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S1262................................................by JUDICIARY AND RULES
IDAHO ENTITY TRANSACTION ACT - Repeals and amends existing law to revise
definitions; to provide for the required notice for an interest exchange,
conversion or domestication; to provide for obtaining the appropriate order
of the Attorney General for certain transactions; to revise appraisal
rights; to revise the procedure for approval of a plan of merger; to revise
the effect of a merger; to revise the procedure for approval of a plan of
interest exchange; to revise the effect of an interest exchange; to revise
the procedure for approval of a plan of conversion; to revise the effect of
a conversion; to revise the procedure for approval of a plan of
domestication; and to revise the effect of a domestication.
01/14 Senate intro - 1st rdg - to printing
01/15 Rpt prt - to Jud
01/28 Rpt out - rec d/p - to 2nd rdg
01/29 2nd rdg - to 3rd rdg
01/31 3rd rdg - PASSED - 34-0-1
AYES -- Andreason, Bair, Bastian, Bilyeu, Broadsword, Burkett,
Cameron, Coiner, Corder, Darrington, Davis, Fulcher, Geddes, Goedde,
Hammond, Heinrich, Hill, Jorgenson, Kelly, Keough, Langhorst, Little,
Lodge, Malepeai(Sagness), McGee, McKague, McKenzie, Pearce,
Richardson, Schroeder, Siddoway, Stegner, Stennett(Thorson), Werk
NAYS -- None
Absent and excused -- Gannon
Floor Sponsor - Hill
Title apvd - to House
02/01 House intro - 1st rdg - to Jud
02/14 Rpt out - rec d/p - to 2nd rdg
02/15 2nd rdg - to 3rd rdg
02/19 3rd rdg - PASSED - 68-1-1
AYES -- Anderson, Andrus, Barrett, Bayer, Bedke, Bell, Bilbao, Black,
Block, Bock, Boe, Bolz, Bowers, Brackett, Bradford, Chadderdon,
Chavez, Chew, Clark, Collins, Crane, Durst, Eskridge, Hagedorn, Hart,
Henbest(Burgoyne), Henderson, Jaquet, Killen, King, Kren, Labrador,
Lake, LeFavour, Loertscher, Luker, Marriott, Mathews, McGeachin,
Mortimer, Moyle, Nielsen, Nonini, Pasley-Stuart, Patrick, Pence,
Raybould, Ringo, Roberts, Ruchti, Rusche, Sayler, Schaefer,
Shepherd(02), Shepherd(08), Shirley, Shively, Smith(24),
Smith(30)(Stanek), Snodgrass, Stevenson, Thayn, Thomas, Trail, Vander
Woude, Wills, Wood(27), Wood(35)
NAYS -- Harwood
Absent and excused -- Mr. Speaker
Floor Sponsor - Bock
Title apvd - to Senate
02/20 To enrol
02/21 Rpt enrol - Pres signed
02/22 Sp signed
02/25 To Governor
02/26 Governor signed
Session Law Chapter 36
Effective: 07/01/08
]]]] LEGISLATURE OF THE STATE OF IDAHO ]]]] Fifty-ninth Legislature Second Regular Session - 2008IN THE SENATE SENATE BILL NO. 1262 BY JUDICIARY AND RULES COMMITTEE 1 AN ACT 2 RELATING TO THE IDAHO ENTITY TRANSACTION ACT; REPEALING SECTION 30-1-901, 3 IDAHO CODE, RELATING TO EXCLUDED TRANSACTIONS, SECTION 30-1-902, IDAHO 4 CODE, RELATING TO REQUIRED APPROVALS, SECTION 30-1-920, IDAHO CODE, RELAT- 5 ING TO DOMESTICATIONS, SECTION 30-1-922, IDAHO CODE, RELATING TO ARTICLES 6 OF DOMESTICATION AND SECTION 30-1-924, IDAHO CODE, RELATING TO EFFECT OF 7 DOMESTICATION; AMENDING SECTION 30-18-102, IDAHO CODE, TO REVISE DEFINI- 8 TIONS AND TO DEFINE NEW TERMS; AMENDING SECTION 30-18-104, IDAHO CODE, TO 9 PROVIDE FOR THE REQUIRED NOTICE FOR AN INTEREST EXCHANGE, CONVERSION OR 10 DOMESTICATION, TO REMOVE REFERENCES TO THE COMMON LAW AND SPECIFIC STAT- 11 UTES AND TO PROVIDE FOR OBTAINING AN APPROPRIATE ORDER OF THE ATTORNEY 12 GENERAL FOR CERTAIN TRANSACTIONS; AMENDING SECTION 30-18-109, IDAHO CODE, 13 TO REMOVE A PROVISION FOR APPRAISAL RIGHTS FOR CORPORATION SHAREHOLDERS 14 AND TO PROVIDE FOR APPRAISAL RIGHTS; AMENDING SECTION 30-18-203, IDAHO 15 CODE, TO REVISE PROCEDURE FOR APPROVAL OF A PLAN OF MERGER; AMENDING SEC- 16 TION 30-18-205, IDAHO CODE, TO PROVIDE AN ADDITIONAL REQUIREMENT TO BE 17 CONTAINED IN A STATEMENT OF MERGER; AMENDING SECTION 30-18-206, IDAHO 18 CODE, TO REVISE TERMINOLOGY AND TO REVISE THE EFFECT OF A MERGER; AMENDING 19 SECTION 30-18-303, IDAHO CODE, TO REVISE THE PROCEDURE FOR APPROVAL OF A 20 PLAN OF INTEREST EXCHANGE; AMENDING SECTION 30-18-306, IDAHO CODE, TO 21 REVISE THE EFFECT OF AN INTEREST EXCHANGE; AMENDING SECTION 30-18-403, 22 IDAHO CODE, TO REVISE THE PROCEDURE FOR APPROVAL OF A PLAN OF CONVERSION; 23 AMENDING SECTION 30-18-405, IDAHO CODE, TO PROVIDE AN ADDITIONAL REQUIRE- 24 MENT TO BE CONTAINED IN A STATEMENT OF CONVERSION; AMENDING SECTION 25 30-18-406, IDAHO CODE, TO REVISE THE EFFECT OF A CONVERSION; AMENDING SEC- 26 TION 30-18-503, IDAHO CODE, TO REVISE THE PROCEDURE FOR APPROVAL OF A PLAN 27 OF DOMESTICATION; AMENDING SECTION 30-18-505, IDAHO CODE, TO PROVIDE AN 28 ADDITIONAL REQUIREMENT TO BE CONTAINED IN A STATEMENT OF DOMESTICATION; 29 AMENDING SECTION 30-18-506, IDAHO CODE, TO REVISE THE EFFECT OF A 30 DOMESTICATION AND TO MAKE TECHNICAL CORRECTIONS; AND AMENDING SECTION 31 30-18-702, IDAHO CODE, TO MAKE TECHNICAL CORRECTIONS. 32 Be It Enacted by the Legislature of the State of Idaho: 33 SECTION 1. That Sections 30-1-901, 30-1-902, 30-1-920, 30-1-922 and 34 30-1-924, Idaho Code, be, and the same are hereby repealed. 35 SECTION 2. That Section 30-18-102, Idaho Code, be, and the same is hereby 36 amended to read as follows: 37 30-18-102. DEFINITIONS. In this chapter: 38 (1) "Acquired entity" means the entity, all of one (1) or more classes or 39 series of interests in which are acquired in an interest exchange. 40 (2) "Acquiring entity" means the entity that acquires all of one (1) or 41 more classes or series of interests of theexchangingacquired entity in an 42 interest exchange. 2 1 (3) "Approve" means, in the case of an entity, for its governors and 2 interest holders to take whatever steps are necessary under its organic rules, 3 organic law, and other law to: 4 (a) Propose a transaction subject to this chapter; 5 (b) Adopt and approve the terms and conditions of the transaction; and 6 (c) Conduct any required proceedings or otherwise obtain any required 7 votes or consents of the governors or interest holders. 8 (4) "Business corporation" means a corporation whose internal affairs are 9 governed by the Idaho business corporation act, chapter 1, title 30, Idaho 10 Code. 11 (5) "Conversion" means a transaction authorized by part 4 of this chap- 12 ter. 13 (56) "Converted entity" means the converting entity as it continues in 14 existence after a conversion. 15 (67) "Converting entity" means the domestic entity that approves a plan 16 of conversion pursuant to section 30-18-403, Idaho Code, or the foreign entity 17 that approves a conversion pursuant to the law of its jurisdiction of organi- 18 zation. 