Conversion
A TBOC-authorized transaction in which a Texas business entity changes its form (e.g., LLC to corporation) or jurisdiction of formation (e.g., Delaware corporation to Texas corporation) without dissolving and reforming. Contracts, debts, and liabilities continue uninterrupted.
Conversion is a TBOC-authorized transaction in which a Texas business entity changes its form (e.g., LLC to corporation, corporation to LLC, partnership to LLC) or its jurisdiction of formation (e.g., Delaware corporation to Texas corporation) without dissolving and reforming. The converted entity is the same legal person before and after the conversion; contracts, debts, and liabilities continue uninterrupted.
Plan of conversion
Under § 10.103, the plan of conversion must specify the name of the converting and converted entity, their respective forms, the manner of converting interests, and the certificate of formation or governing documents of the converted entity. The plan must be approved as required by the converting entity's governing documents and the TBOC (typically by the same vote required for a fundamental action, two-thirds of outstanding voting shares for a corporation, unless the certificate provides for a lower threshold).
Effect of conversion (§ 10.106)
On the effective date: (1) the converting entity continues to exist in the converted form; (2) all rights, title, and interests in property pass to the converted entity by operation of law; (3) all debts, liabilities, and obligations of the converting entity continue as obligations of the converted entity; and (4) all proceedings pending against the converting entity continue against the converted entity.
Conversion is the standard mechanism for entity-form changes (LLC-to-corporation pre-IPO; corporation-to-LLC for tax planning) and for re-domiciling from another state to Texas. The conversion procedure is generally faster and more efficient than dissolving the existing entity and reforming as the new entity.