Merger, Share Exchange and Conversion

Tenn. Code Ann. tit. 48, ch. 21

in effect

Tenn. Code Ann. § 48-21-101 Chapter definitions.

48-21-101. Chapter definitions. As used in this chapter, unless the context otherwise requires: (1) “Converted entity” means the domestic business corporation or domestic unincorporated entity that adopts a plan of entity conversion or the foreign unincorporated entity converting to a domestic business corporation; (2) “Eligible entity” means a domestic or foreign unincorporated entity or a domestic or foreign nonprofit corporation; (3) “Eligible interests” means interests or memberships; (4) “Filing entity” means an unincorporated entity that is of a type that is created by filing a public organic document; (5) “Interest holder” means a person who holds of record an interest; (6) “Membership” means the rights of a member in a domestic or foreign nonprofit corporation; (7) “Participating shares” means shares however denominated that entitle their holders to participate in distributions on dissolution after all preferences have been paid; (8) “Party to a merger or share exchange” means any domestic or foreign corporation, or eligible entity that will: (A) Merge in a plan of merger; (B) Acquire shares or eligible interests of another domestic or foreign corporation, or an eligible entity in a share exchange; or (C) Have all of its shares or eligible interests of one (1) or more classes or series acquired in share exchange; (9) “Survivor” means the corporation or unincorporated entity that is in existence immediately after consummation of a merger or entity conversion pursuant to this chapter; and (10) “Voting shares” means shares that entitle their holders to vote unconditionally in the election of directors. Acts 1994, ch. 776, § 35; 2006, ch. 620, § 58; 2012, ch. 1051, § 39.

Tenn. Code Ann. § 48-21-102 Merger.

48-21-102. Merger. (a) One (1) or more corporations may merge with one (1) or more domestic or foreign business corporations or eligible entities pursuant to a plan of merger, or two (2) or more foreign business corporations or domestic or foreign eligible entities may merge into a new domestic business corporation to be created in the merger in the manner provided in this chapter. The merger shall result in a single survivor. (b) A foreign business corporation, or a foreign eligible entity, may be a party to a merger with a domestic business corporation, or may be created by the terms of the plan of merger, only if the merger is permitted by the laws under which the foreign business corporation or eligible entity is organized or by which it is governed. If the organic law of a domestic eligible entity does not provide procedures for the approval of a merger, a plan of merger may be adopted and approved, the merger effectuated, and dissenters' rights exercised in accordance with the procedures in this chapter and chapter 23 of this title. For the purposes of applying this chapter and chapter 23 of this title: (1) The eligible entity, its members or interest holders, eligible interests, and organic documents taken together shall be deemed to be a domestic business corporation, shareholders, shares and charter, respectively and vice versa, as the context may require; and (2) If the business and affairs of the eligible entity are managed by a group of persons that is not identical to the members or interest holders, that group shall be deemed to be the board of directors. (c) The plan of merger must set forth: (1) The name of each domestic or foreign business corporation or eligible entity planning to merge and the name of each domestic or foreign business corporation or eligible entity that shall survive the merger; (2) The terms and conditions of the merger; (3) The manner and basis of converting the shares of each merging domestic or foreign business corporation and eligible interest of each merging domestic or foreign eligible entity into shares or other securities, eligible interests, obligations, rights to acquire shares, other securities or eligible interest, cash, other property, or any combination of the foregoing; (4) The charter of any domestic or foreign business corporation or nonprofit corporation, or the organic documents of any domestic or foreign unincorporated entity, to be created by the merger, or if a new domestic or foreign business or nonprofit corporation or unincorporated is not to be created by the merger, any amendments to the survivor's charter or organic documents; and (5) Any other provision required by the laws under which any party to the merger is organized or by which it is governed, or by the charter or organic documents of any such party. (d) The plan of merger may set forth any other provisions relating to the merger. (e) Terms of a plan of merger may be made dependent on facts objectively ascertainable outside the plan in accordance with § 48-11-301(j). (f) The plan of merger may also include a provision that the plan may be amended prior to filing articles of merger, but if the shareholders of a domestic corporation that is a party to the merger are required or permitted to vote on the plan, the plan must provide that subsequent to approval of the plan by such shareholders the plan may not be amended to change: (1) The amount or kind of shares or other securities, eligible interests, obligations, rights to acquire shares, other securities, or eligible interests, cash, or other property to be received under the plan by the shareholders of or owners of eligible interests in any party to the merger; (2) The charter of any corporation, or the organic documents of any unincorporated entity, that will survive or be created as a result of the merger, except for changes permitted by § 48-20-102 or by comparable provisions of the organic laws of any such foreign corporation or domestic or foreign unincorporated entity; or (3) Any of the other terms or conditions of the plan if the change would adversely affect such shareholders in any material respect. (g) Property held in trust or for charitable purposes under the laws of this state by a domestic or foreign eligible entity shall not be diverted by a merger from the objects for which it was donated, granted, or devised, unless and until the eligible entity obtains a court order specifying the disposition of the property to the extent required by and pursuant to § 35-15-413. Acts 1986, ch. 887, § 11.01; 1987, ch. 273, § 37; 1994, ch. 776, § 36; T.C.A., § 48-21-101; Acts 2012, ch. 1051, § 39.

Tenn. Code Ann. § 48-21-103 Share exchange.

