Domesticating your Foreign Corporation into California

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Looking to move your business out west? You may be able to domesticate your foreign corporation into a California entity.

Under the California Corporations Code, foreign entities may convert their business to a California entity so long as the converting entity is authorized by the laws in the foreign state or country where it is organized to effect the conversion.

Conversion results in the foreign entity continuing to exist in California while terminating its existence in the initial foreign jurisdiction. Some businesses may prefer this method when deciding to become a California entity because it is a one-entity transaction. Statutory Conversion is more streamlined and convenient because the procedure to form a new corporation is not required. Furthermore, it limits any disruption to your operations and does not require a formal transfer of assets, liabilities, or properties into California.

The following will be part of the Conversion process:

  • An approved plan of conversion (or other required instruments) pursuant to the laws of the original jurisdiction in which the converting entity is organized.
  • Obtaining approval of the conversion in the manner provided by the converting entity’s governing documents or by applicable law.
  • Filing articles of incorporation with the Secretary of State Office that contains the required statement of conversion.
  • Addressing any additional post-conversion concerns, such as tax considerations.

Be aware that not all states permit Domestication or Conversion. Consequently, if such laws do not exist in your foreign state, such as New York, this approach would not be possible for the foreign entity when coming to California. Therefore, it is important to hire professionals who can ensure this method is appropriate for your business and its needs along with assisting you with preparing the foregoing documentation.

For more information, please contact us at info@mnklawyers.com.

This material is provided for informational purposes only. It is not intended to constitute legal advice, nor does it create a client-lawyer relationship between MNK Law and any recipient. Recipients should consult with counsel before taking any actions based on the information contained within this material.

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