  Issue a certificate of conversion to the converted
 
10           entity or its authorized representatives."
 
11      SECTION 7.  Section 415-128, Hawaii Revised Statutes, is
 
12 amended to read as follows:
 
13      "§415-128  Fees for filing documents and issuing
 
14 certificates.  (a)  The following fees shall be paid to the
 
15 director upon the filing of corporate documents:
 
16      (1)  Articles of incorporation, $100;
 
17      (2)  Articles of amendment, $50;
 
18      (3)  Restated articles of incorporation, $50;
 
19      (4)  Articles of conversion, merger, or consolidation, $200;
 
20      (5)  Articles of merger (subsidiary corporation), $100;
 
21      (6)  Articles of dissolution, $50;
 
22      (7)  Annual report of domestic and foreign corporations
 
23           organized for profit, $25;
 

 
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                                     S.B. NO.           S.D. 1
                                                        
                                                        

 
 1      (8)  Any other statement, report, certificate, application,
 
 2           or other corporate document, except an annual report,
 
 3           of a domestic or foreign corporation, $50;
 
 4      (9)  Application for a certificate of authority, $100;
 
 5     (10)  Application for a certificate of withdrawal, $50;
 
 6     (11)  Reservation of corporate name, $20;
 
 7     (12)  Transfer of reservation of corporate name, $20;
 
 8     (13)  Good standing certificate, $25;
 
 9     (14)  Special handling fee for review of corporation
 
10           documents, excluding articles of conversion, merger, or
 
11           consolidation, $50;
 
12     (15)  Special handling fee for review of articles of
 
13           conversion, merger, or consolidation, $150;
 
14     (16)  Special handling fee for certificates issued by the
 
15           department, $20 per certificate; and
 
16     (17)  Special handling fee for certification of documents, $1
 
17           per page.
 
18      (b)  All special handling fees shall be credited to the
 
19 special fund established for use by the department in expediting
 
20 the processing of documents.  At least two temporary business
 
21 registration assistant I positions shall be paid out of the
 
22 special fund.
 
23      (c)  The director shall adjust the fees assessed under this
 

 
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 1 section, as necessary from time to time, through rules adopted
 
 2 under chapter 91 to ensure that the proceeds, together with all
 
 3 other receipts of the special fund under this section do not
 
 4 surpass the annual operating costs of the program.  All
 
 5 unexpended and unencumbered moneys remaining on balance with the
 
 6 fund at the close of each fiscal year which are deemed, by the
 
 7 director of finance, to be in excess of the moneys necessary to
 
 8 carry out the processing of corporate documents over the next
 
 9 following fiscal year shall lapse to the credit of the state
 
10 general fund."
 
11      SECTION 8.  Section 415B-155, Hawaii Revised Statutes, is
 
12 amended to read as follows:
 
13      "§415B-155  Fees for filing documents and issuing
 
14 certificates.  (a)  The following fees shall be paid to the
 
15 director upon the filing of corporate documents:
 
16      (1)  Articles of incorporation, $50;
 
17      (2)  Articles  of amendment, $20;
 
18      (3)  Restated articles of incorporation, $20;
 
19      (4)  Articles of merger or consolidation, $100;
 
20      (5)  Articles of conversion, $200;
 
21     [(5)] (6)  Articles of dissolution, $20;
 
22     [(6)] (7)  Annual report of nonprofit domestic and foreign
 
23           corporations, $5;
 

 
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 1     [(7)] (8)  Any other statement, report, certificate,
 
 2           application, or other corporate document, except an
 
 3           annual report, of a nonprofit domestic or foreign
 
 4           corporation, $20;
 
 5     [(8)] (9)  Application for a certificate of authority, $50;
 
 6     [(9)] (10)  Application for a certificate of withdrawal, $20;
 
 7    [(10)] (11)  Reservation of corporate name, $20;
 
 8    [(11)] (12)  Transfer of reservation of corporate name, $20;
 
 9    [(12)] (13)  Good standing certificate, $20;
 
10    [(13)] (14)  Special handling fee for review of corporation
 
11           documents, excluding articles of merger or
 
12           consolidation, $50;
 
13    [(14)] (15)  Special handling fee for review of articles of
 
14           conversion, merger, or consolidation, $150;
 
15    [(15]  (16)  Special handling fee for certificates issued by
 
16           the department, $20 per certificate; and
 
17    [(16)] (17)  Special handling fee for certification of
 
18           documents, $1 per page.
 
