183.0404 183.0404 Voting.
183.0404(1)(1) Unless otherwise provided in an operating agreement or this chapter, and subject to sub. (2), an affirmative vote, approval or consent as follows shall be required to decide any matter connected with the business of a limited liability company:
183.0404(1)(a) (a) If management of a limited liability company is reserved to the members, an affirmative vote, approval or consent by members whose interests in the limited liability company represent contributions to the limited liability company of more than 50% of the value, as stated in the records required to be kept under s. 183.0405 (1), of the total contributions made to the limited liability company.
183.0404(1)(b) (b) If the management of a limited liability company is vested in one or more managers, the affirmative vote, consent or approval of more than 50% of the managers.
183.0404(2) (2) Unless otherwise provided in an operating agreement or this chapter, the affirmative vote, approval or consent of all members shall be required to do any of the following:
183.0404(2)(a) (a) Amend the articles of organization.
183.0404(2)(b) (b) Issue an interest in a limited liability company to any person.
183.0404(2)(c) (c) Adopt, amend or revoke an operating agreement.
183.0404(2)(d) (d) Allow a limited liability company to accept any additional contribution from a member.
183.0404(2)(e) (e) Allow a partial redemption of an interest in a limited liability company under s. 183.0603.
183.0404(2)(f) (f) Value the contributions of members under s. 183.0501 (2).
183.0404(2)(fm) (fm) Convert to a new form of business entity under s. 183.1207.
183.0404(2)(g) (g) Authorize a manager, member or other person to do any act on behalf of the limited liability company that contravenes an operating agreement, including any provision of the operating agreement that expressly limits the purpose or business of the limited liability company or the conduct of the business of the limited liability company.
183.0404(3) (3) Unless otherwise provided in an operating agreement, if any member is precluded from voting with respect to a given matter, then the value of the contribution represented by the interest in the limited liability company with respect to which the member would otherwise have been entitled to vote shall be excluded from the total contributions made to the limited liability company for purposes of determining the 50% threshold under sub. (1) (a) for that matter.
183.0404(4) (4) Unless otherwise provided in an operating agreement or this chapter, if all or part of an interest in the limited liability company is assigned under s. 183.0704, all of the following apply:
183.0404(4)(a) (a) The assigning member shall be considered the owner of the assigned interest for purposes of determining the 50% threshold under sub. (1) (a) until the assignee of the interest in the limited liability company becomes a member under s. 183.0706.
183.0404(4)(b) (b) If the assigning member ceases to be a member of the limited liability company, and until the assignee of the interest in the limited liability company becomes a member under s. 183.0706, the contribution represented by the assigned interest shall be excluded from the total contributions made to the limited liability company for purposes of determining the 50% threshold under sub. (1) (a).
183.0404 History History: 1993 a. 112; 2001 a. 44.
183.0404 Annotation Reading ss. 183.0402 and 183.0404 together, members with a material conflict of interest are not prevented from voting their ownership interest with respect to a given matter. Rather, they are prohibited from acting in a manner that constitutes a willful failure to deal fairly with the LLC or its other members by willfully acting, or failing to act, in a manner that will have the effect of injuring the LLC or its other members. Gottsacker v. Monnier, 2005 WI 69, 281 Wis. 2d 361, 697 N.W.2d 436, 03-0457.
183.0404 Annotation Chapter 183, unlike ch. 180, does not contain a requirement that approval or consent of members to undertake an action be reduced to written form. Rather, it requires an affirmative vote, approval, or consent to decide any matter connected with the business of an LLC. Sanitary District No. 4 - Town of Brookfield v. City of Brookfield, 2009 WI App 47, 317 Wis. 2d 532, 767 N.W.2d 316, 08-0511.
183.0404 Annotation The First LLC Case. Boucher & Kamperschroer. Wis. Law. Sept. 2005.
183.0405 183.0405 Records and information.
183.0405(1) (1) A limited liability company shall keep at its principal place of business all of the following:
183.0405(1)(a) (a) A list, kept in alphabetical order, of each past and present member and, if applicable, manager. The list shall include the full name and last-known mailing address of each member or manager, the date on which the person became a member or manager and the date, if applicable, on which the person ceased to be a member or manager.
