ADMINISTRATION OF THE GOVERNMENT (Chapters 1 through 182)
Effect of nonprofit conversion
Section 9.34. EFFECT OF NONPROFIT CONVERSION
(a) When a conversion of a domestic business corporation to a domestic nonprofit corporation becomes effective:
(1) the title to all real and personal property, both tangible and intangible, of the corporation remains in the corporation without reversion or impairment;
(2) the liabilities of the corporation remain the liabilities of the corporation;
(3) an action or proceeding pending against the corporation continues against the corporation as if the conversion had not occurred;
(4) the articles of nonprofit conversion, or the articles of organization attached to the articles of nonprofit conversion, constitute the articles of organization of the corporation;
(5) the shares of the corporation are reclassified into memberships, securities, obligations, rights to acquire memberships or securities of the corporation or into cash or other property in accordance with the plan of conversion, and the shareholders are entitled only to the rights provided in the plan of nonprofit conversion or to any rights they may have under PART 13; and
(6) the corporation is considered to:
(i) be a domestic nonprofit corporation for all purposes;
(ii) be the same corporation without interruption as the corporation that existed before the conversion; and
(iii) have been incorporated on the date that it was originally incorporated as a domestic business corporation.
(b) When a conversion of a domestic business corporation to a foreign nonprofit corporation becomes effective, the foreign nonprofit corporation is considered to:
(1) appoint the secretary of state as its agent for service of process in a proceeding to enforce the rights of shareholders who exercise appraisal rights in connection with the conversion; and
(2) agree that it will promptly pay the amount, if any, to which such shareholders are entitled under PART 13.
(c) The owner liability of a shareholder in a domestic business corporation that converts to a domestic nonprofit corporation shall be as follows:
(1) The conversion does not discharge any owner liability of the shareholder with respect to the business corporation to the extent any such owner liability arose before the effective date of the articles of nonprofit conversion.
(2) The shareholder shall not have owner liability for any debt, obligation or liability of the nonprofit corporation that arises after the effective date of the articles of nonprofit conversion.
(3) The laws of the commonwealth shall continue to apply to the collection or discharge of any owner liability preserved by paragraph (1), as if the conversion had not occurred and the nonprofit corporation were still a business corporation.
(4) The shareholder shall have whatever rights of contribution from other shareholders are provided by the laws of the commonwealth with respect to any owner liability preserved by paragraph (1), as if the conversion had not occurred and the nonprofit corporation were still a business corporation.
(d) A shareholder who becomes subject to owner liability for some or all of the debts, obligations or liabilities of the nonprofit corporation shall be personally liable only for those debts, obligations or liabilities of the nonprofit corporation that arise after the effective time of the articles of nonprofit conversion.