Domestication of Entities in Idaho

The Idaho Model Entity Act ("MET Act") authorizes domestications. Domestication is the process where a foreign entity becomes an Idaho entity or an Idaho entity becomes a foreign entity. I.C. § 30-22-501.

Plan of Domestication

An Idaho entity may become a foreign entity by approving a "plan of domestication." I.C. § 30-22-502. The Plan of Domestication must be in writing and it must state:

  • The name and type of entity of the domesticating entity. I.C. § 30-22-502(a)(1).
  • The name and jurisdiction of formation of the domesticated entity. I.C. § 30-22-502(a)(2).
  • The manner of converting the interests in the domesticating entity into interests, securities, obligations, money, other property, or rights to acquire interests or securities, or any combination of the foregoing. I.C. § 30-22-502(a)(3).
  • The proposed "public organic record" of the domesticated entity if it is a filing entity. I.C. § 30-22-502(a)(4).
  • The full text of the "private organic rules" of the domesticated entity that are proposed to be in a record. I.C. § 30-22-502(a)(5).
  • The other terms and conditions of the domestication. I.C. § 30-22-502(a)(6)
  • Any other provision required by the law of this state or the "organic rules" of the domesticating entity. I.C. § 30-22-502(a)(7).

The plan may also have any provision that does not violate law. I.C. § 30-22-502(b)

Approval of the Plan of Domestication

The Plan of Domestication must be approved by the Idaho entity. I.C. § 30-22-503(a)(1). The plan must be approved according the "organic rules" of the entity. I.C. § 30-22-503(a)(1)(A). If the "organic rules" do not provide for approval of domestication, then the domestication must be approved in the same manner as a merger under the "organic law" of the entity. I.C. § 30-22-503(a)(1)(B). If the "organic law" does not provide for approval of a merger, then all the interest holders must approve the domestication. I.C. § 30-22-503(a)(1)(C).

Moreover, each interest holder who will have any liability for debts, obligations, and other liabilities that arise after the domestication must vote for or consent to the domestication. I.C. §  30-22-503(a)(2).

Amendment of the Plan of Domestication

A Plan of Domestication may be amended after it is adopted but before it becomes effective. I.C. § 30-22-504(a). The Plan of Domestication is amended the same way the Plan of Domestication was originally adopted. But only if the plan does NOT state how it can be amended. I.C. § 30-22-504(a)(1). If the plan states how it will be amended, then that process must be followed. I.C. § 30-22-504(a)(2)

However, regardless of what the plan states on how it can be amended, all interest holders are allowed to vote on an amendment that changes the "amount or kind of interests, securities, obligations, money, other property, or rights to acquire interests or securities, or any combination of the foregoing" that the interest holder will receive in the domestication. I.C. § 30-22-504(a)(2)(A). In addition, if the amendment proposes to change the "public organic record" or the "private organic rules", the interest holders must approve the amendment if they are otherwise entitled to vote on the change to the "public organic record" or the "private organic rules." I.C. § 30-22-504(a)(2)(B). For example, if the amendment proposes to change the articles of incorporation and corporate law requires a vote of the shareholders to change the articles, then the interest holders must approve the amendment. Finally, interest holders must approve any amendment that would "adversely affect the interest holder in any material aspect." I.C. § 30-22-504(a)(2)(C)

Abandonment of the Plan of Domestication

A Plan of Domestication may be abandoned before it becomes effective. I.C. § 30-22-504(b). The abandonment must be approved as stated in the plan or, if the plan does not provide for abandonment, in the same manner as the plan was adopted. Id. If the Plan of Domestication was filed with the Secretary of State, the entity must file a Statement of Abandonment with the Secretary of State. I.C. § 30-22-504(c).

Statement of Domestication

A Statement of Domestication must be delivered to the Secretary of State. I.C. § 30-22-505(a). A Statement of Domestication must state:

  • The name, jurisdiction of formation, and type of entity of the domesticating entity. I.C. § 30-22-505(b)(1).
  • The name, jurisdiction of formation, and type of entity of the domesticated entity. I.C. § 30-22-505(b)(2).
  • If the Statement of Domestication is not to be effective upon filing, the later date and time on which it will become effective, which may not be more than ninety (90) days after the date of filing. I.C. § 30-22-505(b)(3)
  • If the domesticating entity is a domestic entity, a statement that the Plan of Domestication was approved in accordance with Idaho Code § 30-22-501 et. seq. or, if the domesticating entity is a foreign entity, a statement that the domestication was approved by the foreign entity in accordance with the law of its jurisdiction of formation. I.C. § 30-22-505(b)(4)
  • If the domesticated entity is a domestic filing entity, its "public organic record", as an attachment. I.C. § 30-22-505(b)(5).
  • If the domesticated entity is a domestic limited liability partnership, its Statement of Qualification, as an attachment. I.C. § 30-22-505(b)(6). 
  • If the domesticated entity is a foreign entity, a statement designating a registered agent in compliance with section 30-21-411, Idaho Code. I.C. § 30-22-505(b)(7).

The Statement of Domestication may also contain any provision not otherwise in violation of law. I.C. § 30-22-505(c).

If an Idaho entity is the subject of the domestication, its "public organic record" must contain all the information required by Idaho law. I.C. § 30-22-505(d). However, it does not need to be signed or contain anything that is not required by a restatement. Id.

The entity has the option of delivering a Plan of Domestication rather than a Statement of Domestication as long as the plan has all the information required by Idaho Code § 30-22-505(b)I.C. § 30-22-505(e).

Effect of Domestication

When an entity is domesticated, it is immediately governed by the organic law that governs the entity and it is treated as if it is the same entity without interruption as the domesticating entity. I.C. § 30-22-506(a)(1)(A)-(B). The domesticating entity's assets automatically become the assets of the domesticated entity.  I.C. § 30-22-506(a)(2). No deeds or other documents transferring title need to be signed. 

All the debts of the domesticating entity automatically become the debts of the domesticated entity. I.C. § 30-22-506(a)(3)

All rights of the domesticating entity automatically become the rights of the domesticated entity. I.C. § 30-22-506(a)(4).

The name of the domesticated entity may be substituted for the name of the domesticating entity in any lawsuit. I.C. § 30-22-506(a)(5)

The interests in the domesticating entity are converted (if conversion is part of the plan), and the interest holders of the domesticating entity are entitled only to the rights provided to them under the Plan of Domestication and to any appraisal rights they have under Idaho Code § 30-22-109, and the domesticating entity's organic law. I.C. § 30-22-506(a)(9).

An interest holder that did not have liability before the domestication will not have any liability after the domestication unless the liability is provided for in the organic law or arose after the domestication. I.C. § 30-22-506(c).

If an interest holder of a domesticating entity has liability before the domestication, the liability is not discharged by the domestication. I.C. § 30-22-506(d)(1). The opposite is also true. Any liability of the domesticating entity that may arise after the domestication will not be a liability of the interest holder. I.C. § 30-22-506(d)(2). The law that governed any liability before the domestication still applies after the domestication. I.C. § 30-22-506(d)(3). This prevents a domestication for the purpose of discharging an interest holder's liability. Finally, the law of contribution still applies even after the domestication. I.C. § 30-22-506(d)(4)

If a foreign entity domesticates to an Idaho entity, it can be served with a lawsuit in Idaho for liabilities that arose in another state. I.C. § 30-22-506(e). This prevents a foreign corporation from converting to an Idaho entity to avoid a lawsuit.

Finally, a domestication will not allow for an entity to wind up its affairs or dissolve. I.C. §  30-22-506(g)

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