183.0405(1)(b) (b) A copy of the articles of organization and all amendments to the articles.
183.0405(1)(c) (c) Copies of the limited liability company's federal, state and local income or franchise tax returns and financial statements, if any, for the 4 most recent years or, if such returns and statements are not prepared for any reason, copies of the information and statements provided to, or which should have been provided to, the members to enable them to prepare their federal, state and local income tax returns for the 4 most recent years.
183.0405(1)(d) (d) Copies of all operating agreements, all amendments to operating agreements and any operating agreements no longer in effect.
183.0405(1)(e) (e) Unless already set forth in an operating agreement, written records containing all of the following information:
183.0405(1)(e)1. 1. The value of each member's contribution made to the limited liability company as determined under s. 183.0501 (2).
183.0405(1)(e)2. 2. Records of the times at which or the events upon which any additional contributions are agreed to be made by each member.
183.0405(1)(e)3. 3. Any events upon which the limited liability company is to be dissolved and its business wound up.
183.0405(1)(e)4. 4. Other writings as required by an operating agreement.
183.0405(2) (2) Upon reasonable request, a member may, at the member's own expense, inspect and copy during ordinary business hours any limited liability company record required to be kept under sub. (1) and, unless otherwise provided in an operating agreement, any other limited liability company record, wherever the record is located.
183.0405(3) (3) Members or, if the management of the limited liability company is vested in one or more managers, managers shall provide, to the extent that the circumstances render it just and reasonable, true and full information of all things affecting the members to any member or to the legal representative of any member upon reasonable request of the member or the legal representative.
183.0405(4) (4) Failure of a limited liability company to keep or maintain any of the records or information required under this section shall not be grounds for imposing liability on any person for the debts and obligations of the limited liability company.
183.0405 History History: 1993 a. 112; 1995 a. 400.
183.0405 Annotation The scope of a member's right of inspection under sub. (2) is exceptionally broad and hinges on what constitutes an LLC record and the degree and kind of restrictions on access that upon reasonable request may impose. Kasten v. Doral Dental USA, 2007 WI 76, 301 Wis. 2d 598, 733 N.W.2d 300, 05-0995.
183.0405 Annotation Inspection "upon reasonable request" in sub. (2) pertains to the breadth of an inspection request, as well as the timing and form of the inspection. One purpose of the "upon reasonable request" requirement is to protect the company from member inspection requests that impose undue financial burdens on the company. Whether an inspection request is unreasonable requires balancing the statute's bias in favor of member access to records against the costs of the inspection to the company. Kasten v. Doral Dental USA, 2007 WI 76, 301 Wis. 2d 598, 733 N.W.2d 300, 05-0995.
183.0405 Annotation When applying the balancing test to determine whether a request for records imposes undue financial burdens, a number of factors may be relevant, including: 1) whether the request is restricted by date or subject matter; 2) the reason given, if any, for the request, and whether the request is related to that reason; 3) the importance of the information to the member's interest in the company; and 4) whether the information may be obtained from another source. Kasten v. Doral Dental USA, 2007 WI 76, 301 Wis. 2d 598, 733 N.W.2d 300, 05-0995.
183.0405 Annotation Sub. (3) establishes a member right to true and full information, without regard to whether that information is recorded and stored as a record or document, but restricted to information affecting the members and to the extent that the circumstances render the provision of the information just and reasonable. "All things affecting the members" means all things affecting the requesting member's financial interest in the company. To the extent records and documents requested contain information affecting a member's financial interest in the company, the information contained in the records or documents must be furnished to the requesting member. Kasten v. Doral Dental USA, 2007 WI 76, 301 Wis. 2d 598, 733 N.W.2d 300, 05-0995.
subch. V of ch. 183 SUBCHAPTER V
FINANCE
183.0501 183.0501 Contributions.
