A corporate reorganization is any change to a company’s internal operating structure that aims to improve efficiency, increase revenues, decrease costs, or achieve any combination of these objectives.
Under Section 368 of the Internal Revenue Code (IRC), there are seven different types of corporate reorganizations. The seven types of reorganizations are the following:
- Type A Reorganization: Merger and Consolidation. Section 368(a)(1)(A)
- Type B Reorganization: Acquisition of Subsidiary. Section 368(a)(1)(B)
- Type C Reorganization: Acquisition with Target Liquidation. Section 368(a)(1)(C)
- Type D Reorganization: Transfers. Section 368(a)(1)(D)
- Type E Reorganization: Recapitalization. Section 368(a)(1)(E)
- Type F Reorganization: Identity Change. Section 368(a)(1)(F)
- Type G Reorganization: Transfer of Assets. Section 368(a)(1)(G)
Type F Reorganizations under Section 368(a)(1)(F)
A Type F reorganization is an identity change where a corporation changes its form, entity name, or place of organization. In the U.S., the most common Type F reorganizations are a change to company name or place of incorporation.
A change in form, for example, would be Delaware corporation filing a “Certificate of Conversion” to change from a Delaware corporation to a Delaware Limited Liability Company (LLC).
Example Type F Reorganization for Place of Incorporation
Corporation A, a Florida corporation, was formed on January 1, 2018. After several years of business, the corporation’s legal advisors suggested that the corporation redomicile to Delaware.
On January 1, 2023, Corporation A files a “Certificate of Conversion from a Non-Delaware Corporation to a Delaware Corporation Pursuant to Section 265 of the Delaware General Corporation Law” with the State of Delaware. Corporation A also includes the Delaware Certificate of Incorporation.
Corporation A must also file the “Articles of Conversion for Florida Profit Corporation Into a Non-Florida Business Entity” with the State of Florida. After completing both filings, the Florida corporation has redomiciled to Delaware.
Example Type F Reorganization for Name Change
Corporation B, a Delaware corporation, was formed on June 30, 2019. After several years of business operations, the corporation wants to change its legal entity name from “Corporation B” to “Corporation ABC Advisors.” To do so, the corporation prepares and files a “Certificate of Amendment” with the State of Delaware.