REPORT TITLE:



DESCRIPTION:


 
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THE SENATE                              S.B. NO.           
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      "415-66  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 will, unless
 
19           otherwise agreed to by that shareholder, own an equity
 

 
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 1           interest or other ownership interest in, and be a
 
 2           shareholder, partner, member, owner, or other security
 
 3           holder of, the converted entity;
 
 4      (4)  The shareholders of the domestic corporation shall not,
 
 5           as a result of the conversion, 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 shall, after all
 
 9 fees have been paid:
 
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
 
17      and shall not be effective.
 
18       415-    Articles of conversion.  (a)  If a plan of
 
19 conversion has been approved in accordance with section 415-   
 
20 and has not been abandoned, articles of conversion shall be
 
21 executed by an officer or other duly authorized representative of
 
22 the converting entity and shall set forth:
 
23      (1)  A statement certifying the following:
 
24           (A)  The name, state, or country of incorporation,
 
25                formation, or organization of the converting
 
26                entity, and organizational form of the converting
 
27                entity;
 
28           (B)  That a plan of conversion has been approved in
 
29                accordance with section 415-  ;
 
30           (C)  That an executed plan of conversion is on file at
 
31                the principal place of business of the converting
 
32                entity and stating the address thereof; and
 
33           (D)  That a copy of the plan of conversion shall be
 
34                furnished by the converting entity prior to the
 
35                conversion or by the converted entity after the
 
36                conversion on written request and without cost, to
 
37                any shareholder, partner, member, or owner of the
 
38                converting entity or the converted entity;
 
39      (2)  If the converting entity is a domestic corporation, the
 
40           number of shares outstanding and, if the shares of any
 
41           class or series are entitled to vote as a class, the
 
42           designation and number of outstanding shares of each
 
43           such class or series;
 
44      (3)  If the converting entity is a domestic corporation, the
 
45           number of shares outstanding that voted for and against
 
46           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-    Effective date of the conversion.  Upon the
 
23 issuance of the certificate of conversion by the director, the
 
24 conversion shall be effective.
 

 
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 1      415-    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
 

 
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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 415-
 
10                81; and
 
11      (9)  If the converting entity is a domestic corporation, the
 
12           provisions of sections 415-80 and 415-81 shall apply as
 
13           if the converted entity were the survivor of a merger
 
14           with the converting entity.
 
15      415-   Definition of other entity.  For purposes of this
 
16 chapter, "other entity" means and includes a domestic or foreign
 
17 non-profit corporation, limited liability company, general
 
18 partnership, limited partnership, or limited liability
 
19 partnership, or a domestic professional corporation."
 
20      SECTION 2.  Chapter 415A, Hawaii Revised Statutes, is
 
21 amended by adding five new sections to be designated
 
22 appropriately as follows:
 
23      "415A-    Conversion in to and from professional
 
24 corporations. (a)  A professional corporation may adopt a plan of
 
25 conversion and convert to any other entity if:
 
26      (1)  The board of directors and shareholders of the
 
27           professional corporation approve a plan of conversion
 
28           in the manner prescribed by section 415-73 and the
 
29           conversion is treated as a merger to which the
 
30           converting entity is a party and not the surviving
 
31           entity;
 
32      (2)  The conversion is permitted by, and complies with the
 
33           laws of the state or country in which the converted
 
34           entity is to be incorporated, formed, or organized; and
 
35           the incorporation, formation, or organization of
 
36           the converted entity complies with such laws;
 
37      (3)  At the time the conversion becomes effective, each
 
38           shareholder of the converting entity, unless otherwise
 
39           agreed to by that shareholder, will own an equity
 
40           interest or other ownership interest in, and be a
 
41           shareholder, partner, member, owner, or other security
 
42           holder of, the converted entity;
 
43      (4)  The shareholders of the professional corporation shall
 
44           not, as a result of the conversion, become personally
 
45           liable without the shareholders' consent, for the
 
46           liabilities or obligations of the converted entity; and
 
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 1      (5)  The converted entity is incorporated, formed, or
 
 2           organized as part of or pursuant to the plan of
 
 3           conversion.
 
 4      (b)  Any other entity may adopt a plan of conversion and
 
 5 convert to a professional corporation if the conversion is
 
 6 permitted by and complies with the laws under which the other
 
 7 entity is incorporated, formed, or organized.
 
