Wisconsin Legislature: 400,12

1995 WISCONSIN ACT 400

An Act to repeal 183.0107 (1) (b), 183.0901 (3), 183.0908 (4), 183.1101 (1) (b), 215.02 (15) (e), 215.26 (1), 452.12 (2) (b), chapter 776, 813.02 (3) and 813.09; to renumber 180.1602 (1); to renumber and amend 179.53, 180.1915 and 183.0403 (1); to consolidate, renumber and amend 183.0107 (1) (intro.) and (a) and 183.1101 (1) (intro.) and (a); to amend 20.865 (1) (a), 20.865 (1) (g), 20.865 (1) (q), 71.07 (7) (b), 93.06 (4), 133.12, 180.0640 (6), 180.0706 (1), 180.1604 (1), 183.0105 (3) (intro.), 183.0201, 183.0301 (1) (b), 183.0301 (2) (b), 183.0304 (2), 183.0401 (2) (c), 183.0402 (3), 183.0403 (2), 183.0403 (3), 183.0403 (4), 183.0403 (5) (b), 183.0405 (1) (b), 183.0405 (1) (e) (intro.), 183.0405 (1) (e) 4., 183.0601, 183.0602, 183.0702 (2) (b), 183.0706 (2) (a), 183.0707, 183.0801 (1) (b), 183.0801 (2) (a), 183.0801 (2) (b), 183.0802 (1) (h), 183.0802 (3), 183.0901 (4) (a), 183.0907 (2) (intro.), 183.0907 (2) (c), 183.0908 (1), 183.0908 (3) (intro.), 183.1008 (1) (intro.), 183.1101 (2), 183.1101 (3), 183.1101 (4), 183.1102, 183.1203 (2) (c), 185.95, 188.26, 452.09 (1) (b), 452.09 (1) (d), 452.09 (1) (e), 452.10 (1), 452.12 (2) (a), 452.12 (2) (c), 452.133 (3) (b), 452.14 (4), 452.22 (2), 551.02 (13) (b), 551.02 (13) (c), 628.04 (1) (b) 1., 891.20 and 972.085; and to create 71.21 (5), 179.53 (2), 180.1602 (1), 180.1915 (1) and (2), 183.0202 (6), 183.0403 (1) (b), 183.0802 (1) (k), 183.0909, 452.01 (3j) and 452.01 (3k) of the statutes; relating to: withdrawals of limited partners from a limited partnership, business corporation law and limited liability company law revisions, extending the other state tax credit to members of a limited liability company, permitting a limited liability company to obtain a real estate brokers license, repealing provisions for bringing legal actions and for filing injunctions against corporations or limited liability companies and the liability of service corporations and their shareholders, directors, officers and employes.

The people of the state of Wisconsin, represented in senate and assembly, do enact as follows:

400,2 Section 2 . 20.865 (1) (a) of the statutes is amended to read:

20.865 (1) (a) Judgments and legal expenses. A sum sufficient to pay for legal expenses under ss. s. 59.31 and 776.43, for costs under ss. 227.485 and 814.245 and for the costs of judgments, orders and settlements of actions, appeals and complaints under subch. II of ch. 111 or subch. II or III of ch. 230, and those judgments, awards, orders and settlements under ss. 21.13, 165.25 (6), 775.04 and 895.46 that are not otherwise reimbursable as liability costs under par. (fm). Release of moneys under this paragraph pursuant to any settlement agreement, whether or not incorporated into an order, is subject to approval of the attorney general.

400,3 Section 3 . 20.865 (1) (g) of the statutes is amended to read:

20.865 (1) (g) Judgments and legal expenses; program revenues. From the appropriate program revenue and program revenue-service accounts, a sum sufficient to pay for legal expenses under ss. s. 59.31 and 776.43, for costs under ss. 227.485 and 814.245 and for the cost of judgments, orders and settlements of actions, appeals and complaints under subch. II of ch. 111 or subch. II or III of ch. 230, and those judgments, awards, orders and settlements under ss. 21.13, 165.25 (6), 775.04 and 895.46 that are not otherwise reimbursable as liability costs under par. (fm). Release of moneys under this paragraph pursuant to any settlement agreement, whether or not incorporated into an order, is subject to approval of the attorney general.

400,4 Section 4 . 20.865 (1) (q) of the statutes is amended to read:

20.865 (1) (q) Judgments and legal expenses; segregated revenues. From the appropriate segregated funds, a sum sufficient to pay for legal expenses under ss. s. 59.31 and 776.43, for costs under ss. 227.485 and 814.245 and for the cost of judgments, orders and settlements of actions, appeals and complaints under subch. II of ch. 111 or subch. II or III of ch. 230, and those judgments, awards, orders and settlements under ss. 21.13, 165.25 (6), 775.04 and 895.46 that are not otherwise reimbursable as liability costs under par. (fm). Release of moneys under this paragraph pursuant to any settlement agreement, whether or not incorporated into an order, is subject to approval of the attorney general.

400,5 Section 5 . 71.07 (7) (b) of the statutes is amended to read:

71.07 (7) (b) If a resident individual, estate or trust pays a net income tax to another state, that resident individual, estate or trust may credit the net tax paid to that other state on that income against the net income tax otherwise payable to the state on income of the same year. The credit may not be allowed unless the income taxed by the other state is also considered income for Wisconsin tax purposes. The credit may not be allowed unless claimed within the time provided in s. 71.75 (2), but s. 71.75 (4) does not apply to those credits. For purposes of this paragraph, amounts declared and paid pursuant to the income tax law of another state shall be deemed a net income tax paid to that other state only in the year in which the income tax return for that state was required to be filed. Income and franchise taxes paid to another state by a tax-option corporation or limited liability company that is treated as a partnership may be claimed as a credit under this paragraph by that corporation's shareholders or that limited liability company's members who are residents of this state and who otherwise qualify under this paragraph.

