Statutory conversion
A legal process for changing an entity's form (LLC to Corporation, or vice versa) under 6 Del. C. § 18-211.
Definition
Statutory conversion allows a non-LLC entity to become a Delaware LLC, or vice versa, without dissolving and re-forming. Codified at 6 Del. C. § 18-211 and 8 Del. C. § 266. State fee: $200 for the Certificate of Conversion plus the new Certificate of Formation fee.
Context
Conversion preserves entity history, contracts, and bank accounts; new formation does not.
Example
A founder operating as a sole proprietorship converts to a Delaware LLC. Contracts, EIN, and bank accounts can typically continue under the converted entity.
Common pitfalls
- Federal tax implications can include gain recognition.
- All members or owners must consent.
- Some states do not recognize statutory conversion; foreign-qualification needs separate handling.