Flashcards Studio

Lumière Holdings, Inc., a domestic stock corporation with 2,000,000 authorized capital and 1,100,000 outstanding shares, adopts a plan of conversion to a non-stock corporation named Lumière Foundation, Inc., in which all assets, liabilities, contracts, and records of Lumière Holdings would be assumed by the new non-stock entity with no dissolution of Lumière Holdings. The board approves the plan, and stockholders representing 65% of the outstanding shares approve at a stockholders’ meeting. The corporation also fails to notify creditors as required by law and to file the plan with the Securities and Exchange Commission within the period prescribed by law. (Scope: no dissolution contemplated; the old corporation would be replaced by the new non-stock entity, with transfer of property and obligations to the new entity.) (a) Identify the controlling doctrine governing conversion of a corporation under the Revised Corporation Code. (b) Distinguish the rule on stockholders’ approval from the creditor-notice and SEC-filing requirements. (c) Apply the facts: is the conversion valid? What are the consequences for the parties and for pre-conversion contracts?