Guide to Converting Corporations and LLCs in New York
Strazzullo Law Firm has a team of dedicated and experienced Brooklyn attorneys to help you make the best decisions for your business. These changes are complex and often time-consuming; it is strongly recommended that you seek advice from your business attorney when doing anything to change a business entity.
From a Corporation to an LLC
In other states there may be two ways to transform a corporation into an LLC—a statutory conversion and a statutory merger; but New York is one of only ten states that do not allow statutory conversions. In order to convert your New York corporation to a New York LLC via statutory merger, you need to:
- Create a new LLC—the key elements of which include filing articles of organization with the Department of State and preparing an operating agreement.
- Prepare an agreement or plan of merger—including, but not limited to, name of the corporation, name of limited liability company, designation of outstanding corporation shares and organizational changes.
- The corporation’s board of directors and shareholders must adopt the plan of merger—while there are many rules to consider when getting approval, it is important to note that a majority, not unanimous, must vote for the change in order for it to be considered approved.
- Get LLC member approval of the plan of merger—a simple majority is required unless the plan must be approved by percentage specified in the LLC operating agreement.
- File a certificate of merger with the Department of State—must include, but not limited to, the names and addresses of the corporation and LLC, dates of the business’s original creation and effectiveness of the merger, and authorized signatures.
From an LLC to a Corporation
Like the transformation from a corporation to an LLC, New York state does not allow statutory conversions, only statutory mergers.
- Create a new corporation—rather than articles of organization, a corporation requires a certificate of incorporation and bylaws.
- Prepare an agreement or plan of merger—same as above.
- Get LLC member approval of the plan of merger—same as above.
- The corporation’s board of directors and shareholders must adopt the plan of merger—same as above.
- File a certificate of merger with the Department of State—same as above.