19      (b)  All special handling fees shall be credited to a
 
20 special fund which may be established for use by the department
 
21 in expediting the processing of documents.  At least two
 
22 temporary business registration assistant I positions shall be
 
23 paid out of the special fund."
 

 
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 1      SECTION 9.  Section 425-12, Hawaii Revised Statutes, is
 
 2 amended to read as follows:
 
 3      "§425-12  Fee for filing documents and issuing certificates.
 
 4 (a)  The following fees shall be paid to the director upon the
 
 5 filing of general partnership documents:
 
 6      (1)  Partnership registration statement, $25;
 
 7      (2)  Partnership change of name statement, $25;
 
 8      (3)  Partnership dissolution statement, $25;
 
 9      (4)  Foreign general partnership registration statement,
 
10           $25;
 
11      (5)  Statement of change, $25;
 
12      (6)  Application of certificate of withdrawal, $10;
 
13      (7)  Statement of correction, $25;
 
14      (8)  Reservation of name, $20;
 
15      (9)  Transfer of reservation of name, $20;
 
16     (10)  Annual statement for domestic or foreign general
 
17           partnership, $10;
 
18     (11)  Good standing certificate, $25;
 
19     (12)  Articles of conversion, $200:
 
20    [(12)] (13)  Any other statement, certificate, or other
 
21           document for a domestic or foreign general partnership,
 
22           $25;
 
23    [(13)] (14)  Special handling fee for review of any general
 

 
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 1           partnership document, $20;
 
 2    [(14)] (15)  Special handling fee for certificates issued by
 
 3           the director, $20 per certificate; [and]
 
 4    [(15)] (16)  Special handling fee for certification of
 
 5           documents, $1 per page[.]; and
 
 6     (17)  Special handling fee for review of articles of
 
 7           conversion, $150.
 
 8      (b)  All special handling fees shall be credited to the
 
 9 special fund authorized by section 415-128."
 
10      SECTION 10.  Section 425-169, Hawaii Revised Statutes, is
 
11 amended to read as follows:
 
12      "§425-169  Fee for recording.(a)  The director shall
 
13 collect the following fees for documents filed under this part:
 
14      (1)  For each change of partnership name or statement of
 
15           dissolution filed, a fee of $5 per partner, subject to
 
16           a maximum fee of $5,000;
 
17      (2)  For each annual statement filed, a fee of $50;
 
18      (3)  For each limited liability partnership registered, a
 
19           fee of $100 for each partner, subject to a maximum fee
 
20           of $10,000;
 
21      (4)  For each foreign limited liability partnership
 
22           registered, a fee of $1,000 if the partnership has
 
23           fewer than ten partners; $5,000 if the partnership has
 

 
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 1           ten or more but fewer than fifty partners; and $10,000
 
 2           if the partnership has fifty or more partners;
 
 3      (5)  For each reservation or transfer of limited liability
 
 4           partnership name, a fee of $100;
 
 5      (6)  For each certificate of correction or certificate of
 
 6           amendment, a fee of $100;
 
 7      (7)  For each certificate of good standing, a fee of $100;
 
 8      (8)  For review of articles of conversion, a fee of $200;
 
 9     [(8)] (9)  For any other certificate, statement, or document,
 
10           a fee of $100; and
 
11     [(9)] (10)  For each certification of domestic or foreign
 
12           partnership, a fee of $100.
 
13      (b)  The following special handling fees shall be assessed
 
14 by the director for expeditious review of the following
 
15 documents:
 
16      (1)  For limited liability partnerships:  certificate of
 
17           limited liability partnership, $100; certificate of
 
18           correction, $100; change of name statement, $100;
 
19           partnership dissolution statement, $100; annual
 
20           statement, $100; certification of limited liability
 
21           partnership, $1 a page; certificate of good standing,
 
22           $100; articles of conversion, $150;
 
23      (2)  For foreign limited liability partnerships:
 

 
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 1           registration statement, $100; certificate of
 
 2           correction, $100; withdrawal application, $100; annual
 
 3           statement, $100; certification of foreign partnership,
 
 4           $1 a page; certificate of good standing, $100; filing
 
 5           articles of conversion, $150; and
 
 6      (3)  For any other certificate or document authorized by
 
 7           this part, $100.
 
 8      (c)  All special handling fees shall be credited to the
 
 9 special fund authorized by section 415-128.  All other fees
 
10 collected under this section shall be managed in accordance with
 
11 section 26-9(l)."
 
