Texas Attorney General Opinion: JC-126 Page: 2 of 6
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The Honorable Jeff Wentworth - Page 2
To solve this problem, HB 1104 would allow a process of conversion
and conversion merger.
HOUSE RESEARCH ORG., BILL ANALYSIS, Tex. H.B. 1104, 75th Leg., R.S. 5 (May 5, 1997); see also
Tex. Att'y Gen. Op. No. JC-0015 (1999) at 4-6 (discussing legislative history of conversion
provision).
In order for a corporation to convert to a new business form, it must comply with the
requirements of the conversion statute. Among other things, the corporation must adopt a plan of
conversion approved by its shareholders, draft articles of conversion, and deliver the articles of
conversion to the Secretary of State. TEX. Bus. CORP. ACT ANN. arts. 5.17, 5.18 (Vernon Supp.
1999). If the Secretary of State finds that the articles of conversion conform to law and that the
corporation has complied with applicable conversion requirements, the Secretary of State issues a
certificate of conversion and the conversion becomes effective. Id. arts. 5.18(C), 5.19.
The Act sets out the effects of a conversion. Generally speaking, upon conversion, the
converting entity continues to exist and all of the assets and liabilities of the converting entity that
exist at the time of conversion continue with the entity in its new form:
A. When a conversion of a converting entity takes effect:
(1) the converting entity shall continue to exist, without
interruption, but in the organizational form of the converted entity
rather than in its prior organizational form;
(2) all rights, title, and interests to all real estate and other
property owned by the converting entity shall continue to be owned
by the converted entity in its new organizational form without
reversion or impairment, without further act or deed, and without any
transfer or assignment having occurred, but subject to any existing
liens or other encumbrances thereon;
(3) all liabilities and obligations of the converting entity shall
continue to be liabilities and obligations of the converted entity in its
new organizational form without impairment or diminution by reason
of the conversion;
(4) all rights of creditors or other parties with respect to or against
the prior interest holders or other owners of the converting entity in
their capacities as such in existence as of the effective time of the
conversion will continue in existence as to those liabilities and
obligations and may be pursued by such creditors and obligees as if
the conversion had not occurred;(JC-0126)
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Texas. Attorney-General's Office. Texas Attorney General Opinion: JC-126, text, October 13, 1999; (https://texashistory.unt.edu/ark:/67531/metapth274435/m1/2/: accessed April 19, 2024), University of North Texas Libraries, The Portal to Texas History, https://texashistory.unt.edu; crediting UNT Libraries Government Documents Department.