19 (78) "Domestic entity" means an entity whose internal affairs are gov- 20 erned by the law of this state. 21 (89) "Domesticated entity" means the domesticating entity as it continues 22 in existence after a domestication. 23 (910) "Domesticating entity" means the domestic entity that approves a 24 plan of domestication pursuant to section 30-18-503, Idaho Code, or the for- 25 eign entity that approves a domestication pursuant to the law of its jurisdic- 26 tion of organization. 27 (101) "Domestication" means a transaction authorized by part 5 of this 28 chapter. 29 (112) "Entity" means:a30 (a) A business corporation; 31 (b) A nonprofit corporation; 32 (c) A general partnership, including a limited liability partnership; 33 (d) A limited partnership, including a limited liability limited partner- 34 ship; 35 (e) A limited liability company; 36 (f) A statutory trust entity; 37 (g) An unincorporated nonprofit association; 38 (h) A cooperative; 39 (i) A limited cooperative association; or 40 (j) Any other person that has a separate legal existence or has the power 41 to acquire an interest in real property in its own name other than: 42 (ai) An individual; 43 (bii) A testamentary, inter vivos, or charitable trust, with the 44 exception of a business trust or similar trust; 45 (ciii) An association or relationship that is not a partnership 46 solely by reason of section 53-3-202(c), Idaho Code, or a similar 47 provision of the law of any other jurisdiction; 48 (div) A decedent's estate; or 49 (ev) A government, a governmental subdivision, agency, or instru- 50 mentality, or a quasi-governmental instrumentality. 51 (123) "Filing entity" means an entity that is created by the filing of a 52 public organic document. 53 (134) "Foreign entity" means an entity other than a domestic entity. 54 (145) "Governance interest" means the right under the organic law or 55 organic rules of an entity, other than as a governor, agent, assignee, or 3 1 proxy, to: 2 (a) Receive or demand access to information concerning, or the books and 3 records of, the entity; 4 (b) Vote for the election of the governors of the entity; or 5 (c) Receive notice of or vote on any or all issues involving the internal 6 affairs of the entity. 7 (156) "Governor" means a person by or under whose authority the powers of 8 an entity are exercised and under whose direction the business and affairs of 9 the entity are managed pursuant to the organic law and organic rules of the 10 entity. 11 (167) "Interest" means a: 12 (a) Governance interest in an unincorporated entity; 13 (b) Transferable interest in an unincorporated entity; or 14 (c) Share or membership in a corporation. 15 (178) "Interest exchange" means a transaction authorized by part 3 of this 16 chapter. 17 (189) "Interest holder" means a direct holder of an interest. 18 (1920) "Interest holder liability" means: 19 (a) A personal liability for a liability of an entity that is imposed on 20 a person: 21 (ai) Solely by reason of the status of the person as an interest 22 holder; or 23 (bii) By the organic rules of the entity pursuant to a provision of 24 the organic law authorizing the organic rules to make one (1) or more 25 specified interest holders or categories of interest holders liable 26 in their capacity as interest holders for all or specified liabili- 27 ties of the entity; or 28 (b) An obligation of an interest holder under the organic rules of an 29 entity to contribute to the entity. 30 (201) "Jurisdiction of organization" of an entity means the jurisdiction 31 whose law includes the organic law of the entity. 32 (212) "Liability" includes a liability arising in any manner, regardless 33 of whetheror notit is secured or whether it is contingent. 34 (223) "Merger" means a transaction in which two (2) or more merging enti- 35 ties are combined into a surviving entity pursuant to a filing with the secre- 36 tary of state. 37 (234) "Merging entity" means an entity that is a party to a merger and 38 exists immediately before the merger becomes effective. 39 (25) "Nonprofit corporation" means a corporation whose internal affairs 40 are governed by the Idaho nonprofit corporation act, chapter 3, title 30, 41 Idaho Code. 42 (246) "Organic law" means the statutes, if any, other than this chapter, 43 governing the internal affairs of an entity. 44 (257) "Organic rules" means the public organic document and private 45 organic rules of an entity. 46 (268) "Person" means an individual, corporation, estate, trust, partner- 47 ship, limited liability company, business or similar trust, association, joint 48 venture, public corporation, government, or governmental subdivision, agency, 49 or instrumentality, unincorporated nonprofit association or any other legal or 50 commercial entity. 51 (279) "Plan" means a plan of merger, interest exchange, conversion,or 52 domestication. 53 (2830) "Private organic rules" means rules, whether or not in a record, 54 that govern the internal affairs of an entity, are binding on all of its 55 interest holders, and are not part of its public organic document, if any. 4 1 (2931) "Protected agreement" means: 2 (a) Adebt security, note, or similar evidence ofrecord evidencing 3 indebtednessfor money borrowed, whether secured or unsecured, issued or4signed by an entity which is unpaid, in whole or in part,and any related 5 agreement in effect on the effective date of this chapter; 6 (b) An agreement that is binding on an entity on the effective date of 7 this chapter; 8 (c) The organic rules of an entity in effect on the effective date of 9 this chapter; or 10 (d) An agreement that is binding on any of the governors or interest 11 holders of an entity on the effective date of this chapter. 12 (302) "Public organic document" means the public record the filing of 13 which creates an entity, and any amendment to or restatement of that record. 14 (313) "Qualified foreign entity" means a foreign entity that is authorized 15 to transact business in this state pursuant to a filing with the secretary of 16 state. 17 (324) "Record" means information that is inscribed on a tangible medium or 18 that is stored in an electronic or other medium and is retrievable in 19 perceivable form. 20 (335) "Sign" means, with present intent to authenticate or adopt a record 21 to: 22 (a) Execute or adopt a tangible symbol; or 23 (b) Attach to or logically associate with the record an electronic sound, 24 symbol, or process. 25 (346) "Surviving entity" means the entity that continues in existence 26 after or is created by a merger. 