Entity Rationalization in the US – The Model Entity Transactions Act (META)
With the introduction and proliferation of new corporate entities such as the Limited Liability Company and the Limited Liability Partnership over the past few decades, for the most part state statutes have not kept pace with the requirements posed by differing entities with different characteristics. For example, only a few states such as Delaware, Wyoming and Nevada offer conversion provisions allowing a corporation to convert to a Limited Liability Company and the reverse.
In the annual meeting of the National Public Records Research Association recently held in San Diego, an association of companies (of which IBCF is one) devoted to providing public record services, William H. Clark, Jr., a Partner with Drinker Biddle & Reath LLP in Philadelphia, presented the current work by the National Conference of Commissioners on Uniform State Laws (NCCUSL) in this area.
NCCUSL in conjunction with the American Bar Association has drafted the Model Entity Transactions Act which authorizes cross-species transactions such as mergers and consolidations, interest exchanges, conversions and domestications and authorizes these transactions in a same-species environment if not provided for under current entity law. Although META is now final, the drafting committees are continuing to meet to prepare additional provisions on divisions.
The text of META can be viewed at http://www.law.upenn.edu/bll/ulc/ulc_frame.htm. The next step is the adoption of the Act by the various states.
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