48-21-103. Share exchange. (a) Through a share exchange: (1) A domestic corporation may acquire all of the outstanding shares of one (1) or more classes or series of shares of another domestic or foreign corporation or all of the interests of one (1) or more classes or series of interests of a domestic or foreign other entity, in exchange for shares, other securities, interests, obligations, rights to acquire shares, other securities, or interests, cash, other property, or any combination of the foregoing, pursuant to a plan of share exchange; or (2) All of the shares of one (1) or more classes or series of shares of a domestic corporation may be acquired by another domestic or foreign corporation or other entity, in exchange for shares, other securities, interests, obligations, rights to acquire shares, other securities or interests, cash, other property, or any combination of the foregoing, pursuant to a plan of share exchange. (b) A foreign corporation or eligible entity may be a party to a share exchange only if the share exchange is permitted by the law under which the corporation or other entity is organized or by which it is governed. If the organic law of a domestic other entity does not provide procedures for the approval of a share exchange, a plan of share exchange may be adopted and approved, the share exchange effectuated, and dissenters' rights exercised in accordance with the procedures, if any, for a merger. If the organic law of a domestic other entity does not provide procedures for the approval of either a share exchange or a merger, a plan of share exchange may be adopted and approved, the share exchange effectuated, and dissenters' rights exercised, in accordance with the procedures in this chapter and chapter 23 of this title. For the purposes of applying this chapter and chapter 23 of this title: (1) The other entity, its interest holders, interests, and organic documents taken together shall be deemed to be a domestic business corporation, shareholders, shares, and charter, respectively and vice versa, as the context may require; and (2) If the business and affairs of the other entity are managed by a group of persons that is not identical to the interest holders, that group shall be deemed to be the board of directors. (c) The plan of share exchange must set forth: (1) The name of each corporation or other entity whose shares or interests will be acquired and the name of the acquiring corporation or other entity; (2) The terms and conditions of the share exchange; (3) The manner and basis of exchanging shares of each corporation or interests in an other entity who shares or interests will be acquired under the share exchange into shares, other securities, interests, obligations, rights to acquire shares, other securities or interests, cash, other property, or any combination of the foregoing; and (4) Any other provisions required by the laws under which any party to the share exchange is organized or by the charter or organic document of any such party. (d) The plan of share exchange may set forth other provisions relating to the share exchange. (e) This section does not limit the power of a domestic corporation to acquire all or part of the shares of one (1) or more classes or series of another corporation or interests of another entity through a voluntary exchange or otherwise. Acts 1986, ch. 887, § 11.02; 1994, ch. 776, § 37; T.C.A., § 48-21-102; Acts 2012, ch. 1051, § 39.

Tenn. Code Ann. § 48-21-104 Action on plan of merger or share exchange.

48-21-104. Action on plan of merger or share exchange. In the case of a domestic corporation that is a party to a merger or share exchange: (1) The plan of merger or share exchange shall be adopted by the board of directors of each party to the merger or share exchange and approved by the shareholders; (2) Except as provided in subdivision (7) and in § 48-21-105, after adopting the plan of merger or share exchange, the board of directors shall submit the plan of merger or share exchange for approval by the shareholders. The board of directors must also transmit to the shareholders a recommendation that the shareholders approve the plan, unless the board of directors makes a determination that because of conflicts of interest or other special circumstances it should not make such a recommendation, in which case the board of directors must also transmit to the shareholders the basis for that determination; (3) The board of directors may condition its submission of the plan of merger or share exchange to its shareholders on any basis; (4) If the plan of merger or share exchange is required to be approved by the shareholders, and if the approval is to be given at a meeting, the corporation shall notify each shareholder, whether or not entitled to vote, of the shareholders' meeting at which the plan is to be submitted for approval. The notice shall state that the purpose, or one (1) of the purposes, of the meeting is to consider the plan of merger or share exchange and shall contain or be accompanied by a copy or summary of the plan. If the corporation is to be merged into an existing corporation or other entity, the notice shall also include or be accompanied by a copy or summary of the charter or organic documents of that corporation or other entity. If the corporation is to be merged into a corporation or other entity that is to be created pursuant to the merger, the notice shall include or be accompanied by a copy or a summary of the charter or organizational documents of the new corporation or other entity; (5) Unless chapters 11-27 of this title, the charter, or the board of directors acting pursuant to subdivision (3) requires a greater vote or a vote by voting groups, the plan of merger or share exchange to be authorized must be approved by each voting group entitled to vote separately on the plan by a majority of all the votes entitled to be cast on the plan by that voting group; (6) Separate voting by voting groups is required: (A) On a plan of merger, by each class or series of shares that would be entitled to vote as a separate group on a provision in the plan that, if contained in a proposed amendment to the charter, would require action by separate voting groups under § 48-20-104; (B) On a plan of share exchange, by each class or series of shares included in the exchange, with each class or series constituting a separate voting group; or (C) On a plan of merger or share exchange, if the voting group is entitled under the charter or by agreement to vote as a voting group to approve a plan of merger or share exchange; (7) Unless the charter otherwise provides, approval by the shareholders of a domestic corporation of a plan of merger or share exchange shall not be required if: (A) The corporation will survive the merger or is the acquiring corporation in a share exchange; (B) Except for amendments enumerated in § 48-20-102, its charter will not differ from the charter before the merger; (C) Each shareholder of the corporation whose shares were outstanding immediately before the effective date of the merger or exchange will hold the same number of shares, with identical designations, preferences, limitations and relative rights, immediately after the effective date of the merger or exchange; (D) The voting power of the shares outstanding immediately after the merger or exchange, plus the voting power of the shares issuable as a result of the merger or exchange (either by the conversion of securities issued pursuant to the merger or exchange or by the exercise of rights and warrants issued pursuant to the merger or exchange), will not exceed by more than twenty percent (20%) the voting power of the total shares of the corporation outstanding immediately before the merger or exchange; and (E) The number of participating shares outstanding immediately after the merger or exchange, plus the number of participating shares issuable as a result of the merger or exchange (either by the conversion of securities issued pursuant to the merger or exchange by the exercise of rights and warrants issued pursuant to the merger or exchange), will not exceed more than twenty percent (20%) the total number of participating shares outstanding immediately before the merger or exchange; and (8) If as a result of a merger or share exchange one (1) or more shareholders of a domestic corporation would become subject to owner liability for the debts, obligations, or liabilities of any other person or entity, approval of the plan of merger or share exchange shall require the execution, by each shareholder, of a separate written consent to become subject to such owner liability. Acts 1986, ch. 887, § 11.03; 1994, ch. 776, § 38; T.C.A., § 48-21-103; Acts 1996, ch. 618, § 2; 2012, ch. 1051, § 39; 2015, ch. 60, § 2.