27 (357) "Transferable interest" means the right under an entity's organic 28 law to receive distributions from the entity. 29 (368) "Type," with regard to an entity, means a generic form of entity: 30 (a) Recognized at common law; or 31 (b) Organized under an organic law, whether or not some entities orga- 32 nized under that organic law are subject to provisions of that law that 33 create different categories of the form of entity. 34 SECTION 3. That Section 30-18-104, Idaho Code, be, and the same is hereby 35 amended to read as follows: 36 30-18-104. REQUIRED NOTICE OR APPROVAL. (1) A domestic or foreign entity 37 that is required to give notice to, or obtain the approval of, a governmental 38 agency or officer before engaging in a merger transaction of a type covered by 39 this chapter shall give the notice,or obtain the approval,in order to be a 40 party toa transaction under this chapteran interest exchange, conversion or 41 domestication. 42 (2) Property held for a charitable purpose under the law of this state by 43 a domestic or foreign entity immediately before a transaction under this chap- 44 ter becomes effective may not, as a result of the transaction, be diverted 45 from the objects for which it was donated, granted or devised,unless,the46entity obtains the prior consent of the attorney generalto the extent 47 required by or pursuant tosection 67-1401 5., Idaho Code, orthecommonlaw 48as it relates to charitable trust assets, or chapter 12, title 68, Idaho Code,49or, with respect to nonprofit hospitals, the entity complies with the provi-50sions of chapter 15, title 48, Idaho Codeof this state concerning cy pres or 51 other law dealing with nondiversion of charitable assets, the entity obtains 52 an appropriate order of the attorney general specifying the disposition of the 53 property. 5 1 SECTION 4. That Section 30-18-109, Idaho Code, be, and the same is hereby 2 amended to read as follows: 3 30-18-109. APPRAISAL RIGHTS.Appraisal rights only for shareholders of a4corporation that is a party to a transaction covered by this chapter shall be5governed by(1) An interest holder of a domestic merging, acquired, converting 6 or domesticating entity is entitled to appraisal rights in connection with the 7 transaction if the interest holder would have been entitled to appraisal 8 rights under the entity's organic law in connection with a merger in which the 9 interest of the interest holder was changed, converted or exchanged unless: 10 (a) The organic law permits the organic rules to limit the availability 11 of appraisal rights; and 12 (b) The organic rules provide such a limit. 13 (2) An interest holder of a domestic merging, acquired, converting or 14 domesticating entity is entitled to contractual appraisal rights in connection 15 with a transaction under this chapter to the extent provided: 16 (a) In the entity's organic rules; 17 (b) In the plan; or 18 (c) In the case of a business corporation, by action of its governors. 19 (3) If an interest holder is entitled to contractual appraisal rights 20 under subsection (2) of this section and the entity's organic law does not 21 provide procedures for the conduct of an appraisal rights proceeding, part 13, 22 chapter 1, title 30, Idaho Code, applies to the extent practicable or as 23 otherwise provided in the entity's organic rules or the plan. 24 SECTION 5. That Section 30-18-203, Idaho Code, be, and the same is hereby 25 amended to read as follows: 26 30-18-203. APPROVAL OF PLAN OF MERGER. (1) A plan of merger is not effec- 27 tive unless it has been approved: 28 (a) By a domestic merging entity: 29 (i) In accordance with the requirements, if any, in its organic law 30 and organic rules for approval of: 31 1. In the case of an entity that is not a business corporation, 32 a merger; or 33 2. In the case of a business corporation, a merger requiring 34 approval by a vote of the interest holders or the business cor- 35 poration; or 36 (ii) If neither its organic law nor organic rules provide for 37 approval of a merger described in subparagraph (i)2. of this para- 38 graph, by all of the interest holders of the entity entitled to vote 39 on or consent to any matter; and 40 (b) In a record, by each interest holder of a domestic merging entity 41 that will have interest holder liability for liabilities that arise after 42 the merger becomes effective, unless, in the case of an entity that is not 43 a business corporation or nonprofit corporation: 44 (i) The organic rules of the entity provide in a record for the 45 approval of a merger in which some or all of its interest holders 46 become subject to interest holder liability by the vote or consent of 47 fewer than all of the interest holders; and 48 (ii) The interest holder voted for or consented in a record to that 49 provision of the organic rules or became an interest holder after the 50 adoption of that provision. 51 (2) A merger involving a foreign merging entity is not effective unless 52 it is approved by the foreign entity in accordance with the law of the foreign 6 1 entity's jurisdiction of organization. 2 SECTION 6. That Section 30-18-205, Idaho Code, be, and the same is hereby 3 amended to read as follows: 4 30-18-205. STATEMENT OF MERGER -- EFFECTIVE DATE. (1) A statement of 5 merger must be signed on behalf of each merging entity and filed with the sec- 6 retary of state. 7 (2) A statement of merger must contain: 8 (a) The name, jurisdiction of organization, and type of each merging 9 entity that is not the surviving entity; 10 (b) The name, jurisdiction of organization, and type of the surviving 11 entity; 12 (c) If the statement of merger is not to be effective upon filing, the 13 later date and time on which it will become effective, which may not be 14 more than ninety (90) days after the date of filing; 15 (d) A statement that the merger was approved by each domestic merging 16 entity, if any, in accordance with this part and by each foreign merging 17 entity, if any, in accordance with the law of its jurisdiction of organi- 18 zation; 19 (e) If the surviving entity exists before the merger and is a domestic 20 filing entity, any amendment to its public organic document approved as 21 part of the plan of merger; 22 (f) If the surviving entity is created by the merger and is a domestic 23 filing entity, its public organic document, as an attachment;and24 (g) If the surviving entity is created by the merger and is a domestic 25 limited liability partnership, its statement of qualification, as an 26 attachment; and 27 (h) If the surviving entity is a foreign entity that is not a qualified 28 foreign entity, a mailing address to which the secretary of state may send 29 any process served on the secretary of state pursuant to section 30 30-18-206(5), Idaho Code. 31 (3) In addition to the requirements of subsection (2) of this section, a 32 statement of merger may contain any other provision not prohibited by law. 33 (4) If the surviving entity is a domestic entity, its public organic doc- 34 ument, if any, must satisfy the requirements of the law of this state, except 35 that it does not need to be signed and may omit any provision that is not 36 required to be included in a restatement of the public organic document. 