HF 385

2nd Engrossment - 89th Legislature (2015 - 2016) Posted on 06/02/2016 12:30pm

A bill for an act
relating to business organizations; modifying conversion provisions; amending
Minnesota Statutes 2014, sections 66A.02, subdivision 4; 302A.011, subdivisions
19, 22, 63, 64, 68, by adding a subdivision; 302A.471, subdivision 1; 302A.691;
302A.692; 322B.03, subdivision 37, by adding subdivisions; 322B.383,
subdivision 1; 322C.0105, subdivision 2, by adding a subdivision; 322C.0110,
subdivisions 4, 7; 322C.0201, subdivision 2; 322C.0203, subdivision 1;
322C.0404, subdivision 1; 322C.0407, subdivisions 1, 4; 322C.0408, subdivision
6; 322C.0410, subdivision 2; 322C.0502, subdivision 4; 322C.0902; 322C.1001,
subdivisions 11, 12; 322C.1007; 322C.1009; 322C.1101, subdivision 5;
322C.1204, subdivision 3; proposing coding for new law in Minnesota Statutes,
chapters 302A; 322B; repealing Minnesota Statutes 2014, sections 302A.681;
302A.683; 302A.685; 302A.687; 302A.689; 322B.78; Laws 2014, chapter 157,
article 2, sections 10; 11; 12; 13; 14; 15; 16; 30.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

Minnesota Statutes 2014, section 66A.02, subdivision 4, is amended to read:

Subd. 4.

Exceptions.

The following provisions of chapter 302A do not apply
to domestic mutual insurance companies: sections 302A.011, subdivisions 2, 6, 6a, 7,
10, 20, 21, 25, 26, 27, 28, 29, 31, 32, and 37 to 59; 302A.105; 302A.137; 302A.161,
subdivision 19; 302A.201, subdivision 2; 302A.401 to 302A.429; 302A.433, subdivisions
1, paragraphs (a), (b), (c), and (e), and 2; 302A.437, subdivision 2; 302A.443; 302A.445,
subdivisions 3 to 6; 302A.449, subdivision 7; 302A.453 to 302A.457; 302A.461;
302A.463; 302A.471 to 302A.473; 302A.553; 302A.601 to 302A.651; 302A.671 to
302A.675; deleted text begin 302A.681 deleted text end new text begin 302A.682 new text end to 302A.691; and 302A.701 to 302A.791. Those
clauses of section 302A.111 that refer to any of the sections previously referenced in
this subdivision do not apply to domestic mutual insurance companies. The following
sections of chapter 302A are modified in their application to domestic mutual insurance
companies in the manner indicated:

(1) with regard to section 302A.133, the articles may be amended pursuant to section
302A.171 by the incorporators or by the board before the issuance of any policies by
the company;

(2) with regard to section 302A.135, subdivision 2, a resolution proposing an
amendment to the certificate of authority must be filed with the corporate secretary no less
than 30 days before the meeting to consider the proposed amendment;

(3) with regard to section 302A.161, subdivision 19 of that section does not apply,
except this must not be construed to limit the power of a mutual insurance company
from issuing securities other than stock;

(4) with regard to section 302A.201, the references in subdivision 1 of that section
to "subdivision 2" and "section 302A.457 " do not apply;

(5) with regard to section 302A.203, the board shall consist of no less than five
directors;

(6) with regard to section 302A.215, subdivisions 2 and 3 of that section only apply
if the corporation's certificate of incorporation provides cumulative voting;

(7) with regard to section 302A.433, subdivision 1 of that section, special meetings of
the members may be called for any purpose or purposes at any time by a person or persons
authorized in the articles or bylaws to call special meetings, and with regard to subdivision
3 of that section, special meetings must be held on the date and at the time and place fixed
by a person or persons authorized by the articles or bylaws to call a meeting; and

(8) with regard to section 302A.435, if the company complies substantially and in
good faith with the notice requirements of section 302A.435, the company's failure to give
any member or members the required notice does not impair the validity of any action
taken at the members' meeting.

Sec. 2.

Minnesota Statutes 2014, section 302A.011, subdivision 19, is amended to read:

Subd. 19.

Organization.

"Organization" means a deleted text begin domestic or foreign corporation
deleted text end new text begin general partnership, including a limited liability partnership, limited partnership, including
a limited liability limited partnership new text end , limited liability company, deleted text begin whether domestic or
foreign, partnership, limited partnership, joint venture, association, deleted text end business trust, deleted text begin estate,
trust, enterprise, and any other legal or commercial entity deleted text end new text begin corporation, or any other
person having a governing statute. The term includes a domestic or foreign organization
regardless of whether organized for profit new text end .

Sec. 3.

Minnesota Statutes 2014, section 302A.011, subdivision 22, is amended to read:

Subd. 22.

Person.

"Person" includes a natural person deleted text begin and deleted text end new text begin , new text end an organization new text begin , and
any other association, business trust, estate, trust, enterprise, and any other legal or
commercial entity new text end .

Sec. 4.

Minnesota Statutes 2014, section 302A.011, subdivision 63, is amended to read:

Subd. 63.

Converted organization.

"Converted organization" means the deleted text begin domestic
or foreign corporation or domestic or foreign limited liability company resulting from a
conversion under deleted text end new text begin organization into which a converting organization converts pursuant
to new text end sections deleted text begin 302A.681 deleted text end new text begin 302A.682 new text end to deleted text begin 302A.691 deleted text end new text begin 302A.692 new text end .

Sec. 5.

Minnesota Statutes 2014, section 302A.011, subdivision 64, is amended to read:

Subd. 64.

Converting organization.

"Converting organization" means deleted text begin the domestic
or foreign corporation or domestic or foreign limited liability company that effects a
conversion under deleted text end new text begin an organization that converts into another organization pursuant to
new text end sections deleted text begin 302A.681 deleted text end new text begin 302A.682 new text end to deleted text begin 302A.691 deleted text end new text begin 302A.692 new text end .

Sec. 6.

Minnesota Statutes 2014, section 302A.011, subdivision 68, is amended to read:

Subd. 68.

Organizational documents.

"Organizational documents" means:

(1) for a domestic or foreign general partnership, its partnership agreement;

(2) for a limited partnership or foreign limited partnership, its certificate of limited
partnership and partnership agreement;

(3) for a domestic or foreign limited liability company, its certificate or articles
of organization and operating agreement, or comparable documents as provided in its
governing statute;

(4) for a business trust, its agreement of trust and declaration of trust;

(5) for a domestic or foreign corporation for profit, its articles of incorporation,
bylaws, and other agreements among its shareholders that are authorized by its governing
statute, or comparable documents as provided in its governing statute; and

(6) for any other organization, the basic deleted text begin agreements or other documents deleted text end new text begin records new text end that
create the organization and determine its internal governance and the relations among the
persons that own it, have an interest in it, or are members of it new text begin , in each case as provided or
authorized by its governing statute new text end .

Sec. 7.

Minnesota Statutes 2014, section 302A.011, is amended by adding a
subdivision to read:

new text begin Subd. 70. new text end

new text begin Governing statute. new text end

new text begin "Governing statute" means the statute that governs
an organization's internal affairs.
new text end

Sec. 8.

Minnesota Statutes 2014, section 302A.471, subdivision 1, is amended to read:

Subdivision 1.

Actions creating rights.