183.0501(1)(1) A member's contributions to a limited liability company may consist of cash, property or services rendered, or promissory notes or other written obligations to provide cash or property or to perform services.
183.0501(2) (2) The value of a member's contribution shall be determined in the manner provided in an operating agreement. If the members do not enter into an operating agreement or if an operating agreement does not so provide, the value of a contribution shall be approved by the members under s. 183.0404 (2) (f). That value shall be properly reflected in the records and information kept by the limited liability company under s. 183.0405 (1) and the value shall be binding and conclusive on the limited liability company and its members.
183.0501 History History: 1993 a. 112.
183.0502 183.0502 Liability for contribution.
183.0502(1) (1) An obligation of a member to provide cash or property or to perform services as a contribution to a limited liability company is not enforceable unless specified in a writing signed by the member.
183.0502(2) (2) Unless otherwise provided in an operating agreement, a member is obligated to a limited liability company to perform any enforceable promise to provide cash or property or to perform services, even if the member is unable to perform because of death, disability or any other reason. If a member does not provide cash, property or services as promised, the member is obligated at the option of the limited liability company to provide cash equal to that portion of the value, as stated in the records required to be kept under s. 183.0405 (1), of the stated contribution that has not been fulfilled.
183.0502(3) (3) Unless otherwise provided in an operating agreement, a member's obligation to provide cash or property or perform services as a contribution to the limited liability company may be compromised only by the written consent of all of the members.
183.0502 History History: 1993 a. 112.
183.0503 183.0503 Allocation of profits and losses. The profits and losses of a limited liability company shall be allocated among the members in the manner provided in an operating agreement. If the members do not enter into an operating agreement or the operating agreement does not so provide, profits and losses shall be allocated on the basis of value, as stated in the records required to be kept under s. 183.0405 (1), of the contributions made by each member.
183.0503 History History: 1993 a. 112.
183.0504 183.0504 Series of members, managers, or limited liability company interests. An operating agreement may establish, or provide for the establishment of, designated series or classes of members, managers, or limited liability company interests that have separate or different preferences, limitations, rights, or duties, with respect to profits, losses, distributions, voting, property, or other incidents associated with the limited liability company.
183.0504 History History: 2001 a. 44.
subch. VI of ch. 183 SUBCHAPTER VI
NONLIQUIDATING DISTRIBUTIONS
183.0601 183.0601 Interim distributions. Except as provided in this subchapter, a member is entitled to receive distributions from a limited liability company, before the member's dissociation from the limited liability company and before its dissolution and winding up, to the extent and at the times or upon the events specified in an operating agreement, or, if not otherwise provided in an operating agreement, to the extent and at the times determined by the members or managers under s. 183.0404 (1).
183.0601 History History: 1993 a. 112; 1995 a. 400.
183.0602 183.0602 Allocation of distributions. Distributions of cash or other assets of a limited liability company shall be allocated among the members as provided in an operating agreement. If the members do not enter into an operating agreement or the operating agreement does not so provide, distributions shall be allocated in the same manner that profits are allocated under s. 183.0503.
183.0602 History History: 1993 a. 112; 1995 a. 400.
183.0603 183.0603 Distribution upon partial redemption. Except as provided in this subchapter, upon the distribution in partial redemption by a limited liability company of a member's interest, the redeeming member is entitled to receive with respect to the redeemed interest any distribution to which the member is entitled under an operating agreement and, if not otherwise provided in an operating agreement, within a reasonable time after the redemption, the redeeming member is entitled to receive the fair value of the redeemed interest as of the date of redemption based on the member's right to share in distributions from the limited liability company.
183.0603 History History: 1993 a. 112.
183.0604 183.0604 Distribution upon dissociation. Except as otherwise provided in this subchapter, upon an event of dissociation under s. 183.0802 that does not cause dissolution of the limited liability company, a dissociating member is entitled to receive any distribution to which the member is entitled under an operating agreement and, if not otherwise provided in an operating agreement, within a reasonable time after dissociation, the dissociating member is entitled to receive a distribution in complete redemption of the fair value of the member's interest in the limited liability company as of the date of dissociation based on the member's right to share in distributions from the limited liability company.