Tenn. Code Ann. § 48-21-105 Merger of parent and subsidiary.

48-21-105. Merger of parent and subsidiary. (a) A domestic parent corporation owning at least ninety percent (90%) of the outstanding voting shares of each class and series of a domestic or foreign subsidiary corporation or eligible interests of an other entity may either: (1) Merge the subsidiary corporation or other entity into the parent corporation; (2) Merge the parent corporation into the subsidiary corporation or other entity; or (3) Merge two (2) or more such subsidiary corporations or subsidiary other entities with and into each other. (b) The board of directors of the parent corporation shall adopt a plan of merger that sets forth: (1) The name of the parent corporation owning at least ninety percent (90%) of the outstanding voting shares of the subsidiary corporation or eligible interests of the other entity and the name of the subsidiary corporation(s) or other entity or entities to be a party to the merger, and the name of the corporation or other entity that is to survive the merger; (2) The terms and conditions of the merger; (3) The manner and basis of converting the shares of each corporation or eligible interests of the subsidiary or other entity into shares, eligible interests, obligations or other securities of the survivor or of any other corporation or other entity or into cash or other property or any combination of the foregoing; and (4) Such other provisions with respect to the proposed merger as the board considers necessary or desirable. (c) No vote of the shareholders of a subsidiary corporation or approval of interest holders of a subsidiary other entity shall be required with respect to such a merger. If the parent corporation will be the survivor, no vote of its shareholders shall be required. If the subsidiary corporation or other entity will be the survivor, the approval of the shareholders of the parent corporation shall be obtained in the manner provided in § 48-21-104. (d) If under subsection (c) approval of a merger by the subsidiary's shareholders or interest holders is not required, the parent corporation shall, within ten (10) days after the effective date of the merger, notify each of the subsidiary's shareholders or interest holders that the merger has become effective. (e) Except as provided in subsections (a)-(d), a merger between a parent and a subsidiary shall be governed by the provisions of this chapter applicable to mergers generally. Acts 1986, ch. 887, § 11.04; 1989, ch. 451, § 34; 1994, ch. 776, § 39; T.C.A., § 48-21-104; Acts 1996, ch. 618, § 3; 2012, ch. 1051, § 39.

Tenn. Code Ann. § 48-21-106 Abandonment of merger.

48-21-106. Abandonment of merger. (a) After a plan of merger or share exchange has been adopted and approved as required by chapters 11-27 of this title, and at any time before the merger or share exchange has become effective, the merger or share exchange may be abandoned (subject to any contractual rights) by any corporation or other entity that is a party to the merger or share exchange, without action by the shareholders or interest holders of such party, in accordance with the procedures set forth in the plan of merger or share exchange or, if no such procedures are set forth in the plan, in the manner determined by the board of directors of such corporation or the managers of such other entity. (b) If the merger or share exchange is abandoned after articles of merger or share exchange have been filed with the secretary of state but before the merger or share exchange has become effective, a statement, executed on behalf of each party to the merger or share exchange by an officer or other duly authorized representative, stating that the merger or share exchange has been abandoned in accordance with the plan and this section, shall be filed with the secretary of state prior to the effectiveness of the merger or share exchange. (c) The secretary of state shall, when all fees have been paid as required by law: (1) Endorse on the original and each copy the word “filed” and the month, day, and year of the filing thereof; (2) File the original in the office of the secretary of state; and (3) Issue a certificate of abandonment to each party to the merger or share exchange. (d) Upon the filing of such statement by the secretary of state, the merger or share exchange shall be deemed abandoned and shall not become effective. Acts 1994, ch. 776, § 40; 1999, ch. 361, §§ 1, 2; 2012, ch. 1051, § 39.

Tenn. Code Ann. § 48-21-107 Articles of merger or share exchange.

48-21-107. Articles of merger or share exchange. (a) After a plan of merger or share exchange has been adopted and approved as required by this chapter, articles of merger or share exchange shall be executed on behalf of each party to the merger or share exchange by an officer or other duly authorized representative and shall set forth: (1) The names of the parties to the merger or share exchange and the date on which the merger or share exchange occurred or is to be effective; (2) If the charter or organic documents of the survivor of a merger are amended, or if a new corporation is created as a result of a merger, the amendments to the survivor’s charter or organic documents or the charter of the new corporation; (3) If approval by the shareholders of a domestic corporation that is a party to the merger or exchange is not required by this chapter, a statement to that effect and the date on which the plan was adopted by the board of directors; (4) If approval by the shareholders of a domestic corporation that is a party to the merger or exchange is required by this chapter, a statement to that effect and a statement that the plan was approved by the affirmative vote of the required percentage of all of: (A) The votes entitled to be cast if there is no voting by voting groups; or (B) The votes entitled to be cast by each voting group having the right to vote separately on the plan and the votes cast by the outstanding shares otherwise entitled to vote on the plan; and (5) As to each foreign corporation and each other entity that was a party to the merger or share exchange, a statement that the plan and performance of its terms were duly authorized by all action required by the laws under which it was organized and by its charter or organic documents. (b) The original of the articles of merger or share exchange shall be delivered to the secretary of state for filing together with the required filing fee. A merger or share exchange takes effect upon the effective date of the articles of merger or share exchange. Acts 1986, ch. 887, § 11.05; 1994, ch. 776, § 44; T.C.A., § 48-21-105; Acts 2012, ch. 1051, § 39.