A shareholder of a corporation may dissent
from, and obtain payment for the fair value of the shareholder's shares in the event of, any
of the following corporate actions:

(a) unless otherwise provided in the articles, an amendment of the articles that
materially and adversely affects the rights or preferences of the shares of the dissenting
shareholder in that it:

(1) alters or abolishes a preferential right of the shares;

(2) creates, alters, or abolishes a right in respect of the redemption of the shares,
including a provision respecting a sinking fund for the redemption or repurchase of the
shares;

(3) alters or abolishes a preemptive right of the holder of the shares to acquire shares,
securities other than shares, or rights to purchase shares or securities other than shares;

(4) excludes or limits the right of a shareholder to vote on a matter, or to cumulate
votes, except as the right may be excluded or limited through the authorization or issuance
of securities of an existing or new class or series with similar or different voting rights;
except that an amendment to the articles of an issuing public corporation that provides that
section 302A.671 does not apply to a control share acquisition does not give rise to the
right to obtain payment under this section; or

(5) eliminates the right to obtain payment under this subdivision;

(b) a sale, lease, transfer, or other disposition of property and assets of the
corporation that requires shareholder approval under section 302A.661, subdivision 2, but
not including a disposition in dissolution described in section 302A.725, subdivision 2, or a
disposition pursuant to an order of a court, or a disposition for cash on terms requiring that
all or substantially all of the net proceeds of disposition be distributed to the shareholders
in accordance with their respective interests within one year after the date of disposition;

(c) a plan of merger, whether under this chapter or under chapter 322B, to which the
corporation is a constituent organization, except as provided in subdivision 3, and except
for a plan of merger adopted under section 302A.626;

(d) a plan of exchange, whether under this chapter or under chapter 322B, to which
the corporation is a party as the corporation whose shares will be acquired by the acquiring
organization, except as provided in subdivision 3;

(e) a plan of conversion new text begin is new text end adopted by the corporation new text begin and becomes effective new text end ;

(f) an amendment of the articles in connection with a combination of a class or series
under section 302A.402 that reduces the number of shares of the class or series owned by
the shareholder to a fraction of a share if the corporation exercises its right to repurchase
the fractional share so created under section 302A.423; or

(g) any other corporate action taken pursuant to a shareholder vote with respect to
which the articles, the bylaws, or a resolution approved by the board directs that dissenting
shareholders may obtain payment for their shares.

Sec. 9.

new text begin [302A.682] CONVERSION.
new text end

new text begin Subdivision 1. new text end

new text begin Conversion requirements. new text end

new text begin Pursuant to this section, sections
302A.684 to 302A.692, and a plan of conversion, another organization may convert to a
domestic corporation, and a domestic corporation may convert to another organization if:
new text end

new text begin (1) the other organization's governing statute authorizes the conversion;
new text end

new text begin (2) the conversion is not prohibited by other law of this state or the law of the
jurisdiction that enacted the other organization's governing statute; and
new text end

new text begin (3) the other organization complies with its governing statute in effecting the
conversion.
new text end

new text begin Subd. 2. new text end

new text begin Contents of plan of conversion. new text end

new text begin A plan of conversion must include:
new text end

new text begin (1) the name and form of the organization and the jurisdiction of the organization's
governing statute before conversion;
new text end

new text begin (2) the name and form of the organization and the jurisdiction of the organization's
governing statute after conversion;
new text end

new text begin (3) the terms and conditions of the conversion, including the manner and basis
for converting interests in the converting organization into any combination of money,
interests in the converted organization, and other consideration; and
new text end

new text begin (4) the organizational documents of the converted organization as they are to be in
effect upon completion of the conversion.
new text end

Sec. 10.

new text begin [302A.684] ACTION ON PLAN OF CONVERSION BY CONVERTING
CORPORATION.
new text end

new text begin Subdivision 1. new text end

new text begin Approval of plan of conversion. new text end

new text begin Subject to section 302A.692, a plan
of conversion of a converting corporation must be approved under subdivisions 2 and 3.
new text end

new text begin Subd. 2. new text end

new text begin Board approval; notice to shareholders. new text end

new text begin A resolution containing the
plan of conversion must be approved by the affirmative vote of a majority, or more if
so provided in the converting corporation's organizational documents, of the directors
present at a meeting of the board of directors of the converting corporation and must
then be submitted at a regular or a special meeting to the shareholders of the converting
corporation. Written notice must be given to every shareholder of the converting
corporation, whether or not entitled to vote at the meeting, not less than 14 days nor more
than 60 days before the meeting. The written notice must state that a purpose of the
meeting is to consider the proposed plan of conversion. A copy or short description of the
plan of conversion must be included in or enclosed with the notice.
new text end

new text begin Subd. 3. new text end

new text begin Approval by shareholders. new text end

new text begin At the meeting, a vote of the shareholders
must be taken on the proposed plan. The plan of conversion is adopted when approved by
the affirmative vote of the holders of a majority of the voting power of all shares entitled
to vote. A class or series of shares is entitled to vote as a class or series on the approval
of the plan unless otherwise provided in the articles or shareholder control agreement, in
which case the articles or shareholder control agreement shall govern such class voting
rights to the exclusion of section 302A.137.
new text end

new text begin Subd. 4. new text end

new text begin Amendment of plan or abandonment of conversion. new text end

new text begin Subject to section
302A.692 and any contractual rights, after a conversion is approved, and at any time
before articles of conversion are delivered to the secretary of state for filing under section
302A.686, a converting corporation may amend the plan or abandon the conversion:
new text end

new text begin (1) as provided in the plan; or
new text end

new text begin (2) except as otherwise prohibited in the plan, by the same consent as was required
to approved the plan.
new text end

Sec. 11.

new text begin [302A.686] FILINGS REQUIRED FOR CONVERSION; EFFECTIVE
DATE AND TIME.
new text end

new text begin Subdivision 1. new text end

new text begin Articles of conversion. new text end

new text begin After a plan of conversion is approved:
new text end

new text begin (1) if the converting organization is a converting corporation, the converting
corporation shall file articles of conversion with the secretary of state, together with a total
fee of $35, which articles of conversion must be signed as provided in section 302A.011,
subdivision 30, and must include:
new text end

new text begin (i) the plan of conversion;
new text end

new text begin (ii) a statement that the corporation is converting into another organization;
new text end

new text begin (iii) the name and form of the converted organization and the jurisdiction of its
governing statute;
new text end

new text begin (iv) the time the conversion is effective under the governing statute of the converted
organization;
new text end

new text begin (v) a statement that the conversion was approved as required by this chapter;
new text end

new text begin (vi) a statement that the conversion was approved as required by the governing
statute of the converted organization; and
new text end

new text begin (vii) if the converted organization is a foreign organization not authorized to transact
business in this state, the street address of an office that the secretary of state may use for
the purposes of section 302A.691, subdivision 3; and
new text end

new text begin (2) if the converting organization is not a converting corporation, the converting
organization shall file articles of conversion with the secretary of state, together with
a total fee of $35, which articles of conversion must be signed as provided in section
302A.011, subdivision 30, and must include:
new text end

new text begin (i) articles of incorporation for the corporation into which the converting
organization is converting, which articles of incorporation must include the information
required by section 302A.111, subdivision 1, paragraphs (a) to (c);
new text end

new text begin (ii) the plan of conversion;
new text end

new text begin (iii) a statement that the converting organization is converting into a corporation;
new text end

new text begin (iv) the name and form of the converting organization and the jurisdiction of its
governing statute; and
new text end

new text begin (v) a statement that the conversion was approved in a manner that complied with the
converting organization's governing statute.
new text end

new text begin Subd. 2. new text end

new text begin Effective date and time of conversion. new text end

new text begin A conversion becomes effective:
new text end

new text begin (1) if the converted organization is a corporation, when the articles of conversion
are filed with the secretary of state or on a later date or at a later time specified in the
articles of conversion; and
new text end

new text begin (2) if the converted organization is not a corporation, as provided by the governing
statute of the converted organization.
new text end

new text begin Subd. 3. new text end

new text begin Certificate. new text end

new text begin The secretary of state shall issue to the converted organization
or its legal representative a certificate of conversion and, if the converted organization is a
corporation, a certificate of incorporation.
new text end

Sec. 12.

Minnesota Statutes 2014, section 302A.691, is amended to read:

302A.691 deleted text begin EFFECTIVE DATE OR TIME OF CONVERSION; deleted text end EFFECT new text begin OF
CONVERSION new text end .

Subdivision 1.

deleted text begin Effective date or time deleted text end new text begin Same entity new text end .

deleted text begin A conversion is effective
when the articles of conversion are filed with the secretary of state or on a later date
or at a later time specified in the articles of conversion. deleted text end new text begin An organization that has been
converted pursuant to sections 302A.682 to 302A.692 is for all purposes the same entity
that existed before the conversion.
new text end

Subd. 2.

