REPORT TITLE:
Business Entities


DESCRIPTION:
Allows corporations, partnerships, limited liability partnerships
and limited liability companies to convert to any other form of
business entity provided for under Hawaii law. (HB1079 HD2)

 
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                                                        1079
HOUSE OF REPRESENTATIVES                H.B. NO.           H.D. 2
TWENTIETH LEGISLATURE, 1999                                
STATE OF HAWAII                                            
                                                             
________________________________________________________________
________________________________________________________________


                   A  BILL  FOR  AN  ACT

RELATING TO THE CONVERSION OF BUSINESS ENTITIES. 



BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

 1      SECTION 1.  Chapter 415, Hawaii Revised Statutes, is amended
 
 2 by adding five new sections to be appropriately designated and to
 
 3 read as follows:
 
 4      "415-A  Conversion into and from corporations.  (a)  A
 
 5 domestic corporation may adopt a plan of conversion and convert
 
 6 to a foreign corporation or any other entity if:
 
 7      (1)  The board of directors and shareholders of the domestic
 
 8           corporation approve a plan of conversion in the manner
 
 9           prescribed by section 415-73 and the conversion is
 
10           treated as a merger to which the converting entity is a
 
11           party and not the surviving entity;
 
12      (2)  The conversion is permitted by, and complies with the
 
13           laws of the state or country in which the converted
 
14           entity is to be incorporated, formed, or organized; and
 
15           the incorporation, formation, or organization of the
 
16           converted entity complies with such laws;
 
17      (3)  At the time the conversion becomes effective, each
 
18           shareholder of the domestic corporation, unless
 
19           otherwise agreed to by that shareholder, shall own an
 

 
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 1           equity interest or other ownership interest in, and be
 
 2           a shareholder, partner, member, owner, or other
 
 3           security holder of, the converted entity;
 
 4      (4)  The shareholders of the domestic corporation, as a
 
 5           result of the conversion, shall not become personally
 
 6           liable, without the shareholders' consent, for the
 
 7           liabilities or obligations of the converted entity; and
 
 8      (5)  The converted entity is incorporated, formed, or
 
 9           organized as part of or pursuant to the plan of
 
10           conversion.
 
11      (b)  Any foreign corporation or other entity may adopt a
 
12 plan of conversion and convert to a domestic corporation if the
 
13 conversion is permitted by and complies with the laws of the
 
14 state or country in which the foreign corporation or other entity
 
15 is incorporated, formed, or organized.
 
16      (c)  A plan of conversion shall set forth:
 
17      (1)  The name of the converting entity and the converted
 
18           entity;
 
19      (2)  A statement that the converting entity is continuing
 
20           its existence in the organizational form of the
 
21           converted entity;
 
22      (3)  A statement describing the organizational form of the
 
23           converted entity and the state or country under the
 

 
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 1           laws of which the converted entity is to be
 
 2           incorporated, formed, or organized;
 
 3      (4)  The manner and basis of converting the shares or other
 
 4           forms of ownership of the converting entity into shares
 
 5           or other forms of ownership of the converted entity, or
 
 6           any combination thereof;
 
 7      (5)  If the converted entity is a domestic corporation, the
 
 8           articles of incorporation of the domestic corporation
 
 9           shall be attached; and
 
10      (6)  If the converted entity is not a domestic corporation,
 
11           proof that the converted entity is registered in this
 
12           State shall be attached.
 
13      (d)  A plan of conversion may set forth any other provisions
 
14 relating to the conversion that are not prohibited by law,
 
15 including without limitation the initial bylaws and officers of
 
16 the converted entity.
 
17      (e)  After a conversion of a domestic or foreign corporation
 
18 is approved, and at any time before the conversion becomes
 
19 effective, the plan of conversion may be abandoned by the
 
20 converting entity without shareholder action and in accordance
 
21 with the procedures set forth in the plan of conversion or, if
 
22 these procedures are not provided in the plan, in the manner
 
23 determined by the board of directors.  If articles of conversion
 

 
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 1 have been filed with the director but the conversion has not
 
 2 become effective, the conversion may be abandoned if a statement,
 
 3 executed on behalf of the converting entity by an officer or
 
 4 other duly authorized representative and stating that the plan of
 
 5 conversion has been abandoned in accordance with applicable law,
 
 6 is filed with the director prior to the effective date of the
 
 7 conversion.  If the director finds that the statement satisfies
 
 8 the requirements provided by law, the director, after all fees
 
 9 have been paid shall:
 
10      (1)  Stamp the word "Filed" on the statement and the date of
 
11           the filing;
 
12      (2)  File the document in the director's office; and
 
13      (3)  Issue a certificate of abandonment to the converting
 
14           entity or its authorized representatives.
 
15      (f)  Once the statement provided in subsection (e) is filed
 
16 with the director, the conversion shall be deemed abandoned and
 
17 shall not be effective.
 
18      415-B  Articles of conversion.  (a)  If a plan of
 
19 conversion has been approved in accordance with section 415-A and
 
20 has not been abandoned, articles of conversion shall be executed
 
21 by an officer or other duly authorized representative of the
 
22 converting entity and shall set forth:
 
23      (1)  A statement certifying the following:
 

 
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 1           (A)  The name, state, or country of incorporation,
 
 2                formation, or organization of the converting
 
 3                entity, and organizational form of the converting
 
 4                entity;
 
 5           (B)  That a plan of conversion has been approved in
 
 6                accordance with section 415-A;
 
 7           (C)  That an executed plan of conversion is on file at
 
 8                the principal place of business of the converting
 
 9                entity and stating the address thereof; and
 
10           (D)  That a copy of the plan of conversion shall be
 
11                furnished by the converting entity prior to the
 
12                conversion or by the converted entity after the
 
13                conversion on written request and without cost, to
 
14                any shareholder, partner, member, or owner of the
 
15                converting entity or the converted entity;
 
16      (2)  If the converting entity is a domestic corporation, the
 
17           number of shares outstanding and, if the shares of any
 
18           class or series are entitled to vote as a class, the
 
19           designation and number of outstanding shares of each
 
20           such class or series;
 
21      (3)  If the converting entity is a domestic corporation, the
 
22           number of shares outstanding that voted for and against
 
23           the plan, and, if the shares of any class or series are
 

 
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 1           entitled to vote as a class, the number of shares of
 
 2           each such class or series that voted for and against
 
 3           the plan; and
 
 4      (4)  If the converting entity is a foreign corporation or
 
 5           other entity, a statement that the approval of the plan
 
 6           of conversion was duly authorized and complied with the
 
 7           laws under which it was incorporated, formed, or
 
 8           organized.
 
 9      (b)  The articles of conversion shall be delivered to the
 
10 director.  If the converted entity is a domestic corporation, the
 
11 articles of incorporation shall also be delivered to the director
 
12 with the articles of conversion.
 
13      (c)  If the director finds that the articles of conversion
 
14 satisfy the requirements provided by law, and that all required
 
15 documents are filed, the director, after all fees have been paid,
 
16 shall:
 
17      (1)  Stamp the word "Filed" on the articles of conversion
 
18           and the date of the filing;
 
19      (2)  File the document in the director's office; and
 
20      (3)  Issue a certificate of conversion to the converted
 
21           entity or its authorized representatives.
 
22      415-C  Effective date of the conversion.  Upon the issuance
 
23 of the certificate of conversion by the director, the conversion
 

 
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 1 shall be effective.
 
 2      415-D  Effect of conversion.  (a)  When a conversion
 
 3 becomes effective:
 
 4      (1)  The converting entity shall continue to exist without
 
 5           interruption, but in the organizational form of the
 
 6           converted entity;
 
 7      (2)  All rights, title, and interest in all real estate and
 
 8           other property owned by the converting entity shall
 
 9           automatically be owned by the converted entity without
 
10           reversion or impairment, subject to any existing liens
 
11           or other encumbrances thereon;
 
12      (3)  All liabilities and obligations of the converting
 
13           entity shall automatically be liabilities and
 
14           obligations of the converted entity without impairment
 
15           or diminution due to the conversion;
 
16      (4)  The rights of creditors of the converting entity shall
 
17           continue against the converted entity and shall not be
 
18           impaired or extinguished by the conversion;
 
19      (5)  Any action or proceeding pending by or against the
 
20           converting entity may be continued by or against the
 
21           converted entity without any need for substitution of
 
22           parties;
 
23      (6)  The shares and other forms of ownership in the
 

 
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 1           converting entity that are to be converted into shares,
 
 2           or other forms of ownership, in the converted entity as
 
 3           provided in the plan of conversion shall be  converted,
 
 4           and if the converting entity is a domestic corporation,
 
 5           the shareholders of the domestic corporation shall be
 
 6           entitled only to the rights provided in the plan of
 
 7           conversion or to the rights to dissent under section
 
 8           415-80;
 
 9      (7)  A shareholder, partner, member, or other owner of the
 
10           converted entity shall be liable for the debts and
 
11           obligations of the converting entity that existed
 
12           before the conversion takes effect only to the extent
 
13           that such shareholder, partner, member, or other owner:
 
14           (A)  Agreed in writing to be liable for such debts or
 
15                obligations;
 
16           (B)  Was liable under applicable law prior to the
 
17                effective date of the conversion, for such debts
 
18                or obligations; or
 
19           (C)  Becomes liable under applicable law for existing
 
20                debts and obligations of the converted entity by
 
21                becoming a shareholder, partner, member, or other
 
22                owner of the converted entity;
 
23      (8)  If the converted entity is a foreign corporation or
 

 
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 1           other entity, the converted entity shall:
 
 2           (A)  Appoint a resident of this State, as its agent for
 
 3                service of process in a proceeding to enforce any
 
 4                obligation or the rights of dissenting
 
 5                shareholders of the converting domestic
 
 6                corporation; and
 
 7           (B)  Promptly pay the dissenting shareholders of the
 
 8                converting domestic corporation the amount, if
 
 9                any, to which they are entitled under section
 
10                415-81;
 
11           and
 
12      (9)  If the converting entity is a domestic corporation, the
 
13           provisions of sections 415-80 and 415-81 shall apply as
 
14           if the converted entity were the survivor of a merger
 
15           with the converting entity.
 
