How to Reincorporate a California C-Corp into a Delaware C-Corp

The state of California is one of a handful of states that does not recognize the concept of “conversion” to reincorporate a domestic California C-Corp into a foreign C-Corp (e.g. to reincorporate from California to Delaware).

By way of background, a conversion transaction is a simplified way to change an entity type (e.g. change from LLC to C-Corp) or reincorporate from one state to another.  However, in order to use a conversion to change a corporation’s state of incorporation, both states have to recognize the concept.

For states that do not recognize the concept, such as California, most companies choose to reincorporate to another state by means of a merger – meaning that (i) a new corporation is created in the state where the California corporation desires to reincorporate (e.g. Delaware), (ii) the California entity is merged with and into the newly formed foreign corporation, and (iii) the newly formed foreign corporation survives the merger, and the California corporation thereby ceases to exist.

Below is an outline of the steps required.

CA Corporation

  • Agreement and Plan of Merger and Reincorporation
  • Board Consent
  • Shareholder Consent
  • File Certificate of Merger with CA

DE Corporation

  • File Certification of Incorporation
    • Adopt Bylaws
    • Appoint Board of Directors
    • Issue Stock
  • Agreement and Plan of Merger and Reincorporation
  • Board Consent
  • Stockholder Consent
  • File Certificate of Merger with DE

Tax Issues

Filing Fees

  • Filing of Certificate of Incorporation for New DE Entity:  Approximately $107
  • Registered Agent for Service of Process in DE: Between $50-$100 per year
  • Filing of Certificate of Merger in DE:  Approximately $250, plus certification fee of $50 (required for filing with State of CA)
  • Filing of certified Certificate of Merger in CA:  $100

Other Fees

  • Qualification to do Business in the State of CA: $100
  • Annual Statement of Information: $25
  • CA Annual Franchise Taxes: Approximately $800
  • DE Annual Franchise Taxes: Approximately $350

Disclaimer: This article discusses general legal issues, but it does not constitute legal advice in any respect.  No reader should act or refrain from acting on the basis of any information presented herein without seeking the advice of counsel in the relevant jurisdiction.  Helen E. Quinn expressly disclaims all liability in respect of any actions taken or not taken based on any contents of this article.

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