Tenn. Code Ann. § 48-21-108 Effect of merger or share exchange.

48-21-108. Effect of merger or share exchange. (a) When a merger becomes effective: (1) The corporation or eligible entity that is designated in the plan of merger as an entity surviving the merger shall survive, and the separate existence of every other corporation or eligible entity that is a party to the merger shall cease; (2) All property owned by, and every contract right possessed by, each corporation or eligible entity that is merged into the survivor shall be vested in the survivor without reversion or impairment; (3) All liabilities of each corporation or eligible entity that is merged into the survivor shall be vested in the survivor; (4) A proceeding pending against any corporation or eligible entity that is a party to the merger may be continued as if the merger did not occur or the name of the survivor may be substituted in the proceeding for any corporation or eligible entity whose existence ceased in the merger; (5) The charter or organic document of the survivor shall be amended to the extent provided in the plan of merger; (6) The charter or organic documents of a survivor created by the plan of merger shall become effective; and (7) The share of each corporation and the interests of each eligible entity that are to be converted into shares, other securities, interests, obligations, rights to acquire shares, other securities or interests, cash, other property, or any combination of the foregoing in the merger shall be converted or exchanged, and the former holders of such shares or eligible interests shall be entitled only to the rights provided to them in the plan of merger or to their rights under chapter 23 of this title or the organic law of the eligible entity. (b) When a share exchange takes effect, the shares of each corporation that are to be exchanged for shares, other securities, interests, obligations, rights to acquire shares, other securities or interests, cash, other property or any combination of the foregoing in the share exchange shall be exchanged, and the former holders of such shares shall be entitled only to the rights provided in the plan of share exchange or to their rights under chapter 23 of this title. (c) Upon a merger becoming effective, a foreign corporation, or a foreign eligible entity, that is the survivor of the merger is deemed to: (1) Appoint the secretary of state as its agent for service of process in a proceeding to enforce the rights of shareholders of each domestic corporation that is a party to the merger who exercise dissenters' rights; and (2) Agree that it will promptly pay the amount, if any, to which such shareholders are entitled under chapter 23 of this title. (d) The effect of a merger or share exchange on the owner liability of a person who had owner liability for some or all of the debts, obligations or liabilities of a party to the merger or share exchange shall be as follows: (1) The merger or share exchange does not discharge any owner liability under the organic law of the entity in which the person was a shareholder or interest holder to the extent any such owner liability arose before the effective time of the articles of merger or share exchange; (2) The person shall not have owner liability under the organic law of the entity in which the person was shareholder or interest holder prior to the merger or share exchange for any debt, obligation or liability that arises after the effective time of the articles of merger or share exchange; (3) The organic law of any entity for which the person had owner liability before the merger or share exchange shall continue to apply to the collection or discharge of any owner liability preserved by subdivision (d)(1), as if the merger or share exchange had not occurred; and (4) The person shall have whatever rights of contribution from other persons are provided by the organic law of the entity for which the person had owner liability with respect to any owner liability preserved by subdivision (d)(1), as if the merger or share exchange had not occurred. (e) A merger or share exchange shall take effect upon the date the articles of merger or share exchange are filed as provided in § 48-21-107(b) or on such later date as may be specified in the plan of merger or share exchange. Acts 1986, ch. 887, § 11.06; 1994, ch. 776, § 41; T.C.A., § 48-21-106; Acts 2012, ch. 1051, § 39.

Tenn. Code Ann. § 48-21-109 Entity conversion.

48-21-109. Entity conversion. (a) A domestic business corporation may become a domestic unincorporated entity pursuant to a plan of entity conversion. (b) A domestic business corporation may become a foreign unincorporated entity if the entity conversion is permitted by the laws of the foreign jurisdiction. (c) A domestic unincorporated entity may become a domestic business corporation. If the organic law of a domestic unincorporated entity does not provide procedures for the approval of an entity conversion, the conversion shall be adopted and approved, and the entity conversion effectuated, in the same manner as a merger of the unincorporated entity. If the organic law of a domestic unincorporated entity does not provide procedures for the approval of either an entity conversion or a merger, a plan of entity conversion shall be adopted and approved, the entity conversion effectuated, and dissenters' rights exercised, in accordance with the procedures in this chapter and chapter 23 of this title. Without limiting this subsection (c), a domestic unincorporated entity whose organic law does not provide procedures for the approval of an entity conversion shall be subject to subsection (e) and § 48-21-111(7). For purposes of applying this chapter and chapter 23 of this title: (1) The unincorporated entity, its interest holders, interests, and organic documents taken together, shall be deemed to be a domestic business corporation, shareholders, shares, and charters, respectively, and vice versa, as the context may require; and (2) If the business and affairs of the unincorporated entity are managed by a group of persons that is not identical to the interest holders, that group shall be deemed to be the board of directors. (d) A foreign unincorporated entity may become a domestic business corporation if the organic law of the foreign unincorporated entity authorizes it to become a corporation in another jurisdiction. (e) If any provision of a debt security, note or similar evidence of indebtedness for money borrowed, whether secured or unsecured, or a contract of any kind, issued, incurred or executed by a domestic business corporation before January 1, 2013, applies to a merger of the corporation and the document does not refer to an entity conversion of the corporation, the provision shall be deemed to apply to an entity conversion of the corporation until such time as the provision is amended on or subsequent to January 1, 2013. Acts 1986, ch. 887, § 11.07; 1994, ch. 776, §§ 42, 43; T.C.A., § 48-21-107; Acts 2012, ch. 1051, § 39.