12      SECTION 11.  Section 425-191, Hawaii Revised Statutes, is
 
13 amended to read as follows:
 
14      "[[]§425-191[]]  Merger [or conversion] of domestic general
 
15 and limited liability partnerships.  One or more domestic general
 
16 and limited liability partnerships may be [converted into or]
 
17 merged with a domestic limited liability company pursuant to
 
18 [section 428-902 or] sections 428-904 to 428-906[, as the case
 
19 may be]."
 
20      SECTION 12.  Section 425D-1107, Hawaii Revised Statutes, is
 
21 amended to read as follows:
 
22      "§425D-1107  Fee for filing documents and issuing
 
23 certificates.  (a)  The following fees shall be paid to the
 

 
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 1 director upon the filing of limited partnership documents:
 
 2      (1)  Certificate of limited partnership, $50;
 
 3      (2)  Any certificate of amendment, restatement, or
 
 4           correction, $20;
 
 5      (3)  Certificate of cancellation, $20;
 
 6      (4)  Annual statement for domestic or foreign limited
 
 7           partnership, $10;
 
 8      (5)  Any other certificate or document of domestic or
 
 9           foreign limited partnership, $20;
 
10      (6)  Application for registration as a foreign limited
 
11           partnership, $100;
 
12      (7)  Any certificate of amendment or agent change for
 
13           foreign limited partnership, $20;
 
14      (8)  Application for certificate of withdrawal of foreign
 
15           limited partnership, $20;
 
16      (9)  Reservation of name, $20;
 
17     (10)  Transfer of reservation of name, $20;
 
18     (11)  Good standing certificate, $20;
 
19     (12)  Filing articles of conversion, $200;
 
20     (13)  Special handling fee for review of articles of
 
21           conversion, $150;
 
22    [(12)] (14)  Special handling fee for review of any limited
 
23           partnership document, $50;
 

 
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 1    [(13)] (15)  Special handling of fee for certificates issued
 
 2           by the director, $20 per certificate; and
 
 3    [(14)] (16)  Special handling fee for certification of
 
 4           documents, $1 per page.
 
 5      (b)  All special handling fees shall be credited to the
 
 6 special fund authorized by section 415-128."
 
 7      SECTION 13.  Section 425D-1109, Hawaii Revised Statutes, is
 
 8 amended to read as follows:
 
 9      "[[]§425D-1109[]]  Merger [or conversion] of domestic
 
10 limited partnerships.  One or more domestic limited partnerships
 
11 may be [converted into or] merged with a domestic limited
 
12 liability company pursuant to [section 428-902 or] sections
 
13 428-904 to 428-906[, as the case may be]."
 
14      SECTION 14.  Section 428-901, Hawaii Revised Statutes, is
 
15 amended by adding a new definition to be appropriately inserted
 
16 and to read as follows:
 
17      ""Other entity" means a foreign or domestic corporation,
 
18 whether organized for profit or not, a domestic or foreign
 
19 partnership, limited partnership, limited liability partnership,
 
20 or a domestic professional corporation."
 
21      SECTION 15.  Section 428-903, Hawaii Revised Statutes, is
 
22 amended to read as follows:
 
23      "[[]§428-903[]]  Effect of conversion[; entity unchanged].
 

 
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 1 [(a)  A general partnership or limited partnership that has been
 
 2 converted to a limited liability company pursuant to section
 
 3 428-902 shall be considered the same legal entity that existed
 
 4 prior to the conversion, the only change shall be the form in
 
 5 which the legal entity now exists.
 
 6      (b)  When the conversion takes effect:
 
 7      (1)  All property owned by the converting general
 
 8           partnerships or-limited partnerships is vested in the
 
 9           limited liability company;
 
10      (2)  All debts, liabilities, and other obligations of the
 
11           converting general partnership or limited partnership
 
12           continue as obligations of the limited liability
 
13           company;
 
14      (3)  Any action or proceeding pending by or against the
 
15           converting general partnership or limited partnership
 
16           may be continue as if the conversion had not occurred
 
17           and the limited liability company may be substituted as
 
18           a party to the actions or proceeding;
 
19      (4)  Except as prohibited by other law, all the rights,
 
20           privileges, immunities, powers, and purposes of the
 
21           converting general partnership or limited partnership
 
22           are vested in the limited liability company; and
 
23      (5)  Except as otherwise provided in the agreement of the
 

 
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 1           conversion under section 428-902(c), all of the
 
 2           partners of the converting general partnership or
 
 3           limited partnership shall continue as members of the
 
 4           limited liability company.]
 
