A Delaware LLC can convert directly into a Delaware C-corporation by statutory conversion under 6 Del. C. § 18-216 and 8 Del. C. § 265 without forming a new entity, transferring contracts, or closing bank accounts. Approve a Plan of Conversion, file the Certificate of Conversion and Certificate of Incorporation together with the Division of Corporations, size your authorized shares and low par value (e.g., 10,000,000 shares at $0.00001 par value) to protect against Authorized Shares franchise tax shock under 8 Del. C. § 503, and establish your post-conversion corporate minute book, stock ledger (8 Del. C. § 224), and stock certificates (8 Del. C. § 158).
Delaware Code Online (Title 6, Title 8 & Title 30) ↗Delaware Division of Corporations (Title 8 & Title 6) ↗Delaware Division of Corporations (Title 8 & Title 6) ↗Delaware statutory references supplied for the October 25, 2026 review; confirm current official instructions.
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Start with the right question.
Why Founders Convert a Delaware LLC to a C-Corporation
Venture investors commonly prefer a C-corporation with preferred stock, a defined board structure, and an employee option pool. A conversion can exchange LLC interests for common or preferred shares and support later financing. IRC § 351 may permit a tax-free property-for-stock exchange when its control and other requirements are met; Rev. Rul. 84-111 describes alternative partnership incorporation methods. Liabilities, compensation, appreciated property, and the LLC’s existing tax classification can change the result. QSBS under IRC § 1202 is conditional, not automatic: original issuance, eligible shareholders, gross assets, active business, issuance-date rules, and the applicable holding period require tax review. Time holding LLC units does not automatically count as time holding qualified corporate stock.
Internal Revenue Service (IRS) ↗How 6 Del. C. § 18-216 and 8 Del. C. § 265 Work Together
Section 18-216 authorizes the Delaware LLC’s conversion out of LLC form, while § 265 permits conversion into a Delaware corporation. Under § 18-216(b), follow the LLC Agreement’s conversion approval provisions; if it is silent, follow its merger approval provisions; if neither applies, all members must approve. An applicable agreement can specify a lower threshold. Approve the conversion and charter before the corporate filings become effective. Section 265(f) preserves uninterrupted legal continuity: property, rights, debts, obligations, and liabilities remain with the converted entity. A new legal entity or separate asset assignment is not generally required, but review lender consents, contracts, licenses, foreign registrations, and bank documentation rather than assuming no updates are needed.
Delaware Code Online (Title 6, Title 8 & Title 30) ↗Step-by-Step Delaware Statutory Conversion Checklist
1. Review the LLC Operating Agreement, capitalization, approval provisions, and outstanding obligations. 2. Draft a Plan of Conversion mapping LLC units, profits interests, and other rights to common or preferred stock, including any vesting and option-pool treatment. 3. Draft the Certificate of Incorporation with the corporate name, registered agent, authorized classes, share counts, and par values. 4. Execute Written Member Consent under the applicable approval threshold. 5. File the Certificate of Conversion and Certificate of Incorporation simultaneously with the Delaware Division of Corporations and coordinate their effective time. 6. Adopt Bylaws, elect the board, authorize and issue shares, and review any applicable § 83(b) election within 30 days of a restricted-property transfer—not automatically 30 days after conversion. 7. Set up the Delaware stock ledger and corporate kit, retaining approved plans, consents, stamped filings, and issuance records. Confirm current filing fees rather than using a new-formation package as a conversion quote.
Delaware Code Online (Title 6, Title 8 & Title 30) ↗Sizing Authorized Shares & Par Value to Avoid Franchise Tax Shock
A venture charter may authorize 10,000,000 shares at $0.00001 par value, an aggregate authorized par value of $100. Low stated par value alone does not prevent a large Authorized Shares assessment. Under 8 Del. C. § 503, compare the Authorized Shares Method ($175 minimum) with the Assumed Par Value Capital Method ($400 minimum), using actual issued shares and total gross assets. The applicable tax can exceed either minimum. Add the $50 domestic annual report fee and calendar March 1. Keep issuance and asset records accurate so the corporation can evaluate both methods; a 10-million-share charter is not a guarantee of $400 tax.
Delaware Division of Corporations (Title 8 & Title 6) ↗Statutory Conversion (§ 265) vs. Statutory Merger vs. Holding-Company Flip
Direct statutory conversion changes the existing entity’s legal form with continuity under § 265. A statutory merger combines entities under the applicable merger provisions and requires a merger agreement, approvals, and filings; assets and liabilities vest in the survivor under those provisions. A holding-company flip inserts a new parent above the existing business, generally by exchanging ownership interests, and may leave the LLC as a subsidiary rather than convert it. Financing goals, tax classification, contract restrictions, regulatory requirements, and investor preferences determine which path fits. None is automatically tax-free or consent-free.