16      415-E  Definition of other entity.  For purposes of this
 
17 chapter, "other entity" includes a domestic or foreign non-profit
 
18 corporation, limited liability company, general partnership,
 
19 limited partnership, limited liability partnership, or a domestic
 
20 professional corporation."
 
21      SECTION 2.  Chapter 415A, Hawaii Revised Statutes, is
 
22 amended by adding five new sections to be designated
 
23 appropriately as follows:
 

 
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 1      "415A-    Conversion into and from professional
 
 2 corporations.  (a)  A professional corporation may adopt a plan
 
 3 of conversion and convert to any other entity if:
 
 4      (1)  The board of directors and shareholders of the
 
 5           professional corporation approve a plan of conversion
 
 6           in the manner prescribed by section 415-73 and the
 
 7           conversion is treated as a merger to which the
 
 8           converting entity is a party and not the surviving
 
 9           entity;
 
10      (2)  The conversion is permitted by and complies with the
 
11           laws of the state or country in which the converted
 
12           entity is to be incorporated, formed, or organized; and
 
13           the incorporation, formation, or organization of the
 
14           converted entity complies with such laws;
 
15      (3)  At the time the conversion becomes effective, each
 
16           shareholder of the converting entity, unless otherwise
 
17           agreed to by that shareholder, owns an equity interest
 
18           or other ownership interest in, and is a shareholder,
 
19           partner, member, owner, or other security holder of,
 
20           the converted entity;
 
21      (4)  The shareholders of the professional corporation, as a
 
22           result of the conversion, shall not become personally
 
23           liable without the shareholders' consent, for the
 

 
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 1           liabilities or obligations of the converted entity; and
 
 2      (5)  The converted entity is incorporated, formed, or
 
 3           organized as part of or pursuant to the plan of
 
 4           conversion.
 
 5      (b)  Any other entity may adopt a plan of conversion and
 
 6 convert to a professional corporation if the conversion is
 
 7 permitted by and complies with the laws under which the other
 
 8 entity is incorporated, formed, or organized.
 
 9      (c)  A plan of conversion shall set forth:
 
10      (1)  The name of the converting entity and the converted
 
11           entity;
 
12      (2)  A statement that the converting entity is continuing
 
13           its existence in the organizational form of the
 
14           converted entity;
 
15      (3)  A statement describing the organizational form of the
 
16           converted entity and the state or country under the
 
17           laws of which the converted entity is to be
 
18           incorporated, formed, or organized;
 
19      (4)  The manner and basis of converting the shares or other
 
20           forms of ownership of the converting entity into shares
 
21           or other forms of ownership of the converted entity, or
 
22           any combination thereof;
 
23      (5)  If the converted entity is a professional corporation,
 

 
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 1           the articles of incorporation of the professional
 
 2           corporation shall be attached; and
 
 3      (6)  If the converted entity is not a professional
 
 4           corporation, proof that the converted entity is
 
 5           registered in this State shall be attached.
 
 6      (d)  A plan of conversion may set forth any other provisions
 
 7 relating to the conversion that are not prohibited by law,
 
 8 including without limitation the initial bylaws and officers of
 
 9 the converted entity.
 
10      (e)  After a conversion of a professional corporation is
 
11 approved, and at any time before the conversion becomes
 
12 effective, the plan of conversion may be abandoned by the
 
13 professional corporation without shareholder action and in
 
14 accordance with the procedures set forth in the plan of
 
15 conversion or, if these procedures are not provided in the plan,
 
16 in the manner determined by the board of directors.  If articles
 
17 of conversion have been filed with the director but the
 
18 conversion has not become effective, the conversion may be
 
19 abandoned if a statement, executed on behalf of the converting
 
20 entity by an officer or other duly authorized representative and
 
21 stating that the plan of conversion has been abandoned in
 
22 accordance with applicable law, is filed with the director prior
 
23 to the effective date of the conversion.  If the director finds
 

 
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 1 that the statement satisfies the requirements provided by law,
 
 2 the director, after all fees have been paid shall:
 
 3      (1)  Stamp the word "Filed" on the statement and the date of
 
 4           the filing;
 
 5      (2)  File the document in the director's office; and
 
 6      (3)  Issue a certificate of abandonment to the converting
 
 7           entity or its authorized representatives.
 
 8      (f)  Once the statement provided in subsection (e) is filed
 
 9 with the director, the conversion shall be deemed abandoned and
 
10 shall not be effective.
 
11      415A-    Articles of conversion.  (a)  If a plan of
 
12 conversion has been approved in accordance with section 415-A and
 
13 has not been abandoned, articles of conversion shall be executed
 
14 by an by officer or other duly authorized representative of the
 
15 converting entity by and shall set forth:
 
16      (1)  A statement certifying the following:
 
17           (A)  The name, state, or country of incorporation,
 
18                formation, or organization of the converting
 
19                entity, and organizational form of the converting
 
20                entity;
 
21           (B)  That a plan of conversion has been approved in
 
22                accordance with section 415-A;
 
23           (C)  That an executed plan of conversion is on file at
 

 
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 1                the principal place of business of the converting
 
 2                entity and stating the address thereof; and
 
 3           (D)  That a copy of the plan of conversion shall be
 
 4                furnished by the converting entity prior to the
 
 5                conversion or by the converted entity after the
 
 6                conversion on written request and without cost, to
 
 7                any shareholder of the converting entity or the
 
 8                converted entity;
 
 9      (2)  If the converting entity is a professional corporation,
 
10           the number of shares outstanding and, if the shares of
 
11           any class or series are entitled to vote as a class,
 
12           the designation and number of outstanding shares of
 
13           each such class or series;
 
14      (3)  If the converting entity is a professional corporation,
 
15           the number of shares outstanding that voted for and
 
16           against the plan and, if the shares of any class or
 
17           series are entitled to vote as a class, the number of
 
18           shares of each such class or series that  voted for and
 
19           against the plan; and
 
20      (4)  If the converting entity is another entity, a statement
 
21           that the approval of the plan of conversion was duly
 
22           authorized and complied with the laws under which it
 
23           was incorporated, formed, or organized.
 

 
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 1      (b)  The articles of conversion shall be delivered to the
 
 2 director.  If the converted entity is a professional corporation,
 
 3 the articles of incorporation shall also be delivered to the
 
 4 director with the articles of conversion.
 
 5      (c)  If the director finds that the articles of conversion
 
 6 satisfy the requirements provided by law, and that all required
 
 7 documents are filed, the director, after all fees have been paid
 
 8 shall:
 
 9      (1)  Stamp the word "Filed" on the articles of conversion
 
10           and the date of the filing;
 
11      (2)  File the document in the director's office; and
 
12      (3)  Issue a certificate of conversion to the converted
 
13           entity or its authorized representatives.
 
14      415A-    Effective date of the conversion.  Upon the
 
15 issuance of the certificate of conversion by the director, the
 
16 conversion shall be effective.
 