37 (5) A plan of merger that is signed on behalf of all of the merging enti- 38 ties and meets all of the requirements of subsection (2) of this section may 39 be filed with the secretary of state instead of a statement of merger and upon 40 filing has the same effect. If a plan of merger is filed as provided in this 41 subsection (5), references in this chapter to a statement of merger refer to 42 the plan of merger filed under this subsection (5). 43 (6) A statement of merger becomes effective upon the date and time of 44 filing or the later date and time specified in the statement of merger. 45 SECTION 7. That Section 30-18-206, Idaho Code, be, and the same is hereby 46 amended to read as follows: 47 30-18-206. EFFECT OF MERGER. (1) When a merger becomes effective: 48 (a) The surviving entity continues or comes into existence; 49 (b) Each merging entity that is not the surviving entity ceases to exist; 50 (c) All property of each merging entity vests in the surviving entity 51 without transfer, conveyance, assignment, reversion, or impairment; 7 1 (d) All liabilities of each merging entity are liabilities of the surviv- 2 ing entity; 3 (e) Except as otherwise provided by law other than this chapter or the 4 plan of merger, all of the rights, privileges, immunities, powers, and 5 purposes of each merging entity vest in the surviving entity; 6 (f) If the surviving entity exists before the merger: 7 (i) All of its property continues to be vested in it without rever- 8 sion or impairment; 9 (ii) It remains subject to all of its liabilities; and 10 (iii) All of its rights, privileges, immunities, powers, and purposes 11 continue to be vested in it; 12 (g) The name of the surviving entity may be substituted for the name of 13 any merging entity that is a party to any pending action or proceeding; 14 (h) If the surviving entity exists before the merger: 15 (i) Its public organic document, if any, is amended as provided in 16 the statement of merger andremainsis binding on its interest hold- 17 ers; and 18 (ii) Its private organic rules that are to be in a record, if any, 19 are amended to the extent provided in the plan of merger andremain20 are binding on and enforceable by: 21 1. Iits interest holders; and 22 2. In the case of a surviving entity that is not a business 23 corporation or a nonprofit corporation, any other person that is 24 a party to an agreement that is part of the surviving entity's 25 private organic rules; 26 (i) If the surviving entity is created by the merger,: 27 (i) Iits public organic document, if any, is effective and is bind- 28 ing on its interest holders; and 29 (ii) Iits private organic rules are effective and are bindingupon30theon and enforceable by: 31 1. Its interest holders;of the surviving entity;and 32 2. In the case of a surviving entity that is not a business 33 corporation or a nonprofit corporation, any other person that 34 was a party to an agreement that was part of the organic rules 35 of a merging entity if that person has agreed to be a party to 36 an agreement that is part of the surviving entity's private 37 organic rules; and 38 (j) The interests in each merging entity that are to be converted in the 39 merger are converted, and the interest holders of those interests are 40 entitled only to the rights provided to them under the plan of merger and 41 to any appraisal rights they have under section 30-18-109, Idaho Code, and 42 the merging entity's organic law. 43 (2) Except as otherwise provided in the organic law or organic rules of a 44 merging entity, the merger does not give rise to any rights that an interest 45 holder, governor, or third party would otherwise have upon a dissolution, liq- 46 uidation, or winding-up of the merging entity. 47 (3) When a merger becomes effective, a person that did not have interest 48 holder liability with respect to any of the merging entities and that becomes 49 subject to interest holder liability with respect to a domestic entity as a 50 result of a merger has interest holder liability only to the extent provided 51 by the organic law of the entity and only for those liabilities that arise 52 after the merger becomes effective. 53 (4) When a merger becomes effective, the interest holder liability of a 54 person that ceases to hold an interest in a domestic merging entity with 55 respect to which the person had interest holder liability is as follows: 8 1 (a) The merger does not discharge any interest holder liability under the 2 organic law of the domestic merging entity to the extent the interest 3 holder liability arose before the merger became effective; 4 (b) The person does not have interest holder liability under the organic 5 law of the domestic merging entity for any liability that arises after the 6 merger becomes effective; 7 (c) The organic law of the domestic merging entity continues to apply to 8 the release, collection, or discharge of any interest holder liability 9 preserved under paragraph (a) of this subsection as if the merger had not 10 occurred and the surviving entity was the domestic merging entity; and 11 (d) The person has whatever rights of contribution from any other person 12 as are provided by the organic law or organic rules of the domestic merg- 13 ing entity with respect to any interest holder liability preserved under 14 paragraph (a) of this subsection as if the merger had not occurred. 15 (5) When a merger becomes effective, a foreign entity that is the surviv- 16 ing entity: 17 (a) May be served with process in this state for the collection and 18 enforcement of any liabilities of a domestic merging entity; and 19 (b) Appoints the secretary of state as its agent for service of process 20 for collecting or enforcing those liabilities. 21 (6) When a merger becomes effective, the certificate of authority or 22 other foreign qualification of any foreign merging entity that is not the sur- 23 viving entity is canceled. 