Prior to January 1, 2023, California law prevented a California corporation from converting into a corporate entity in another state. Other forms of entities, such as partnerships and limited liability companies, were allowed to convert out of California. Thanks to a new recently adopted California law California corporations can now convert into most other state corporations.
Sometimes, corporations, like people, have valid business reasons to move to another state. There are all sorts of such business reasons. Maybe the owners have decided to move their entity and operations to another place where it is more conducive to the success and nature of their business. Maybe the owners were operating in several states and have decided to move their headquarters and principal operations to another state. Maybe the owners just want to move to another state and can easily operate their business from their new residence. Such moves are usually motivated by operational and not necessarily tax reasons.
Prior to 2023, a corporation could change the state of its operations by way of a merger. In other words, it could form a new entity in the new state of its choice and then merge its California corporation into that new entity. From a legal standpoint this was most likely a much more costly and cumbersome method to move to a new state. Now conversions offer a much easier approach to move.
We can assist other privately owned corporations to take advantage of unique and similar corporate transactional opportunities. To learn more about converting your CA corporation into a corporate entity contact the Business Law Attorneys at Chauvel & Glatt.
The material in this article, provided by Chauvel & Glatt, is designed to provide informative and current information as of the date of the post. It should not be considered, nor is it intended to constitute, legal advice or promise similar outcomes. For information on your particular circumstances, please contact Chauvel & Glatt at 650-881-2938.