 5      (a)  When a conversion becomes effective:
 
 6      (1)  The converting entity shall continue to exist without
 
 7           interruption, but in the organizational form of the
 
 8           converted entity;
 
 9      (2)  All rights, title, and interest in all real estate and
 
10           other property owned by the converting entity shall
 
11           automatically be owned by the converted entity without
 
12           reversion or impairment, subject to any existing liens
 
13           or other encumbrances thereon;
 
14      (3)  All liabilities and obligations of the converting
 
15           entity shall automatically be liabilities and
 
16           obligations of the converted entity without impairment
 
17           or diminution due to the conversion;
 
18      (4)  The rights of creditors of the converting entity shall
 
19           continue against the converted entity and shall not be
 
20           impaired or extinguished by the conversion;
 
21      (5)  Any action or proceeding pending by or against the
 
22           converting entity may be continued by or against the
 
23           converted entity without any need for substitution of
 

 
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 1           parties;
 
 2      (6)  The shares and other forms of ownership in the
 
 3           converting entity that are to be converted into shares,
 
 4           or other forms of ownership, or other securities in the
 
 5           converted entity as provided in the plan of conversion
 
 6           shall be converted, and if the converting entity is a
 
 7           domestic limited liability company, the members of the
 
 8           domestic limited liability company shall be entitled
 
 9           only to the rights provided in the plan of conversion
 
10           or to the rights to dissent under section 415-80;
 
11      (7)  A shareholder, partner, member, or other owner of the
 
12           converted entity shall be liable for the debts and
 
13           obligations of the converting entity that existed
 
14           before the conversion takes effect only to the extent
 
15           that such shareholder, partner, member, or other owner:
 
16           (A)  Agreed in writing to be liable for such debts or
 
17                obligations,
 
18           (B)  Was liable under applicable law prior to the
 
19                effective date of the conversion, for such debts
 
20                or obligations, or
 
21           (C)  Becomes liable under applicable law for existing
 
22                debts and obligations of the converted entity by
 
23                becoming a shareholder, partner, member, or other
 

 
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 1                owner of the converted entity;
 
 2      (8)  If the converted entity is a foreign limited liability
 
 3           company or other entity, such converted entity shall
 
 4           appoint a resident of this State as its agent for
 
 5           service of process in a proceeding to enforce any
 
 6           obligation or the rights of dissenting members of the
 
 7           converting domestic limited liability company; and
 
 8      (9)  If the converting entity is a domestic limited
 
 9           liability company, section 428-907 shall apply as if
 
10           the converted entity were the survivor of a merger with
 
11           the converting entity.
 
12      (b)  Upon the issuance of the certificate of conversion by
 
13 the director, the conversion shall be effective."
 
14      SECTION 16.  Section 428-1301, Hawaii Revised Statues, is
 
15 amended to read as follows:
 
16      "§428-1301  Fees.  (a)  The following fees shall be paid to
 
17 the director upon the filing and issuance of records under this
 
18 chapter:
 
19      (1)  Articles of organization, $100;
 
20      (2)  Articles of amendment, $50;
 
21      (3)  Restated articles of organization, $50;
 
22      (4)  Articles of merger[,] or conversion, $200;
 
23      (5)  Statement of dissociation, $50;
 

 
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 1      (6)  Articles of termination, $50;
 
 2      (7)  Application for reinstatement for administratively
 
 3           terminated limited liability company, $50;
 
 4      (8)  Annual report, $25;
 
 5      (9)  Statement of change of designated office or agent for
 
 6           service of process, or both, for limited liability
 
 7           company or foreign limited liability company, $50;
 
 8     (10)  Statement of resignation of agent for service of
 
 9           process, $50;
 
10     (11)  Any other statement or document of a domestic or
 
11           foreign limited liability company, $50;
 
12     (12)  Application for certificate of authority for foreign
 
13           limited liability company, $100;
 
14     (13)  Application for cancellation of authority of foreign
 
15           limited liability company, $50;
 
16     (14)  Reservation of name, $25;
 
17     (15)  Good standing certificate, $25;
 
18     (16)  Any other record not otherwise covered in this part,
 
19           $50;
 