17      415A-    Effect of conversion.  (a)  When a conversion
 
18 becomes effective:
 
19      (1)  The converting entity shall continue to exist without
 
20           interruption but in the organizational form of the
 
21           converted entity;
 
22      (2)  All rights, title, and interest in all real estate and
 
23           other property owned by the converting entity shall
 

 
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                                     H.B. NO.           H.D. 2
                                                        
                                                        

 
 1           automatically be owned by the converted entity without
 
 2           reversion or impairment, subject to any existing liens
 
 3           or other encumbrances thereon;
 
 4      (3)  All liabilities and obligations of the converting
 
 5           entity shall automatically be liabilities and
 
 6           obligations of the converted entity without impairment
 
 7           or diminution due to the conversion;
 
 8      (4)  The rights of creditors of the converting entity shall
 
 9           continue against the converted entity and shall not be
 
10           impaired or extinguished by the conversion;
 
11      (5)  Any action or proceeding pending by or against the
 
12           converting entity may be continued by or against the
 
13           converted entity without any need for substitution of
 
14           parties;
 
15      (6)  The shares and other forms of ownership in the
 
16           converting entity that are to be converted into shares
 
17           or other forms of ownership in the converted entity as
 
18           provided in the plan of conversion shall be converted,
 
19           and if the converting entity is a professional
 
20           corporation, the former shareholders of the
 
21           professional corporation shall be entitled only to the
 
22           rights provided in the plan of conversion or to the
 
23           rights to dissent under section 415-80;
 

 
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 1      (7)  A shareholder, partner, member, or other owner of the
 
 2           converted entity shall be liable for the debts and
 
 3           obligations of the converting entity that existed
 
 4           before the conversion takes effect only to the extent
 
 5           that such shareholder, partner, member, or other owner:
 
 6           (A)  Agreed in writing to be liable for such debts or
 
 7                obligations;
 
 8           (B)  Was liable under applicable law prior to the
 
 9                effective date of the conversion for such debts or
 
10                obligations; or
 
11           (C)  Becomes liable under applicable law for existing
 
12                debts and obligations of the converted entity by
 
13                becoming a shareholder, partner, member, or other
 
14                owner of the converted entity;
 
15      (8)  If the converted entity is a foreign corporation or
 
16           other entity, the converted entity shall:
 
17           (A)  Appoint a resident of this State as its agent for
 
18                service of process in a proceeding to enforce any
 
19                obligation or the rights of dissenting
 
20                shareholders of the converting domestic
 
21                corporation; and
 
22           (B)  Promptly pay the dissenting shareholders of the
 
23                converting domestic corporation the amount, if
 

 
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 1                any, to which they are entitled under section
 
 2                415-81;
 
 3           and
 
 4      (9)  If the converting entity is a professional corporation,
 
 5           the provisions of section 415-80 and 415-81 shall apply
 
 6           as if the converted entity were the survivor of a
 
 7           merger with the converting entity.
 
 8      415A-    Definition of other entity.  For purposes of this
 
 9 chapter, "other entity" includes a domestic or foreign
 
10 corporation, whether organized for profit or not, a domestic or
 
11 foreign limited liability company, general partnership, limited
 
12 partnership, or limited liability partnership."
 
13      SECTION 3.  Chapter 415B, part IV, Hawaii Revised Statutes,
 
14 is amended by adding five new sections to be appropriately
 
15 designated and to read as follows:
 
16                             "PART IV.
 
17           MERGERS [AND], CONSOLIDATIONS AND CONVERSIONS
 
18      415B-    Conversions into and from corporations.  (a)  A
 
19 domestic corporation may adopt a plan of conversion and convert
 
20 to a foreign corporation or any other entity if:
 
21      (1)  The board of directors and members of the domestic
 
22           corporation approve a plan of conversion in the manner
 
23           prescribed by section 415B-83 and if the conversion is
 

 
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 1           treated as a merger to which the converting entity is a
 
 2           party and not the surviving entity;
 
 3      (2)  The conversion is permitted by and complies with the
 
 4           laws of the state or country in which the converted
 
 5           entity is to be incorporated, formed, or organized; and
 
 6           the incorporation, formation, or organization of the
 
 7           converted entity complies with such laws;
 
 8      (3)  At the time the conversion becomes effective, each
 
 9           member of the converting entity, unless otherwise
 
10           agreed to by the member, or directors, owns an equity
 
11           interest or other ownership interest in, and is a
 
12           shareholder, partner, member, owner, or other security
 
13           holder of, the converted entity;
 
14      (4)  The members of the domestic corporation, as a result of
 
15           the conversion, shall not become personally liable
 
16           without the members' consent, for the liabilities or
 
17           obligations of the converted entity; and
 
18      (5)  The converted entity is incorporated, formed, or
 
19           organized as part of or pursuant to the plan of
 
20           conversion.
 
21      (b)  Any foreign corporation or other entity may adopt a
 
22 plan of conversion and convert to a domestic corporation if the
 
23 conversion is permitted by and complies with the laws of the
 

 
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 1 state or country in which the foreign corporation or other entity
 
 2 is incorporated, formed, or organized.
 
 3      (c)  A plan of conversion shall set forth:
 
 4      (1)  The name of the converting entity and the converted
 
 5           entity;
 
 6      (2)  A statement that the converting entity is continuing
 
 7           its existence in the organizational form of the
 
 8           converted entity;
 
 9      (3)  A statement describing the organizational form of the
 
10           converted entity and the state or country under the
 
11           laws of which the converted entity is to be
 
12           incorporated, formed, or organized;
 
13      (4)  The manner and basis of converting the shares or other
 
14           forms of ownership, of the converting entity into
 
15           shares or other forms of ownership, of the converted
 
16           entity, or any combination thereof;
 
17      (5)  If the converted entity is a domestic corporation, the
 
18           articles of incorporation of the domestic corporation
 
19           shall be attached; and
 
20      (6)  If the converted entity is not a domestic corporation,
 
21           proof that the converted entity is registered in this
 
22           State shall be attached; and
 
23      (7)  A plan of conversion may set forth any other provisions
 

 
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 1           relating to the conversion that are not prohibited by
 
 2           law, including without limitation the initial bylaws
 
 3           and officers of the converted entity.
 
 4      (e)  After a conversion of a domestic corporation is
 
 5 approved, and at any time before the conversion becomes
 
 6 effective, the plan of conversion may be abandoned by the
 
 7 domestic corporation in accordance with the procedures set forth
 
 8 in the plan of conversion or, if these procedures are not
 
 9 provided in the plan, in the manner determined by the board of
 
10 directors.  If articles of conversion have been filed with the
 
11 director but the conversion has not become effective, the
 
12 conversion may be abandoned if a statement, executed on behalf of
 
13 the converting entity by an officer or other duly authorized
 
14 representative and stating that the plan of conversion has been
 
15 abandoned in accordance with applicable law, is filed with the
 
16 director prior to the effective date of the conversion.  If the
 
17 director finds that the statement satisfies the requirements
 
18 provided by law, the director, after all fees have been paid
 
19 shall:
 
20      (1)  Stamp the word "Filed" on the statement and the date of
 
21           the filing;
 
22      (2)  File the document in the director's office; and
 
23      (3)  Issue a certificate of abandonment to the converting
 

 
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 1           entity or its authorized representatives.
 
 2      (f)  Once the statement provided in subsection (e) is filed
 
 3 with the director, the conversion shall be deemed abandoned and
 
 4 shall not be effective.
 
 5      415B-    Articles of conversion.  (a)  If a plan of
 
 6 conversion has been approved in accordance with section 415B-83
 
 7 and has not been abandoned, articles of conversion shall be
 
 8 executed by an officer or other duly authorized representative of
 
 9 the converting entity and shall set forth:
 
10      (1)  A statement certifying the following:
 
11           (A)  The name, state or country of incorporation,
 
12                formation, or organization of the converting
 
13                entity, and organizational form of the converting
 
14                entity;
 
15           (B)  That a plan of conversion has been approved;
 
16           (C)  That an executed plan of conversion is on file at
 
17                the principal place of business of the converting
 
18                entity and stating the address thereof; and
 
19           (D)  That a copy of the plan of conversion shall be
 
20                furnished by the converting entity prior to the
 
21                conversion or by the converted entity after the
 
22                conversion on written request and without cost, to
 
23                any member or director, as the case may be, of the
 

 
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 1                converting entity or the converted entity;
 
 2           and
 
 3      (2)  If the converting entity is a domestic or foreign
 
 4           corporation or other entity, a statement that the
 
 5           approval of the plan of conversion was duly authorized
 
 6           and complied with the laws under which it was
 
 7           incorporated, formed, or organized.
 
 8      (b)  The articles of conversion shall be delivered to the
 
 9 director.  If the converted entity is a domestic corporation the
 
10 articles of incorporation shall also be delivered to the director
 
11 with the articles of conversion.
 
12      (c)  If the director finds that the articles of conversion
 
13 satisfy the requirements provided by law, and that all required
 
14 documents are filed, the director, after all fees have been paid
 
15 shall:
 
16      (1)  Stamp the word "Filed" on the articles of conversion
 
17           and the date of the filing;
 
18      (2)  File the document in the director's office; and
 
19      (3)  Issue a certificate of conversion to the converted
 
20           entity or its authorized representatives.
 
21      415B-    Effective date of the conversion.  Upon the
 
22 issuance of the certificate of conversion by the director, the
 
23 conversion shall be effective.
 

 
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 1      415B-    Effect of conversion.  (a)  When a conversion
 
 2 becomes effective:
 
 3      (1)  The converting entity shall continue to exist without
 
 4           interruption, but in the organizational form of the
 
 5           converted entity;
 
 6      (2)  All rights, title, and interest in all real estate and
 
 7           other property owned by the converting entity shall
 
 8           automatically be owned by the converted entity without
 
 9           reversion or impairment, subject to any existing liens
 
10           or other encumbrances thereon;
 
11      (3)  All liabilities and obligations of the converting
 
12           entity shall automatically be liabilities and
 
13           obligations of the converted entity without impairment
 
14           or diminution due to the conversion;
 
15      (4)  The rights of creditors of the converting entity shall
 
16           continue against the converted entity and shall not be
 
17           impaired or extinguished by the conversion;
 
18      (5)  Any action or proceeding pending by or against the
 
19           converting entity may be continued by or against the
 
20           converted entity without any need for substitution of
 
21           parties;
 
22      (6)  The shares and other forms of ownership in the
 
23           converting entity that are to be converted into shares,
 

 
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                                     H.B. NO.           H.D. 2
                                                        
                                                        

 
 1           or other forms of ownership in the converted entity as
 
 2           provided in the plan of conversion shall be converted;
 
 3           and
 
 4      (7)  A shareholder, partner, member, or other owner of the
 
 5           converted entity shall be liable for the debts and
 
 6           obligations of the converting entity that existed
 
 7           before the conversion takes effect only to the extent
 
 8           that such shareholder, partner, member, or other owner:
 
 9           (A)  Agreed in writing to be liable for such debts or
 
10                obligations;
 
11           (B)  Was liable under applicable law prior to the
 
12                effective date of the conversion for such debts or
 
13                obligations; or
 
14           (C)  Becomes liable under applicable law for existing
 
15                debts and obligations of the converted entity by
 
16                becoming a shareholder, partner, member, or other
 
17                owner of the converted entity.
 
