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I am enquiring about a conversion from an LLC to a corporation

 
Attorney Arcadier's Avatar
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Customer Question

I am enquiring about a conversion from an LLC to a corporation in Colorado in US.
Can you advise if a legal agreement exits in the LLC name if it is automatically transferred upon a conversion to a corporation?

Eg. I have a Master franchise agreement between an Australian Company with a LLC in Colorado in US and the LLC has converted to a corporation.

Can you confirm that the agreement is binding and I am not required to do anything to ensure the corporation is legally bound in the same manner that the LLC was?

 

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Country relating to Question: United States

Submitted: 342 days ago.
Category: Business Law
Value: AU$99
Status: CLOSED

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Expert:  Attorney Arcadier replied 342 days ago.


Attorney Arcadier : So long as you have kept the same fein number, then you are fine. Normally fein number stays the same unless you elected otherwise.
Attorney Arcadier : I hope you found my answer helpful, please click on the GREEN ACCEPT button above for my answer OR the HAPPY SMILEY FACE. This is necessary for me to be paid for my work and so that I can get credit for assisting you. Your question will not close, and you will still have the opportunity to follow-up if needed. Leaving a bonus and positive feedback is not required, but doing so is certainly appreciated! If you have additional questions, please keep in mind that I do not know what you already know or don't know, or with what you need help, unless you tell me. Please consider that I am answering the question or question that is posed in your posting based upon my reading of your post and sometimes misunderstandings can occur. If I did not answer the question you thought you were asking, please respond with the specific question you wanted answered. Also remember, sometimes the law does not support what we want it to support, but that is not the fault of the person answering the question, so please be courteous. Kindly note, sometimes legal answers take more than a few minutes to be properly addressed as the law is esoteric. Indeed, we are dealing with laws throughout the United States and applying them to complex fact patterns, SO PLEASE BE PATIENT IT WILL BE MORE THAN A FEW MINUTES  IN SOME CASES BEFORE YOU GET A RESPONSE, BUT BE ASSURED YOU ARE NOT BEING IGNORED. Sometimes, I may be logged off, but rest assured, I will follow up on your concerns as soon as possible. There can also be a delay of an hour or more in between my answers because I may be helping other customers or taking a break.
Customer :

Can you tell me what a fein number is?

Attorney Arcadier : Its a federal employer identification number. All corporations and llc's must have it in order to do business in the U.S.
Attorney Arcadier : The fein number is XXX social security number of the corporation
Customer :

HiChange of Ownership or Structure
Generally, businesses need a new EIN when their ownership or structure has changed. Refer to "Do You Need a New EIN?" to determine if this applies to your business

Customer :

I dont understand you say it has to be the same EIN yet the paragraph above states this.

Customer :

What forms do I need to see to show that all the assets of the LLC have been transferred to the corporation?

Attorney Arcadier : The link you provided clearly explains that you generally do not need a new ein number when converting from llc to inc. Llc to inc is not a change in ownership
Customer :

Thank you fr your patience obviously Aus law and my understaning based on Aus law is different in the US.

Attorney Arcadier : If you do get a new fein for a variety of reasons, then you will need to recertify your legal agreements.
Customer :

To confirm you can covert a LLC to a corporation which will take all assets of the LLC over to the Corporation and the Corporation is still legally bound by the agreement that clearly states it was with the Australian company and the LLC?

Attorney Arcadier : yes if you keep fein number.
Customer :

So where do I go to find out if the new Corporation that has been formed is legally bound to the agreement that was with the LLC? I have copies of the Statement of coversion but is does not list the agreements or any assets? Should I be requesting more proof that the agreements will be liable under this conversion?

Attorney Arcadier : I would ask them to confirm that their fein number is XXXXXXXXX or recertify agreements with new name.
Attorney Arcadier : And if it is a conversion, it is not a new corporation formed.. its a conversion.
Customer :

So when you say rectify agreements with the new name... For the current agreement between Aus Co and the LLC DO we just do a letter up to state thattheir has been a conversion and the agreement is now with the Aus company and the Corporation?... AND with the agreements between the LLC and the franchisees (current agreements) do we do the same? OR do you mean just to change any future agreements to reflect the corporation name not the LLC?

Attorney Arcadier : You need a letter executed by the converted inc and the franchisee that says: "this certifies that the agreements in place between llc and franchises remain in effect with converted company"
Attorney Arcadier : Or a confirmation that llc and new inc have same fein number.
Customer :

To confirm you state between the LLC and the franchisees signed by both parties? Can you confirm that we also do the same between the Aus company and the LLC? Does this HAVE to be done by law as they have advised me that they have been given advice that does not need to happen. What if the Franchisee does not wish to sign the letter? Or is it simply advice to notify the franchisee?

Attorney Arcadier : You just need to protect your interests as a master franchisee. IRS has that info, but not available to you unless you are in litigation. If they represent that they have same fein number in writing, then thats enough. Or the letter signed by both parties. Why wouldnt franchisee not sign letter? There are many facts you are introducing. This requires a one hour consultation to properly address to make sure everyones interests are being covered. The answer to your question has been clearly answered and explained. To discuss how to protect all parties and require who to do what, that is a complex, long one hour discussion.
Customer :

Thanks for the clarification. I will ask them the questions. If I decide that we need to have the one hour consultation, how much is it and how do I ensure I get back to you so I do not have to explain everything again?

Attorney Arcadier : You can go back to this chat even after you click accept. You can also just google my unique name.
Customer :

Okay - Thank you for your help it's appreciated!

Attorney Arcadier : Justanswer prevents us from disclosing private information
Attorney Arcadier : Best wishes. Just a little bit of ensuring can give you piece of mind as to the enforceability of your contract. I do appreciate your concerns. But because 99% of time same fein number remains the same, you should be fine. Just confirm to be sure.
Customer :

Thanks again.

Customer :

So do I need to do anything to ensure you are paid the $99? Or is this automatically done?

Attorney Arcadier : Please click accept. Then justanswer distributes it.
Attorney Arcadier : You forgot to click accept. Please do so as I do not get credit unless accept is clicked.

Expert TypeAttorney
Category: Business Law
Pos. Feedback: 97.1 %
Accepts: 197
Answered: 5/11/2012

Experience: Contract questions and Incorporation questions answered.

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