Effect on new text begin converting new text end organization.

deleted text begin (a) A converted organization is for all
purposes the same organization as the converting organization, having been incorporated
or organized on the date that the converting organization was originally incorporated
or organized.
deleted text end

deleted text begin (b) deleted text end When a conversion deleted text begin becomes effective deleted text end new text begin takes effect new text end :

deleted text begin (1) if the converted organization is a domestic corporation, the converted
organization has all the rights, privileges, immunities, and powers, and is subject to all the
duties and liabilities, of a corporation incorporated under this chapter;
deleted text end

deleted text begin (2) if the converted organization is a domestic limited liability company, the
converted organization has all the rights, privileges, immunities, and powers, and is subject
to all the duties and liabilities, of a limited liability company organized under chapter 322B;
deleted text end

deleted text begin (3) deleted text end new text begin (1) new text end all property owned by the converting organization remains vested in the
converted organization new text begin and no assignment by operation of law or otherwise of its assets,
properties, or contracts shall be deemed to have occurred new text end ;

deleted text begin (4) deleted text end new text begin (2) new text end all debts, deleted text begin liabilities, and other deleted text end obligations new text begin , or other liabilities new text end of the
converting organization continue as new text begin debts, new text end obligations new text begin , or other liabilities new text end of the converted
organization;

deleted text begin (5) deleted text end new text begin (3) new text end an action or proceeding pending by or against the converting organization
may be continued as if the conversion had not occurred deleted text begin ; and deleted text end new text begin or as actions or proceedings
by or against the converted organization;
new text end

deleted text begin (6) all deleted text end new text begin (4) except as prohibited by law other than this chapter, all of the new text end rights,
privileges, immunities, deleted text begin and deleted text end powers new text begin , and purposes new text end of the converting organization remain
vested in the converted organization deleted text begin . deleted text end new text begin ; and
new text end

new text begin (5) the conversion does not dissolve a converting corporation for the purposes of
sections 302A.701 to 302A.791.
new text end

Subd. 3.

deleted text begin Effect on shareholders or members deleted text end new text begin Foreign organization new text end .

deleted text begin When
a conversion becomes effective, each share or membership interest in the converting
organization is deemed to be converted into shares or membership interests in the
converted organization or, in whole or in part, into money or other property to be received
under the plan by the shareholders or the members, subject to any dissenters' rights
under section 302A.471, in the case of shareholders of a converting organization that is
a domestic corporation, or section 322B.383, in the case of members of a converting
organization that is a domestic limited liability company. deleted text end new text begin A converted organization that
is a foreign organization consents to the jurisdiction of the courts of this state to enforce
any debt, obligation, or other liability for which the converting corporation is liable if,
before the conversion, the converting corporation was subject to suit in this state on the
debt, obligation, or other liability. A converted organization that is a foreign organization
and not authorized to transact business in this state appoints the secretary of state as
its agent for service of process for purposes of enforcing a debt, obligation, or other
liability under this subdivision.
new text end

Sec. 13.

Minnesota Statutes 2014, section 302A.692, is amended to read:

302A.692 RESTRICTIONS ON APPROVAL OF CONVERSIONS.

Subdivision 1.

Personal liability of shareholder.

If a shareholder of a converting
corporation will have personal liability with respect to a converted organization, approval
or amendment of a plan of conversion is ineffective without the consent of the shareholder,
unless:

(1) a new text begin valid new text end shareholder control agreement of the converting corporation provides for
approval of a conversion deleted text begin with the consent of fewer than all the members deleted text end new text begin and imposition of
personal liability without the consent of all shareholders against whom personal liability is
imposed new text end ; deleted text begin and
deleted text end

(2) the shareholder has consented new text begin in writing new text end to the provision of the new text begin valid new text end shareholder
control agreement deleted text begin . deleted text end new text begin ; and
new text end

new text begin (3) the shareholder does not exercise dissenter's rights pursuant to section 302A.471.
new text end

Subd. 2.

Consent.

A shareholder does not give the consent required by subdivision
1 merely by consenting to a provision of a shareholder control agreement new text begin or any other
agreement new text end that permits the shareholder control agreement new text begin or any other agreement new text end to be
amended with the consent of fewer than all shareholders new text begin or parties to the other agreement new text end .

Sec. 14.

Minnesota Statutes 2014, section 322B.03, subdivision 37, is amended to read:

Subd. 37.

Person.

"Person" includes a natural person deleted text begin and deleted text end new text begin , new text end an organization new text begin , and
any other association, business trust, estate, trust, enterprise, and any other legal or
commercial entity new text end .

Sec. 15.

Minnesota Statutes 2014, section 322B.03, is amended by adding a
subdivision to read:

new text begin Subd. 52. new text end

new text begin Converted organization. new text end

new text begin "Converted organization" means the
organization into which a converting limited liability company converts pursuant to
sections 322B.781 to 322B.791.
new text end

Sec. 16.

Minnesota Statutes 2014, section 322B.03, is amended by adding a
subdivision to read:

new text begin Subd. 53. new text end

new text begin Converting limited liability company. new text end

new text begin "Converting limited liability
company" means a domestic limited liability company other than a nonprofit limited
liability company that is governed by this chapter and which converts or intends to convert
into another organization pursuant to sections 322B.781 to 322B.791.
new text end

Sec. 17.

Minnesota Statutes 2014, section 322B.03, is amended by adding a
subdivision to read:

new text begin Subd. 54. new text end

new text begin Governing statute. new text end

new text begin "Governing statute" means the statute that governs
an organization's internal affairs.
new text end

Sec. 18.

Minnesota Statutes 2014, section 322B.03, is amended by adding a
subdivision to read:

new text begin Subd. 55. new text end

new text begin Organizational documents. new text end

new text begin "Organizational documents" means:
new text end

new text begin (1) for a domestic or foreign general partnership, its partnership agreement;
new text end

new text begin (2) for a domestic or foreign limited partnership, its certificate of limited partnership
and partnership agreement;
new text end

new text begin (3) for a domestic or foreign limited liability company, its certificate or articles of
organization and operating agreement, or comparable records as provided in its governing
statute;
new text end

new text begin (4) for a business trust, its agreement of trust and declaration of trust;
new text end

new text begin (5) for a domestic or foreign corporation for profit, its articles of incorporation,
bylaws, and other agreements among its shareholders which are authorized by its
governing statute, or comparable records as provided in its governing statute; and
new text end

new text begin (6) for any other organization, the basic records that create the organization and
determine its internal governance and the relations among the persons that own it, have
an interest in it, or are members of it, in each case as provided or authorized by its
governing statute.
new text end

Sec. 19.

Minnesota Statutes 2014, section 322B.03, is amended by adding a
subdivision to read:

new text begin Subd. 56. new text end

new text begin Personal liability. new text end

new text begin "Personal liability" means liability for a debt,
obligation, or other liability of an organization which is imposed on a person that co-owns,
has an interest in, or is a member of the organization:
new text end

new text begin (1) by the organization's governing statute solely by reason of the person co-owning,
having an interest in, or being a member of the organization; or
new text end

new text begin (2) by the organization's organizational documents under a provision of the
organization's governing statute authorizing those documents to make one or more
specified persons liable for all or specified debts, obligations, or other liabilities of the
organization solely by reason of the person or persons co-owning, having an interest or
interests in, or being a member or members of the organization.
new text end

Sec. 20.

Minnesota Statutes 2014, section 322B.383, subdivision 1, is amended to read:

Subdivision 1.

Actions creating dissenters' rights.