24 SECTION 8. That Section 30-18-303, Idaho Code, be, and the same is hereby 25 amended to read as follows: 26 30-18-303. APPROVAL OF PLAN OF INTEREST EXCHANGE. (1) A plan of interest 27 exchange is not effective unless it has been approved: 28 (a) By a domestic acquired entity: 29 (i) In accordance with the requirements, if any, in its organic law 30 and organic rules for approval of an interest exchange; 31 (ii) Except as otherwise provided in subsection (4) of this section, 32 if neither its organic law nor organic rules provide for approval of 33 an interest exchange, in accordance with the requirements, if any, in 34 its organic law and organic rules for approval of: 35 1. In the case of an entity that is not a business corporation, 36 a merger, as if the interest exchange were a merger; or 37 2. In the case of a business corporation, a merger requiring 38 approval by a vote of the interest holders of the business cor- 39 poration, as if the interest exchange were that type of merger; 40 or 41 (iii) If neither its organic law nor organic rules provide for 42 approval of an interest exchange or a merger described in subpara- 43 graph (ii)2. of this paragraph, by all of the interest holders of the 44 entity entitled to vote on or consent to any matter; and 45 (b) In a record, by each interest holder of a domestic acquired entity 46 that will have interest holder liability for liabilities that arise after 47 the interest exchange becomes effective, unless, in the case of an entity 48 that is not a business corporation or nonprofit corporation: 49 (i) The organic rules of the entity provide in a record for the 50 approval of an interest exchange or a merger in which some or all of 51 its interest holders become subject to interest holder liability by 52 the vote or consent of fewer than all of the interest holders; and 53 (ii) The interest holder voted for or consented in a record to that 9 1 provision of the organic rules or became an interest holder after the 2 adoption of that provision. 3 (2) An interest exchange involving a foreign acquired entity is not 4 effective unless it is approved by the foreign entity in accordance with the 5 law of the foreign entity's jurisdiction of organization. 6 (3) Except as otherwise provided in its organic law or organic rules, the 7 interest holders of the acquiring entity are not required to approve the 8 interest exchange. 9 (4) A provision of the organic law of a domestic acquired entity that 10 would permit a merger between the acquired entity and the acquiring entity to 11 be approved without the vote or consent of the interest holders of the 12 acquired entity because of the percentage of interests in the acquired entity 13 held by the acquiring entity does not apply to approval of an interest 14 exchange under subsection (1)(a)(ii) of this section. 15 SECTION 9. That Section 30-18-306, Idaho Code, be, and the same is hereby 16 amended to read as follows: 17 30-18-306. EFFECT OF INTEREST EXCHANGE. (1) When an interest exchange 18 becomes effective: 19 (a) The interests in the acquired entity that are the subject of the 20 interest exchange cease to exist or are converted or exchanged, and the 21 interest holders of those interests are entitled only to the rights pro- 22 vided to them under the plan of interest exchange and to any appraisal 23 rights they have under section 30-18-109, Idaho Code, and the acquired 24 entity's organic law; 25 (b) The acquiring entity becomes the interest holder of the interests in 26 the acquired entity stated in the plan of interest exchange to be acquired 27 by the acquiring entity; 28 (c) The public organic document, if any, of the acquired entity is 29 amended as provided in the statement of interest exchange andremainsis 30 binding on its interest holders; and 31 (d) The private organic rules of the acquired entity that are to be in a 32 record, if any, are amended to the extent provided in the plan of interest 33 exchange andremainare binding on and enforceable by: 34 (i) Iits interest holders; and 35 (ii) In the case of an acquired entity that is not a business corpo- 36 ration or nonprofit corporation, any other person that is a party to 37 an agreement that is part of the acquired entity's private organic 38 rules. 39 (2) Except as otherwise provided in the organic law or organic rules of 40 the acquired entity, the interest exchange does not give rise to any rights 41 that an interest holder, governor, or third party would otherwise have upon a 42 dissolution, liquidation, or winding-up of the acquired entity. 43 (3) When an interest exchange becomes effective, a person that did not 44 have interest holder liability with respect to the acquired entity and that 45 becomes subject to interest holder liability with respect to a domestic entity 46 as a result of the interest exchange has interest holder liability only to the 47 extent provided by the organic law of the entity and only for those liabili- 48 ties that arise after the interest exchange becomes effective. 49 (4) When an interest exchange becomes effective, the interest holder lia- 50 bility of a person that ceases to hold an interest in a domestic acquired 51 entity with respect to which the person had interest holder liability is as 52 follows: 53 (a) The interest exchange does not discharge any interest holder liabil- 10 1 ity under the organic law of the domestic acquired entity to the extent 2 the interest holder liability arose before the interest exchange became 3 effective; 4 (b) The person does not have interest holder liability under the organic 5 law of the domestic acquired entity for any liability that arises after 6 the interest exchange becomes effective; 7 (c) The organic law of the domestic acquired entity continues to apply to 8 the release, collection, or discharge of any interest holder liability 9 preserved under paragraph (a) of this subsection as if the interest 10 exchange had not occurred; and 11 (d) The person has whatever rights of contribution from any other person 12 as are provided by the organic law or organic rules of the domestic 13 acquired entity with respect to any interest holder liability preserved 14 under paragraph (a) of this subsection as if the interest exchange had not 15 occurred. 