Can You Domesticate a Texas Corporation in Florida?

Can You Domesticate a Texas Corporation in Florida?

Domesticating or Moving a Texas C or S Corporation to Florida

In the last few years, Florida has become notably popular among business owners looking to relocate their operations to a new state – Texas corporations included. There are plenty of reasons for this, ranging from our tropical climate to our welcoming culture. It’s pretty great that we’re one of the few states without any personal income tax on business owners, too. If your Texas corporation is looking to move to Florida, then you might be interested in learning more about “domestication.” This is a statutory process for transferring a corporation from one state to another. For a more personalized walkthrough on how to domesticate your Texas corporation to Florida, schedule a consultation with our corporate attorney today.

What’s the Difference Between a Conversion and a Domestication in Florida?

Businesses from out of state are known as “foreign” business entities. Florida allows foreign entities, such as Texas corporations, to become Florida entities by undergoing either a conversion or a domestication, depending on the business’s structure. Our state statutes use the term “conversion” for incoming limited liability companies and “domestication” for incoming corporations. However, the opposite is true for some other states, so be sure to double check the laws in both jurisdictions before filing. For this article, we will be using Florida terminology.

What Happens to My Texas Corporation During Domestication?

We like to suggest domestication to clients interested in relocating their corporations to Florida because it lets them move their businesses without risking continuity or requiring any burdensome changes. Once the process is complete, it will still be the same corporation that it always was, just with a new address and jurisdiction. Just about everything else stays as it was. Your business keeps the same EIN, incorporation date, and corporate structure. The Texas corporation’s real estate, property, and contractual rights continue unchanged as well. 

There is, however, one small change you might need to make. If your Texas corporation’s original name is already in use by a Florida entity, then you’re going to think of something new to call the business unless you can convince the owners of that business to sell or otherwise part with the name. You can save yourself a lot of trouble by running a preliminary name search using the Florida Division of Corporation’s website before officiating your move.

What are the Effects of Domestication?

Domestication brings your Texas corporation to Florida with minimal interference. Your ownership structure stays the same, and you can even keep conducting business as usual in most cases. Shareholder rights are protected during the transfer by the terms of the conversion, the new Florida articles of incorporation, and Florida state law. The rights to obtain shares remain the same, as does the value of those shares, along with the domesticated entity’s stock, eligible interests, securities, and other obligations. You should know, however, that any debts, liabilities, obligations, lawsuits, or other legal proceedings against the Texas corporation will carry over to your new Florida corporation, too.

Does My Texas Corporation Dissolve When I Domesticate to Florida?

No, not so long your filing is done right. However, the domesticated business will no longer be allowed to do business back in Texas without first filing for a foreign qualification.

How Long Does It Take to Relocate My Business from Texas to Florida?

The average corporate domestication takes between 1 and 4 weeks to complete. That timeline can be longer if your business owns significant real estate. The most accurate estimate will be available through your attorney once they’ve had time to review the specific assets and structure of your corporation.

How Do I Domesticate My Texas C or S Corporation to Florida?

Most Texas corporations start their domestication process by creating a plan of domestication that details the statutory process permitting the move. This document should reference the authorizing statutes in both Texas and Florida. It also needs to cover any expected tax consequences, the corporate ownership structure, and the transfer of rights and obligations. The corporation’s directors and shareholders need to approve and sign off on the plan before the necessary documents can be filed with both Texas and Florida agencies.

Be careful and strictly follow the instructions in both the Florida and Texas corporate domestication statutes. Failure to do so could cause major problems for your business, including potential dissolution.

Should I Use FL Patel Law to Domesticate My Corporation?

It’s definitely what we’d recommend, and we have the experience to back it up. Our corporate attorney has helped domesticate businesses from across the country – including a few from Texas. This has resulted in an efficient process that helps ensure that your domestication moves forward as fast as possible. We’ve done this before, and first-timers can have a difficult time navigating the different statutes that must be accounted for when moving across state lines. Many of our clients enjoy working with us so much that they keep coming back to us for help with other projects after their move, too.

Corporate transactions often come with legal and tax implications. Mistakes during the domestication process could cause you to lose liability protection, discourage potential investors, or even the liquidation of your company. It’s always worth the effort to find a qualified lawyer to assist you.

Does Florida Permit the Domestication of a Texas Corporation?

Florida allows corporations from out of state – also known as “foreign corporations” – to domesticate to Florida so long as the other state has its own statutes authorizing the transfer, too. Foreign LLCs can undergo a similar process called a conversion. For a full list of conditions, see Section 607.0101 of the Florida Business Corporation Act (FBCA). Review this section carefully — mistakes at this point could cause corporate dissolution.

Does Texas Allow Corporations to Domesticate or Relocate to Florida?

Yes, under Section VIII, Title 1, Chapter 10, Subchapter C of the Texas Business Organization Code.

Sec. 10.101. CONVERSION OF DOMESTIC ENTITIES. (a) A domestic entity may convert into a different type of domestic entity or a non-code organization by adopting a plan of conversion.

(b) To effect a conversion, the converting entity must act on and the owners or members of the domestic entity must approve a plan of conversion in the manner prescribed by this code for the approval of conversions by the domestic entity or, if not prescribed by this code, in the same manner as prescribed by this code for the adoption and approval of a plan of merger by the domestic entity when the domestic entity does not survive the merger.

(c) A domestic entity subject to dissenters’ rights must provide the notice required by Section 10.355.

(d) A conversion may not take effect if the conversion is prohibited by or inconsistent with the laws of the converted entity’s jurisdiction of formation, and the formation, incorporation, or organization of the converted entity under the plan of conversion must be effected in compliance with those laws pursuant to the plan of conversion.

(e) At the time a conversion takes effect, each owner or member of the converting entity, other than those who receive payment of their ownership or membership interest under any applicable provisions of this code relating to dissent and appraisal, has, unless otherwise agreed to by that owner or member, an ownership or membership interest in, and is the owner or member of, the converted entity.

(f) A domestic entity may not convert under this section if an owner or member of the domestic entity, as a result of the conversion, becomes subject to owner liability, without the consent of the owner or member, for a liability or other obligation of the converted entity.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

Amended by:

Acts 2007, 80th Leg., R.S., Ch. 688 (H.B. 1737), Sec. 52, eff. September 1, 2007.

Acts 2015, 84th Leg., R.S., Ch. 32 (S.B. 860), Sec. 11, eff. September 1, 2015.

Sec. 10.102. CONVERSION OF NON-CODE ORGANIZATIONS. (a) A non-code organization may convert into a domestic entity by adopting a plan of conversion as provided by this section.

(b) To effect a conversion, the non-code organization must take any action that may be required for a conversion under the laws of the organization’s jurisdiction of formation and the organization’s governing documents.

(c) The conversion must be permitted by the laws under which the non-code organization is incorporated or organized or by its governing documents, which may not be inconsistent with the laws of the jurisdiction in which the non-code organization is incorporated or organized.

Texas BOC § VIII, Title 1, Chapter 10, Subchapter C

Is your Texas corporation ready to hop across the gulf to sunny Florida? Call (727) 279-5037 to speak with our corporate attorney or visit our consultation page to learn more about our domestication services. 

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