Subject to a member control
agreement under section 322B.37, a member of a limited liability company may dissent
from, and obtain payment for the fair value of the member's membership interests in the
event of, any of the following limited liability company actions:

(1) unless otherwise provided in the articles, an amendment of the articles of
organization, but not an amendment to a member control agreement, which materially and
adversely affects the rights or preferences of the membership interests of the dissenting
member in that it:

(i) alters or abolishes a preferential right of the membership interests;

(ii) creates, alters, or abolishes a right in respect of the redemption of the membership
interests, including a provision respecting a sinking fund for the redemption or repurchase
of the membership interests;

(iii) alters or abolishes a preemptive right of the owner of the membership interests
to make a contribution;

(iv) excludes or limits the right of a member to vote on a matter, or to cumulate votes,
except as the right may be excluded or limited through the acceptance of contributions or
the making of contribution agreements pertaining to membership interests with similar
or different voting rights;

(v) changes a member's right to resign or retire;

(vi) establishes or changes the conditions for or consequences of expulsion; or

(vii) eliminates the right to obtain payment under clause (1);

(2) a sale, lease, transfer, or other disposition of property and assets of the limited
liability company that requires member approval under section 322B.77, subdivision 2,
but not including a disposition in dissolution described in section 322B.813, subdivision
4, or a disposition pursuant to an order of a court, or a disposition for cash on terms
requiring that all or substantially all of the net proceeds of disposition be distributed to
the members in accordance with their respective membership interests within one year
after the date of disposition;

(3) a plan of merger to which the limited liability company is a constituent
organization;

(4) a plan of exchange to which the limited liability company is a party as the
organization whose ownership interests will be acquired by the acquiring organization, if
the membership interests being acquired are entitled to be voted on the plan;

(5) a plan of conversion new text begin is adopted new text end under section deleted text begin 302A.683 deleted text end new text begin 322B.783 and becomes
effective new text end ; or

(6) any other limited liability company action taken pursuant to a member vote with
respect to which the articles of organization, a member control agreement, the bylaws, or a
resolution approved by the board of governors directs that dissenting members may obtain
payment for their membership interests.

Sec. 21.

new text begin [322B.781] CONVERSION.
new text end

new text begin Subdivision 1. new text end

new text begin Conversion requirements. new text end

new text begin Pursuant to this section, sections
322B.783 to 322B.791, and a plan of conversion, a converting limited liability company
may convert to another organization if:
new text end

new text begin (1) the other organization's governing statute authorizes the conversion;
new text end

new text begin (2) the conversion is not prohibited by other law of this state or the law of the
jurisdiction that enacted the other organization's governing statute; and
new text end

new text begin (3) the other organization complies with its governing statute in effecting the
conversion.
new text end

new text begin Subd. 2. new text end

new text begin Contents of plan of conversion. new text end

new text begin A plan of conversion must include:
new text end

new text begin (1) the name of the converting limited liability company before conversion;
new text end

new text begin (2) the name and form of the organization and the jurisdiction of the organization's
governing statute after conversion;
new text end

new text begin (3) the terms and conditions of the conversion, including the manner and basis for
converting interests in the converting limited liability company into any combination of
money, interests in the converted organization, and other consideration; and
new text end

new text begin (4) the organizational documents of the converted organization as they are to be in
effect upon completion of the conversion.
new text end

Sec. 22.

new text begin [322B.783] ACTION ON PLAN OF CONVERSION BY CONVERTING
CORPORATION.
new text end

new text begin Subdivision 1. new text end

new text begin Approval of plan of conversion. new text end

new text begin Subject to section 322B.789, a
plan of conversion of a converting limited liability company must be approved under
subdivisions 2 and 3.
new text end

new text begin Subd. 2. new text end

new text begin Board approval; notice to members. new text end

new text begin A resolution containing the plan
of conversion must be approved by the affirmative vote of a majority, or more if so
provided in the converting limited liability company's organizational documents, of the
governors present at a meeting of the board of governors of the converting limited liability
company and must then be submitted at a regular or special meeting to the members of the
converting limited liability company. Written notice must be given to every member of the
converting limited liability company, whether or not entitled to vote at the meeting, not
less than 14 days or more than 60 days before the meeting. The written notice must state
that a purpose of the meeting is to consider the proposed plan of conversion. A copy or
short description of the plan of conversion must be included in or enclosed with the notice.
new text end

new text begin Subd. 3. new text end

new text begin Approval by members. new text end

new text begin At the meeting, a vote of the members must
be taken on the proposed plan. The plan of conversion is adopted when approved by
the affirmative vote of the holders of a majority of the voting power of all membership
interests entitled to vote. A class or series of membership interests is entitled to vote as
a class or series on the approval of the plan unless otherwise provided in the articles or
member control agreement, in which case the articles or member control agreement shall
govern such class voting rights to the exclusion of section 322B.155.
new text end

new text begin Subd. 4. new text end

new text begin Amendment of plan or abandonment of conversion. new text end

new text begin Subject to section
322B.789 and any contractual rights, after a conversion is approved, and at any time
before articles of conversion are delivered to the secretary of state for filing under section
322B.785, a converting limited liability company may amend the plan or abandon the
conversion:
new text end

new text begin (1) as provided in the plan; or
new text end

new text begin (2) except as otherwise prohibited in the plan, by the same consent as was required
to approve the plan.
new text end

Sec. 23.

new text begin [322B.785] FILINGS REQUIRED FOR CONVERSION; EFFECTIVE
DATE AND TIME.
new text end

new text begin Subdivision 1. new text end

new text begin Articles of conversion. new text end

new text begin After a plan of conversion is approved, the
converting limited liability company shall file articles of conversion with the secretary
of state, together with a total fee of $35, which articles of conversion must be signed as
provided in section 322B.03, subdivision 45, and must include:
new text end

new text begin (1) a statement that the limited liability company is converting into another
organization;
new text end

new text begin (2) the name and form of the converted organization and the jurisdiction of its
governing statute;
new text end

new text begin (3) the time the conversion is effective under the governing statute of the converted
organization;
new text end

new text begin (4) a statement that the conversion was approved as required by this chapter;
new text end

new text begin (5) a statement that the conversion was approved as required by the governing
statute of the converted organization; and
new text end

new text begin (6) if the converted organization is a foreign organization not authorized to transact
business in this state, the street address of an office that the secretary of state may use for
the purposes of section 322B.791, subdivision 3.
new text end

new text begin Subd. 2. new text end

new text begin Effective date and time of conversion. new text end

new text begin A conversion becomes effective
as provided by the governing statute of the converted organization.
new text end

Sec. 24.

new text begin [322B.789] RESTRICTIONS ON APPROVAL OF CONVERSIONS.
new text end

new text begin Subdivision 1. new text end

new text begin Personal liability of member. new text end

new text begin If a member of a converting limited
liability company will have personal liability with respect to a converted organization,
approval or amendment of a plan of conversion is ineffective without the express written
consent of the member, unless:
new text end

new text begin (1) a valid member control agreement of the limited liability company provides for
approval of a conversion and imposition of personal liability without the consent of all
members against whom personal liability is imposed;
new text end

new text begin (2) the member has consented in writing to the provision of the valid member
control agreement; and
new text end

new text begin (3) the member does not exercise dissenter's rights pursuant to section 322B.383.
new text end

new text begin Subd. 2. new text end

new text begin Consent. new text end

new text begin A member does not give the consent required by subdivision
1 merely by consenting to a provision of a member control agreement or any other
agreement that permits the member control agreement or any other agreement to be
amended with the consent of fewer than all the members or parties to the other agreement.
new text end

Sec. 25.

new text begin [322B.791] EFFECT OF CONVERSION.
new text end

new text begin Subdivision 1. new text end

new text begin Same entity. new text end

new text begin An organization that has been converted pursuant to
sections 322B.781 to 322B.791 is for all purposes the same entity that existed before
the conversion.
new text end

new text begin Subd. 2. new text end

new text begin Effect on converting limited liability company. new text end

new text begin When a conversion
takes effect:
new text end

new text begin (1) all property owned by the converting limited liability company remains vested
in the converted organization and no assignment by operation of law or otherwise of its
assets, properties, or contracts shall be deemed to have occurred;
new text end

new text begin (2) all debts, obligations, or other liabilities of the converting limited liability
company continue as debts, obligations, or other liabilities of the converted organization;
new text end

new text begin (3) an action or proceeding pending by or against the converting limited liability
company may be continued as if the conversion had not occurred or as actions or
proceedings by or against the converted organization;
new text end

new text begin (4) except as prohibited by law other than this chapter, all of the rights, privileges,
immunities, powers, and purposes of the converting limited liability company remain
vested in the converted organization;
new text end

new text begin (5) except as otherwise provided in the plan of conversion, the terms and conditions
of the plan of conversion take effect; and
new text end

new text begin (6) except as otherwise agreed, the conversion does not dissolve a converting limited
liability company for the purposes of sections 322B.80 to 322B.873.
new text end

new text begin Subd. 3. new text end

new text begin Foreign organization. new text end

new text begin A converted organization that is a foreign
organization consents to the jurisdiction of the courts of this state to enforce any debt,
obligation, or other liability for which the converting limited liability company is liable if,
before the conversion, the converting limited liability company was subject to suit in this
state on the debt, obligation, or other liability. A converted organization that is a foreign
organization and not authorized to transact business in this state appoints the secretary
of state as its agent for service of process for purposes of enforcing a debt, obligation,
or other liability under this subdivision.
new text end

Sec. 26.