18      415B-    Definition of other entity.  For purposes of this
 
19 chapter, "other entity" includes a domestic or foreign
 
20 corporation, whether organized for profit or not, a domestic or
 
21 foreign limited liability company, general partnership, limited
 
22 partnership, limited liability partnership, or a domestic
 
23 professional corporation."
 

 
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                                     H.B. NO.           H.D. 2
                                                        
                                                        

 
 1      SECTION 4.  Chapter 425, part VI, Hawaii Revised Statutes,
 
 2 is amended by adding five new sections to be appropriately
 
 3 designated and to read as follows:
 
 4      "425-A  Conversion into and from partnerships or limited
 
 5 liability partnerships.  (a)  A domestic partnership or limited
 
 6 liability partnership may adopt a plan of conversion and convert
 
 7 to a foreign partnership, limited liability partnership, or any
 
 8 other entity if:
 
 9      (1)  The domestic partnership or limited liability
 
10           partnership acts on and its partners approve a plan of
 
11           conversion in the manner prescribed by sections 425-191
 
12           and 428-904 to 428-906 and the conversion is treated as
 
13           a merger to which the converting entity is a party and
 
14           not the surviving entity;
 
15      (2)  The conversion is permitted by and complies with the
 
16           laws of the state or country in which the converted
 
17           entity is to be incorporated, formed, or organized; and
 
18           the incorporation, formation, or organization of the
 
19           converted entity complies with such laws;
 
20      (3)  At the time the conversion becomes effective, each
 
21           partner of the converting entity, unless otherwise
 
22           agreed to by that partner, owns an equity interest or
 
23           other ownership interest in, and is a shareholder,
 

 
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                                     H.B. NO.           H.D. 2
                                                        
                                                        

 
 1           partner, member, owner, or other security holder of,
 
 2           the converted entity; and
 
 3      (4)  The converted entity shall be incorporated, formed, or
 
 4           organized as part of or pursuant to the plan of
 
 5           conversion.
 
 6      (b)  Any foreign partnership, limited liability partnership,
 
 7 or other entity may adopt a plan of conversion and convert to a
 
 8 domestic partnership or limited liability partnership if the
 
 9 conversion is permitted by and complies with the laws of the
 
10 state or country in which the foreign partnership, limited
 
11 liability partnership, or other entity is incorporated, formed or
 
12 organized.
 
13      (c)  A plan of conversion shall set forth:
 
14      (1)  The name of the converting entity and the converted
 
15           entity;
 
16      (2)  A statement that the converting entity is continuing
 
17           its existence in the organizational form of the
 
18           converted entity;
 
19      (3)  A statement describing the organizational form of the
 
20           converted entity and  the state or country under the
 
21           laws of which the converted entity is to be
 
22           incorporated, formed, or organized;
 
23      (4)  The manner and basis of converting the partnership
 

 
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                                     H.B. NO.           H.D. 2
                                                        
                                                        

 
 1           interests, or other forms of ownership of the
 
 2           converting entity into partnership interests, or other
 
 3           forms of ownership of the converted entity, or any
 
 4           combination thereof;
 
 5      (5)  If the converted entity is a domestic partnership or
 
 6           limited liability partnership, the registration
 
 7           statement of the domestic partnership or limited
 
 8           liability partnership shall be attached; and
 
 9      (6)  If the converted entity is not a domestic partnership,
 
10           or limited liability partnership, proof that the
 
11           converted entity is registered in this state shall be
 
12           attached.
 
13      (d)  A plan of conversion may set forth any other provisions
 
14 relating to the conversion that are not prohibited by law,
 
15 including without limitation the initial partnership or limited
 
16 liability partnership agreement of the converted entity if the
 
17 converted entity is a partnership or limited liability
 
18 partnership.
 
19      425-B  Articles of conversion.  (a)  If a plan of
 
20 conversion has been approved in accordance with the section 425-A
 
21 and has not been abandoned, articles of conversion shall be
 
22 executed by a partner, officer, or other duly authorized
 
23 representative of the converting entity and shall set forth:
 

 
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                                     H.B. NO.           H.D. 2
                                                        
                                                        

 
 1      (1)  A statement certifying the following:
 
 2           (A)  The name, the state or country of incorporation,
 
 3                formation, or organization of the converting
 
 4                entity and the organizational form of the
 
 5                converting entity;
 
 6           (B)  That a plan of conversion has been approved in
 
 7                accordance with section 425-A;
 
 8           (C)  That an executed plan of conversion is on file at
 
 9                the principal place of business of the converting
 
10                entity and stating the address thereof; and
 
11           (D)  That a copy of the plan of conversion shall be
 
12                furnished by the converting entity prior to the
 
13                conversion or the converted entity after the
 
14                conversion on written request and without cost, to
 
15                any partner, shareholder, owner or member of the
 
16                converting entity or the converted entity;
 
17           and
 
18      (2)  A statement that the approval of the plan of conversion
 
19           was duly authorized by all action required by the laws
 
20           under which the converting entity was incorporated,
 
21           formed, or organized.
 
22      (b)  The articles of conversion shall be delivered to the
 
23 director.
 

 
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                                     H.B. NO.           H.D. 2
                                                        
                                                        

 
 1      (c)  If the converted entity is a domestic partnership, the
 
 2 registration statement of the domestic partnership or limited
 
 3 liability partnership shall also be delivered to the director
 
 4 with the articles of conversion.
 
 5      425-C  Effective date of the conversion.  Upon the issuance
 
 6 of a certificate of conversion by the director, the conversion
 
 7 shall be effective.
 
 8      425-D  Effect of conversion.  (a)  When a conversion
 
 9 becomes effective:
 
10      (1)  The converting entity shall continue to exist without
 
11           interruption, but in the organizational form of the
 
12           converted entity;
 
13      (2)  All rights, title, and interest in all real estate and
 
14           other property owned by the converting entity shall
 
15           automatically be owned by the converted entity without
 
16           reversion or impairment, subject to any existing liens
 
17           or other encumbrances thereon;
 
18      (3)  All liabilities and obligations of the converting
 
19           entity shall automatically be liabilities and
 
20           obligations of the converted entity without impairment
 
21           or diminution due to the conversion;
 
22      (4)  The rights of creditors of the converting party shall
 
23           continue against the converted entity and shall not be
 

 
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                                     H.B. NO.           H.D. 2
                                                        
                                                        

 
 1           impaired or extinguished by the conversion;
 
 2      (5)  Any action or proceeding pending by or against the
 
 3           converting entity may be continued by or against the
 
 4           converted entity, without any need for substitution of
 
 5           parties;
 
 6      (6)  The partnership interests, and other forms of ownership
 
 7           in the converting entity that are to be converted into
 
 8           partnership interests, or other forms of ownership, in
 
 9           the converted entity as provided in the plan of
 
10           conversion shall be converted;
 
11      (7)  A shareholder, partner, member, or other owner of the
 
12           converted entity, shall be liable for the debts and
 
13           obligations of the converting entity that existed
 
14           before the conversion takes effect only to the extent
 
15           that such shareholder, partner, member, or other owner:
 
16           (A)  Agreed in writing to be liable for such debts or
 
17                obligations;
 
18           (B)  Was liable under applicable law prior to the
 
19                effective date of the conversion for such debts or
 
20                obligations; or
 
21           (C)  Becomes liable under applicable law for existing
 
22                debts and obligations of the converted entity by
 
23                becoming a shareholder, partner, member, or other
 

 
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 1                owner of the converted entity;
 
 2      (8)  If the converted entity is a foreign partnership,
 
 3           limited liability partnership or other entity, the
 
 4           converted entity shall appoint a resident of the State
 
 5           as its agent, for service of process in a proceeding to
 
 6           enforce any obligation or rights of dissenting partners
 
 7           of the converting domestic partnership or limited
 
 8           liability partnership; and
 
 9      (9)  If the converting partnership is a domestic
 
10           partnership, or limited liability partnership, the
 
11           provisions of section 425-191 shall apply as if the
 
12           converted entity were the survivor of a merger with the
 
13           converting entity.
 
14      425-E  Definition of other entity.  For purposes of this
 
15 chapter, "other entity" includes a domestic or foreign
 
16 corporation, whether organized for profit or not, a domestic or
 
17 foreign limited partnership, limited liability company, or
 
18 domestic professional corporation."
 
