proposed Model Inter-Entity Transactions Act: A proposal to rationalize changes in forms of business organizations, The

Real Property, Probate and Trust Journal, Fall 2002 by Geu, Thomas, Keatinge, Robert

The conforming amendments and repeaters concerning all the different organization forms leave mergers involving a single form of organization to the organic statute governing that form of entity.20 In this regard, a partnership is the same form of entity as a limited liability partnership, and a limited partnership is the same form as a limited liability limited partnership. As a result, for example, domestication (the relocation of the state of organization without a change in form) as contemplated by the statutory structure of MITA, would appear in the organic act governing the form of entity rather than in MITA because domestication is not a change in form of entity. An example of such a transaction would be a Nevada corporation becoming a Delaware corporation under the domestication provisions of MITA, which amend the RMBCA. MITA expressly excludes estates, trusts that are not business trusts, and "governmental or quasigovernmental subdivision[s], agenc[ies], or instrumentalit[ies]."21

careful technical drafting and internal definitions to parse issues such as: "What is a regulatory law?" and "When does the regulatory law conflict with MITA?" MITA answers those questions within the statutory text by providing that if a statute prohibits an organization's merger or conversion with another organization of the same form without the approval of a regulator, the organization may not engage in that transaction under MITA without that approval.23 In addition, MITA contains an optional provision under which the adopting state may list certain forms of entities that are not permitted to use MITA.

Finally, MITA is not available for use by sole proprietorships24 or relationships that do not rise to the level of a partnership under RUPA, such as cotenancies.25 MITA's definition of "entity" seems to allow its use by unincorporated nonprofit associations, and the comments indicate that the definition includes such associations.26 It does not yet address division transactions, although it reserves a chapter for divisions.27 MITA includes inter-entity mergers,28 inter-entity exchanges,29 and inter-entity conversions30 and makes conforming amendments to other widely adopted organizational acts to allow for those intra-entity transactions, as well as domestication.31

A certain rhythm permeates the substantive provisions governing each kind of transaction because the issues raised in each transaction are similar. Thus, the chapters governing each kind of transaction contain sections on the authority to conduct the transaction, the plan of the transaction, required action on the plan, a statement of the action taken, the effect of the transaction, and abandonment of the transaction.35 The only exception to the rhythm and to the parallel numbering of the sections within the chapters is the addition of a section captioned "Surrender of charter upon conversion" in chapter 4(36) and a subchapter concerning the qualification of foreign entities in the conversion transaction, also in chapter 4.(37)