 8      (c)  A plan of conversion shall set forth:
 
 9      (1)  The name of the converting entity and the converted
 
10           entity;
 
11      (2)  A statement that the converting entity is continuing
 
12           its existence in the organizational form of the
 
13           converted entity;
 
14      (3)  A statement describing the organizational form of the
 
15           converted entity and the state or country under the
 
16           laws of which the converted entity is to be
 
17           incorporated, formed, or organized;
 
18      (4)  The manner and basis of converting the shares or other
 
19           forms of ownership of the converting entity into shares
 
20           or other forms of ownership of the converted entity, or
 
21           any combination thereof;
 
22      (5)  If the converted entity is a professional corporation,
 
23           the articles of incorporation of the professional
 

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

 
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 1      (1)  Stamp the word "Filed" on the statement and the date of
 
 2           the filing;
 
 3      (2)  File the document in the director's office; and
 
 4      (3)  Issue a certificate of abandonment to the converting
 
 5           entity or its authorized representatives.
 
 6      (f)  Once the statement provided in subsection (e) is filed
 
 7 with the director, the conversion shall be deemed abandoned and
 
 8 shall not be effective.
 
 9      415A-    Articles of conversion.  (a)  If a plan of
 
10 conversion has been approved in accordance with section 415-66
 
11 and has not been abandoned, articles of conversion shall be
 
12 executed by an by officer or other duly authorized representative
 
13 of the converting entity by and shall set forth:
 
14      (1)  A statement certifying the following:
 
15           (A)  The name, state, or country of incorporation,
 
16                formation, or organization of the converting
 
17                entity, and organizational form of the converting
 
18                entity;
 
19           (B)  That a plan of conversion has been approved in
 
20                accordance with section 415-  ;
 
21           (C)  That an executed plan of conversion is on file at
 
22                the principal place of business of the converting
 

 
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 1                entity and stating the address thereof; and
 
 2           (D)  That a copy of the plan of conversion shall be
 
 3                furnished by the converting entity prior to the
 
 4                conversion or by the converted entity after the
 
 5                conversion on written request and without cost, to
 
 6                any shareholder of the converting entity or the
 
 7                converted entity;
 
 8      (2)  If the converting entity is a professional corporation,
 
 9           the number of shares outstanding and, if the shares of
 
10           any class or series are entitled to vote as a class,
 
11           the designation and number of outstanding shares of
 
12           each such class or series;
 
13      (3)  If the converting entity is a professional corporation,
 
14           the number of shares outstanding, that voted for and
 
15           against the plan and, if the shares of any class or
 
16           series are entitled to vote as a class, the number of
 
17           shares of each such class or series that  voted for and
 
18           against the plan; and
 
19      (4)  If the converting entity is another entity, a statement
 
20           that the approval of the plan of conversion was duly
 
21           authorized and complied with the laws under which it
 
22           was incorporated, formed, or organized.
 
23      (b)  The articles of conversion shall be delivered to the
 
24 director.  If the converted entity is a professional corporation,
 
25 the articles of incorporation shall also be delivered to the
 
26 director with the articles of conversion.
 
27      (c)  If the director finds that the articles of conversion
 
28           satisfy the requirements provided by law, and that all
 
29           required documents are filed, the director shall, after
 
30           all fees have been paid:
 
31      (1)  Stamp the word "Filed" on the articles of conversion
 
32           and the date of the filing;
 
33      (2)  File the document in the director's office; and
 
34      (3)  Issue a certificate of conversion to the converted
 
35           entity or its authorized representatives.
 
36      415A-    Effective date of the conversion.  Upon the
 
37 issuance of the certificate of conversion by the director, the
 
38 conversion shall be effective.
 
39      415A-    Effect of conversion.  (a)  When a conversion
 
40 becomes effective:
 
41      (1)  The converting entity shall continue to exist without
 
42           interruption but in the organizational form of the
 
43           converted entity;
 
44      (2)  All rights, title, and interest in all real estate and
 
45           other property owned by the converting entity shall
 
46           automatically be owned by the converted entity without
 
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 1           reversion or impairment, subject to any existing liens
 
 2           or other encumbrances thereon;
 
 3      (3)  All liabilities and obligations of the converting
 
 4           entity shall automatically be liabilities and
 
 5           obligations of the converted entity without impairment
 
 6           or diminution due to the conversion;
 
 7      (4)  The rights of creditors of the converting entity shall
 
 8           continue against the converted entity and shall not be
 
 9           impaired or extinguished by the conversion;
 
10      (5)  Any action or proceeding pending by or against the
 
11           converting entity may be continued by or against the
 
12           converted entity without any need for substitution of
 
13           parties;
 
14      (6)  The shares and other forms of ownership in the
 
15           converting entity that are to be converted into shares
 
16           or other forms of ownership in the converted entity as
 
17           provided in the plan of conversion shall be converted,
 
18           and if the converting entity is a professional
 
19           corporation, the former shareholders of the
 
20           professional corporation shall be entitled only to the
 
21           rights provided in the plan of conversion or to the
 
22           rights to dissent under section 415-80;
 
23      (7)  A shareholder, partner, member, or other owner of the
 

 
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 1           converted entity shall be liable for the debts and
 
