Code of Virginia

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Code of Virginia
Title 13.1. Corporations
Chapter 9. Virginia Stock Corporation Act
10/29/2020

This section has more than one version with varying effective dates. Scroll down to see all versions.

§ 13.1-722.11. (Effective until July 1, 2021) Action on plan of entity conversion.

A. Except as provided in subsection B, the plan of entity conversion shall be adopted by the corporation in the following manner:

1. The board of directors shall adopt the plan of entity conversion.

2. After adopting the plan of entity conversion, the board of directors shall submit the plan to the shareholders for their approval. The board of directors shall also transmit to the shareholders a recommendation that the shareholders approve the plan of entity conversion, unless the board of directors determines that because of conflicts of interest or other special circumstances it should make no recommendation and communicates the basis of its determination to the shareholders with the plan.

3. The board of directors may condition its submission of the plan of entity conversion to the shareholders on any basis.

4. The corporation shall notify each shareholder, whether or not entitled to vote, of the proposed shareholders' meeting in accordance with § 13.1-658 at which the plan of entity conversion is to be submitted for approval. The notice shall also state that the purpose, or one of the purposes, of the meeting is to consider the plan and shall contain or be accompanied by a copy of the plan.

5. Unless this chapter or the board of directors, acting pursuant to subdivision 3, requires a greater vote, the plan of entity conversion shall be approved by each voting group entitled to vote on the plan by more than two-thirds of all the votes entitled to be cast by that voting group. The articles of incorporation may provide for a greater or lesser vote than that provided for in this subsection or a vote by separate voting groups so long as the vote provided for is not less than a majority of all the votes cast on the plan by each voting group entitled to vote on the plan at a meeting at which a quorum of the voting group exists.

B. If a corporation has not yet issued shares, a majority of its initial board of directors or incorporators, in the event that there is no board of directors, may adopt the plan of entity conversion.

2001, c. 545; 2002, c. 1; 2012, c. 130; 2016, c. 288.

§ 13.1-722.11. (Effective July 1, 2021) Action on plan of conversion.

A. In the case of a conversion of a domestic corporation to a domestic or foreign eligible entity, the plan of conversion shall be adopted in the following manner:

1. The plan of conversion shall first be adopted by the board of directors.

2. After adopting the plan of conversion, the board of directors shall submit the plan to the shareholders for their approval. In submitting the plan of conversion to the shareholders for their approval, the board of directors shall recommend 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 shall inform the shareholders of the basis for that determination.

3. The board of directors may set conditions for approval of the plan of conversion by the shareholders or the effectiveness of the plan of conversion.

4. If the approval of the shareholders is to be sought at a shareholders meeting, the corporation shall notify each shareholder, regardless of whether entitled to vote, of the meeting of shareholders at which the plan of conversion is to be submitted for approval. The notice shall state that the purpose, or one of the purposes, of the meeting is to consider the plan of conversion and shall contain or be accompanied by a copy or summary of the plan. The notice must include or be accompanied by a copy of the organic rules of the converted entity, which are to be in writing as they will be in effect immediately after the conversion.

5. Unless the articles of incorporation or the board of directors acting pursuant to subdivision 3, requires a greater vote, approval of the plan of conversion requires (i) the approval of the shareholders at a meeting at which a quorum exists consisting of more than two thirds of the votes entitled to be cast on the plan and (ii) the approval of each class or series of shares voting as a separate voting group at a meeting at which a quorum of the voting group exists consisting of more than two thirds of the votes entitled to be cast on the plan by that voting group. The articles of incorporation may provide for a greater or lesser vote than that provided in this subsection or a vote by separate voting groups so long as the vote provided for is not less than a majority of all votes cast on the plan by each voting group entitled to vote on the plan at a meeting at which a quorum of the voting group exists.

B. In the case of a conversion of a domestic eligible entity to a domestic corporation, the plan of conversion shall be adopted in accordance with subsection B of § 13.1-722.9.

C. If as a result of the conversion one or more shareholders of the converting domestic corporation would become subject to interest holder liability, approval of the plan of conversion shall require the signing in connection with the transaction, by each such shareholder, of a separate written consent to become subject to such interest holder liability.

2001, c. 545; 2002, c. 1; 2012, c. 130; 2016, c. 288; 2019, c. 734; 2020, c. 1226.

The chapters of the acts of assembly referenced in the historical citation at the end of this section may not constitute a comprehensive list of such chapters and may exclude chapters whose provisions have expired.