Category: Evaluating LLC Acts

AMENDED NEVIS LLC ACT

By , September 19, 2017 10:23 am

I’m leery of using foreign LLC acts to protect the assets of individuals and families residing in the U.S.   I think doing so can create far more problems than it solves.  But many LLC lawyers disagree with me.

Below are the citation, title and first paragraph of a very clear and thoughtful new law journal article about recent amendments to the Nevis LLC Act.

31-OCT Prob. & Prop. 56
Probate and Property
September/October, 2017
Feature
Gary A. Forster
Copyright © 2017 by American Bar Association; Gary A. Forster

THE NEW NEVIS

The Nevis Limited Liability Company (Amendment) Ordinance (NLLCAO), 2015 (the “New Ordinance”) strengthens and clarifies the prior Nevis Limited Liability Company Ordinance (NLLCO) of 1995 (“Prior Ordinance”). Among the improvements made by the New Ordinance are the addition of (1) fraudulent transfer provisions governing assets contributed to a Nevis LLC, (2) language prohibiting enforcement of foreign judgments against member equity, and (3) enhanced limitations on creditor remedies. This article explores several significant aspects of the New Ordinance.

MINNESOTA LLC ACT

By , June 26, 2017 9:23 am

Below are the citation and first paragraphs of a article about the soon-forthcoming new version of the Minnesota LLC Act.  The article will of course be of interest to Minnesota lawyers but also to people (like me) who try to follow LLC statutory developments nationwide.

74-JUN Bench & B. Minn. 27
Bench and Bar of Minnesota
May/June, 2017
David Jenson
Copyright © 2017 by Minnesota State Bar Association; David Jenson
WHY YOU MAY NEED AN LLC UPDATE IN 2017

Ready or Not, Minnesota’s LLC Law Changes in January 2018

Many Minnesota LLCs have not yet updated their member control agreements and related documents to accommodate the new realities of a Chapter 322C world, but starting in 2018 that statute will govern all LLCs in the state. This article explores the impact of the change and explains why it’s crucial for businesses to adapt to Chapter 322C on their own terms while there is still time to do so.

For Minnesota LLCs, the clock is ticking to update member control agreements and related documents before a new and different LLC statute automatically applies on January 1, 2018.

Since August 1, 2015, anyone forming a new LLC in Minnesota has confronted the Minnesota Revised Uniform Limited Liability Company Act, also known as Chapter 322C. Minnesota’s new LLC statute differs significantly from the “old” LLC statute, Chapter 322B, but many existing LLCs and their owners have continued under Chapter 322B unaffected by (and perhaps unaware of) this major change and have been spared the necessity of confronting the new law because Chapter 322C currently only applies to newly formed companies and Chapter 322B LLCs that take action to opt in to Chapter 322C.

That all changes in January, when Chapter 322C will automatically apply to all Minnesota LLCs, whether their owners ever intended to be subject to Chapter 322C or not. This article explores the impact of this looming change and posits that it is crucial for businesses to adapt to Chapter 322C on their own terms rather than be forced (perhaps unawares) into Chapter 322C next year.

ARTICLE ABOUT STATUTES FOR CLOSELY HELD BUSINESSES

By , February 17, 2017 11:19 am

If you are interested in LLC statutory law, you may be interested in the article cited below and the paragraph summarizing the article.

46 Sw. L. Rev. 63
Southwestern Law Review
2016
Article
TOO MANY COOKS SPOIL THE CAKE, AND TOO MANY STATUTES SPOIL THE LLC: A PLEA FOR UNIFORMITY
Carol Goforth
Copyright © 2016 by Southwestern Law School; Carol Goforth

There is widespread agreement that closely held enterprises play a critical role in this country. Even if some economists are questioning whether all closely-held businesses offer the same long term benefits for the economy in terms of job-production or innovation, the reality that so many American businesses are in fact closely held means that such enterprises are significant to a very large number of individuals. In the past thirty years, we have seen dramatic and unparalleled growth in the range of operational structures available to such businesses. Regrettably, in the rush to try and offer entrepreneurs “new” and “better” statutory options, we have lost the benefits of uniform, predictable and well-understood operational structures. We continue to modify, adapt, and innovate so rapidly that the ideal business form is a constantly shifting and moving target, which serves no one well. This article suggests that it is time to stop offering “new” alternatives and “new” rules, and to attempt to find common ground and move towards a more uniform understanding of how LLCs, in particular, should be structured and operated to maximize efficiency for the closely held, multi-owner business. The current ULLCA, promulgated by the Uniform Law Commission, seems the most likely alternative to achieve this result.

NEW LAW JOURNAL ARTICLE ABOUT MINNESOTA LLC ACT

By , October 18, 2016 12:15 pm

Below are the citation to a new law journal article about the Minnesota LLC Act and the first couple of paragraphs of the article.  The article will of course be of interest to Minnesota LLCs but also to LLC lawyers (like me) who are interested in the evolution of LLC statutory law.