Delaware Code Online (Title 6, Title 8 & Title 30) ↗Post-Conversion Corporate Kit, Stock Ledger (§ 224), and Stock Certificates (§ 158)
Create a corporate minute book containing the Plan of Conversion, member consent, both stamped certificates, incorporator and board actions, Bylaws, stock purchase agreements, and any timely tax elections. Maintain a stock ledger under 8 Del. C. § 224 recording stockholders, addresses, shares, and transfers; electronic records must meet the statute’s requirements. Section 158 addresses stock certificates and permits uncertificated shares when properly authorized, so paper certificates are not invariably required. A corporate kit organizes records but does not replace valid approvals, issuance records, or the ledger. Review corporate kits and the startup C-corporation service through the links below; the startup formation package is not a statutory-conversion fee quote.
Delaware Code Online (Title 6, Title 8 & Title 30) ↗Your preparation checklist
- Review LLC Operating Agreement and conversion or merger approval threshold.
- Draft Plan of Conversion mapping LLC units to common/preferred stock.
- Draft Certificate of Incorporation with share classes, authorized shares, and par value.
- Execute Written Member Consent and approve the charter before effectiveness.
- File Certificate of Conversion + Certificate of Incorporation simultaneously.
- Adopt Bylaws, elect the board, issue shares, and review applicable § 83(b) elections within 30 days of transfer.
- Set up Delaware stock ledger and corporate kit; update banks, contracts, licenses, and tax records as needed.
Conversion filing costs: confirm the current schedule
Conversion filing costs: confirm the current schedule
Conversion requires two coordinated filings. Confirm current conversion and incorporation fees, expedite charges, and any service quote. The startup formation package is not a conversion quote.
Delaware Division of Corporations (Title 8 & Title 6) ↗0 / 7 complete
Keep the requirements separate.
| Requirement | Rule / confirmation needed | Official authority |
|---|---|---|
| Conversion filing pair | File Certificate of Conversion and Certificate of Incorporation together; confirm current state fees and any expedite charges. New-formation prices are not conversion quotes. | Delaware Code Online (Title 6, Title 8 & Title 30) ↗ |
| Authorized Shares Method | $175 minimum franchise tax under § 503; actual authorized share count determines the calculation. | Delaware Division of Corporations (Title 8 & Title 6) ↗ |
| Assumed Par Value Capital Method | $400 minimum under § 503; issued shares and total gross assets affect the actual tax. | Delaware Division of Corporations (Title 8 & Title 6) ↗ |
| Domestic corporate annual report | $50 annual report fee, separate from franchise tax; due March 1. | Delaware Division of Corporations (Title 8 & Title 6) ↗ |
| Stock ledger | Maintain stockholder and transfer records under 8 Del. C. § 224. | Delaware Code Online (Title 6, Title 8 & Title 30) ↗ |
Carry the decision forward.
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Before your next step
6 Del. C. § 18-216 governs the LLC’s conversion authorization; 8 Del. C. § 265 governs conversion into a Delaware corporation. File the Certificate of Conversion and Certificate of Incorporation together after obtaining the required approvals.
Delaware Code Online (Title 6, Title 8 & Title 30) ↗Under § 18-216(b), use conversion provisions in the LLC Agreement first, then applicable merger approval provisions if conversion provisions are absent. If neither is specified, all members must approve. The applicable agreement may provide a lower threshold.
Delaware Code Online (Title 6, Title 8 & Title 30) ↗Section 265(f) preserves the entity’s legal continuity and its property, rights, debts, and liabilities without a separate asset transfer. Nevertheless, review consent clauses, bank policies, licenses, foreign registrations, and federal tax/EIN rules; continuity does not eliminate every notice or update requirement.
Delaware Code Online (Title 6, Title 8 & Title 30) ↗No. IRC § 351 and Rev. Rul. 84-111 require analysis of the exchange structure, control, liabilities, and existing tax classification. IRC § 1202 eligibility and the applicable holding period depend on separate requirements; prior LLC ownership does not automatically qualify. Obtain transaction-specific tax advice.
Internal Revenue Service (IRS) ↗No. Compare the § 503 Authorized Shares Method ($175 minimum) and Assumed Par Value Capital Method ($400 minimum) using issued shares and gross assets. Either calculation can exceed its minimum. The $50 annual report fee is separate, and domestic corporations file and pay by March 1.
Delaware Division of Corporations (Title 8 & Title 6) ↗Retain the conversion plan, consents, stamped filings, Bylaws, board actions, and issuance records; maintain the § 224 stock ledger. Section 158 permits properly authorized uncertificated shares. When a qualifying transfer of restricted property occurs, an applicable § 83(b) election must be filed within 30 days of that transfer; conversion alone does not necessarily trigger an election.
Delaware Code Online (Title 6, Title 8 & Title 30) ↗