19      SECTION 5.  Chapter 425D, article 11, Hawaii Revised
 
20 Statutes, is amended by adding five new sections to be
 
21 appropriately designated as follows:
 
22      "425D-A  Conversion into or from limited partnerships.  (a)
 
23 A domestic limited partnership may adopt a plan of conversion and
 

 
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                                     H.B. NO.           H.D. 2
                                                        
                                                        

 
 1 convert to a foreign limited partnership or any other entity if:
 
 2      (1)  The domestic limited partnership acts on and its
 
 3           partners approve a plan of conversion in the manner
 
 4           prescribed by sections 425-191, 428-904 to 428-906, as
 
 5           if the conversion is treated as a merger to which the
 
 6           converting entity is a party and not the surviving
 
 7           entity;
 
 8      (2)  The conversion is permitted by and complies with the
 
 9           laws of the state or country in which the converted
 
10           entity is to be incorporated, formed, or organized; and
 
11           the incorporation, formation, or organization of the
 
12           converted entity complies with such laws;
 
13      (3)  At the time the conversion becomes effective, each
 
14           partner of the converting entity, unless otherwise
 
15           agreed to by that partner, owns an equity interest or
 
16           other ownership  interest in, and is a shareholder,
 
17           partner, member, owner, or other security holder of,
 
18           the converted entity; and
 
19      (4)  The converted entity shall be incorporated, formed, or
 
20           organized as part of or pursuant to the plan of
 
21           conversion.
 
22      (b)  Any foreign limited partnership or other entity may
 
23 adopt a plan of conversion and convert to a domestic limited
 

 
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                                     H.B. NO.           H.D. 2
                                                        
                                                        

 
 1 partnership if the conversion is permitted by and complies with
 
 2 the laws of the state or country in which the foreign limited
 
 3 partnership or other entity is incorporated, formed or organized.
 
 4      (c)  A plan of conversion shall set forth:
 
 5      (1)  The name of the converting entity and the converted
 
 6           entity;
 
 7      (2)  A statement that the converting entity is continuing
 
 8           its existence in the  organizational form of the
 
 9           converted entity;
 
10      (3)  A statement describing the organizational form of the
 
11           converted entity and the state or country under the
 
12           laws of which the converted entity is to be
 
13           incorporated, formed, or organized;
 
14      (4)  The manner and basis of converting the partnership
 
15           interests, or other forms of ownership of the
 
16           converting entity into partnership interests, or other
 
17           forms of ownership of the converted entity, or any
 
18           combination thereof;
 
19      (5)  If the converted entity is a domestic limited
 
20           partnership, the certificate of limited partnership
 
21           shall be attached; and
 
22      (6)  If the converted entity is not a domestic limited
 
23           partnership, proof that the converted entity is
 

 
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                                     H.B. NO.           H.D. 2
                                                        
                                                        

 
 1           registered in this State shall be attached.
 
 2      (d)  A plan of conversion may set forth any other provisions
 
 3 relating to the conversion that are not prohibited by law,
 
 4 including without limitation the initial partnership agreement of
 
 5 the converted entity.
 
 6      425D-B  Articles of conversion.  (a)  If a plan of
 
 7 conversion has been approved in accordance with the section 425D-
 
 8     and has not been abandoned, articles of conversion shall be
 
 9 executed by the a partner, officer, or other duly authorized
 
10 representative of the converting entity and shall set forth:
 
11      (1)  A statement certifying the following:
 
12           (A)  The name, the state or country of incorporation,
 
13                formation, or organization of the converting
 
14                entity, and the organizational form of the
 
15                converting entity;
 
16           (B)  That a plan of conversion has been approved in
 
17                accordance with section 425D-A;
 
18           (C)  That an executed plan of conversion is on file at
 
19                the principal place of business of the converting
 
20                entity and stating the address thereof;
 
21           (D)  That a copy of the plan of conversion shall be
 
22                furnished by the converting entity prior to the
 
23                conversion or the converted entity after the
 

 
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 1                conversion, on written request and without cost,
 
 2                to any limited partner of the converting entity or
 
 3                the converted entity;
 
 4           and
 
 5      (2)  A statement that the approval of the plan of conversion
 
 6           was duly authorized by all action required by the laws
 
 7           under which the converting entity was incorporated,
 
 8           formed, or organized;
 
 9      (b)  The articles of conversion shall be delivered to the
 
10 director.
 
11      (c)  If the converted entity is a domestic limited
 
12 partnership, the certificate of limited partnership shall also be
 
13 delivered to the director with the articles of conversion.
 
14      425D-C  Effective date of the conversion.  Upon the
 
15 issuance of a certificate of conversion by the director, the
 
16 conversion shall be effective.
 
17      425D-D  Effect of conversion.  (a)  When a conversion
 
18 becomes effective:
 
19      (1)  The converting entity shall continue to exist without
 
20           interruption, but in the organizational form of the
 
21           converted entity;
 
22      (2)  All rights, title, and interest in all real estate and
 
23           other property owned by the converting entity shall
 

 
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                                     H.B. NO.           H.D. 2
                                                        
                                                        

 
 1           automatically be owned by the converted entity without
 
 2           reversion or impairment, subject to any existing liens
 
 3           or other encumbrances thereon;
 
 4      (3)  All liabilities and obligations of the converting
 
 5           entity shall automatically be liabilities and
 
 6           obligations of the converted entity without impairment
 
 7           or diminution due to the conversion;
 
 8      (4)  The rights of creditors of the converting party shall
 
 9           against the converted party and shall not be impaired
 
10           or extinguished by the conversion;
 
11      (5)  Any action or proceeding pending by or against the
 
12           converting entity may be continued by or against the
 
13           converted entity without any need for substitution of
 
14           parties;
 
15      (6)  The partnership interests and other forms of ownership
 
16           in the converting entity that are to be converted into
 
17           partnership interests, and other forms of ownership, in
 
18           the converted entity as provided in the plan of
 
19           conversion shall be converted;
 
20      (7)  A shareholder, partner, member, or other owner of the
 
21           converted entity shall be liable for the debts and
 
22           obligations of the converting entity that existed
 
23           before the conversion takes effect only to the extent
 

 
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 1           that such shareholder, partner, member, or other owner:
 
 2           (A)  Agreed in writing to be liable for such debts or
 
 3                obligations, 
 
 4           (B)  Was liable under applicable law prior to the
 
 5                effective date of the conversion for such debts or
 
 6                obligations; or
 
 7           (C)  Becomes liable under applicable law for existing
 
 8                debts and obligations of the converted entity by
 
 9                becoming a shareholder, partner, member, or other
 
10                owner of the converted entity;
 
11      (8)  If the converted entity is a foreign limited
 
12           partnership or other entity, the converted entity shall
 
13           appoint a resident of this State as its agent for
 
14           service of process in a proceeding to enforce any
 
15           obligation or rights of dissenting limited partners of
 
16           the converting domestic limited partnership; and
 
17      (9)  If the converting partnership is a domestic limited
 
18           partnership, the provisions of section 425D-1109 shall
 
19           apply as if the converted entity were the survivor of a
 
20           merger with the converting entity.
 
21      425D-E  Definitions of other entity.  For purposes of this
 
22 chapter, "other entity" includes a domestic or foreign
 
23 corporation, whether organized for profit or not, a domestic or
 

 
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                                     H.B. NO.           H.D. 2
                                                        
                                                        

 
 1 foreign partnership, limited liability partnership, or limited
 
 2 liability company, or a professional corporation."
 
 3      SECTION 6.  Chapter 428, part IX, Hawaii Revised Statutes,
 
 4 is amended by adding two new sections to be appropriately
 
 5 designated and to read as follows:
 
 6      "428-A  Conversion into and from limited liability
 
 7 companies.  (a)  A domestic limited liability company may adopt a
 
 8 plan of conversion and convert to a foreign limited liability
 
 9 company or any other entity if:
 
10      (1)  The domestic limited liability company acts on and its
 
11           members approve a plan of conversion in the manner
 
12           prescribed by sections 428-904 to 428-906 and the
 
13           conversion is treated as a merger to which the
 
14           converting entity is a party and not the surviving
 
15           entity;
 
16      (2)  The conversion is permitted by, and complies with with,
 
17           the laws of the state or country in which the converted
 
18           entity is to be incorporated, formed, or organized; and
 
19           the incorporation, formation, or organization of the
 
20           converted entity complies with such laws;
 
21      (3)  At the time the conversion becomes effective, each
 
22           member of the  converting entity, unless otherwise
 
23           agreed to by that member, owns an equity interest or
 

 
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 1           other ownership interest in, and is a shareholder,
 
 2           partner, member, owner, or other security holder of,
 
 3           the converted entity;
 
 4      (4)  The members of the domestic limited liability company
 
 5           shall not, as a result of the conversion, become
 
 6           personally liable without the members' consent, for the
 
 7           liabilities or obligations of the converted entity; and
 
 8      (5)  The converted entity is incorporated, formed, or
 
 9           organized as part of or pursuant to the plan of
 
10           conversion.
 
11      (b)  Any foreign limited liability company or other entity
 
12 may adopt a plan of conversion and convert to a domestic limited
 
13 liability company if the conversion is permitted by and complies
 
14 with the laws of the state or country in which the foreign
 
15 corporation is incorporated, formed or organized.
 
