Redomestication

Redomestication moves an entity from one state's law to another's. The company that comes out the far side is the same company. Same contracts. Same litigation. Same bank accounts. What changes is which state's statute governs its internal affairs and where its formation documents sit on file.

The Texas mechanism is conversion

Chapter 10 of the Business Organizations Code carries the machinery, and Subchapter C is the operative part. Section 10.101 lets a domestic Texas entity convert into a different type of domestic entity or into a non-code organization, which is the outbound path. Section 10.102 runs the other direction, letting a non-code organization, meaning an entity formed under another jurisdiction's law, convert into a Texas entity. That inbound section is what most Delaware to Texas moves use on the Texas side.

Mind the vocabulary. Chapter 10 does not use the word domestication anywhere. Delaware and a number of other states do, and clients arrive using it, but the Texas statute and the Texas filing both say conversion. Subchapter A of Chapter 10 covers mergers, and a change of domicile can also be structured as a merger into a newly formed Texas entity. Conversion is usually simpler, cheaper and cleaner on the paperwork.

What has to happen

First there is a plan. Section 10.103 requires the written plan of conversion to state the name of the converting entity and the name of the converted entity, that the converting entity continues in existence in the converted form, the type and jurisdiction of formation of the converted entity, the manner of converting ownership interests, and the certificate of formation or governing document of the converted entity. Section 10.104 sets out what the plan may add.

Then approval. Section 10.101(b) requires the entity to act on the plan and the owners or members to approve it in the manner the code prescribes for that entity type, or, where the code prescribes no manner, in the same way it prescribes for approving a plan of merger in which the entity does not survive. For a corporation that generally means board adoption followed by a shareholder vote. Owners who dissent may have appraisal rights under Subchapter H, and Section 10.101(c) requires the notice under Section 10.355 where those rights apply.

Then the filing. Section 10.154 governs the contents of the certificate of conversion and Section 10.155 governs filing it. A filing is normally required in both states, and the sequencing has to be coordinated so the entity is never left in a gap or, worse, on file as existing in two states on inconsistent terms.

Section 10.106 states the effect, and it is the reason conversion is worth doing this way. The converting entity continues in existence without interruption. Property vests in the converted entity without reversion or impairment and without any transfer. Liabilities and obligations continue undiminished. Pending proceedings continue. Nothing has to be assigned.

What still needs attention

The statute makes the entity continuous. It does not make the paperwork continuous, and this is where these deals go wrong. Credit agreements and leases routinely include representations about the borrower's jurisdiction of organization and covenants restricting changes to it, so lender consent is often needed before the filing rather than after it. UCC financing statements are filed based on the debtor's location, and under Tex. Bus. & Com. Code § 9.307(e) a registered organization is located in its state of organization. Perfection under the old state's law continues only for four months after the change under § 9.316(a)(2), so a secured party has to re-file in the new state inside that window or lose priority. Licenses, permits, insurance policies, registered agent appointments, foreign qualifications in other states, and any contract with a change of control or assignment trigger all need to be reviewed and updated.

On taxes, a change in the state of organization alone is generally treated as a reorganization rather than a taxable event, but that depends on the structure, on whether the entity's federal classification changes in the process, and on state level franchise and margin tax exposure in both jurisdictions. That is a question for tax counsel on your specific facts. It is not a rule to assume.