You have decided to change the status of your business from a corporation to an LLC. Before you take action on that decision, talk to one of the knowledgeable and experienced New York business attorneys at Hiller, PC.
A Complicated Business Transaction
In New York, you cannot simply check a box, file some paperwork and thereby “convert” your corporation to an LLC. In fact, strictly speaking, New York law does not allow a corporation to convert to an LLC. Instead, you must engage in a process called “statutory merger,” which requires you to create a new LLC and then “merge” the old corporation into that new entity.
A statutory merger involves six steps:
- Create a new LLC. This process involves, among other things, drafting an Operating Agreement and Articles of Organization. These documents should establish the shareholders of the corporation as the “members” of the new LLC.
- Prepare an agreement (or “plan”) of merger, which sets set forth the details of how the merger will be accomplished and the effect of the merger on the entities involved.
- Have the corporation’s board of directors adopt the agreement;
- Obtain the corporate shareholders’ approval of the agreement;
- Obtain LLC member approval of the agreement; and
- File a Certificate of Merger with the New York Department of State.
The statutory merger process is made even more complicated by the fact that there are several different types of corporations (S corporations; C corporations; for-profit and not-for-profit corporations); different types of LLC’s; and different tax consequences for each type of LLC. Plus, the statutory merger process is governed by two different sets of laws –New York Business Corporations Law and New York Limited Liability Company Law – and parts of each statute apply to a corporation-to-LLC merger.
Contact Our Experienced New York Business Attorneys
Even the simplest merger of a corporation into an LLC is a complicated business transaction. The knowledgeable New York business attorneys at Hiller, PC can help you navigate this process with confidence. Call us, at 212-319-4000, to schedule an initial consultation.
