Tennessee § 48-61-120 - Effect of for-profit conversion.

§ 48-61-120. Effect of for-profit conversion.

When a conversion of a domestic nonprofit corporation to a domestic business corporation becomes effective: The title to all real and personal property, both tangible and intangible, of the corporation remains in the corporation without reversion or impairment; The liabilities of the corporation remain the liabilities of the corporation; An action or proceeding pending against the corporation continues against the corporation as if the conversion had not occurred; The charter of the domestic or foreign for-profit corporation becomes effective; The memberships of the corporation are reclassified into shares, interests, securities, obligations, rights to acquire shares or securities, or into cash or other property in accordance with the plan of for-profit conversion, and the members are entitled only to the rights provided in the plan of for-profit conversion or to any rights they may have under charter or organic documents of the corporation; and The corporation is deemed to: Be a domestic business corporation for all purposes; Be the same corporation without interruption as the corporation that existed prior to the conversion; and Have been incorporated on the date it was originally incorporated as a domestic nonprofit corporation. When a conversion of a domestic nonprofit corporation to a foreign for-profit corporation becomes effective, the foreign for-profit corporation is deemed to: Appoint the secretary of state as its agent for service of process in a proceeding to enforce the rights of members who exercise appraisal rights in connection with the conversion; and Agree that it will promptly pay the amount, if any, to which such members are entitled under the charter or organic documents of the corporation. The owner liability of a member in a domestic nonprofit corporation that converts to a domestic business corporation shall be as follows: The conversion does not discharge any owner liability of the member as a member of the nonprofit corporation to the extent any such owner liability arose before the effective time of the articles of for-profit conversion; The member shall not have owner liability for any debt, obligation, or liability of the for-profit corporation that arises after the effective time of the articles of for-profit conversion; The laws of this state shall continue to apply to the collection or discharge of any owner liability preserved by subdivision (c)(1), as if the conversion had not occurred and the business corporation were still a nonprofit corporation; and The member shall have whatever rights of contribution from other members are provided by the laws of this state with respect to any owner liability preserved by subdivision (c)(1), as if the conversion had not occurred and the business corporation was still a nonprofit corporation. A member who becomes subject to owner liability for some or all of the debts, obligations, or liabilities of the business corporation shall have owner liability only for those debts, obligations, or liabilities of the business corporation that arise after the effective time of the articles of for-profit conversion. Acts 2014, ch. 899, § 72. Compiler's Notes. Former chapter 61, §§ 48-61-101 — 48-61-107 (Acts 1987, ch. 242, §§ 11.01-11.07), concerning merger, was repealed and reenacted by Acts 2014, ch. 899, §§ 65-72, effective January 1, 2015.