New Montana Business Corporation Act

NOTHING IN THIS ARTICLE SHOULD BE CONSTRUED AS LEGAL ADVICE AND THE READER SHOULD NOT RELY ON THE STATEMENTS CONTAINED HEREIN.

Montana has a new Business Corporation Act (“Act”), and it is the first major revision to corporate law in Montana in nearly three decades. The revisions to the Act bring Montana’s corporate laws closer to the American Bar Association’s Model Business Corporation Act, which numerous states also follow. A few of the pivotal changes to the Act are discussed in this article. 

The changes to the Act permit new fundamental corporate changes that were previously not allowed.  For example, if a corporation desired to change its state of incorporation, it had to start a new corporation in the desired state, and dissolve the corporation in the old state. Now, due to the recent amendments to the Act, a corporation can change from a Montana Corporation to a different (foreign) state of incorporation.  Similarly, a foreign corporation can change its state of incorporation to Montana. Domestication of a foreign corporation, however, is only permitted if the foreign state’s law allows for the change. This provides a smoother and more cost effective option for many corporate moves, and allows the corporation to keep its corporate history, age, and good name which can be helpful for establishing credit.  

The revisions to the Act also permit, and provide a process for, a corporation to convert to a limited liability company, and for a limited liability company to convert to a corporation.  This is an invaluable tool to companies that have grown or have decided to seek investment from outside sources.  The decision to convert is an important one and will have significant tax implications.  Prior to making the decision to convert please contact an attorney and tax professional.

Please contact The Rabb Law Firm with your business or corporation questions or issues.