 2           obligations of the converting entity that existed
 
 3           before the conversion takes effect only to the extent
 
 4           that such shareholder, partner, member, or other owner:
 
 5           (A)  Agreed in writing to be liable for such debts or
 
 6                obligations;
 
 7           (B)  Was liable under applicable law prior to the
 
 8                effective date of the conversion for such debts or
 
 9                obligations; or
 
10           (C)  Becomes liable under applicable law for existing
 
11                debts and obligations of the converted entity by
 
12                becoming a shareholder, partner, member, or other
 
13                owner of the converted entity;
 
14      (8)  If the converted entity is a foreign corporation or
 
15           other entity, the converted entity shall:
 
16           (A)  Appoint a resident of this State, as its agent for
 
17                service of process in a proceeding to enforce any
 
18                obligation or the rights of dissenting
 
19                shareholders of the converting domestic
 
20                corporation; and
 
21           (B)  Promptly pay the dissenting shareholders of the
 
22                converting domestic corporation the amount, if
 
23                any, to which they are entitled under section 415-
 

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

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

 
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 1      (c)  A plan of conversion shall set forth:
 
 2      (1)  The name of the converting entity and the converted
 
 3           entity;
 
 4      (2)  A statement that the converting entity is continuing
 
 5           its existence in the organizational form of the
 
 6           converted entity;
 
 7      (3)  A statement describing the organizational form of the
 
 8           converted entity and the state or country under the
 
 9           laws of which the converted entity is to be
 
10           incorporated, formed, or organized;
 
11      (4)  The manner and basis of converting the shares or other
 
12           forms of ownership, of the converting entity into
 
13           shares or other forms of ownership, of the converted
 
14           entity, or any combination thereof;
 
15      (5)  If the converted entity is a domestic corporation, the
 
16           articles of incorporation of the domestic corporation
 
17           shall be attached; and
 
18      (6)  If the converted entity is not a domestic corporation,
 
19           proof that the converted entity is registered in this
 
20           State shall be attached.
 
21      (d)  A plan of conversion may set forth any other provisions
 
22 relating to the conversion that are not prohibited by law,
 
23 including without limitation the initial bylaws and officers of
 
24 the converted entity.
 

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

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

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

 
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                                     S.B. NO.           
                                                        
                                                        

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

 
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 1           obligations of the converting entity that existed
 
 2           before the conversion takes effect only to the extent
 
 3           that such shareholder, partner, member, or other owner:
 
 4           (A)  Agreed in writing to be liable for such debts or
 
 5                obligations;
 
 6           (B)  Was liable under applicable law prior to the
 
 7                effective date of the conversion for such debts or
 
 8                obligations; or
 
 9           (C)  Becomes liable under applicable law for existing
 
10                debts and obligations of the converted entity by
 
11                becoming a shareholder, partner, member, or other
 
12                owner of the converted entity.
 
13      415B-    Definition of other entity.  For purposes of this
 
14 chapter, "other entity" means and includes a domestic or foreign
 
15 corporation, whether organized for profit or not, a domestic or
 
16 foreign limited liability company, general partnership, limited
 
17 partnership, or limited liability partnership, or a domestic
 
18 professional corporation."
 
19      SECTION 4.  Chapter 425, Part VI, Hawaii Revised Statutes,
 
20 is amended by adding new sections to be appropriately designated
 
21 and to read as follows:
 
22      "425-    Conversion into and from partnerships or limited
 
23 liability partnerships.
 

 
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                                     S.B. NO.           
                                                        
                                                        

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

 
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 1           conversion.
 
 2      (b)  Any foreign partnership, limited liability partnership
 
 3 or other entity may adopt a plan of conversion and convert to a
 
 4 domestic partnership or limited liability partnership if the
 
 5 conversion is permitted by and complies with the laws of the
 
 6 state or country in which the foreign partnership, limited
 
 7 liability partnership, or other entity is incorporated, formed or
 
 8 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 partnership
 
20           interests, or other forms of ownership of the
 
21           converting entity into partnership interests, or other
 
22           forms of ownership of the converted entity, or any
 
23           combination thereof;
 

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

 
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                                     S.B. NO.           
                                                        
                                                        

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

 
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 1      425-    Effective date of the conversion.  Upon the
 
 2 issuance of a certificate of conversion by the director, the
 
 3 conversion shall be effective.
 
