Less Cumbrous Conversions In Sight For California Corporations

Conversions will soon be less cumbrous for California corporations.  Current law authorizes various types of California business entities to convert in a one-step process into business entities organized under the laws of another jurisdiction (whether another state, the District of Columbia, or a foreign country).  The General Corporation Law, however, includes no equivalent procedure for converting California corporations into foreign business entities.  

SB 49  will allow California corporations to convert to a foreign corporation or foreign other business entity provided the foreign jurisdiction also authorizes that type of conversion.  The bill was sponsored by the Corporations Committee of the Business Law Section of the California Lawyers Association.   The bill takes effect on January 1, 2023.

After January 1, 2023., to complete a conversion of a California corporation to a foreign out of state entity online, go to the California Secretary of State's  bizfile Online.  Then open the California corporation’s entity record, click “File Amendment” and scroll down to find the correct conversion.   The fee for conversion will be $150.

The ability to easily convert to a foreign corporation or foreign other business entity may make incorporating as a California corporation more attractive, as promoters may feel less "locked in" to their initial entity choices.