Minnesota Statutes 2014, section 322C.0105, is amended by adding a
subdivision to read:

new text begin Subd. 1a. new text end

new text begin Loans, guarantees, and suretyship. new text end

new text begin Without in any way limiting
the generality of the power of a limited liability company to do all things necessary or
convenient to carry on its activities as conferred in subdivision 1, a limited liability
company may lend money to, guarantee an obligation of, become a surety for, or otherwise
financially assist a person, if the transaction, or a class of transactions to which the
transaction belongs, is approved pursuant to this chapter and the company's operating
agreement and:
new text end

new text begin (1) is in the usual and regular course of business of the limited liability company;
new text end

new text begin (2) is with, or for the benefit of, a related organization, an organization in which the
limited liability company has a financial interest, an organization with which the limited
liability company has a business relationship, or an organization to which the limited
liability company has the power to make donations, any of which relationships constitute
consideration sufficient to make the loan, guarantee, suretyship, or other financial
assistance so approved enforceable against the limited liability company;
new text end

new text begin (3) is with, or for the benefit of, a member who provides services to the limited
liability company, or a manager or other employee of the limited liability company or a
subsidiary, including a member, manager, or employee who is a governor of the limited
liability company or a subsidiary, and may reasonably be expected, in the judgment of the
board of governors, to benefit the limited liability company; or
new text end

new text begin (4) whether or not any separate consideration has been paid or promised to the
limited liability company, has been approved by (i) the owners of two-thirds of the
voting power of persons other than the interested person or persons, or (ii) the unanimous
affirmative vote of all members, whether or not ordinarily entitled to vote.
new text end

new text begin Any such loan, guaranty, surety contract, or other financial assistance may be with or
without interest and may be unsecured or may be secured in any manner including,
without limitation, a grant of a security interest in a member's transferable interest in
the limited liability company. This subdivision does not grant any authority to act as a
bank or to carry on the business of banking.
new text end

Sec. 27.

Minnesota Statutes 2014, section 322C.0105, subdivision 2, is amended to read:

Subd. 2.

Shelf LLC.

Until a limited liability company has or has had at least one
member, the company lacks the capacity to do any act or carry on any activity except:

(1) delivering to the secretary of state for filing a statement of change under section
322C.0114, an amendment to the deleted text begin certificate deleted text end new text begin articles of organization new text end under section
322C.0202, a statement of correction under section 322C.0206, an annual report under
section 322C.0208, and a statement of termination under section 322C.0702;

(2) admitting a member under section 322C.0401; and

(3) dissolving under section 322C.0701.

Sec. 28.

Minnesota Statutes 2014, section 322C.0110, subdivision 4, is amended to read:

Subd. 4.

Provisions particularly but not exclusively authorized.

If not manifestly
unreasonable, and without limiting the terms that may be included in an operating
agreement, the operating agreement may:

(1) restrict or eliminate the duty:

(i) as required in section 322C.0409, subdivisions 2, clause (1), deleted text begin and deleted text end 7, new text begin and 8, new text end to
account to the limited liability company and to hold as trustee for it any property, profit, or
benefit derived by the member in the conduct or winding up of the company's business,
from a use by the member of the company's property, or from the appropriation of a
limited liability company opportunity;

(ii) as required in section 322C.0409, subdivisions 2, clause (2), deleted text begin and deleted text end 7, new text begin and 8, new text end to
refrain from dealing with the company in the conduct or winding up of the company's
business as or on behalf of a party having an interest adverse to the company; and

(iii) as required by section 322C.0409, subdivisions 2, clause (3), deleted text begin and deleted text end 7, new text begin and 8, new text end to
refrain from competing with the company in the conduct of the company's business before
the dissolution of the company;

(2) identify specific types or categories of activities that do not violate the duty
of loyalty;

(3) alter the duty of care, except to authorize intentional misconduct or knowing
violation of law;

(4) alter any other fiduciary duty, including eliminating particular aspects of that
duty; and

(5) prescribe the standards by which to measure the performance of the contractual
obligation of good faith and fair dealing under section 322C.0409, subdivision 4.

Sec. 29.

Minnesota Statutes 2014, section 322C.0110, subdivision 7, is amended to read:

Subd. 7.

Indemnification and exculpation.

The operating agreement may alter or
eliminate the indemnification for a member, manager, or governor provided by section
322C.0408, subdivision deleted text begin 1 deleted text end new text begin 2 new text end , and may eliminate or limit a member's, manager's, or
governor's liability to the limited liability company and members for money damages,
except for:

(1) breach of the duty of loyalty;

(2) a financial benefit received by the member or manager to which the member or
manager is not entitled;

(3) a breach of a duty under section 322C.0406;

(4) intentional infliction of harm on the company or a member; or

(5) an intentional violation of criminal law.

Sec. 30.

Minnesota Statutes 2014, section 322C.0201, subdivision 2, is amended to read:

Subd. 2.

Required contents of articles of organization.

Articles of organization
must state:

(1) the name of the limited liability company, which must comply with section
322C.0108;

(2) the street address of the initial registered office and new text begin , if the limited liability
company has an agent for the service of process, new text end the name of the deleted text begin initial deleted text end agent for service
of process of the company at the registered office; and

(3) the name and street address of each organizer.

Sec. 31.

Minnesota Statutes 2014, section 322C.0203, subdivision 1, is amended to read:

Subdivision 1.

Signing requirements.

A record filed with the secretary of state
pursuant to this chapter must be signed as follows:

(1) Except as otherwise provided in clauses (2) through deleted text begin (4) deleted text end new text begin (5) new text end , a record signed on
behalf of a limited liability company must be signed by a person authorized by the company.

(2) A limited liability company's initial articles of organization must be signed by
at least one person acting as an organizer.

deleted text begin (3) A notice under section 322C.0201, subdivision 5, clause (1), must be signed
by an organizer.
deleted text end

deleted text begin (4) deleted text end new text begin (3) new text end A record filed on behalf of a dissolved limited liability company that has no
members must be signed by the person winding up the company's activities under section
322C.0702, subdivision 3, or a person appointed under section 322C.0702, subdivision 4,
to wind up those activities.

deleted text begin (5) deleted text end new text begin (4) new text end A statement of denial by a person under section 322C.0303 must be signed
by that person.

deleted text begin (6) deleted text end new text begin (5) new text end Any other record must be signed by the person on whose behalf the record is
filed with the secretary of state.

Sec. 32.

Minnesota Statutes 2014, section 322C.0404, subdivision 1, is amended to read:

Subdivision 1.

Equal distributions.

new text begin Subject to section 322C.1204, subdivision 3,
clause (3), items (i) through (iv), new text end any distributions made by a limited liability company
before its dissolution and winding up must be in equal shares among members and
dissociated members, except to the extent necessary to comply with any transfer effective
under section 322C.0502 and any charging order in effect under section 322C.0503.

Sec. 33.

Minnesota Statutes 2014, section 322C.0407, subdivision 1, is amended to read:

Subdivision 1.

Member-managed default.

new text begin Except as provided in section
322C.1101, subdivision 5, with respect to nonprofit limited liability companies, new text end a limited
liability company is a member-managed limited liability company unless the operating
agreement:

(1) expressly provides that:

(i) the company is or will be "manager-managed" or "board-managed";

(ii) the company is or will be "managed by managers" or "managed by a board"; or

(iii) management of the company is or will be "vested in managers" or "vested
in a board"; or

(2) includes words of similar import.

Sec. 34.

Minnesota Statutes 2014, section 322C.0407, subdivision 4, is amended to read:

Subd. 4.

Board-managed company rules.

