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IBCF: NEWS AND INFORMATION
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Conversion of Foreign Entities into Delaware Limited Liability Companies
Increasingly, companies formed in other (including non-US) jurisdictions have been converted to Delaware Limited Liability Companies. Particularly as the OECD spotlight shines unfavorably on some jurisdictions, Delaware has emerged as a leading candidate when selecting a successor jurisdiction particularly when the company is not doing business in the US and when the Members are US nonresidents.
If appropriate, it is important to note that the procedure has been streamlined. Previously, it was a two step process: the filing of a Certificate of Domestication accompanied by a Certificate of Incorporation. This had the effect of converting a foreign corporation into a Delaware corporation. One would then file a Certificate of Conversion accompanied by a Certificate of Formation. This step had the effect of transforming the new Delaware entity into a Delaware domestic Limited Liability Company.
The process has now been streamlined and the filing of a Certificate of Conversion along with the Certificate of Formation is sufficient. The new process saves several hundreds of dollars in state fees alone; it can be completed within 24 hours and for about $500 in total! Of course, the company's existence continues back to the original date of first formation in the original jurisdiction. Please see the relevant portion of the statute reproduced below.
This is just another example of Delaware's continuing commitment to flexibility and listening to the needs of their constituency.
CHAPTER 18. LIMITED LIABILITY COMPANY ACT
§ 18-214. Conversion of certain entities to a limited liability company.
d) Upon the filing in the office of the Secretary of State of the certificate of conversion to limited liability company and the certificate of formation or upon the future effective date or time of the certificate of conversion to limited liability company and the certificate of formation, the other entity shall be converted into a domestic limited liability company and the limited liability company shall thereafter be subject to all of the provisions of this chapter, except that notwithstanding § 18-201 of this title, the existence of the limited liability company shall be deemed to have commenced on the date the other entity commenced its existence in the jurisdiction in which the other entity was first created, formed, incorporated or otherwise came into being.
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