183.0604 History History: 1993 a. 112.
183.0605 183.0605 Distribution in kind. Unless otherwise provided in an operating agreement, all of the following apply:
183.0605(1) (1) A member may not demand and receive any distribution from a limited liability company in any form other than cash, regardless of the form of the member's contribution to the limited liability company.
183.0605(2) (2) A member may not be compelled to accept a distribution of any asset in kind from a limited liability company to the extent that the percentage of the asset distributed to the member exceeds the percentage in which the member shares in distributions from the limited liability company.
183.0605 History History: 1993 a. 112.
183.0606 183.0606 Right to distribution. At the time that a member becomes entitled to receive a distribution from a limited liability company, the member has the status of and is entitled to all remedies available to a creditor of the limited liability company with respect to the distribution.
183.0606 History History: 1993 a. 112.
183.0607 183.0607 Limitations on distribution.
183.0607(1) (1) A limited liability company may not declare or make a distribution to any of its members if, after giving effect to the distribution, any of the following would occur:
183.0607(1)(a) (a) The limited liability company would be unable to pay its debts as they become due in the usual course of business.
183.0607(1)(b) (b) The fair value of the limited liability company's total assets would be less than the sum of its total liabilities plus, unless an operating agreement provides otherwise, the amount that would be needed, if the limited liability company were to be dissolved at the time of the distribution, to satisfy the preferential rights upon dissolution of members, if any, whose preferential rights are superior to those of the members receiving the distribution.
183.0607(2) (2) A limited liability company may base a determination that a distribution is not prohibited by sub. (1) on any of the following:
183.0607(2)(a) (a) Financial statements and other financial data prepared on the basis of accounting practices and principles that are reasonable under the circumstances.
183.0607(2)(b) (b) A fair valuation or other method that is reasonable under the circumstances.
183.0607(3) (3) Except as provided in sub. (5), the effect of a distribution for purposes of sub. (1) is measured as of the following date:
183.0607(3)(a) (a) The date on which the distribution is authorized if the payment occurs within 120 days after the date of authorization.
183.0607(3)(b) (b) The date on which payment is made if the payment occurs more than 120 days after the date of authorization.
183.0607(4) (4) A limited liability company's indebtedness to a member incurred by reason of a distribution made in accordance with this section is at parity with the limited liability company's indebtedness to its general, unsecured creditors, except to the extent subordinated by written agreement. This subsection does not affect the validity or priority of a security interest in a limited liability company's property that is created to secure the indebtedness to the member.
183.0607(5) (5) Indebtedness of a limited liability company, including indebtedness issued as a distribution, is not considered a liability for purposes of a determination under sub. (1) if the terms of the indebtedness provide that payment of principal and interest is to be made only if, and to the extent that, payment of a distribution to members could then be made under this section. If indebtedness is issued as a distribution, each payment of principal or interest on the indebtedness is treated as a distribution, the effect of which is measured on the date on which the payment is made.
183.0607 History History: 1993 a. 112.
183.0608 183.0608 Liability for wrongful distribution.
183.0608(1) (1) Except as provided in sub. (3), a member or manager who votes for or assents to a distribution in violation of s. 183.0607 or of an operating agreement is personally liable to the limited liability company for the amount of the distribution that exceeds what could have been distributed without violating s. 183.0607 or the operating agreement.
183.0608(2) (2) Each member or manager who is liable under sub. (1) for a wrongful distribution is entitled to contribution from all of the following persons:
183.0608(2)(a) (a) Every other member or manager who could be held liable under sub. (1) for the wrongful distribution.
183.0608(2)(b) (b) Every member for the amount that the member received knowing that the distribution was made in violation of s. 183.0607 or of an operating agreement.
Loading...
Loading...
2011-12 Wisconsin Statutes updated through 2013 Wis. Act 380 and all Supreme Court Orders entered before Sept. 3, 2014. Published and certified under s. 35.18. Changes effective after Sept. 3, 2014 are designated by NOTES. (Published 9-3-14)