Tenn. Code Ann. § 48-21-110 Plan of entity conversion.

48-21-110. Plan of entity conversion. (a) A plan of entity conversion must include: (1) A statement of the type of other entity the survivor will be and, if it will be a foreign other entity, its jurisdiction of organization; (2) The terms and conditions of the conversion; (3) The manner and basis of converting the shares of the domestic business corporation following its conversion into interests or other securities, obligations, rights to acquire interests or other securities, cash, other property, or any combination of the foregoing; and (4) The full text, as they will be in effect immediately after consummation of the conversion, of the organic documents of the survivor. (b) The plan of entity conversion may also include a provision that the plan may be amended prior to filing articles of entity conversion, except that subsequent to approval of the plan by the shareholders, the plan may not be amended to change: (1) The amount or kind of shares or other securities, interests, obligations, rights to acquire shares, other securities or interests, cash or other property to be received under the plan by the shareholders; (2) The organic documents that will be in effect immediately following the conversion, except for changes permitted by a provision of the organic law of the survivor comparable to § 48-20-102; or (3) Any of the other terms or conditions of the plan if the change would adversely affect any of the shareholders in any material respect. (c) Terms of a plan of entity conversion may be made dependent upon facts objectively ascertainable outside the plan in accordance with § 48-11-301. Acts 1994, ch. 868, § 7; 2006, ch. 620, § 59; 2012, ch. 1051, § 39.

Tenn. Code Ann. § 48-21-111 Action on a plan of entity conversion.

48-21-111. Action on a plan of entity conversion. In the case of an entity conversion of a domestic business corporation to a domestic or foreign unincorporated entity: (1) The plan of entity conversion must be adopted by the board of directors; (2) After adopting the plan of entity conversion, the board of directors must submit the plan to the shareholders for their approval. The board of directors must also transmit the shareholders a recommendation that the shareholders approve the plan, unless the board of directors makes a determination that because of conflicts of interest or other special circumstances it should not make such a recommendation, in which case the board of directors must transmit to the shareholders the basis for that determination; (3) The board of directors may condition its submission of the plan of entity conversion to the shareholders on any basis; (4) If the approval of the shareholders is to be given at a meeting, the corporation must notify each shareholder, whether or not entitled to vote, of the meeting of shareholders at which the plan of entity conversion is to be submitted for approval. The notice must state that the purpose, or one (1) of the purposes, of the meeting is to consider the plan and must contain or be accompanied by a copy or summary of the plan. The notice shall include or be accompanied by a copy of the organic documents as they will be in effect immediately after the entity conversion; (5) Unless chapters 11-27 of this title, the charter, or the board of directors acting pursuant to subdivision (3) requires a greater vote or a vote by voting groups, the plan of conversion to be authorized must be approved by each voting group entitled to vote separately on the plan by a majority of all the votes entitled to be cast on the plan by that voting group; (6) If any provision of the charter, bylaws or an agreement to which any of the directors or shareholders are parties, adopted or entered into before January 1, 2013, applies to a merger of the corporation and the document does not refer to an entity conversion of the corporation, the provision shall be deemed to apply to an entity conversion of the corporation until such time as the provision is subsequently amended; and (7) If as a result of the conversion one (1) or more shareholders of the corporation would become subject to owner liability for the debts, obligations, or liabilities of any other person or entity, approval of the plan of conversion shall require the execution, by each such shareholder, of a separate written consent to become subject to such owner liability. Acts 2000, ch. 623, § 1; 2006, ch. 620, §§ 60–62; 2012, ch. 1051, § 39.

Tenn. Code Ann. § 48-21-112 Articles of entity conversion.

48-21-112. Articles of entity conversion. (a) After the conversion of a domestic business corporation to a domestic unincorporated entity has been adopted and approved as required by this chapter, articles of entity conversion shall be executed on behalf of the corporation by any officer or other duly authorized representative. The articles shall: (1) Set forth the name of the corporation immediately before the filing of the articles of entity conversion and the name to which the name of the corporation is to be changed, which shall be a name that satisfies the organic law of the survivor; (2) State the type of unincorporated entity that the survivor will be; (3) Set forth a statement that the plan of entity conversion was duly approved by the shareholders in the manner required by this chapter and the charter; and (4) If the survivor is a filing entity, have attached the applicable public organic document; except that provisions that would not be required to be included in a restated public organic document may be omitted. (b) After the conversion of a domestic unincorporated entity to a domestic business corporation has been adopted and approved as required by the organic law of the unincorporated entity, articles of entity conversion shall be executed on behalf of the unincorporated entity by any officer or other duly authorized representative. The articles shall: (1) Set forth the name of the unincorporated entity immediately before the filing of the articles of entity conversion and the name to which the name of the unincorporated entity is to be changed, which shall be a name that satisfies the requirements of § 48-14-101; (2) Set forth a statement that the plan of entity conversion was duly approved in accordance with the organic law of the unincorporated entity; and (3) Have attached a charter; except that provisions that would not be required to be included in a restated charter of a domestic business corporation may be omitted. (c) After the conversion of a foreign unincorporated entity to a domestic business corporation has been authorized as required by the laws of the foreign jurisdiction, articles of entity conversion shall be executed on behalf of the foreign unincorporated entity by any officer or other duly authorized representative. The articles shall: (1) Set forth the name of the unincorporated entity immediately before the filing of the articles of entity conversion and the name to which the name of the unincorporated entity is to be changed, which shall be a name that satisfies the requirements of § 48-14-101; (2) Set forth the jurisdiction under the laws of which the unincorporated entity was organized immediately before the filing of the articles of entity conversion and the date on which the unincorporated entity was organized in that jurisdiction; (3) Set forth a statement that the conversion of the unincorporated entity was duly approved in the manner required by its organic law; and (4) Have attached a charter; except that provisions that would not be required to be included in a restated charter of a domestic business corporation may be omitted. (d)(1) The articles of entity conversion shall be delivered to the secretary of state for filing, together with the required filing fee, and shall take effect at the effective time provided in § 48-11-304. (2) Articles of entity conversion filed under subsection (a) or (b) may be combined with any required conversion filing under the organic law of the domestic unincorporated entity if the combined filing satisfies the requirements of both this section and the other organic law. (3) The public organic document required to be attached by subsection (a) shall be delivered to the secretary of state for filing, and shall take effect at the effective time of the articles of entity conversion. A filing fee for the public organic document shall be paid to the secretary of state in the amount specified for such public organic document by the applicable law governing the formation of such domestic unincorporated entity. (4) The charter required to be attached by subsection (b) or (c) shall be delivered to the secretary of state for filing, and shall take effect at the effective time of the articles of entity conversion. The fee for filing the charter shall be paid in accordance with § 48-11-303. (e) If the converting entity is a foreign unincorporated entity that is authorized to transact business in this state under a provision of law similar to chapter 25 of this title, its certificate of authority or other type of foreign qualification shall be cancelled automatically on the effective date of its conversion. Acts 2000, ch. 623, § 2; 2006, ch. 620, § 63; 2012, ch. 1051, § 39.