16      (c)  A plan of conversion shall set forth:
 
17      (1)  The name of the converting entity and the converted
 
18           entity;
 
19      (2)  A statement that the converting entity is continuing
 
20           its existence in the organizational form of the
 
21           converted entity;
 
22      (3)  A statement describing the organizational form of the
 
23           converted entity and the state or country under the
 

 
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 1           laws of which the converted entity is to be
 
 2           incorporated, formed, or organized;
 
 3      (4)  The manner and basis of converting the shares or other
 
 4           forms of ownership of the converting entity into shares
 
 5           or other forms of ownership of the converted entity, or
 
 6           any combination thereof;
 
 7      (5)  If the converted entity is a domestic limited liability
 
 8           company the articles of organization of the domestic
 
 9           limited liability company shall be attached; and
 
10      (6)  If the converted entity is not a domestic limited
 
11           liability company, proof that the converted entity is
 
12           registered in this state shall be attached.
 
13      (d)  A plan of conversion may set forth any other provisions
 
14 relating to the conversion that are not prohibited by law,
 
15 including without limitation the initial bylaws and officers of
 
16 the converted entity.
 
17      (e)  After a conversion of a limited liability company is
 
18 approved, and at any time before the conversion becomes
 
19 effective, the plan of conversion may be abandoned by the
 
20 converting entity without member action and in accordance with
 
21 the procedures set forth in the plan of conversion or, if these
 
22 procedures are not provided in the plan of conversion, in the
 
23 manner determined by the members.  If articles of conversion have
 

 
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                                     H.B. NO.           H.D. 2
                                                        
                                                        

 
 1 been filed with the director but the conversion has not become
 
 2 effective, the conversion may be abandoned if a statement,
 
 3 executed on behalf of the converting entity by an officer or
 
 4 other duly authorized representative and stating that the plan of
 
 5 conversion has been abandoned in accordance with applicable law,
 
 6 is filed with the director prior to the effective date of the
 
 7 conversion.  If the director finds that the statement satisfies
 
 8 the requirements provided by law, the director, after all fees
 
 9 have been paid shall:
 
10      (1)  Stamp the word "Filed" on the statement and the date of
 
11           the filing;
 
12      (2)  File the document in the director's office; and
 
13      (3)  Issue a certificate of abandonment to the converting
 
14           entity or its authorized representatives.
 
15      (f)  Once the statement provided in subsection (e) is filed
 
16 with the director, the conversion shall be deemed abandoned and
 
17 shall not be effective.
 
18      428-B  Articles of conversion.  (a)  If a plan of
 
19 conversion has been approved in accordance with section 428-A and
 
20 has not been abandoned, articles of conversion shall be executed
 
21 by an officer or other duly authorized representative of the
 
22 converting entity by and shall set forth:
 
23      (1)  A statement certifying the following:
 

 
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 1           (A)  The name, state or country of incorporation,
 
 2                formation, or organization of the converting
 
 3                entity, and organizational form of the converting
 
 4                entity;
 
 5           (B)  That a plan of conversion has been approved:
 
 6           (C)  That an executed plan of conversion is on file at
 
 7                the principal place of business of the converting
 
 8                entity and stating the address thereof; and
 
 9           (D)  That a copy of the plan of conversion shall be
 
10                furnished by the converting entity prior to the
 
11                conversion or by the converted entity after the
 
12                conversion on written request and without cost, to
 
13                any member, shareholder, partner or owner of the
 
14                converting entity or the converted entity;
 
15      (2)  If the converting entity is a domestic limited
 
16           liability company, the total number of authorized
 
17           votes, and the number voted for and against the plan;
 
18           and
 
19      (3)  If the converting entity is a foreign limited liability
 
20           company or other entity, a statement that the approval
 
21           of the plan of conversion was duly authorized and
 
22           complied with the laws under which it was incorporated,
 
23           formed, or organized.
 

 
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 1      (b)  The articles of conversion shall be delivered to the
 
 2 director.  If the converted entity is a domestic limited
 
 3 liability company, the articles of organization of the domestic
 
 4 limited liability company, shall also be delivered to the
 
 5 director with the articles of conversion.
 
 6      (c)  If the director finds that the articles of conversion
 
 7 satisfy the requirements provided by law, and that all required
 
 8 documents are filed, the director shall, after all fees have been
 
 9 paid:
 
10      (1)  Stamp the word "Filed" on the articles of conversion
 
11           and the date of the filing;
 
12      (2)  File the document in the director's office; and
 
13      (3)  Issue a certificate of conversion to the converted
 
14           entity or its authorized representatives."
 
15      SECTION 7.  Section 415-128, Hawaii Revised Statutes, is
 
16 amended to read as follows:
 
17      "415-128  Fees for filing documents and issuing
 
18 certificates.  (a)  The following fees shall be paid to the
 
19 director upon the filing of corporate documents:
 
20      (1)  Articles of incorporation, $100;
 
21      (2)  Articles of amendment, $50;
 
22      (3)  Restated articles of incorporation, $50;
 
23      (4)  Articles of conversion, merger, or consolidation, $200;
 

 
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 1      (5)  Articles of merger (subsidiary corporation), $100;
 
 2      (6)  Articles of dissolution, $50;
 
 3      (7)  Annual report of domestic and foreign corporations
 
 4           organized for profit, $25;
 
 5      (8)  Any other statement, report, certificate,
 
 6           application,
 
 7           or other corporate document, except an annual
 
 8           report, of a domestic or foreign corporation, $50;
 
 9      (9)  Application for a certificate of authority, $100;
 
10     (10)  Application for a certificate of withdrawal, $50;
 
11     (11)  Reservation of corporate name, $20;
 
12     (12)  Transfer of reservation of corporate name, $20;
 
13     (13)  Good standing certificate, $25;
 
14     (14)  Special handling fee for review of corporation
 
15           documents, excluding articles of conversion, merger, or
 
16           consolidation, $50;
 
17     (15)  Special handling fee for review of articles of
 
18           conversion, merger, or consolidation,  $150;
 
19     (16)  Special handling fee for certificates issued by the
 
20           department, $20 per certificate; and
 
21     (17)  Special handling fee for certification of documents, $1
 
22           per page.
 
23      (b)  All special handling fees shall be credited to the
 

 
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                                     H.B. NO.           H.D. 2
                                                        
                                                        

 
 1 special fund established for use by the department in expediting
 
 2 the processing of documents.  At least two temporary business
 
 3 registration assistant I positions shall be paid out of the
 
 4 special fund.
 
 5      (c)  The director shall adjust the fees assessed under this
 
 6 section, as necessary from time to time, through rules adopted
 
 7 under chapter 91 to ensure that the proceeds, together with all
 
 8 other receipts of the special fund under this section do not
 
 9 surpass the annual operating costs of the program.  All
 
10 unexpended and unencumbered moneys remaining on balance with the
 
11 fund at the close of each fiscal year which are deemed, by the
 
12 director of finance, to be in excess of the moneys necessary to
 
13 carry out the processing of corporate documents over the next
 
14 following fiscal year shall lapse to the credit of the state
 
15 general fund."
 
16      SECTION 8.  Section 415B-155, Hawaii Revised Statutes, is
 
17 amended to read as follows:
 
18      "415B-155  Fees for filing documents and issuing
 
19 certificates.  (a)  The following fees shall be paid to the
 
20 director upon the filing of corporate documents:
 
21      (1)  Articles of incorporation, $50;
 
22      (2)  Articles  of amendment, $20;
 
23      (3)  Restated articles of incorporation, $20;
 

 
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 1      (4)  Articles of merger or consolidation, $100;
 
 2      (5)  Articles of conversion, $200;
 
 3      (6)  Articles of dissolution, $20;
 
 4     [(6)] (7)  Annual report of nonprofit domestic and foreign
 
 5           corporations, $5;
 
 6     [(7)] (8)  Any other statement, report, certificate,
 
 7           application, or other corporate document, except an
 
 8           annual report, of a nonprofit domestic or foreign
 
 9           corporation, $20;
 
10     [(8)] (9)  Application for a certificate of authority, $50;
 
11     [(9)] (10)  Application for a certificate of withdrawal, $20;
 
12    [(10)] (11)  Reservation of corporate name, $20;
 
13    [(11)] (12)  Transfer of reservation of corporate name, $20;
 
14    [(12)] (13)  Good standing certificate, $20;
 
15    [(13)] (14)  Special handling fee for review of corporation
 
16           documents, excluding articles of merger or
 
17           consolidation, $50;
 
18    [(14)] (15)  Special handling fee for review of articles of
 
19           conversion, merger, or consolidation, $150;
 
20    [(15)] (16)  Special handling fee for certificates issued by
 
21           the department, $20 per certificate; and
 
22    [(16)] (17)  Special handling fee for certification of
 
23           documents, $1 per page.
 

 
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 1      (b)  All special handling fees shall be credited to a
 
 2 special fund which may be established for use by the department
 
 3 in expediting the processing of documents.  At least two
 
 4 temporary business registration assistant I positions shall be
 
 5 paid out of the special fund."
 
 6      Section 9.  Section 425-12, Hawaii Revised Statutes, is
 
 7 amended to read as follows:
 
 8      "425-12  Fee for filing documents and issuing certificates.
 