9 Wm. Mitchell J. L. & Prac. 1
William Mitchell Journal of Law & Practice
2016
Article
THE NEW MINNESOTA LLC ACT: FLEXIBILITY AND CONTROL FOR MINNESOTA BUSINESS OWNERS
Leanne Fuith
Copyright © 2016 Mitchell Hamline School of Law, Leanne Fuith

In April 2014, the Minnesota legislature introduced the Minnesota Revised Uniform Limited Liability Company Act (herein “the New Act”) which became effective on August 1, 2015 for all new LLCs formed on or after that date.1 LLCs already in existence prior to August 1, 2015, will be governed by the New Act as of January 1, 2018, or sooner if they so elect.2

The New Act provides LLC member owners with a greater ability to create the business that they want by agreement (rather than being subject to statutorily set restrictions) while maintaining the key benefits of LLCs such as limited liability and pass-through partnership taxation. The introduction of the New Act allows for greater flexibility and less formality in the formation and management of the LLC than the corporate-based model to which Minnesota LLC owners had become accustomed and it is also a step toward achieving great uniformity with LLC law in other states.

The actual impact of the New Act on Minnesota businesses, however, is yet to be determined. Attorney practitioners across the state of Minnesota are closely evaluating how these changes should be implemented within their clients’ businesses and when the right time is to do so. For many clients, the introduction of the New Act will bring increased flexibility in being able to manage their business, but may also increase cost in making the transition from the current corporate-like model to a more partnership-based model.

This article will highlight some of the key changes in the Minnesota Revised Uniform Limited Liability Company Act and discuss the reasons for the change and how some of those changes may impact Minnesota business owners.

NEW MINNESOTA AND NORTH DAKOTA LLC ACTS

By , December 17, 2015 9:24 am

For those for whom it may be useful, here is a link to a good brief discussion of the above new LLC acts:

http://www.lexology.com/library/detail.aspx?g=cf10c801-c1a0-4809-83df-e8b368f8ca00&l=7Q3MPJT/

SUMMARY OF CALIFORNIA LLC “CLEAN-UP” LEGISLATION

By , December 3, 2015 12:04 pm

This authoritative summary may be of interest to California lawyers and also to non-California lawyers who form California LLCs or who believe they may someday form them.

CHANGES IN CALIFORNIA LLC LAW

By , November 23, 2015 10:32 am

The post under the link below will interest lawyers who do or may do work under the California LLC Act.

Here’s the link:

http://www.lexology.com/library/detail.aspx?g=e7f424e4-f382-4290-87e8-44645e717dce&l=7PZRJU1

ARTICLE ON UNIFORMITY AND NON-UNIFORMITY OF LLC STATUTES

By , November 6, 2015 10:41 am

LLC practice often requires at least a general knowledge of LLC statutes other than that of one’s home jurisdiction.  The just-updated article cited below provides a good initial overview about uniformity and non-uniformity among these statutes.   Professor Miller is a leading LLC scholar.  Professor Ragazzo is, at the very least, a knowledgeable one.

19 Tex. Prac., Business Organizations § 18:5 (3d ed.)

Texas Practice Series TM

Business Organizations

Database updated October 2015

Elizabeth S. Miller, Robert A. Ragazzo

Part III. Limited Liability Companies

Chapter 18. The Limited Liability Company: Background and Introduction

MISSOURI AND DELAWARE

By , September 11, 2015 8:17 am

The newly published article cited below may be of interest both to Missouri lawyers and to lawyers who form Delaware LLCs:

Ferguson, SWING AND A MISS: THE MISSOURI COURT OF APPEALS ATTEMPTS TO INTERPRET DELAWARE CORPORATION LAW–HCI Investors, LLC v. Fox, 412 S.W.3d 424 (Mo. Ct. App. 2013), 80 Mo. L. Rev. 231 (Winter 2015)

JUNCTION BOX STATUTES

By , July 22, 2015 9:45 am

A growing number of states are adopting “junction box statutes” which provide uniform cross-entity rules for all of the various types of entities available under their laws with respect to entity transactions such as name reservations, mergers, conversions and interest exchanges.  Pennsylvania has just adopted such a statute, effective July 1, 2015.  Here’s a link with a post from the law firm of McCarter & English about the new statute:

http://www.lexology.com/library/detail.aspx?g=651ef321-cc0f-41e8-bfd4-ba4740330701&utm_source=Lexology+Daily+Newsfeed&utm_medium=HTML+email+-+Body+-+General+section&utm_campaign=Lexology+subscriber+daily+feed&utm_content=Lexology+Daily+Newsfeed+2015-07-15&utm_term=