In a board-managed limited liability
company, the following rules apply:

(1) The activities and affairs of a limited liability company are to be managed by and
under the direction of a board of governors, which shall consist of one or more governors
as determined by members holding a majority of the voting power of the members. Except
as specifically stated in this subdivision and section deleted text begin 322C.0204 deleted text end new text begin 322C.0202 new text end , subdivision
5 new text begin , subject to section 322C.0302 new text end :

(i) the board acts only through an act of the board;

(ii) no individual governor has any right or power to act for the limited liability
company; and

(iii) only officers, managers, or other agents designated by the board or through a
process approved by the board have the right to act for the limited liability company, and
that right extends only to the extent consistent with the terms of the designation.

(2) A governor must be a natural person. A person need not be a member to be a
governor, but the dissociation of a member who is also a governor disqualifies the person
as a governor. If a person who is both a governor and a member ceases to be a governor,
that cessation does not by itself dissociate the person as a member. A person's ceasing
to be a governor does not discharge any debt, obligation, or other liability to the limited
liability company or members which the person incurred while a governor.

(3) The method of election and any additional qualifications for governors will
be as determined by members holding a majority of the voting power of the members.
Governors are elected by a plurality of the voting power present and entitled to vote on the
election of governors at a duly called or held meeting at which a quorum is present.

(4) A member may waive notice of a meeting for the election of governors. A
member's waiver of notice under this clause is effective whether given before, at, or after
the meeting, and whether given in a record, orally, or by attendance. Attendance by a
member at a meeting for election of governors is a waiver of notice of that meeting,
except where the member objects at the beginning of the meeting to the transaction of
business because the meeting is not lawfully called or convened and does not participate
in the meeting after the objection.

(5) Once elected, a governor holds office for the term for which the governor
was elected and until a successor is elected, or until the earlier death, resignation,
disqualification, or removal of the governor. A governor may resign at any time. A
governor may be removed at any time, without cause and without advance notice, by a
majority of the voting power of all of the members. The existence of vacancies does not
affect the power of the board to function if at least one governor remains in office.

(6) When a vacancy occurs, the limited liability company shall immediately notify
all members in a record of the vacancy, stating the cause of the vacancy and the date the
notice is sent. Within 30 days of that date, the members may fill the vacancy in the same
method the members may elect governors under clause (3). If the vacancy is not filled
by the members under this clause, the vacancy may be filled by the affirmative vote of a
majority of the remaining governors, even though less than a quorum.

(7) The board shall meet from time to time as determined by members holding a
majority of the voting power of the members, at a place decided by the board. If the day
or date, time, and place of a board of governors meeting have been provided in a board
resolution, or announced at a previous meeting of the board of governors, no notice is
required. Notice of an adjourned meeting need not be given other than by announcement
at the meeting at which adjournment is taken. If notice is required for a meeting, notice
shall be made in the manner stated in clause (8).

(8) A governor may call a board meeting by giving at least ten days' notice in a
record to all governors of the date, time, and place of the meeting. The notice need not
state the purpose of the meeting. As to each governor, the notice is effective when given.

(i) Notice may be:

(A) mailed to the governor at an address designated by the person or at the last
known address of the person;

(B) deposited with a nationally recognized overnight delivery service for overnight
delivery or, if overnight delivery to the governor is not available, for delivery as promptly
as practicable to the governor at an address designated by the governor or at the last
known address of the governor;

(C) communicated to the governor orally;

(D) handed to the governor;

(E) given by facsimile communication, electronic mail, or any other form of
electronic communication, if the governor has consented in a record to receive notice
by such means; or

(F) by any other means determined by members holding a majority of the voting
power of the members.

(ii) The notice is deemed given if by:

(A) mail, when deposited in the United States mail with sufficient postage affixed;

(B) deposit for delivery, when deposited for delivery as provided in item (i), subitem
(B), with delivery charges prepaid or otherwise provided for by the sender;

(C) facsimile communication, when directed to a telephone number at which the
governor has consented in a record to receive notice;

(D) electronic mail, when directed to an electronic mail address at which the
governor has consented in a record to receive notice; and

(E) any other form of electronic communication by which the governor has
consented in a record to receive notice, when directed to the governor.

(9) A governor may waive notice of a meeting of the board of governors. A waiver
of notice by a governor entitled to notice is effective whether given before, at, or after the
meeting, and whether given in a record, orally, or by attendance. Attendance by a governor
at a meeting is a waiver of notice of that meeting, except where the governor objects at the
beginning of the meeting to the transaction of business because the meeting is not lawfully
called or convened and does not participate in the meeting after the objection.

(10) A majority of the governors currently holding office is a quorum for the
transaction of business. When a quorum is present at a duly called or held meeting of
the board, the vote of a majority of the directors present constitutes an act of the board.
If a quorum is present when a duly called or held meeting is convened, the governors
present may continue to transact business until adjournment, even though the withdrawal
of a number of governors originally present leaves less than the proportion or number
otherwise required for a quorum.

(11) Any meeting among governors may be conducted solely by one or more means
of remote communication through which all of the governors may participate with each
other during the meeting, if the number of governors participating in the meeting would
be sufficient to constitute a quorum. Participation in a meeting by that means constitutes
presence in person at the meeting.

(12) A governor may participate in a board of governors meeting by means of
remote communication, through which the governor, other governors so participating, and
all governors physically present at the meeting may participate with each other during
the meeting. Participation in a meeting by that means constitutes presence in person
at the meeting.

(13) An action required or permitted to be taken at a board meeting may be taken
by written action signed by the number of governors that would be required to take the
same action at a meeting of the board of governors at which all governors were present.
The written action is effective when signed by the required number of governors, unless a
different effective time is provided in the written action. When written action is permitted
to be taken by less than all governors, all governors must be notified immediately of its
text and effective date. Failure to provide the notice does not invalidate the written action.
A governor who does not sign or consent to the written action has no liability for the
action or actions taken by the written action.

(14) If the board designates a person as "chief manager," "president," "chief
executive officer," "CEO," or another title of similar import, that person shall:

(i) serve as an agent of the limited liability company at the will of the board, without
prejudice to any rights the person may have under a contract with the limited liability
company;

(ii) have general active management of the business of the limited liability company,
subject to the supervision and control of the board;

(iii) see that all orders and resolutions of the board of governors are carried into effect;

(iv) sign and deliver in the name of the limited liability company any deeds,
mortgages, bonds, contracts, or other instruments pertaining to the business of the limited
liability company, except in cases in which the authority to sign and deliver is required by
law to be exercised by another person or is expressly delegated by the board of governors
to some other officer or agent of the limited liability company;

(v) maintain records of and, whenever necessary, certify all proceedings of the
board of governors and the members; and

(vi) perform other duties prescribed by the board of governors.

(15) If the board designates a person as "treasurer," "chief financial officer," "CFO,"
or another title of similar import, that person shall:

(i) serve as an agent of the limited liability company at the will of the board, without
prejudice to any rights the person may have under a contract with the limited liability
company;

(ii) keep accurate financial records for the limited liability company;

(iii) deposit all money, drafts, and checks in the name of and to the credit of the limited
liability company in the banks and depositories designated by the board of governors;

(iv) endorse for deposit all notes, checks, and drafts received by the limited liability
company as ordered by the board of governors, making proper vouchers for them;

(v) disburse limited liability company funds and issue checks and drafts in the name
of the limited liability company, as ordered by the board of governors;

(vi) give to the chief executive officer and the board of governors, whenever
requested, an account of all transactions by the chief financial officer and of the financial
condition of the limited liability company; and

(vii) perform other duties prescribed by the board of governors or by the chief
executive officer.

(16) The consent of all members is required to:

(i) sell, lease, exchange, or otherwise dispose of all, or substantially all, of the
company's property, with or without the good will, outside the ordinary course of the
company's activities;

(ii) approve a merger, conversion, or domestication under sections 322C.1001 to
322C.1015; and

(iii) amend the operating agreement.

(17) new text begin Subject to section 322C.1204, subdivision 3, new text end for purposes of this subdivision,
each member possesses voting power in proportion to the member's interest in deleted text begin then current
profits deleted text end new text begin distributions new text end of the limited liability company new text begin prior to dissolution new text end and a majority of
the voting power of the members is a quorum at a meeting of the members.

Sec. 35.

Minnesota Statutes 2014, section 322C.0408, subdivision 6, is amended to read:

Subd. 6.

