On April 30 2018, Minnesota Governor Mark Dayton signed into law H.F. No. 2764 as Session Laws Chapter No. 103 (the “Act”). Previously, the Act was unanimously approved by both the Minnesota House and Senate. The adoption of the Act, like the Revised Minnesota Limited Liability Company Act, brings Minnesota business law more in line with the laws of Delaware and many other states, making mergers, conversions, and domestications of business entities in Minnesota much more straight forward for both Minnesota business attorneys and Minnesota business entities.
When Does the Act Apply?
Section 28 of the Act (personal liability and consent of a partner of a limited partnership) will apply retroactively to January 1, 2018. Sections 19 through 27 and 33 through 40 (mergers of wholly owned subsidiaries, conversions, and domestications for limited liability companies, corporations, and partnerships) will apply effective January 1, 2019, and Sections 1 through 18, 29 through 32, and 41 (fees, forum selection, reinstatement of administratively dissolved company, and restrictions on approval) apply as of August 1, 2018.
What Are the Changes?
The Act makes two essential changes:
First, it authorizes “medium-form mergers” (allowing an entity to accept a tender offer for merger and proceed without submitting the merger vote to the owners in certain circumstances), while clarifying the path toward completing conversions (for example, when a Minnesota corporation converts into a Minnesota limited liability company) and domestications (when an entity formed in another state opts to be governed by Minnesota business statutes, such as the Minnesota Business Corporations Act or Minnesota Revised Limited Liability Company Act.)
Second, it allows “exclusive forum bylaws,” which allow a corporation to require all of its internal affairs and shareholder disputes to be decided by Minnesota courts. This is new to Minnesota corporations, but arguably something that can already be accomplished through a Minnesota limited liability company’s operating agreement.
The Act’s changes will continue a trend in making Minnesota law more friendly to corporations. Under the Act, there are now clear procedures for mergers, conversions, and domestications and the steps to be taken by and through the Minnesota Secretary of State to effectuate these actions. As a result, Minnesota should to see more business entities “staying home,” instead of forming as Delaware entities.
For additional information on the Act, merger, conversion, domestication, and the benefits of amending your entity’s governance documents to include an exclusive forum provision, or otherwise be governed under Minnesota’s business laws, contact the Minneapolis business law attorneys at Trepanier MacGillis Battina P.A.
About the Author:
Trepanier MacGillis Battina P.A. is a Minnesota business law firm located in Minneapolis, Minnesota. Their business law attorneys can be reached at 612.455.0500.