20     (17)  Certified copy of any record relating to a limited
 
21           liability company or foreign limited liability company,
 
22           25 cents per page, and $10 for the certificate and
 
23           affixing the seal thereto;
 

 
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 1     (18)  Special handling fee for review of any record other
 
 2           than articles of merger[,] or conversion, $80;
 
 3     (19)  Special handling fee for review of articles of
 
 4           merger[,] or conversion, $200;
 
 5     (20)  Special handling fee for certificates issued by the
 
 6           director not otherwise covered by this part, $10 per
 
 7           certificate;
 
 8     (21)  Special handling fee for certification of record, $1
 
 9           per page; and
 
10     (22)  Any service of notice, demand, or process upon the
 
11           director as agent for service of process of a limited
 
12           liability company or foreign limited liability company,
 
13           $50, which amount may be recovered as taxable costs by
 
14           the party to the suit or action causing such service to
 
15           be made if such party prevails in the suit or action.
 
16      (b)  All special handling fees shall be credited to the
 
17 special fund authorized by section 415-128."
 
18      SECTION 17.  Section 428-902, Hawaii Revised Statutes, is
 
19 repealed.
 
20      ["[§428-902]  Conversion of partnerships or limited
 
21 partnerships to limited liability company.(a)  A domestic
 
22 partnership or domestic limited partnership may be converted into
 
23 a domestic limited liability company pursuant to this section.
 

 
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 1      (b)  The terms and conditions of a conversion of a
 
 2 partnership or limited partnership to a limited liability company
 
 3 shall be approved by all of the partners or by the number or
 
 4 percentage of the partners required for conversion in the
 
 5 partnership agreement.
 
 6      (c)  An agreement of conversion approved under subsection
 
 7 (b) shall set forth the terms and conditions of the conversion of
 
 8 the interests of the general partners in the case of a general
 
 9 partnership and the interests of the general partners and limited
 
10 partners in the case of limited partnership, being converted into
 
11 interests in the limited liability company and any cash or other
 
12 consideration to be paid or delivered as a result of the
 
13 conversion or any combination thereof.
 
14      (d)  Upon compliance with subsection (b) and section
 
15 428-908, the general partnership or limited partnership shall
 
16 file articles or organization in the office of the director which
 
17 satisfy the requirements of section 428-203 and contain:
 
18      (1)  A statement that the general partnership or limited
 
19           partnership was converted to a limited liability
 
20           company;
 
21      (2)  The name of the former partnership or limited
 
22           partnership;
 
23      (3)  A statement detailing the approvals by the general
 

 
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 1           partners in the case of a general partnership
 
 2           conversion, and the general partners and limited
 
 3           partners in the case of a limited partnership
 
 4           conversion, noting the respective votes taken required
 
 5           to approve the conversion under subsection (b);
 
 6      (4)  A statement of cancellation of the partnership
 
 7           registration statement in the case of a general
 
 8           partnership conversion, or statement of cancellation of
 
 9           the certificate of limited partnership in the case of a
 
10           limited partnership conversion, specifying an effective
 
11           date as provided in subsection (f) if the effective
 
12           date is not to be the date of filing; and
 
13      (5)  A statement of compliance with section 428-908.
 
14      (e)  In the case of a general or limited partnership, the
 
15 filing of the articles of organization under subsection (d)
 
16 cancels the partnership registration statement or the certificate
 
17 of limited partnership.
 
18      (f)  A conversion becomes effective upon the filing of the
 
19 articles of organization or upon the time and date subsequent to
 
20 the filing as set forth in the articles but not more than thirty
 
21 days after being filed.
 
22      (g)  A general partner who becomes a member of a limited
 
23 liability company as a result of a conversion remains liable as a
 

 
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 1 general partner for any obligation incurred by the general
 
 2 partnership or limited partnership before the conversion has
 
 3 taken effect.  A general partner's liability for all obligations
 
 4 of the limited liability company incurred after the conversion
 
 5 becomes effective shall be that of a member of the limited
 
 6 liability company.
 
 7      (h)  A limited partner who becomes a member as a result of a
 
 8 conversion remains liable only to the extent the limited partner
 
 9 was liable for an obligation incurred by the limited partnership
 
10 before the conversion takes effect."]
 
11      SECTION 18.  Statutory material to be repealed is bracketed.
 
12 New statutory material is underscored.
 
13      SECTION 19.  This Act shall take effect on July 1, 2000.
 

 
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