Tenn. Code Ann. § 48-21-113 Surrender of charter upon conversion.

48-21-113. Surrender of charter upon conversion. (a) Whenever a domestic business corporation has adopted and approved, in the manner required by this chapter, a plan of entity conversion providing for the corporation to be converted to a foreign unincorporated entity, articles of charter surrender shall be executed on behalf of the corporation by any officer or other duly authorized representative. The articles of charter surrender shall set forth: (1) The name of the corporation; (2) A statement that the articles of charter surrender are being filed in connection with the conversion of the corporation to a foreign unincorporated entity; (3) A statement that the conversion was duly approved by the shareholders in the manner required by this chapter and the charter; (4) The jurisdiction under the laws of which the survivor will be organized; and (5) If the survivor will be a nonfiling entity, the address of its executive office immediately after the conversion. (b) The articles of charter surrender shall be delivered by the corporation to the secretary of state for filing together with the required filing fee. The articles of charter surrender shall take effect on the effective time provided in § 48-11-304. Acts 2012, ch. 1051, § 39.

Tenn. Code Ann. § 48-21-114 Effect of entity conversion.

48-21-114. Effect of entity conversion. (a) When a conversion under § 48-21-111 takes effect: (1) All title to real and personal property, both tangible and intangible, of the converting entity remains in the survivor without reversion or impairment; (2) All obligations and liabilities of the converting entity continue as obligations and liabilities of the survivor; (3) An action or proceeding pending against the converting entity continues against the survivor as if the conversion had not occurred; (4) In the case of a survivor that is a filing entity, its charter or public organic document and its private organic document become effective; (5) In the case of a survivor that is a nonfiling entity, its private organic document becomes effective; (6) The shares or interests of the converting entity are reclassified into shares, interests, other securities, obligations, rights to acquire shares, interests, or other securities, or into cash or other property in accordance with the plan of conversion; and the shareholders or interest holders of the converting entity are entitled only to the rights provided to them under the terms of the conversion and to any dissenters' rights they may have under chapter 23 of this title or under the applicable organic law of the converting entity if it is other than a corporation; and (7) The survivor is deemed to: (A) Be incorporated or organized under and subject to the organic law of the converting entity for all purposes; (B) Be the same corporation or unincorporated entity without interruption as the converting entity; and (C) Have been incorporated or otherwise organized on the date that the converting entity was originally incorporated or organized. (b) When a conversion of a domestic business corporation to a foreign other entity becomes effective, the surviving entity is deemed to: (1) Appoint the secretary of state as its agent for service of process in a proceeding to enforce the rights of shareholders who exercise dissenters' rights in connection with the conversion; and (2) Agree that it will promptly pay the amount, if any, to which such shareholders are entitled under chapter 23 of this title. (c) A shareholder who becomes subject to owner liability for some or all of the debts, obligations, or liabilities of the survivor shall be personally liable only for those debts, obligations, or liabilities of the survivor that arise after the effective time of the articles of entity conversion. (d) The owner liability of an interest holder in an unincorporated entity that converts to a domestic business corporation shall be as follows: (1) The conversion does not discharge any owner liability under the organic law of the unincorporated entity to the extent any such owner liability arose before the effective time of the articles of entity conversion; (2) The interest holder shall not have owner liability under the organic law of the unincorporated entity for any debt, obligation, or liability of the corporation that arises after the effective time of the articles of entity conversion; (3) The organic law of the unincorporated entity shall continue to apply to the collection or discharge of any owner liability preserved by subdivision (d)(1), as if the conversion had not occurred; and (4) The interest holder shall have whatever rights of contribution from other interest holders are provided by the organic law of the unincorporated entity with respect to any owner liability preserved by subdivision (d)(1), as if the conversion had not occurred. (e) The converting entity shall not be required to wind up its affairs or pay its liabilities and distribute its assets, and such conversion shall not be deemed to constitute a dissolution of such entity. (f) The interests of the interest holders of the converting entity, unless otherwise agreed, shall be cancelled and become of no effect whatsoever, with respect to the survivor, and the former holders of such interests shall be entitled only to the rights provided in the plan of conversion or the organic documents for the conversion of shares into interests in the survivor. (g) A conversion shall take effect upon the date the articles of conversion are filed, as provided in § 48-21-112, or on such later date as may be specified in the plan of conversion. (h) Notwithstanding any other law to the contrary, this section and § 48-21-109 shall have no effect on the application of title 67 and other state and federal tax statutes. Any tax consequences of the conversion as referenced herein shall continue to be controlled by applicable state and federal tax statutes as they may be amended from time to time. Acts 2012, ch. 1051, § 39.