16 SECTION 10. That Section 30-18-403, Idaho Code, be, and the same is 17 hereby amended to read as follows: 18 30-18-403. APPROVAL OF PLAN OF CONVERSION. (1) A plan of conversion is 19 not effective unless it has been approved: 20 (a) By a domestic converting entity: 21 (i) In accordance with the requirements, if any, in its organic 22 rules for approval of a conversion; 23 (ii) If its organic rules do not provide for approval of a conver- 24 sion, in accordance with the requirements, if any, in its organic law 25 and organic rules for approval of: 26 1. In the case of an entity that is not a business corporation, 27 a merger, as if the conversion were a merger; or 28 2. In the case of a business corporation, a merger requiring 29 approval by a vote of the interest holders of the business cor- 30 poration, as if the conversion were that type of a merger; or 31 (iii) If neither its organic law nor organic rules provide for 32 approval of a conversion or a merger described in subparagraph (ii)2. 33 of this paragraph, by all of the interest holders of the entity enti- 34 tled to vote on or consent to any matter; and 35 (b) In a record, by each interest holder of a domestic converting entity 36 that will have interest holder liability for liabilities that arise after 37 the conversion becomes effective, unless, in the case of an entity that is 38 not a business or nonprofit corporation: 39 (i) The organic rules of the entity provide in a record for the 40 approval of a conversion or a merger in which some or all of its 41 interest holders become subject to interest holder liability by the 42 vote or consent of fewer than all of the interest holders; and 43 (ii) The interest holder voted for or consented in a record to that 44 provision of the organic rules or became an interest holder after the 45 adoption of that provision. 46 (2) A conversion of a foreign converting entity is not effective unless 47 it is approved by the foreign entity in accordance with the law of the foreign 48 entity's jurisdiction of organization. 49 SECTION 11. That Section 30-18-405, Idaho Code, be, and the same is 50 hereby amended to read as follows: 51 30-18-405. STATEMENT OF CONVERSION -- EFFECTIVE DATE. (1) A statement of 11 1 conversion must be signed on behalf of the converting entity and filed with 2 the secretary of state. 3 (2) A statement of conversion must contain: 4 (a) The name, jurisdiction of organization, and type of the converting 5 entity; 6 (b) The name, jurisdiction of organization, and type of the converted 7 entity; 8 (c) If the statement of conversion is not to be effective upon filing, 9 the later date and time on which it will become effective, which may not 10 be more than ninety (90) days after the date of filing; 11 (d) If the converting entity is a domestic entity, a statement that the 12 plan of conversion was approved in accordance with this part or, if the 13 converting entity is a foreign entity, a statement that the conversion was 14 approved by the foreign converting entity in accordance with the law of 15 its jurisdiction of organization; 16 (e) If the converted entity is a domestic filing entity, the text of its 17 public organic document, as an attachment;and18 (f) If the converted entity is a domestic limited liability partnership, 19 the text of its statement of qualification, as an attachment; and 20 (g) If the converted entity is a foreign entity that is not a qualified 21 foreign entity, a mailing address to which the secretary of state may send 22 any process served on the secretary of state pursuant to section 23 30-18-406(5), Idaho Code. 24 (3) In addition to the requirements of subsection (2) of this section, a 25 statement of conversion may contain any other provision not prohibited by law. 26 (4) If the converted entity is a domestic entity, its public organic doc- 27 ument, if any, must satisfy the requirements of the law of this state, except 28 that it does not need to be signed and may omit any provision that is not 29 required to be included in a restatement of the public organic document. 30 (5) A plan of conversion that is signed on behalf of a domestic convert- 31 ing entity and meets all of the requirements of subsection (2) of this section 32 may be filed with the secretary of state instead of a statement of conversion 33 and upon filing has the same effect. If a plan of conversion is filed as pro- 34 vided in this subsection (5), references in this chapter to a statement of 35 conversion refer to the plan of conversion filed under this subsection (5). 36 (6) A statement of conversion becomes effective upon the date and time of 37 filing or the later date and time specified in the statement of conversion. 38 SECTION 12. That Section 30-18-406, Idaho Code, be, and the same is 39 hereby amended to read as follows: 40 30-18-406. EFFECT OF CONVERSION. (1) When a conversion becomes effective: 41 (a) The converted entity is: 42 (i) Organized under and subject to the organic law of the converted 43 entity; and 44 (ii) The same entity without interruption as the converting entity; 45 (b) All property of the converting entity continues to be vested in the 46 converted entity without transfer, conveyance, assignment, reversion,or 47 impairment; 48 (c) All liabilities of the converting entity continue as liabilities of 49 the converted entity; 50 (d) Except as provided by law other than this chapter or the plan of con- 51 version, all of the rights, privileges, immunities, powers, and purposes 52 of the converting entity remain in the converted entity; 53 (e) The name of the converted entity may be substituted for the name of 12 1 the converting entity in any pending action or proceeding; 2 (f)Unless otherwise provided by the organic law of the converting3entity, the conversion does not cause the dissolution of the converting4entity;5(g)If a converted entity is a filing entity, its public organic document 6 is effective and is binding on its interest holders; 7 (hg) If the converted entity is a limited liability partnership, its 8 statement of qualification is effective simultaneously; 9 (ih) The private organic rules of the converted entity that are to be in 10 a record, if any, approved as part of the plan of conversion are effective 11 and are binding on and enforceable by: 12 (i) Iits interest holders; and 13 (ii) In the case of a converted entity that is not a business corpo- 14 ration or nonprofit corporation, any other person that is a party to 15 an agreement that is part of the entity's private organic rules; and 16 (ji) The interests in the converting entity are converted, and the inter- 17 est holders of the converting entity are entitled only to the rights pro- 18 vided to them under the plan of conversion and to any appraisal rights 19 they have under section 30-18-109, Idaho Code, and the converting entity's 20 organic law. 21 (2) Except as otherwise provided in the organic law or organic rules of 22 the converting entity, the conversion does not give rise to any rights that an 23 interest holder, governor, or third party would otherwise have upon a dissolu- 24 tion, liquidation, or winding-up of the converting entity. 