 4      425-    Effect of conversion.  (a) When a conversion
 
 5 becomes effective:
 
 6      (1)  The converting entity shall continue to exist without
 
 7           interruption, but in the organizational form of the
 
 8           converted entity;
 
 9      (2)  All rights, title, and interest in all real estate and
 
10           other property owned by the converting entity shall
 
11           automatically be owned by the converted entity without
 
12           reversion or impairment, subject to any existing liens
 
13           or other encumbrances thereon;
 
14      (3)  All liabilities and obligations of the converting
 
15           entity shall automatically be liabilities and
 
16           obligations of the converted entity without impairment
 
17           or diminution due to the conversion;
 
18      (4)  The rights of creditors of the converting party shall
 
19           continue against the converted entity and shall not be
 
20           impaired or extinguished by the conversion;
 
21      (5)  Any action or proceeding pending by or against the
 
22           converting entity may be continued by or against the
 
23           converted entity, without any need for substitution of
 

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

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

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

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

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

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

 
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 1           entity shall automatically be liabilities and
 
 2           obligations of the converted entity without impairment
 
 3           or diminution due to the conversion;
 
 4      (4)  The rights of creditors of the converting party shall
 
 5           against the converted party and shall not be impaired
 
 6           or extinguished by the conversion;
 
 7      (5)  Any action or proceeding pending by or against the
 
 8           converting entity may be continued by or against the
 
 9           converted entity without any need for substitution of
 
10           parties;
 
11      (6)  The partnership interests and other forms of ownership
 
12           in the converting entity that are to be converted into
 
13           partnership interests, and other forms of ownership, in
 
14           the converted entity as provided in the plan of
 
15           conversion shall be converted;
 
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, or
 
23           (B)  Was liable under applicable law prior to the
 

 
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                                     S.B. NO.           
                                                        
                                                        

 
 1                effective date of the conversion for such debts or
 
 2                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
 
 8           partnership or other entity, the 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 rights of dissenting limited partners of
 
12           the converting domestic limited partnership; and
 
13      (9)  If the converting partnership is a domestic limited
 
14           partnership, the provisions of section 425D-1109 shall
 
15           apply as if the converted entity were the survivor of a
 
16           merger with the converting entity.
 
17      425D-    Definitions of other entity.  For purposes of this
 
18 chapter; "other entity" means and includes a domestic or foreign
 
19 corporation, whether organized for profit or not, a domestic or
 
20 foreign partnership, limited liability partnership, or limited
 
21 liability company, or a professional corporation."
 
22      SECTION 6.  Chapter 428, Part IX, Hawaii Revised Statutes,
 
23 is amended by adding two new sections to be appropriately
 

 
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 1 designated and to read as follows:
 
 2      "428-    Conversion into and from limited liability
 
 3 companies.  (a) A domestic limited liability company may adopt a
 
 4 plan of conversion and convert to a foreign limited liability
 
 5 company or any other entity if:
 
 6      (1)  The domestic limited liability company acts on and its
 
 7           members approve a plan of conversion in the manner
 
 8           prescribed by sections 428-904 to 428-906 and the
 
 9           conversion is treated as a merger to which the
 
10           converting entity is a party and not the surviving
 
11           entity;
 
12      (2)  The conversion is permitted by, and complies with with,
 
13           the 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           member of the  converting entity will, unless otherwise
 
19           agreed to by that member, own an equity interest or
 
20           other ownership interest in, and be a shareholder,
 
21           partner, member, owner, or other security holder of,
 
22           the converted entity;
 
23      (4)  The members of the domestic limited liability company
 

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

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

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

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

 
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 1      (c)  If the director finds that the articles of conversion
 
 2 satisfy the requirements provided by law, and that all required
 
 3 documents are filed, the director shall, after all fees have been
 
 4 paid:
 
 5      (1)  Stamp the word "Filed" on the articles of conversion
 
 6           and the date of the filing;
 
 7      (2)  File the document in the director's office; and
 
 8      (3)  Issue a certificate of conversion to the converted
 
 9           entity or its authorized representatives."
 
10      SECTION 7.  Section 415-128, Hawaii Revised Statutes, is
 
11 amended to read as follows:
 
12      "415-128  Fees for filing documents and issuing
 
13 certificates.  (a)  The following fees shall be paid to the
 
14 director upon the filing of corporate documents:
 
15      (1)  Articles of incorporation, $100;
 
16      (2)  Articles of amendment, $50;
 
17      (3)  Restated articles of incorporation, $50;
 
18      (4)  Articles of conversion, merger or consolidation, $200;
 
19      (5)  Articles of merger (subsidiary corporation), $100;
 
20      (6)  Articles of dissolution, $50;
 
21      (7)  Annual report of domestic and foreign corporations
 
22           organized for profit, $25;
 

 
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 1      (8)  Any other statement, report, certificate,
 
 2           application,
 
 3           or other corporate document, except an annual
 
 4           report, of a domestic or foreign corporation, $50;
 
 5      (9)  Application for a certificate of authority, $100;
 
 6     (10)  Application for a certificate of withdrawal, $50;
 
 7     (11)  Reservation of corporate name, $20;
 
 8     (12)  Transfer of reservation of corporate name, $20;
 
 9     (13)  Good standing certificate, $25;
 
10     (14)  Special handling fee for review of corporation
 
11           documents, excluding articles of conversion, merger or
 
12           consolidation, $50;
 
13     (15)  Special handling fee for review of articles of
 
14           conversion, merger or consolidation,  $150;
 
15     (16)  Special handling fee for certificates issued by the
 
16           department, $20 per certificate; and
 
17     (17)  Special handling fee for certification of documents, $1
 
18           per page.
 