Tenn. Code Ann. § 48-21-115 Abandonment of entity conversion.

48-21-115. Abandonment of entity conversion. (a) Unless otherwise provided in a plan of entity conversion of a domestic business corporation, after the plan has been adopted and approved as required by § 48-21-111, and at any time before the entity conversion has become effective, it may be abandoned by the board of directors without action by the shareholders. (b) If an entity conversion is abandoned after articles of entity conversion or articles of charter surrender have been filed with the secretary of state but before the entity conversion has become effective, a statement that the entity conversion has been abandoned in accordance with this section, executed by an officer or other duly authorized representative, shall be delivered to the secretary of state for filing, together with the required filing fee, prior to the effective date of the entity conversion. Upon filing, the statement shall take effect and the entity conversion shall be deemed abandoned and shall not become effective. Acts 2012, ch. 1051, § 39.

Tenn. Code Ann. § 48-21-116 Nonprofit conversion.

48-21-116. Nonprofit conversion. (a) A domestic business corporation may become a domestic nonprofit corporation pursuant to a plan of nonprofit conversion. (b) A domestic business corporation may become a foreign nonprofit corporation if the nonprofit conversion is permitted by the laws of the foreign jurisdiction. Regardless of whether the laws of the foreign jurisdiction require the adoption of a plan of nonprofit conversion, the foreign nonprofit conversion shall be approved by the adoption by the domestic business corporation of a plan of nonprofit conversion in the manner provided in this section. (c) The plan of nonprofit conversion must include: (1) The terms and conditions of the conversion; (2) The manner and basis of reclassifying the shares of the corporation following its conversion into memberships, if any, or securities, obligations, rights to acquire memberships or securities, cash, other property, or any combination of the foregoing; (3) Any desired amendments to the charter of the corporation following its conversion; and (4) If the domestic business corporation is to be converted to a foreign nonprofit corporation, a statement of the jurisdiction in which the corporation will be incorporated after the conversion. (d) The plan of nonprofit conversion may also include a provision that the plan may be amended prior to filing articles of nonprofit conversion, except that subsequent to approval of the plan by the shareholders the plan may not be amended to change: (1) The amount or kind of memberships or securities, obligations, rights to acquire memberships or securities, cash, or other property to be received by the shareholders under the plan; (2) The charter as it will be in effect immediately following the conversion, except for changes permitted by § 48-20-102; or (3) Any of the other terms or conditions of the plan if the change would adversely affect any of the shareholders in any material respect. (e) Terms of a plan of nonprofit conversion may be made dependent upon facts objectively ascertainable outside the plan in accordance with § 48-11-301. (f) If any debt security, note or similar evidence of indebtedness for money borrowed, whether secured or unsecured, or a contract of any kind, issued, incurred or executed by a domestic business corporation before January 1, 2013, contains a provision applying to a merger of the corporation and the document does not refer to a nonprofit conversion of the corporation, the provision shall be deemed to apply to a nonprofit conversion of the corporation until such time as the provision is amended on or subsequent to January 1, 2013. Acts 2012, ch. 1051, § 39.

Tenn. Code Ann. § 48-21-117 Action on a plan of nonprofit conversion.

48-21-117. Action on a plan of nonprofit conversion. In the case of a conversion of a domestic business corporation to a domestic or foreign nonprofit corporation: (1) The plan of nonprofit conversion must be adopted by the board of directors; (2) After adopting the plan of nonprofit conversion, the board of directors must submit the plan to the shareholders for their approval. The board of directors must also transmit to the shareholders a recommendation that the shareholders approve the plan, unless the board of directors makes a determination that because of conflicts of interest or other special circumstances it should not make such a recommendation, in which case the board of directors must transmit to the shareholders the basis for that determination; (3) The board of directors may condition its submission of the plan of nonprofit conversion to the shareholders on any basis; (4) If the approval of the shareholders is to be given at a meeting, the corporation must notify each shareholder of the meeting of shareholders at which the plan of nonprofit conversion is to be submitted for approval. The notice must state that the purpose, or one (1) of the purposes, of the meeting is to consider the plan and must contain or be accompanied by a copy or summary of the plan. The notice shall include or be accompanied by a copy of the charter as it will be in effect immediately after the nonprofit conversion; (5) Unless chapters 11-27 of this title, the charter, or the board of directors acting pursuant to subdivision (3) requires a greater vote or a vote by voting groups, the plan of conversion to be authorized must be approved by each voting group entitled to vote separately on the plan by a majority of all the votes entitled to be cast on the plan by that voting group; and (6) If any provision of the charter, bylaws, or an agreement to which any of the directors or shareholders are parties, adopted or entered into before January 1, 2013, applies to a merger of the corporation and the document does not refer to a nonprofit conversion of the corporation, the provision shall be deemed to apply to a nonprofit conversion of the corporation until such time as the provision is amended on or subsequent to January 1, 2013. Acts 2012, ch. 1051, § 39.

Tenn. Code Ann. § 48-21-118 Articles of nonprofit conversion.