 9 (a)  The following fees shall be paid to the director upon the
 
10 filing of general partnership documents:
 
11      (1)  Partnership registration statement, $25;
 
12      (2)  Partnership change of name statement, $25;
 
13      (3)  Partnership dissolution statement, $25;
 
14      (4)  Foreign general partnership registration statement,
 
15           $25;
 
16      (5)  Statement of change, $25;
 
17      (6)  Application of certificate of withdrawal, $10;
 
18      (7)  Statement of correction, $25;
 
19      (8)  Reservation of name, $20;
 
20      (9)  Transfer of reservation of name, $20;
 
21     (10)  Annual statement for domestic or foreign general
 
22           partnership, $10;
 
23     (11)  Good standing certificate, $25;
 

 
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 1     (12)  Articles of conversion, $200:
 
 2    [(12)] (13)  Any other statement, certificate, or other
 
 3           document for a domestic or foreign general partnership,
 
 4           $25;
 
 5    [(13)] (14)  Special handling fee for review of any general
 
 6           partnership document, $20;
 
 7    [(14)] (15)  Special handling fee for certificates issued by
 
 8           the director, $20 per certificate; [and]
 
 9    [(15)] (16)  Special handling fee for certification of
 
10           documents, $1 per page[.]; and
 
11     (17)  Special handling fee for review of articles of
 
12           conversion, $150.
 
13      (b)  All special handling fees shall be credited to the
 
14 special fund authorized by section 415-128."
 
15      SECTION 10.  Section 425-169, Hawaii Revised Statutes, is
 
16 amended to read as follows:
 
17      "[[]425-169[]]  Fee for recording.(a)  The director shall
 
18 collect the following fees for documents filed under this part:
 
19      (1)  For each change of partnership name or statement of
 
20           dissolution filed, a fee of $5 per partner, subject to
 
21           a maximum fee of $5,000;
 
22      (2)  For each annual statement filed, a fee of $50;
 
23      (3)  For each limited liability partnership registered, a
 

 
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 1           fee of $100 for each partner, subject to a maximum fee
 
 2           of $10,000;
 
 3      (4)  For each foreign limited liability partnership
 
 4           registered, a fee of $1,000 if the partnership has
 
 5           fewer than ten partners; $5,000 if the partnership has
 
 6           ten or more but fewer than fifty partners; and $10,00
 
 7           if the partnership has fifty or more partners;
 
 8      (5)  For each reservation or transfer of limited liability
 
 9           partnership name, a fee of $100;
 
10      (6)  For each certificate of correction or certificate of
 
11           amendment, a fee of $100;
 
12      (7)  For each certificate of good standing, a fee of $100;
 
13      (8)  For review of articles of conversion, a fee of $200;
 
14     [(8)] (9)  For any other certificate, statement, or document,
 
15           a fee of $100; and
 
16     [(9)] (10)  For each certification of domestic or foreign
 
17           partnership, a fee of $100.
 
18      (b)  The following special handling fees shall be assessed
 
19 by the director for expeditious review of the following
 
20 documents:
 
21      (1)  For limited liability partnerships:  certificate of
 
22           limited liability partnership, $100; certificate of
 
23           correction, $100; change of name statement, $100;
 

 
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 1           partnership dissolution statement, $100; annual
 
 2           statement, $100; certification of limited liability
 
 3           partnership, $1 a page; certificate of good standing,
 
 4           $100; articles of conversion, $150;
 
 5      (2)  For foreign limited liability partnerships:
 
 6           registration statement, $100; certificate of
 
 7           correction, $100; withdrawal application, $100; annual
 
 8           statement, $100; certification of foreign partnership,
 
 9           $1 a page; certificate of good standing, $100; filing
 
10           articles of conversion, $150; and
 
11      (3)  For any other certificate or document authorized by
 
12           this part, $100.
 
13      (c)  All special handling fees shall be credited to the
 
14 special fund authorized by section 415-128.  All other fees
 
15 collected under this section shall be engaged in accordance with
 
16 section 26-9(l)."
 
17      SECTION 11.  Section 425-191, Hawaii Revised Statutes, is
 
18 amended to read as follows:
 
19      "[[]425-191[]]  Merger [or conversion] of domestic general
 
20 and limited liability partnerships.  One of more domestic general
 
21 and limited liability partnerships may be [converted into or]
 
22 merged with a domestic limited liability company pursuant to
 
23 [section 428-902 or] sections 428-904 to 428-906, as the case may
 

 
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 1 be."
 
 2      SECTION 12.  Section 425D-1107, Hawaii Revised Statutes, is
 
 3 amended to read as follows:
 
 4      "425D-1107  Fee for filing documents and issuing
 
 5 certificates.  (a)  The following fees shall be paid to the
 
 6 director upon the filing of limited partnership documents:
 
 7      (1)  Certificate of limited partnership, $50;
 
 8      (2)  Any certificate of amendment, restatement, or
 
 9           correction, $20;
 
10      (3)  Certificate of cancellation, $20;
 
11      (4)  Annual statement for domestic or foreign limited
 
12           partnership, $10;
 
13      (5)  Any other certificate or document of domestic or
 
14           foreign limited partnership, $20;
 
15      (6)  Application for registration as a foreign limited
 
16           partnership, $100;
 
17      (7)  Any certificate of amendment or agent change for
 
18           foreign limited partnership, $20;
 
19      (8)  Application for certificate of withdrawal of foreign
 
20           limited partnership, $20;
 
21      (9)  Reservation of name, $20;
 
22     (10)  Transfer of reservation of name, $20;
 
23     (11)  Good standing certificate, $20;
 

 
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 1     (12)  Filing articles of conversion, $200;
 
 2     (13)  Special handling fee for review of articles of
 
 3           conversion, $150;
 
 4    [(12)] (14)  Special handling fee for review of any limited
 
 5           partnership document, $50;
 
 6    [(13)] (15)  Special handling of fee for certificates issued
 
 7           by the director, $20 per certificate; and
 
 8    [(14)] (16)  Special handling fee for certification of
 
 9           documents, $1 per page[.];
 
10      (b)  All special handling fees shall be credited to the
 
11 special fund authorized by section 415-128."
 
12      SECTION 13.  Section 425D-1109, Hawaii Revised Statutes, is
 
13 amended to read as follows:
 
14      "[[]425D-1109[]]  Merger [or conversion] of domestic
 
15 limited partnerships.  One or more domestic limited partnerships
 
16 may be [converted into or] merged with a domestic limited
 
17 liability company pursuant to [section 428-902 or] sections 428-
 
18 904 to 428-906, as the case may be."
 
19      SECTION 14.  Section 428-901, Hawaii Revised Statutes, is
 
20 amended by adding a new definition to be appropriately inserted
 
21 and to read as follows:
 
22      ""Other entity" includes a foreign or domestic corporation,
 
23 whether organized for profit or not, a domestic or foreign
 

 
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 1 partnership, limited partnership, or limited liability
 
 2 partnership, or a domestic professional corporation."
 
 3      SECTION 15.  Section 428-903, Hawaii Revised Statutes, is
 
 4 amended to read as follows:
 
 5      "[[]428-903[]]  Effect of conversion [;entity unchanged].
 
 6      [(a)  A general partnership or limited partnership that has
 
 7 been converted to a limited liability company pursuant to section
 
 8 428-902 shall be considered the same legal entity that existed
 
 9 prior to the conversion, the only change shall be the form in
 
10 which the legal entity now exists.
 
11      (b)  When the conversion takes effect:
 
12      (1)  All property owned by the converting general
 
13           partnerships or-limited partnerships is vested in the
 
14           limited liability company;
 
15      (2)  All debts, liabilities, and other obligations of the
 
16           converting general partnership or limited partnership
 
17           continue as obligations of the limited liability
 
18           company;
 
19      (3)  Any action or proceeding pending by or against the
 
20           converting general partnership or limited partnership
 
21           may be continue as if the conversion had not occurred
 
22           and the limited liability company may be substituted as
 
23           a party to the actions or proceeding;
 

 
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 1      (4)  Except as prohibited by other law, all the rights,
 
 2           privileges, immunities, powers, and purposes of the
 
 3           converting general partnership or limited partnership
 
 4           are vested in the limited liability company; and
 
 5      (5)  Except as otherwise provided in the agreement of the
 
 6           conversion under section 428-902(c), all of the
 
 7           partners of the converting general partnership or
 
 8           limited partnership shall continue as members of the
 
 9           limited liability company.]
 