19      (b)  All special handling fees shall be credited to the
 
20 special fund established for use by the department in expediting
 
21 the processing of documents.  At least two temporary business
 
22 registration assistant I positions shall be paid out of the
 
23 special fund.
 
24      (c)  The director shall adjust the fees assessed under this
 

 
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 1 section, as necessary from time to time, through rules adopted
 
 2 under chapter 91 to ensure that the proceeds, together with all
 
 3 other receipts of the special fund under this section do not
 
 4 surpass the annual operating costs of the program.  All
 
 5 unexpended and unencumbered moneys remaining on balance with the
 
 6 fund at the close of each fiscal year which are deemed, by the
 
 7 director of finance, to be in excess of the moneys necessary to
 
 8 carry out the processing of corporate documents over the next
 
 9 following fiscal year shall lapse to the credit of the state
 
10 general fund."
 
11      SECTION 8.  Section 415B-155, Hawaii Revised Statutes, is
 
12 amended to read as follows:
 
13      "415B-155  Fees for filing documents and issuing
 
14 certificates. (a) The following fees shall be paid to the
 
15 director upon the filing of corporate documents:
 
16        (1)  Articles of incorporation, $50;
 
17        (2)  Articles  of amendment, $20;
 
18        (3)  Restated articles of incorporation, $20;
 
19        (4)  Articles of merger or consolidation, $100;
 
20        (5)  Articles of conversion, $200;
 
21 [(5)]  (6)  Articles of dissolution, $20;
 
22 [(6)]  (7)  Annual report of nonprofit domestic and foreign
 
23             corporations, $5;
 

 
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 1 [(7)]  (8)  Any other statement, report, certificate,
 
 2             application, or other corporate document, except an
 
 3             annual report, of a nonprofit domestic or foreign
 
 4             corporation, $20;
 
 5 [(8)]  (9)  Application for a certificate of authority, $50;
 
 6 [(9)] (10)  Application for a certificate of withdrawal, $20;
 
 7 [(10)](11)  Reservation of corporate name, $20;
 
 8 [(11)](12)  Transfer of reservation of corporate name, $20;
 
 9 [(12)](13)  Good standing certificate, $20;
 
10 [(13)](14)  Special handling fee for review of corporation
 
11             documents, excluding articles of merger or
 
12             consolidation, $50;
 
13 [(14)](15)  Special handling fee for review of articles of
 
14             conversion, merger or consolidation, $150;
 
15 [(15] (16)  Special handling fee for certificates issued by the
 
16             department, $20 per certificate; and
 
17 [(16)](17)  Special handling fee for certification of documents,
 
18             $1 per page."
 
19      SECTION 9.  Section 425-12, Hawaii Revised Statutes, is
 
20 amended to read as follows:
 
21      "425-12  Fee for filing documents and issuing certificates.
 
22 (a) The following fees shall be paid to the director upon the
 
23 filing of general partnership documents:
 

 
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 1      (1)  Partnership registration statement, $25;
 
 2      (2)  Partnership change of name statement, $25;
 
 3      (3)  Partnership dissolution statement, $25;
 
 4      (4)  Foreign general partnership registration statement,
 
 5           $25;
 
 6      (5)  Statement of change, $25;
 
 7      (6)  Application of certificate of withdrawal, $10;
 
 8      (7)  Statement of correction, $25;
 
 9      (8)  Reservation of name, $20;
 
10      (9)  Transfer of reservation of name, $20;
 
11      (10) Annual statement for domestic or foreign general
 
12           partnership, $10;
 
13      (11) Good standing certificate, $25;
 
14      (12) Articles of conversion, $200:
 
15     [(12)] (13)  Any other statement, certificate, or other
 
16            document for a domestic or foreign general
 
17            partnership, $25;
 
18     [(13)] (14)  Special handling fee for review of any general
 
19            partnership document, $20;
 
20     [(14)] (15)  Special handling fee for certificates issued by
 
21            the director, $20 per certificate; and
 
22     [(15)] (16)  Special handling fee for certification of
 
23            documents, $1 per page; and
 

 
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 1      (17)  Special handling fee for review of articles of
 
 2            conversion, $150.
 