25 (3) When a conversion becomes effective, a person that did not have 26 interest holder liability with respect to the converting entity and that 27 becomes subject to interest holder liability with respect to a domestic entity 28 as a result of a conversion has interest holder liability only to the extent 29 provided by the organic law of the entity and only for those liabilities that 30 arise after the conversion becomes effective. 31 (4) When a conversion becomes effective: 32 (a) The conversion does not discharge any interest holder liability under 33 the organic law of a domestic converting entity to the extent the interest 34 holder liability arose before the conversion became effective; 35 (b) A person does not have interest holder liability under the organic 36 law of a domestic converting entity for any liability that arises after 37 the conversion becomes effective; 38 (c) The organic law of a domestic converting entity continues to apply to 39 the release, collection, or discharge of any interest holder liability 40 preserved under paragraph (a) of this subsection as if the conversion had 41 not occurred; and 42 (d) A person has whatever rights of contribution from any other person as 43 are provided by the organic law or organic rules of the domestic convert- 44 ing entity with respect to any interest holder liability preserved under 45 paragraph (a) of this subsection as if the conversion had not occurred. 46 (5) When a conversion becomes effective, a foreign entity that is the 47 converted entity: 48 (a) May be served with process in this state for the collection and 49 enforcement of any of its liabilities; and 50 (b) Appoints the secretary of state as its agent for service of process 51 for collecting or enforcing those liabilities. 52 (6) If the converting entity is a qualified foreign entity, the certifi- 53 cate of authority or other foreign qualification of the converting entity is 54 canceled when the conversion becomes effective. 55 (7) A conversion does not require the entity to wind up its affairs and 13 1 does not constitute or cause the dissolution of the entity. 2 SECTION 13. That Section 30-18-503, Idaho Code, be, and the same is 3 hereby amended to read as follows: 4 30-18-503. APPROVAL OF PLAN OF DOMESTICATION. (1) A plan of domestication 5 is not effective unless it has been approved: 6 (a) By a domestic domesticating entity: 7 (i) In accordance with the requirements, if any, in its organic 8 rules for approval of a domestication; 9 (ii) If its organic rules do not provide for approval of a 10 domestication, in accordance with the requirements, if any, in its 11 organic law and organic rules for approval of: 12 1. In the case of an entity that is not a business corporation, 13 a merger, as if the domestication were a merger; or 14 2. In the case of a business corporation, a merger requiring 15 approval by a vote of the interest holders of the business cor- 16 poration, as if the domestication were that type of merger; or 17 (iii) If neither its organic law nor organic rules provide for 18 approval of a domestication or a merger described in subparagraph 19 (ii)2. of this paragraph, by all of the interest holders of the 20 entity entitled to vote on or consent to any matter; and 21 (b) In a record, by each interest holder of a domestic domesticating 22 entity that will have interest holder liability for liabilities that arise 23 after the domestication becomes effective, unless, in the case of an 24 entity that is not a business corporation or nonprofit corporation: 25 (i) The organic rules of the entity in a record provide for the 26 approval of a domestication or merger in which some or all of its 27 interest holders become subject to interest holder liability by the 28 vote or consent of fewer than all of the interest holders; and 29 (ii) The interest holder voted for or consented in a record to that 30 provision of the organic rules or became an interest holder after the 31 adoption of that provision. 32 (2) A domestication of a foreign domesticating entity is not effective 33 unless it is approved in accordance with the law of the foreign entity's 34 jurisdiction of organization. 35 SECTION 14. That Section 30-18-505, Idaho Code, be, and the same is 36 hereby amended to read as follows: 37 30-18-505. STATEMENT OF DOMESTICATION -- EFFECTIVE DATE. (1) A statement 38 of domestication must be signed on behalf of the domesticating entity and 39 filed with the secretary of state. 40 (2) A statement of domestication must contain: 41 (a) The name, jurisdiction of organization, and type of the domesticating 42 entity; 43 (b) The name and jurisdiction of organization of the domesticated entity; 44 (c) If the statement of domestication is not to be effective upon filing, 45 the later date and time on which it will become effective, which may not 46 be more than ninety (90) days after the date of filing; 47 (d) If the domesticating entity is a domestic entity, a statement that 48 the plan of domestication was approved in accordance with this part or, if 49 the domesticating entity is a foreign entity, a statement that the 50 domestication was approved in accordance with the law of its jurisdiction 51 of organization; 14 1 (e) If the domesticated entity is a domestic filing entity, its public 2 organic document, as an attachment;and3 (f) If the domesticated entity is a domestic limited liability partner- 4 ship, its statement of qualification, as an attachment; and 5 (g) If the domesticated entity is a foreign entity that is not a quali- 6 fied foreign entity, a mailing address to which the secretary of state may 7 send any process served on the secretary of state pursuant to section 8 30-18-506(5), Idaho Code. 9 (3) In addition to the requirements of subsection (2) of this section, a 10 statement of domestication may contain any other provision not prohibited by 11 law. 12 (4) If the domesticated entity is a domestic entity, its public organic 13 document, if any, must satisfy the requirements of the law of this state, 14 except that it does not need to be signed and may omit any provision that is 15 not required to be included in a restatement of the public organic document. 