Important Business Law Changes in Colorado in 2007
Allen Sparkman
SPARKMAN · SHAFFER · PERLICK LLP
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H.B. 1135, which was prepared by the Business Law Section’s Legislative Drafting Committee,
was generally effective May 29, 2007. The bill does the following:

Revises the merger and conversion provisions of Title 7 so that:
o The requirements for approval of a merger or conversion by a party which is a
corporation, nonprofit corporation, or cooperative are governed by provisions in
the particular organic statute. For example, in the case of a corporation merging
with or converting into an LLC, the requirements for approval by the board of
directors and shareholders of the corporation are now in the Colorado Business
Corporation Act. C.R.S. §§ 7-111-101, 7-111-101.5, 7-111-104.5, 7-111-106,
and 7-111-106.5.
o The requirements for approval of a merger or conversion by a party which is an
entity other than a corporation, nonprofit corporation, or cooperative are governed
by part two of article 90, title 7.
 Conversions:
 C.R.S. § 7-90-201(authorization of conversions)
 C.R.S. §7-90-201.3 (plan of conversion)
 C.R.S. § 7-90-201.4 (approval of plan of conversion)
 C.R.S. § 7-90-201.7(statement of conversion-when conversion
effective)
 Mergers:
 C.R.S. §7-90-203 (authorization of mergers)
 C.R.S. §7-90-203.3(plan of merger)
 C.R.S. §7-90-203.4(approval of plan of merger)
 C.R.S. §7-90-203.7(statement of merger-when merger effective)
 The net effect of the statutory provisions regarding approval of a merger
or conversion by an unincorporated entity is that, unless otherwise
provided in the operating or partnership agreement, the approval of all the
members or partners is required.
o Part two of article 90 provides the consequences and filing requirements for all
mergers and conversions.
o In the case of a corporation that merges into or converts into an unincorporated
entity, for example, an LLC, the shareholders of the corporation are be entitled to
dissenters’ rights. C.R.S. §7-113-102(1)(e). If a shareholder votes against the


merger or conversion but does not exercise dissenters’ rights, the statute will
deem the shareholder to have assented to, and to have become a party to, the
operating agreement of the LLC. C.R.S. §7-90-206(3).
Makes certain clarifying and technical changes to the LLC Act:
o A member who transfers all of the member’s membership interest ceases to be a
member whether or not the transferee is admitted as a member. C.R.S. §7-80702(2). This change provides smoother operation of changes made in 2006 to
permit the assignees or transferees of the last remaining member of an LLC that
has no members to admit a member.
o An express statement that a member is entitled to an accounting “whenever
circumstances render it just and reasonable.” C.R.S. §7-80-408(6). This change
reverses the inadvertent repeal in 2004 of prior C.R.S. §7-80-712(1)(c). The
Drafting Committee intends this to be a clarifying change and does intend that the
LLC Act from 2004 to 2007 be construed as not allowing a court to order an
accounting when appropriate.
Makes limited partnerships formed after July 26, 2009 and those limited partnerships that
so elect after that date reporting entities. C.R.S. §§ 7-90-102(58), 7-90-102(58.5). The
effective date of this change was established based on the Secretary of State’s
requirements for its web based filing system. The purpose of this change is to improve
the Secretary of State’s records and to allow limited partnerships the benefit of automatic
renewal of their trade names. See C.R.S. §7-71-104(1)(a).
H.B. 1185, also passed in the 2007 legislative session, adds new C.R.S. §11-105-112, providing
that a person who is acting for or on behalf on an entity to open any deposit or loan account with
a financial institution doing business in Colorado may provide the financial institution with a
certificate to evidence the existence of the entity and the authority of such person to act for or on
behalf of the entity with respect to the account. The certificate of existence and authority shall
be an affidavit executed by the person and shall include the following, as applicable:
 The name and mailing address of the entity;
 The type of entity and the state, country, or other governmental authority under whose
laws the entity was formed;
 The organization date of the entity;1
 The name, mailing address, and office or other position held by the person executing
the certificate; and
 A statement that the board of directors, managers, members, general partners, or other
governing body of the entity has duly taken all action legally required to open the
account in the name of the entity and the name, office, or other position of the person
who has been duly authorized to engage in transactions with respect to the account,
including any limitation that may exist upon the authority of the person to bind the
entity and any other matters concerning the manner in which such person may deal
with the account.
Presumably, “organization date” means the date of formation of the entity and not, for example, the date of the
organizational meeting of the incorporators or the initial board of directors.
1
If a financial institution accepts a certificate of existence and authority pursuant to C.R.S.
§11-105-112, the financial institution may open and administer the account in accordance with
the information in the certificate and will not be liable for doing so even if any of the information
is false, unless the financial institution has actual knowledge of the inaccuracy or knowledge
sufficient to cause a reasonably prudent person to doubt the accuracy of such information.
Nothing in C.R.S. §11-1-5-112 is to be construed as prohibiting a financial institution
from requesting additional information or requiring other agreements to establish a deposit or
loan agreement.