 3      (b)  All special handling fees shall be credited to the
 
 4 special fund authorized by section 415-128."
 
 5      SECTION 10.  Section 425-169, Hawaii Revised Statutes, is
 
 6 amended to read as follows:
 
 7      "425-169  Fee for recording.(a)  The director shall
 
 8 collect the following fees for documents filed under this part:
 
 9      (1)   For each change of partnership name or statement of
 
10            dissolution filed, a fee of $5 per partner, subject to
 
11            a maximum fee of $5,000;
 
12      (2)   For each annual statement filed, a fee of $50;
 
13      (3)   For each limited liability partnership registered, a
 
14            fee of $100 for each partner, subject to a maximum fee
 
15            of $10,000;
 
16      (4)   For each foreign limited liability partnership
 
17            registered, a fee of $1,000 if the partnership has
 
18            fewer than ten partners; $5,000 if the partnership has
 
19            ten or more but fewer than fifty partners; and $10,00
 
20            if the partnership has fifty or more partners;
 
21      (5)   For each reservation or transfer of limited liability
 
22            partnership name, a fee of $100;
 
23      (6)   For each certificate of correction or certificate of
 

 
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 1            amendment, a fee of $100;
 
 2      (7)   For each certificate of good standing, a fee of $100;
 
 3      (8)   For review of articles of conversion, a fee of $200;
 
 4     [(8)]  (9)  For any other certificate, statement, or
 
 5            document, a fee of $100; and
 
 6     [(9)]  (10)  For each certification of domestic or foreign
 
 7            partnership, a fee of $100;
 
 8      (b)  The following special handling fees shall be assessed
 
 9 by the director for expeditious review of the following
 
10 documents:
 
11      (1)   For limited liability partnerships:  certificate of
 
12            limited liability partnership, $100; certificate of
 
13            correction, $100; change of name statement, $100;
 
14            partnership dissolution statement, $100; annual
 
15            statement, $100; certification of limited liability
 
16            partnership, $1 a page; certificate of good standing,
 
17            $100, articles of conversion, $150.
 
18      (2)   For foreign limited liability partnerships:
 
19            registration statement, $100; certificate of
 
20            correction, $100; withdrawal application, $100; annual
 
21            statement, $100; certification of foreign partnership,
 
22            $1 a page; certificate of good standing, $100; filing
 
23            articles of conversion, $150; and
 

 
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 1      (3)   For any other certificate or document authorized by
 
 2            this part, $100.
 
 3      (c)  All special handling fees shall be credited to the
 
 4 special fund authorized by section 415-128.  All other fees
 
 5 collected under this section shall be engaged in accordance with
 
 6 section 26-9(l)."
 
 7      SECTION 11.  Section 425-191, Hawaii Revised Statutes, is
 
 8 amended to read as follows:
 
 9      [[]"425-191.[]]  Merger [or conversion] of domestic general
 
10 and limited liability partnerships.  One of more domestic general
 
11 and limited liability partnerships may be [converted into or]
 
12 merged with a domestic limited liability company pursuant to
 
13 [section 428-902 or] sections 428-904 to 428-906, as the case may
 
14 be."
 
15      SECTION 12.  Section 425D-1109, Hawaii Revised Statutes, is
 
16 amended to read as follows:
 
17      [[]"425D-1109[]]  Merger [or conversion] of domestic
 
18 limited partnerships.  One or more domestic limited partnerships
 
19 may be [converted into or] merged with a domestic limited
 
20 liability company pursuant to [section 428-902 or] sections 428-
 
21 904 to 428-906, as the case may be."
 
22      SECTION 13.  Section 425D-1107, Hawaii Revised Statutes, is
 
23 amended to read as follows:
 

 
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 1      "425D-1107  Fee for filing documents and issuing
 
 2 certificates.  (a)  The following fees shall be paid to the
 
 3 director upon the filing of limited partnership documents:
 
 4            (1) Certificate of limited partnership, $50;
 
 5            (2) Any certificate of amendment, restatement, or
 
 6                correction, $20;
 
 7            (3) Certificate of cancellation, $20;
 
 8            (4) Annual statement for domestic or foreign limited
 
 9                partnership, $10;
 
10            (5) Any other certificate or document of domestic or
 
11                foreign limited partnership, $20;
 
12            (6) Application for registration as a foreign limited
 
13                partnership, $100;
 
14            (7) Any certificate of amendment or agent change for
 
15                foreign limited partnership, $20;
 
16            (8) Application for certificate of withdrawal of
 
17                foreign limited partnership, $20;
 
18            (9) Reservation of name, $20;
 
19           (10) Transfer of reservation of name, $20;
 
20           (11) Good standing certificate, $20;
 
21           (12) Filing articles of conversion, $200;
 
22           (13) Special handling fee for review of articles of
 
23                conversion, $150;
 
24 [(12)]    (14) Special handling fee for review of any limited
 
25                partnership document, $50;
 
26 [(13)]    (15) Special handling of fee for certificates issued by
 
27                the director, $20 per certificate; and
 
28 [(14)]    (16) Special handling fee for certification of
 
29                documents, $1 per page.;
 
30      (b)  All special handling fees shall be credited to the
 
31 special fund authorized by section 415-128."
 