Determination of eligibility.

(a) All determinations whether
indemnification of a person is required because the criteria in subdivision 2 have been
satisfied and whether a person is entitled to payment or reimbursement of expenses in
advance of the final disposition of a proceeding as provided in subdivision 3 must be made:

(1) in a board-managed limited liability company:

(i) by the board of governors by a majority of a quorum, provided that governors
who are, at the time, parties to the proceeding shall not be counted for determining either
a majority or the presence of a quorum;

(ii) if a quorum under item (i) cannot be obtained, by a majority of a committee of
the board of governors, consisting solely of two or more governors not at the time parties
to the proceeding, duly designated to act in the matter by a majority of the full board of
governors including governors who are parties; and

(iii) if a determination is not made under item (i) or (ii), by special legal counsel,
selected either by a majority of the board of governors or a committee by vote pursuant
to item (i) or (ii) or, if the requisite quorum of the full board of governors cannot be
obtained and the committee cannot be established, by a majority of the full board of
governors including governors who are parties;

(2) in all other cases, by the affirmative vote of the members, new text begin subject to section
322C.1204, subdivision 3, new text end with each member having voting power in proportion to the
member's interest in deleted text begin then current profits deleted text end new text begin distributions new text end of the limited liability company new text begin prior
to dissolution new text end , but the membership interests held by parties to the proceeding must not be
counted in determining the presence of a quorum and are not considered to be present and
entitled to vote on the determination; or

(3) if an adverse determination is made under clauses (1) or (2), or if no
determination is made under clauses (1) or (2) within 60 days after (i) the later to occur
of the termination of a proceeding or a written request for indemnification to the limited
liability company or (ii) a written request for an advance of expenses, as the case may be,
by a court in this state, which may be the same court in which the proceeding involving
the person's liability took place, upon application of the person and any notice the
court requires. The person seeking indemnification or payment or reimbursement of
expenses pursuant to this clause has the burden of establishing that the person is entitled to
indemnification or payment or reimbursement of expenses.

(b) With respect to a person who is not, and was not at the time of the acts or
omissions complained of in the proceedings, a member, governor, manager, or person
possessing, directly or indirectly, the power to direct or cause the direction of the
management or policies of the limited liability company, the determination whether
indemnification of this person is required because the criteria set forth in subdivision 2
have been satisfied and whether this person is entitled to payment or reimbursement of
expenses in advance of the final disposition of a proceeding as provided in subdivision 3
may be made (i) in a board-managed limited liability company, by an annually appointed
committee of the board of governors, having at least one member who is a governor, which
committee shall report at least annually to the board of governors concerning its actions
and (ii) in all other cases by a committee appointed annually by the members, having at
least one committee member who is a member of the limited liability company, which
committee shall report at least annually to the board of governors concerning its actions.

Sec. 36.

Minnesota Statutes 2014, section 322C.0410, subdivision 2, is amended to read:

Subd. 2.

Manager-managed and board-managed company rules.

In a
manager-managed new text begin or board-managed new text end limited liability company, the following rules apply:

(1) The informational rights stated in subdivision 1 and the duty stated in subdivision
1, clause (3), apply to the managers or governors and not the members.

(2) During regular business hours and at a reasonable location specified by the
company, a member may obtain from the company and inspect and copy full information
regarding the activities, financial condition, and other circumstances of the company as
is just and reasonable if:

(i) the member seeks the information for a purpose material to the member's interest
as a member;

(ii) the member makes a demand in a record received by the company, describing
with reasonable particularity the information sought and the purpose for seeking the
information; and

(iii) the information sought is directly connected to the member's purpose.

(3) Within ten days after receiving a demand pursuant to clause (2), item (ii), the
company shall in a record inform the member that made the demand:

(i) of the information that the company will provide in response to the demand and
when and where the company will provide the information; and

(ii) if the company declines to provide any demanded information, the company's
reasons for declining.

(4) Whenever this chapter or an operating agreement provides for a member to give
or withhold consent to a matter, before the consent is given or withheld, the company
shall, without demand, provide the member with all information that is known to the
company and is material to the member's decision.

Sec. 37.

Minnesota Statutes 2014, section 322C.0502, subdivision 4, is amended to read:

Subd. 4.

Evidence of interest.

A transferable interest may be evidenced by a
certificate of the interest issued by the limited liability company in a record, and, subject
to this section, the interest represented by the certificate may be transferred by a transfer
of the certificate. new text begin Such an interest is not a security, as that term is defined in section
336.8-102, paragraph (a), clause (15), unless the conditions specified in section 336.8-103,
paragraph (c), are satisfied.
new text end

Sec. 38.

Minnesota Statutes 2014, section 322C.0902, is amended to read:

322C.0902 DERIVATIVE ACTION.

A member may maintain a derivative action to enforce a right of a limited liability
company if:

(1) the member first makes a demand on the other members in a member-managed
limited liability company, the managers of a manager-managed limited liability company,
or the board of governors of a board-managed limited liability company requesting that
they cause the company to bring an action to enforce the right, and the member new text begin , manager,
new text end or board does not bring the action within a reasonable time; or

(2) a demand under clause (1) would be futile.

Sec. 39.

Minnesota Statutes 2014, section 322C.1001, subdivision 11, is amended to
read:

Subd. 11.

Organizational documents.

"Organizational documents" means:

(1) for a domestic or foreign general partnership, its partnership agreement;

(2) for a deleted text begin limited partnership deleted text end new text begin domestic new text end or foreign limited partnership, its certificate of
limited partnership and partnership agreement;

(3) for a domestic or foreign limited liability company, its certificate or articles of
organization and operating agreement, or comparable records as provided in its governing
statute;

(4) for a business trust, its agreement of trust and declaration of trust;

(5) for a domestic or foreign corporation for profit, its articles of incorporation,
bylaws, and other agreements among its shareholders which are authorized by its
governing statute, or comparable records as provided in its governing statute; and

(6) for any other organization, the basic records that create the organization and
determine its internal governance and the relations among the persons that own it, have
an interest in it, or are members of it new text begin , in each case as provided or authorized by its
governing statute new text end .

Sec. 40.

Minnesota Statutes 2014, section 322C.1001, subdivision 12, is amended to
read:

Subd. 12.

Personal liability.

"Personal liability" means liability for a debt,
obligation, or other liability of an organization which is imposed on a person that co-owns,
has an interest in, or is a member of the organization:

(1) by the governing statute solely by reason of the person co-owning, having an
interest in, or being a member of the organization; or

(2) by the organization's organizational documents under a provision of the
governing statute authorizing those documents to make one or more specified persons
liable for all or specified debts, obligations, or other liabilities of the organization solely
by reason of the person or persons co-owning, having an interest new text begin or interests new text end in, or being a
member new text begin or members new text end of the organization.

Sec. 41.

Minnesota Statutes 2014, section 322C.1007, is amended to read:

322C.1007 CONVERSION.

Subdivision 1.

Conversion requirements.

new text begin Pursuant to this section, sections
322C.1008 to 322C.1010, and a plan of conversion, new text end an organization other than a limited
liability company, a foreign limited liability company, a nonprofit corporation, or an
organization owning assets irrevocably dedicated to a charitable purpose, may convert
to a limited liability company other than a nonprofit limited liability company, and a
limited liability company other than a nonprofit limited liability company may convert to
an organization other than a foreign limited liability company deleted text begin pursuant to this section,
sections 322C.1008 to 322C.1010, and a plan of conversion deleted text end if:

(1) the other organization's governing statute authorizes the conversion;

(2) the conversion is not prohibited by new text begin other law of this state or new text end the law of the
jurisdiction that enacted the other organization's governing statute deleted text begin or other law of this
state deleted text end ; and

(3) the other organization complies with its governing statute in effecting the
conversion.

Subd. 2.

Contents of plan of conversion.

A plan of conversion must be in a record
and must include:

(1) the name and form of the organization new text begin and the jurisdiction of the organization's
governing statute new text end before conversion;

(2) the name and form of the organization new text begin and the jurisdiction of the organization's
governing statute new text end after conversion;

(3) the terms and conditions of the conversion, including the manner and basis
for converting interests in the converting organization into any combination of money,
interests in the converted organization, and other consideration; and

(4) the organizational documents of the converted organization that are, or are
proposed to be, in a record.