10      (a)  When a conversion becomes effective:
 
11      (1)  The converting entity shall continue to exist without
 
12           interruption, but in the organizational form of the
 
13           converted entity;
 
14      (2)  All rights, title, and interest in all real estate and
 
15           other property owned by the converting entity shall
 
16           automatically be owned by the converted entity without
 
17           reversion or impairment, subject to any existing liens
 
18           or other encumbrances thereon;
 
19      (3)  All liabilities and obligations of the converting
 
20           entity shall automatically be liabilities and
 
21           obligations of the converted entity without impairment
 
22           or diminution due to the conversion;
 
23      (4)  The rights of creditors of the converting entity shall
 

 
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 1           continue against the converted entity and shall not be
 
 2           impaired or extinguished by the conversion;
 
 3      (5)  Any action or proceeding pending by or against the
 
 4           converting entity may be continued by or against the
 
 5           converted entity without any need for substitution of
 
 6           parties;
 
 7      (6)  The shares and other forms of ownership in the
 
 8           converting entity that are to be converted into shares,
 
 9           or other forms of ownership, or other securities in the
 
10           converted entity as provided in the plan of conversion
 
11           shall be converted, and if the converting entity is a
 
12           domestic limited liability company, the members of the
 
13           domestic limited liability company shall be entitled
 
14           only to the rights provided in the plan of conversion
 
15           or to the rights to dissent under section 415-80;
 
16      (7)  A shareholder, partner, member, or other owner of the
 
17           converted entity shall be liable for the debts and
 
18           obligations of the converting entity that existed
 
19           before the conversion takes effect only to the extent
 
20           that such shareholder, partner, member, or other owner:
 
21           (A)  Agreed in writing to be liable for such debts or
 
22                obligations;
 
23           (B)  Was liable under applicable law prior to the
 

 
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 1                effective date of the conversion, for such debts
 
 2                or obligations; or
 
 3           (C)  Becomes liable under applicable law for existing
 
 4                debts and obligations of the converted entity by
 
 5                becoming a shareholder, partner, member, or other
 
 6                owner of the converted entity;
 
 7      (8)  If the converted entity is a foreign limited liability
 
 8           company or other entity, such converted entity shall
 
 9           appoint a resident of this State as its agent for
 
10           service of process in a proceeding to enforce any
 
11           obligation or the rights of dissenting members of the
 
12           converting domestic limited liability company; and
 
13      (9)  If the converting entity is a domestic limited
 
14           liability company, the provisions of section 428-907
 
15           shall apply as if the converted entity were the
 
16           survivor of a merger with the converting entity.
 
17      (b)  Upon the issuance of the certificate of conversion by
 
18 the director, the conversion shall be effective."
 
19      SECTION 16.  Section , Hawaii Revised Statutes, is amended
 
20 to read as follows:
 
21      "[[]428-908[]]  Notice of conversion or merger of
 
22 partnership or limited partnership.  A partnership or limited
 
23 partnership which intends to be converted to a limited liability
 

 
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 1 company pursuant to [sections 428-902 and] section 428-903 or
 
 2 which intends to be party to a merger into a limited liability
 
 3 company pursuant to sections  428-905 to 428-907, shall:
 
 4      (1)  Publish, once in each of three successive weeks (three
 
 5           publications) in a newspaper of general circulation
 
 6           published in the State, notice thereof to the public,
 
 7           and
 
 8      (2)  Make reasonable efforts to give notice thereof in a
 
 9           reasonable manner to persons with whom the partnership
 
10           or limited partnership expects to have a continuing
 
11           business relationship as of the time of the conversion
 
12           or merger.  A partnership or limited partnership which
 
13           determines in a reasonable manner the persons to whom
 
14           such notice is given shall be in compliance with this
 
15           section even if notice is not received by all persons
 
16           with whom the partnership or limited partnership
 
17           conducted business prior to the conversion or merger or
 
18           by all persons with whom the limited liability conducts
 
19           business after the conversion."
 
20      SECTION 17.  Section 428-1301, Hawaii Revised Statues, is
 
21 amended to read as follows:
 
22      "428-1301.  Fees.  (a)  The following fees shall be paid to
 
23 the director upon the filing and issuance of records under this
 

 
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 1 chapter:
 
 2      (1)  Articles of organization, $100;
 
 3      (2)  Articles of amendment, $50;
 
 4      (3)  Restated articles of organization, $50;
 
 5      (4)  Articles of merger or conversion, $200;
 
 6      (5)  Statement of dissociation, $50;
 
 7      (6)  Articles of termination, $50;
 
 8      (7)  Application for reinstatement for administratively
 
 9           terminated limited liability company, $50;
 
10      (8)  Annual report, $25;
 
11      (9)  Statement of change of designated office or agent for
 
12           service of process, or both, for limited liability
 
13           company or foreign limited liability company, $50;
 
14     (10)  Statement of resignation of agent for service of
 
15           process, $50;
 
16     (11)  Any other statement of document of a domestic or
 
17           foreign limited liability company, $50;
 
18     (12)  Application for certificate of authority for foreign
 
19           limited liability company, $100;
 
20     (13)  Application for cancellation of authority of foreign
 
21           limited liability company, $50;
 
22     (14)  Reservation of name, $25;
 
23     (15)  Good standing certificate, $25;
 

 
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 1     (16)  Any other record not otherwise covered in this part,
 
 2           $50;
 
 3     (17)  Certified copy of any record relating to a limited
 
 4           liability company or foreign limited liability company,
 
 5           25 cents per page, and $10 for the certificate and
 
 6           affixing the seal thereto;
 
 7     (18)  Special handling fee for review of any record other
 
 8           than articles of merger[,] or conversion, $80;
 
 9     (19)  Special handling fee for review of articles of
 
10           merger[,] or conversion, $200;
 
11     (20)  Special handling fee for certificates issued by the
 
12           director not otherwise covered by this part, $10 per
 
13           certificate;
 
14     (21)  Special handling fee for certification of record, $1
 
15           per page; and
 
16     (22)  Any service of notice, demand, or process upon the
 
17           director as agent for service of process of a limited
 
18           liability company or foreign limited liability company,
 
19           $50, which amount may be recovered as taxable costs by
 
20           the party to the suit or action causing such service to
 
21           be made if such party prevails in the suit or action.
 
22      (b)  All special handling fees shall be credited to the
 
23 special fund authorized by section 415-128."
 

 
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 1      SECTION 18.  Section 428-902, Hawaii Revised Statutes, is
 
 2 repealed.
 
 3      ["[428-902]  Conversion of partnerships or limited
 
 4 partnerships to limited liability company.(a) A domestic
 
 5 partnership or domestic limited partnership may be converted into
 
 6 a domestic limited liability company pursuant to this section.
 
 7      (b)  The terms and conditions of a conversion of a
 
 8 partnership or limited partnership to a limited liability company
 
 9 shall be approved by all of the partners or by the number or
 
10 percentage of the partners required for conversion in the
 
11 partnership agreement.
 
12      (c)  An agreement of conversion approved under subsection
 
13 (b) shall set forth the terms and conditions of the conversion of
 
14 the interests of the general partners in the case of a general
 
15 partnership and the interests of the general partners and limited
 
16 partners in the case of limited partnership, being converted into
 
17 interests in the limited liability company and any cash or other
 
18 consideration to be paid or delivered as a result of the
 
19 conversion or any combination thereof.
 
20      (d)  Upon compliance with subsection (b) and section 428-
 
21 908, the general partnership or limited partnership shall file
 
22 articles or organization in the office of the director which
 
23 satisfy the requirements of section 428-203 and contain:
 

 
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 1      (1)  A statement that the general partnership or limited
 
 2           partnership was converted to a limited liability
 
 3           company;
 
 4      (2)  The name of the former partnership or limited
 
 5           partnership;
 
 6      (3)  A statement detailing the approvals by the general
 
 7           partners in the case of a general partnership
 
 8           conversion, and the general partners and limited
 
 9           partners in the case of a limited partnership
 
10           conversion, noting the respective votes taken required
 
11           to approve the conversion under subsection (b);
 
12      (4)  A statement of cancellation of the partnership
 
13           registration statement in the case of a general
 
14           partnership conversion, or statement of cancellation of
 
15           the certificate of limited partnership in the case of a
 
16           limited partnership conversion, specifying an effective
 
17           date as provided in subsection (f) if the effective
 
18           date is not to be the date of filing; and
 
19      (5)  A statement of compliance with section 428-908.
 
20      (e)  In the case of a general or limited partnership, the
 
21 filing of the articles of organization under subsection (d)
 
22 cancels the partnership registration statement or the certificate
 
23 of limited partnership.
 

 
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 1      (f)  A conversion becomes effective upon the filing of the
 
 2 articles of organization or upon the time and date subsequent to
 
 3 the filing as set forth in the articles but not more than thirty
 
 4 days after being filed.
 
 5      (g)  A general partner who becomes a member of a limited
 
 6 liability company as a result of a conversion remains liable as a
 
 7 general partner for any obligation incurred by the general
 
 8 partnership or limited partnership before the conversion has
 
 9 taken effect.  A general partner's liability for all obligations
 
10 of the limited liability company incurred after the conversion
 
11 becomes effective shall be that of a member of the limited
 
12 liability company.
 
13      (h)  A limited partner who becomes a member as a result of a
 
14 conversion remains liable only to the extent the limited partner
 
15 was liable for an obligation incurred by the limited partnership
 
16 before the conversion takes effect.]"
 
17      SECTION 19.  In codifying the new sections added by sections
 
18 1, 4, 5, and 6 of this Act, the revisor of statutes shall
 
19 substitute appropriate section numbers for the letters used in
 
20 the new sections designated in this Act.
 
21      SECTION 20.  Statutory material to be repealed is bracketed.
 
22 New statutory material is underscored.
 
23      SECTION 21.  This Act shall take effect on July 1, 2000.
 

 
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