48-21-118. Articles of nonprofit conversion. (a) After a plan of nonprofit conversion providing for the conversion of a domestic business corporation to a domestic nonprofit corporation has been adopted and approved as required by this chapter, articles of nonprofit conversion shall be executed on behalf of the corporation by any officer or other duly authorized representative. The articles shall set forth: (1) The name of the corporation immediately before the filing of the articles of nonprofit conversion and if that name does not satisfy the requirements of § 48-54-101, or the corporation desires to change its name in connection with the conversion, a name that satisfies the requirements of § 48-54-101; and (2) A statement that the plan of nonprofit conversion was duly approved by the shareholders in the manner required by this chapter and the charter. (b) The articles of nonprofit conversion shall have attached a charter that satisfies the requirements of § 48-52-102. Provisions that would not be required to be included in a charter of a domestic nonprofit corporation may be omitted. (c) The articles of nonprofit conversion shall be delivered to the secretary of state for filing, together with the required filing fee, and shall take effect at the effective time provided in § 48-11-304. The attached charter shall also be delivered to the secretary of state for filing. The fee for filing the charter shall be paid in accordance with § 48-51-303. Acts 2012, ch. 1051, § 39.

Tenn. Code Ann. § 48-21-119 Surrender of a charter upon foreign nonprofit conversion.

48-21-119. Surrender of a charter upon foreign nonprofit conversion. (a) Whenever a domestic business corporation has adopted and approved, in the manner required by this chapter, a plan of nonprofit conversion providing for the corporation to be converted to a foreign nonprofit corporation, articles of charter surrender shall be executed on behalf of the corporation by any officer or other duly authorized representative. The articles of charter surrender shall set forth: (1) The name of the corporation; (2) A statement that the articles of charter surrender are being filed in connection with the conversion of the corporation to a foreign nonprofit corporation; (3) A statement that the foreign nonprofit conversion was duly approved by the shareholders in the manner required by this section and the charter; and (4) The corporation's new jurisdiction of incorporation. (b) The articles of charter surrender shall be delivered by the corporation to the secretary of state for filing together with the required filing fee. The articles of charter surrender shall take effect on the effective time provided in § 48-11-304. Acts 2012, ch. 1051, § 39.

Tenn. Code Ann. § 48-21-120 Effect of nonprofit conversion.

48-21-120. Effect of nonprofit conversion. (a) When a conversion of a domestic business corporation to a domestic nonprofit corporation becomes effective: (1) The title to all real and personal property, both tangible and intangible, of the corporation remains in the corporation without reversion or impairment; (2) The liabilities of the corporation remain the liabilities of the corporation; (3) An action or proceeding pending against the corporation continues against the corporation as if the conversion had not occurred; (4) The charter of the domestic nonprofit corporation becomes effective; (5) The shares of the corporation are reclassified into memberships, securities, obligations, rights to acquire memberships, or securities, or into cash or other property in accordance with the plan of conversion, and the shareholders are entitled only to the rights provided in the plan of nonprofit conversion or to any rights they may have under chapter 23 of this title; and (6) The corporation is deemed to: (A) Be a domestic nonprofit corporation for all purposes; (B) Be the same corporation without interruption as the corporation that existed prior to the conversion; and (C) Have been incorporated on the date it was originally incorporated as a domestic business corporation. (b) When a conversion of a domestic business corporation to a foreign nonprofit corporation becomes effective, the foreign nonprofit corporation is deemed to: (1) Appoint the secretary of state as its agent for service of process in a proceeding to enforce the rights of shareholders who exercise dissenters' rights in connection with the conversion; and (2) Agree that it will promptly pay the amount, if any, to which such shareholders are entitled under chapter 23 of this title. (c) The owner liability of a shareholder in a domestic business corporation that converts to a domestic nonprofit corporation shall be as follows: (1) The conversion does not discharge any owner liability of the shareholder as a shareholder of the business corporation to the extent any such owner liability arose before the effective time of the articles of nonprofit conversion; (2) The shareholder shall not have owner liability for any debt, obligation, or liability of the nonprofit corporation that arises after the effective time of the articles of nonprofit conversion; (3) 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 nonprofit corporation was still a business corporation; and (4) The shareholder shall have whatever rights of contribution from other shareholders 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 nonprofit corporation was still a business corporation. (d) A shareholder who becomes subject to owner liability for some or all of the debts, obligations, or liabilities of the nonprofit corporation shall have owner liability only for those debts, obligations, or liabilities of the nonprofit corporation that arise after the effective time of the articles of nonprofit conversion. Acts 2012, ch. 1051, § 39.

Tenn. Code Ann. § 48-21-121 Abandonment of a nonprofit conversion.

48-21-121. Abandonment of a nonprofit conversion. (a) Unless otherwise provided in a plan of nonprofit conversion of a domestic business corporation, after the plan has been adopted and approved as required by this section, and at any time before the nonprofit conversion has become effective, it may be abandoned by the board of directors without action by the shareholders. (b) If a nonprofit conversion is abandoned under subsection (a) after articles of nonprofit conversion or articles of charter surrender have been filed with the secretary of state but before the nonprofit conversion has become effective, a statement that the nonprofit conversion has been abandoned in accordance with this section, executed by an officer or other duly authorized representative, shall be delivered to the secretary of state, together with the required filing fee, for filing prior to the effective date of the nonprofit conversion. The statement shall take effect upon filing, and the nonprofit conversion shall be deemed abandoned and shall not become effective. Acts 2012, ch. 1051, § 39.

Source: Tennessee Code (state release 76 via Public.Resource.Org) + public chapters (Tennessee Secretary of State)URL: https://archive.org/download/gov.tn.tca/release76.2021.05.21/gov.tn.tca.title.48.htmlFetched: 10/24/2026