Merger, Conversion, and Domestication are three processes that can change the nature of a company without dissolving it entirely. In each of these processes, the company continues in some form but its status or relation to other companies has been altered in some way.

Merger is discussed in greatest detail below because it is the most common of the three processes, but Conversion and Domestication involve many of the same issues and decision points.

Because mergers can substantially affect and change a company, members or those with an interest in the company usually have a say in the decision and it is often put to unanimous vote. Your tribe will want to be sure to include default rules regarding how mergers may be executed, and you may wish as well to allow for companies to make their own rules about the approval required to merge.

EXAMPLE

Approval of Merger.

a. Unless otherwise provided in articles of operation a LLC that is a party to a proposed merger shall approve the plan of merger by an affirmative vote of a majority in interest of members. b. Unless otherwise provided in articles of operation the manager or managers of a LLC may not approve a merger without also obtaining the approval of the LLC’s members under paragraph a, above.

c. Each foreign LLC that is a party to a proposed merger shall approve the merger in the manner and by the vote required by the laws applicable to the foreign LLC.

d. Each LLC that is a party to the merger shall have any rights to abandon the merger that are provided for in the plan of merger or in the laws applicable to the LLC.

e. Upon approval of a merger, the LLC shall notify each member of the approval and of the effective date of the merger. 

-5HCC03 §53

The plan of the merger must lay out the terms and conditions of the merger, including how the interests will be converted. The details of what must be in the agreement documents such as name and date the merger goes into effect, who has to sign what in agreement, and where those documents, including the articles of incorporation of the surviving company are filed, can all be specified in the code. See ULLCA §1004 and 5HCC03 §55 for examples.

Plan of Merger. Each LLC that is a into a written plan of merger to be party to a proposed merger shall enter approved under Section 53.

-5HCC03 §54

(b) A plan of merger must be in a record and must include:

(1) the name and form of each constituent organization;

(2) the name and form of the surviving organization and, if the surviving organization is to be created by the merger, a statement to that effect;

(3) the terms and conditions of the merger, including the manner and basis for converting the interests in each constituent organization into any combination of money, interests in the surviving organization, and other consideration;

(4) if the surviving organization is to be created by the merger, the surviving organization’s organizational documents that are proposed to be in a record; and

(5) if the surviving organization is not to be created by the merger, any amendments to be made by the merger to the surviving organization’s organizational documents that are, or are proposed to be, in a record. 

-ULLCA §1002(b)

In general, when a merger becomes effective, the surviving organization continues or comes into existence and the former organization ceases to exist as a separate entity; its property, rights, privileges, immunities, powers, and purposes vest in the surviving organization but the debts, obligations, or other liabilities, legal and otherwise, also follow. A foreign organization must consent to the jurisdiction of the courts of the tribe to enforce any debt, obligation, or other liability. Issues regarding sovereign immunity when one party to the merger is tribally-owned need to be considered; this is discussed in more detail in the chapter on tribally-owned entities.

Any business entity other than a limited liability company may convert to a limited liability company and vice versa unless the law of that company’s jurisdiction does not allow it. The process includes filing a plan of conversion which would include the name and form of the organization before conversion and after, the terms and conditions of the conversion, including the manner and basis for converting interests in the converting organization into any combination of money, interests in the converted organization, and other consideration. Again because of the potentially dramatic effects on a company, the tribe will want to consider requiring a unanimous vote of the members to effect a conversion.

CONVERSION. 

(a) An organization other than a limited liability company may convert to a liability company may convert to an limited liability company pursuant to this and a plan of conversion[...] 

-ULLCA §1006

Some codes allow business entities to switch between domestic and foreign status. In general, the merger and conversion rules are relatively similar to those for domestication, as they deal with similar issues.

DOMESTICATION. 

(a) A foreign limited liability company may become a limited liability company pursuant to this section, Sections 1011 through 1013, and a plan of domestication, if: [...]

(b) A limited liability company may become a foreign limited liability company pursuant to this section, Sections 1011 through 1013, and a plan of domestication, if: [...] 

(c) A plan of domestication must be in a record and must include: [...]

-ULLCA §1010