32      SECTION 14.  Section 428-901, Hawaii Revised Statutes, is
 
33 amended by adding a new definition to be appropriately inserted
 
34 and to read as follows:
 
35      ""Other entity" means and includes, a foreign or domestic
 
36 corporation, whether organized for profit or not, a domestic or
 
37 foreign partnership, limited partnership, or limited liability
 
38 partnership, or a domestic professional corporation ."
 
39      SECTION 15.  Section 428-903, Hawaii Revised Statutes, is
 
40 amended to read as follows:
 
41      "[[]428-903[]]  Effect of conversion [;entity unchanged].
 
42      [(a)  A general partnership or limited partnership that has
 
43 been converted to a limited liability company pursuant to section
 
44 428-902 shall be considered the same legal entity that existed
 
45 prior to the conversion, the only change shall be the form in
 
46 which the legal entity now exists.
 
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 1      (b)  When the conversion takes effect:
 
 2      (1)   All property owned by the converting general
 
 3            partnerships or-limited partnerships is vested in the
 
 4            limited liability company;
 
 5      (2)   All debts, liabilities, and other obligations of the
 
 6            converting general partnership or limited partnership
 
 7            continue as obligations of the limited liability
 
 8            company;
 
 9      (3)   Any action or proceeding pending by or against the
 
10            converting general partnership or limited partnership
 
11            may be continue as if the conversion had not occurred
 
12            and the limited liability company may be substituted
 
13            as a party to the actions or proceeding;
 
14      (4)   Except as prohibited by other law, all the rights,
 
15            privileges, immunities, powers, and purposes of the
 
16            converting general partnership or limited partnership
 
17            are vested in the limited liability company; and
 
18      (5)   Except as otherwise provided in the agreement of the
 
19            conversion under section 428-902(c), all of the
 
20            partners of the converting general partnership or
 
21            limited partnership shall continue as members of the
 
22            limited liability company.]
 
23      (a)  When a conversion becomes effective:
 

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

 
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 1            the plan of conversion shall be converted, and if
 
 2            the converting entity is a domestic limited
 
 3            liability company, the members of the domestic limited
 
 4            liability company shall be entitled only to
 
 5            the rights provided in the plan of conversion or to
 
 6            the rights to dissent
 
 7            under section 415-80;
 
 8      (7)   A shareholder, partner, member, or other owner of the
 
 9            converted entity shall be liable for the debts and
 
10            obligations of the converting entity that existed
 
11            before the conversion takes effect only to the extent
 
12            that such shareholder, partner, member, or other
 
13            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 limited liability
 
24            company or other entity, such converted entity shall
 
25            appoint a resident of this State as its agent for
 
26            service of process in a proceeding to enforce any
 
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 1            obligation or the rights of dissenting members of the
 
 2            converting domestic limited liability company; and
 
 3      (9)   If the converting entity is a domestic limited
 
 4            liability company, the provisions of section 428-907
 
 5            shall apply as if the converted entity were the
 
 6            survivor of a merger with the converting entity.
 
 7      (b)  Upon the issuance of the certificate of conversion by
 
 8 the director, the conversion shall be effective."
 
 9      SECTION 16.  Section 428-1301, Hawaii Revised Statues, is
 
10 amended to read as follows:
 
11      "428-1301.  Fees.(a)  The following fees shall be paid to
 
12 the director upon the filing and issuance of records under this
 
13 chapter:
 
14      (1)   Articles of organization, $100;
 
15      (2)   Articles of amendment, $50;
 
16      (3)   Restated articles of organization, $50;
 
17      (4)   Articles of merger or conversion, $200;
 
18      (5)   Statement of dissociation, $50;
 
19      (6)   Articles of termination, $50;
 
20      (7)   Application for reinstatement for administratively
 
21            terminated limited liability company, $50;
 

 
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 1      (8)   Annual report, $25;
 
 2      (9)   Statement of change of designated office or agent for
 
 3            service of process, or both, for limited liability
 
 4            company or foreign limited liability company, $50;
 
 5     (10)   Statement of resignation of agent for service of
 
 6            process, $50;
 
 7     (11)   Any other statement of document of a domestic or
 
 8            foreign limited liability company, $50;
 
 9     (12)   Application for certificate of authority for foreign
 
10            limited liability company, $100;
 