16 (5) A plan of domestication that is signed on behalf of a domesticating 17 domestic entity and meets all of the requirements of subsection (2) of this 18 section may be filed with the secretary of state instead of a statement of 19 domestication and upon filing has the same effect. If a plan of domestication 20 is filed as provided in this subsection (5), references in this chapter to a 21 statement of domestication refer to the plan of domestication filed under this 22 subsection (5). 23 (6) A statement of domestication becomes effective upon the date and time 24 of filing or the later date and time specified in the statement of 25 domestication. 26 SECTION 15. That Section 30-18-506, Idaho Code, be, and the same is 27 hereby amended to read as follows: 28 30-18-506. EFFECT OF DOMESTICATION. (1) When a domestication becomes 29 effective: 30 (a) The domesticated entity is: 31 (i) Organized under and subject to the organic law of the domesti- 32 cated entity; and 33 (ii) The same entity without interruption as the domesticating 34 entity; 35 (b) All property of the domesticating entity continues to be vested in 36 the entity without transfer, conveyance, assignment, reversion,or 37 impairment; 38 (c) All liabilities of the domesticating entity continue as liabilities 39 of the entity; 40 (d) Except as provided by law other than this chapter or the plan of 41 domestication, all of the rights, privileges, immunities, powers,and pur- 42 poses of the domesticating entity remain in the domesticated entity; 43 (e) The name of the domesticated entity may be substituted for the name 44 of the domesticating entity in any pending action or proceeding; 45 (f)Unless otherwise provided by the organic law of the domesticating46entity, the domestication does not cause the dissolution of the47domesticating entity;48(g)If the domesticated entity is a filing entity, its public organic 49 document is effective and is binding on its interest holders; 50 (hg) If the domesticated entity is a limited liability partnership, its 51 statement of qualification is effective simultaneously; 52 (ih) The private organic rules of the domesticated entity that are to be 53 in a record, if any, approved as part of the plan of domestication are 15 1 effective and are binding on and enforceable by: 2 (i) Iits interest holders; and 3 (ii) In the case of a domesticated entity that is not a business 4 corporation or nonprofit corporation, any other person that is a 5 party to an agreement that is part of the domesticated entity's pri- 6 vate organic rules; and 7 (ji) The interests in the domesticating entity are converted to the 8 extent and as approved in connection with the domestication, and the 9 interest holders of the domesticating entity are entitled only to the 10 rights provided to them under the plan of domestication and to any 11 appraisal rights they have under section 30-18-109, Idaho Code, and the 12 domesticating entity's organic law. 13 (2) Except as otherwise provided in the organic law or organic rules of 14 the domesticating entity, the domestication does not give rise to any rights 15 that an interest holder, governor, or third party would otherwise have upon a 16 dissolution, liquidation, or winding-up of the domesticating entity. 17 (3) When a domestication becomes effective, a person that did not have 18 interest holder liability with respect to the domesticating entity and that 19 becomes subject to interest holder liability with respect to a domestic entity 20 as a result of the domestication has interest holder liability only to the 21 extent provided by the organic law of the entity and only for those liabili- 22 ties that arise after the domestication becomes effective. 23 (4) When a domestication becomes effective: 24 (a) The domestication does not discharge any interest holder liability 25 under the organic law of a domesticating domestic entity to the extent the 26 interest holder liability arose before the domestication became effective; 27 (b) A person does not have interest holder liability under the organic 28 law of a domestic domesticating entity for any liability that arises after 29 the domestication becomes effective; 30 (c) The organic law of a domestic domesticating entity continues to apply 31 to the release, collection, or discharge of any interest holder liability 32 preserved under paragraph (a) of this subsection as if the domestication 33 had not occurred; and 34 (d) A person has whatever rights of contribution from any other person as 35 are provided by the organic law or organic rules of a domestic 36 domesticating entity with respect to any interest holder liability pre- 37 served under paragraph (a) of this subsection as if the domestication had 38 not occurred. 39 (5) When a domestication becomes effective, a foreign entity that is the 40 domesticated entity: 41 (a) May be served with process in this state for the collection and 42 enforcement of any of its liabilities; and 43 (b) Appoints the secretary of state as its agent for service of process 44 for collecting or enforcing those liabilities. 45 (6) If the domesticating entity is a qualified foreign entity, the cer- 46 tificate of authority or other foreign qualification of the domesticating 47 entity is canceled when the domestication becomes effective. 48 (7) A domestication does not require the entity to wind up its affairs 49 and does not constitute or cause the dissolution of the entity. 50 SECTION 16. That Section 30-18-702, Idaho Code, be, and the same is 51 hereby amended to read as follows: 52 30-18-702. RELATION TO ELECTRONIC SIGNATURES IN GLOBAL AND NATIONAL COM- 53 MERCE ACT. This chapter modifies, limits,and supersedes the federal elec- 16 1 tronic signatures in global and national commerce act,(15 U.S.C. section 2 7001, et seq.), but does not modify, limit,or supersede section 101(c) of 3 that act,(15 U.S.C. section 7001(c),)or authorize electronic delivery of any 4 of the notices described in section 103(b) of that act,(15 U.S.C. section 5 7003(b)).
STATEMENT OF PURPOSE
RS 17471C1
This legislation amends the Idaho Entity Transactions Act to
incorporate changes made to the Model Entity Transactions Act by
the National Conference of Commissioners on Uniform State Laws.
FISCAL NOTE
There will be no impact on the state's general fund.
Contact
Name: Senator Bart Davis
Phone: 332-1305
Name: Dale G. Higer
Phone: 345-1432
STATEMENT OF PURPOSE/FISCAL NOTE S 1262