Sec. 42.

Minnesota Statutes 2014, section 322C.1009, is amended to read:

322C.1009 FILINGS REQUIRED FOR CONVERSION; EFFECTIVE DATE
AND TIME.

Subdivision 1.

Articles of conversion.

After a plan of conversion is approved:

(1) deleted text begin a deleted text end new text begin if the converting organization is a converting limited liability company, the
new text end converting limited liability company shall file articles of conversion with the secretary
of state, together with a total fee of $60, which articles of conversion must be signed as
provided in section 322C.0203, subdivision 1, and must include:

(i) a statement that the limited liability company deleted text begin has been converted deleted text end new text begin is converting
new text end into another organization;

(ii) the name and form of the new text begin converted new text end organization and the jurisdiction of its
governing statute;

(iii) the time the conversion is effective under the governing statute of the converted
organization;

(iv) a statement that the conversion was approved as required by this chapter;

(v) a statement that the conversion was approved as required by the governing
statute of the converted organization; and

(vi) if the converted organization is a foreign organization not authorized to transact
business in this state, the street address of an office that the secretary of state may use for
the purposes of section 322C.1010, subdivision 3; and

(2) if the converting organization is not a converting limited liability company, the
deleted text begin converting organization shall file with the secretary of state articles of organization, which
deleted text end deleted text begin must include, in addition to the information required by section deleted text end deleted text begin 322C.0201, subdivision 2 deleted text end deleted text begin :
deleted text end new text begin converting organization shall file articles of conversion with the secretary of state, together
with a total fee of $60, which articles of conversion must be signed as provided in section
322C.0203, subdivision 1, and must include:
new text end

new text begin (i) articles of organization for the limited liability company into which the converting
organization is converting, which articles of organization must include the information
required by section 322C.0201, subdivision 2, clauses (1) and (2);
new text end

deleted text begin (i) deleted text end new text begin (ii) new text end a statement that the deleted text begin converted deleted text end new text begin converting new text end organization deleted text begin was converted from deleted text end new text begin is
converting into a limited liability company from new text end another organization;

deleted text begin (ii) deleted text end new text begin (iii) new text end the name and form of deleted text begin that deleted text end new text begin the new text end converting organization and the jurisdiction of
its governing statute; and

deleted text begin (iii) deleted text end new text begin (iv) new text end a statement that the conversion was approved in a manner that complied
with the converting organization's governing statute.

Subd. 2.

Effective date and time of conversion.

A conversion becomes effective:

(1) if the converted organization is a limited liability company, when the articles of
deleted text begin organization takes effect deleted text end new text begin conversion are filed with the secretary of state or on a later date
or later time specified in the articles of conversion new text end ; and

(2) if the converted organization is not a limited liability company, as provided by
the governing statute of the converted organization.

new text begin Subd. 3. new text end

new text begin Certificate. new text end

new text begin The secretary of state shall issue to the converted organization
or its legal representative a certificate of conversion.
new text end

Sec. 43.

Minnesota Statutes 2014, section 322C.1101, subdivision 5, is amended to read:

Subd. 5.

Management; provisions of chapter 317A applicable to nonprofit
limited liability companies.

(a) A nonprofit limited liability company must be
board-managed. The business and affairs of a nonprofit limited liability company must be
managed by or under the direction of a board of governors, which will have such powers
as are usually exercised by the board of directors of a nonprofit corporation governed by
chapter 317A. All governors will be entitled to vote and have equal rights and preferences
except as otherwise provided in the articles of organization or operating agreement. The
members of the first board may be named in the articles of organization, designated, or
appointed pursuant to the articles of organization, or elected by the organizer.

(b) A nonprofit limited liability company must have one or more natural persons
acting as officers and exercising the functions of the offices of president and treasurer,
however designated. The officers have such powers as are usually exercised by similar
officers of a nonprofit corporation governed by chapter 317A. The board shall elect
or appoint officers, except to the extent that the articles of organization or operating
agreement provide that the members may elect or appoint officers.

(c) Section 317A.161, subdivision 11, applies to a nonprofit limited liability company
as if it were a nonprofit corporation governed by chapter 317A. Section 317A.251 applies
to a governor of a nonprofit limited liability company as if the governor were a director of
a nonprofit corporation, and section deleted text begin 322C.409 deleted text end new text begin 322C.0409 new text end does not apply.

(d) Section 317A.255 applies to, and with regard to, a governor of a nonprofit limited
liability company as if the governor were a director of a nonprofit corporation.

(e) Section 317A.257 applies to a person who serves without compensation as
a governor of a nonprofit limited liability company, manager, member, or agent of a
nonprofit limited liability company as if such person were serving without compensation
as a director, officer, member, or agent of a nonprofit corporation.

(f) Section 317A.671 regarding the diversion of certain assets applies to a nonprofit
limited liability company as if it were a nonprofit corporation governed by chapter 317A.

(g) Section 317A.735 regarding the distribution of assets on dissolution applies to
a nonprofit limited liability company as if it were a nonprofit corporation governed by
chapter 317A.

(h) Section 317A.751 regarding judicial intervention applies to a nonprofit limited
liability company as if it were a nonprofit corporation governed by chapter 317A.

Sec. 44.

Minnesota Statutes 2014, section 322C.1204, subdivision 3, is amended to read:

Subd. 3.

Application to existing new text begin limited liability new text end company.

For the purposes of
applying this chapter to a limited liability company formed before August 1, 2015:

(1) the new text begin limited liability new text end company's articles of organization new text begin under chapter 322B at the
time the limited liability company becomes subject to this chapter new text end are deemed to be the
new text begin limited liability new text end company's articles of organization; deleted text begin and
deleted text end

(2) for the purposes of applying section 322C.0102, subdivision deleted text begin 10 deleted text end new text begin 17 new text end , and subject
to section 322C.0112, subdivision 4, new text begin the new text end language in the articles of organization, new text begin and any
new text end bylaws, operating agreement, deleted text begin and/or deleted text end new text begin or new text end member control agreement of a limited liability
company formed before August 1, 2015, that becomes subject to this chapter will operate
as if that language were in the operating agreement of the limited liability company when
it becomes subject to this chapter deleted text begin . deleted text end new text begin ; and
new text end

new text begin (3) subject to the operating agreement of the limited liability company:
new text end

new text begin (i) the limited liability company shall keep the records specified in section 322B.373,
subdivision 1, clause (11), at the company's principal executive office, or at another place
or places within the United States as determined under section 322B.373, subdivision 1,
before the company became subject to this chapter;
new text end

new text begin (ii) for the purpose of applying item (i), section 322B.40, subdivisions 3 and 4,
continue to apply to the limited liability company as if those provisions had not been
repealed;
new text end

new text begin (iii) section 322C.0404, subdivision 1, does not apply to the limited liability company;
new text end

new text begin (iv) the profits and losses of the limited liability company are to be allocated among
the members, and among classes and series of members, in proportion to the value of the
contributions of the members reflected in the records required by item (i);
new text end

new text begin (v) the voting power of each membership interest is in proportion to the value of the
contributions of the members reflected in the records required by item (i);
new text end

new text begin (vi) distributions of cash or other assets of the company, including distributions on
termination of the limited liability company, must be allocated in proportion to the value
of the contributions of the members reflected in the records required by item (i);
new text end

new text begin (vii) sections 322B.383, subdivisions 1, clause (1), 2, and 3, and 322B.386 continue
to apply to the limited liability company as if those provisions had not been repealed; and
new text end

new text begin (viii) for the purpose of applying item (vii), section 322B.356, subdivision 1,
continues to apply to the limited liability company as if that provision had not been repealed.
new text end

Sec. 45. new text begin REPEALER.
new text end

new text begin (a) new text end new text begin Minnesota Statutes 2014, sections 302A.681; 302A.683; 302A.685; 302A.687;
302A.689; and 322B.78, new text end new text begin are repealed.
new text end

new text begin (b) new text end new text begin Laws 2014, chapter 157, article 2, sections 10; 11; 12; 13; 14; 15; 16; and 30, new text end new text begin are
repealed.
new text end