11     (13)   Application for cancellation of authority of foreign
 
12            limited liability company, $50;
 
13     (14)   Reservation of name, $25;
 
14     (15)   Good standing certificate, $25;
 
15     (16)   Any other record not otherwise covered in this part,
 
16            $50;
 
17     (17)   Certified copy of any record relating to a limited
 
18            liability company or foreign limited liability
 
19            company, 25 cents per page, and $10 for the
 
20            certificate and affixing the seal thereto;
 
21     (18)   Special handling fee for review of any record other
 
22            than articles of merger or conversion, $80;
 
23     (19)   Special handling fee for review of articles of merger
 

 
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 1            or conversion, $200;
 
 2     (20)   Special handling fee for certificates issued by the
 
 3            director not otherwise covered by this part, $10 per
 
 4            certificate; and
 
 5     (21)   Special handling fee for certification of record, $1
 
 6            per page; and
 
 7     (22)   Any service of notice, demand, or process upon the
 
 8            director as agent for service of process of a limited
 
 9            liability company or foreign limited liability
 
10            company, $50, which amount may be recovered as taxable
 
11            costs by the party to the suit or action causing such
 
12            service to be made if such party prevails in the suit
 
13            or action.
 
14      (b)  All special handling fees shall be credited to the
 
15 special fund authorized by section 415-128."
 
16      SECTION 17.  Section 428-902, Hawaii Revised Statutes, is
 
17 repealed.
 
18      ["[428-902]  Conversion of partnerships or limited
 
19 partnerships to limited liability company.  (a) A domestic
 
20 partnership or domestic limited partnership may be converted into
 
21 a domestic limited liability company pursuant to this section.
 
22      (b)  The terms and conditions of a conversion of a
 
23 partnership or limited partnership to a limited liability company
 
24 shall be approved by all of the partners or by the number or
 
25 percentage of the partners required for conversion in the
 

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 1 partnership agreement.
 
 2      (c)  An agreement of conversion approved under subsection
 
 3 (b) shall set forth the terms and conditions of the conversion of
 
 4 the interests of the general partners in the case of a general
 
 5 partnership and the interests of the general partners and limited
 
 6 partners in the case of limited partnership, being converted into
 
 7 interests in the limited liability company and any cash or other
 
 8 consideration to be paid or delivered as a result of the
 
 9 conversion or any combination thereof.
 
10      (d)  Upon compliance with subsection (b) and section 428-
 
11 908, the general partnership or limited partnership shall file
 
12 articles or organization in the office of the director which
 
13 satisfy the requirements of section 428-203 and contain:
 
14      (1)   A statement that the general partnership or limited
 
15            partnership was converted to a limited liability
 
16            company;
 
17      (2)   The name of the former partnership or limited
 
18            partnership;
 
19      (3)   A statement detailing the approvals by the general
 
20            partners in the case of a general partnership
 
21            conversion, and the general partners and limited
 
22            partners in the case of a limited partnership
 

 
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 1            conversion, noting the respective votes taken required
 
 2            to approve the conversion under subsection (b);
 
 3      (4)   A statement of cancellation of the partnership
 
 4            registration statement in the case of a general
 
 5            partnership conversion, or statement of cancellation
 
 6            of the certificate of limited partnership in the case
 
 7            of a limited partnership conversion, specifying an
 
 8            effective date as provided in subsection (f) if the
 
 9            effective date is not to be the date of filing; and
 
10      (5)   A statement of compliance with section 428-908.
 
11      (e)  In the case of a general or limited partnership, the
 
12 filing of the articles of organization under subsection (d)
 
13 cancels the partnership registration statement or the certificate
 
14 of limited partnership.
 
15      (f)  A conversion becomes effective upon the filing of the
 
16 articles of organization or upon the time and date subsequent to
 
17 the filing as set forth in the articles but not more than thirty
 
18 days after being filed.
 
19      (g)  A general partner who becomes a member of a limited
 
20 liability company as a result of a conversion remains liable as a
 
21 general partner for any obligation incurred by the general
 
22 partnership or limited partnership before the conversion has
 
23 taken effect.  A general partner's liability for all obligations
 
24 of the limited liability company incurred after the conversion
 

 
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 1 becomes effective shall be that of a member of the limited
 
 2 liability company.
 
 3      (h)  A limited partner who becomes a member as a result of a
 
 4 conversion remains liable only to the extent the limited partner
 
 5 was liable for an obligation incurred by the limited partnership
 
 6 before the conversion takes effect.]"
 
 7      SECTION 18.  Statutory material to be repealed is bracketed.
 
 8 New statutory material is underscored.
 
 9      SECTION 19.  This Act shall take effect on July 1, 2000. 
 
10 
 
11                           INTRODUCED BY:  _______________________
 

 
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