400,5m Section 5m. 71.21 (5) of the statutes is created to read:

71.21 (5) Section 164 (a) (3) of the internal revenue code is modified so that state taxes and taxes of the District of Columbia that are value-added taxes, single business taxes or taxes on or measured by all or a portion of net income, gross income, gross receipts or capital stock are not deductible.

400,7 Section 7 . 93.06 (4) of the statutes is amended to read:

93.06 (4) Law enforcement. At the request of the attorney general or of any district attorney, assist in the enforcement of any of the following statutes relating to trade: ss. 133.03 to 133.07, 133.10, 133.12 to 133.15, 133.17, 134.01, 185.94, 776.32, 776.36, 784.04 and 939.31.

400,8 Section 8 . 133.12 of the statutes, as affected by 1995 Wisconsin Act 27, is amended to read:

133.12 Domestic and foreign corporations and limited liability companies; cancellation of charters or certificates of authority for restraining trade; affidavit. Any corporation or limited liability company organized under the laws of this state or foreign corporation or foreign limited liability company authorized to transact business in this state pursuant to a certificate of authority from the department of financial institutions which violates any provision of this chapter, may, upon proof thereof, in any circuit court have its charter or authority to transact business in this state suspended, canceled or annulled. Every corporation or limited liability company shall, in its annual report filed with the department of financial institutions, show whether it has entered into any contract, combination in the form of trust or otherwise, or conspiracy in restraint of trade or commerce. The department of justice shall enforce this section.

400,8g Section 8g. 179.53 of the statutes is renumbered 179.53 (1) and amended to read:

179.53 (1) A limited partner may withdraw from a limited partnership only at the time or upon the happening occurrence of events an event specified in writing in the partnership agreement, except as provided in sub. (2) and s. 179.105 (2). If the agreement does not specify in writing the time or the events upon the happening of which a limited partner may withdraw or a definite time for the dissolution and winding up of the limited partnership, a limited partner may withdraw upon not less than 6 months' prior written notice to each general partner at his or her address on the books of the limited partnership at its record office in this state.

400,8r Section 8r. 179.53 (2) of the statutes is created to read:

179.53 (2) If all of the following conditions are met, a limited partner may withdraw upon not less than 6 months' prior written notice to each general partner at his or her address on the books of the limited partnership at its record office in this state:

(a) The limited partnership was formed prior to the effective date of this paragraph .... [revisor inserts date].

(b) On the effective date of this paragraph .... [revisor inserts date], the partnership agreement of the limited partnership did not specify in writing the time or the events upon the happening of which a limited partner could withdraw or a definite time for the dissolution and the winding up of the limited partnership.

(c) The limited partnership has not amended its partnership agreement since the effective date of this paragraph .... [revisor inserts date], to specify in writing, the time or the events upon the happening of which a limited partner may withdraw or a definite time for the dissolution and winding up of the limited partnership.

400,9 Section 9 . 180.0640 (6) of the statutes is amended to read:

180.0640 (6) A corporation's indebtedness to a shareholder incurred because of a distribution made in accordance with this section is at parity with the corporation's indebtedness to its general, unsecured creditors except to the extent subordinated by agreement. This subsection does not affect the validity or priority of a security interest in corporation property created to secure indebtedness incurred because of a distribution.

400,10 Section 10 . 180.0706 (1) of the statutes is amended to read:

180.0706 (1) A shareholder may waive any notice required by this chapter, the articles of incorporation or the bylaws before or after the date and time stated in the notice at any time. The waiver shall be in writing and signed by the shareholder entitled to the notice, contain the same information that would have been required in the notice under any applicable provisions of this chapter, except that the time and place of meeting need not be stated, and be delivered to the corporation for inclusion in the corporate records.

400,11 Section 11 . 180.1602 (1) of the statutes is renumbered 180.1602 (1m).

400,12 Section 12 . 180.1602 (1) of the statutes is created to read:

180.1602 (1) In this section, “shareholder” includes a beneficial owner whose shares are held in a voting trust or by a nominee on the beneficial owner's behalf.

400,13 Section 13 . 180.1604 (1) of the statutes is amended to read:

180.1604 (1) If a corporation does not within a reasonable time allow a shareholder to inspect and copy any record described in s. 180.1602 (1) or (2), the shareholder who complies with s. 180.1602 (1) (1m) or (2), as applicable, may apply to the circuit court for the county where the corporation's principal office or, if none in this state, its registered office is located for an order to permit inspection and copying of the records demanded.

400,14 Section 14 . 180.1915 of the statutes is renumbered 180.1915 (intro.) and amended to read:

180.1915 (title) Contract and tort Professional relationships preserved and liability. (intro.) Sections Except as provided in this section, ss. 180.1901 to 180.1921 do not alter any contract, tort or other legal relationship between a person receiving professional services and one or more persons who are licensed, certified or registered to render those professional services and who are shareholders, directors, officers or employes in the same service corporation. Any legal liability which may arise out of the professional service shall be joint and several among those shareholders of the same service corporation. A shareholder, director, officer or employe of a service corporation is not personally liable for the debts or other contractual obligations of the service corporation nor for the omissions, negligence, wrongful acts, misconduct and malpractice of any person who is not under his or her actual supervision and control in the specific activity in which the omissions, negligence, wrongful acts, misconduct and malpractice occurred. A service corporation may charge for the services of its shareholders, directors, officers, employes or agents, may collect such charges and may compensate those who render such personal services. Nothing in this section shall affect any of the following:

400,15 Section 15 . 180.1915 (1) and (2) of the statutes are created to read:

180.1915 (1) The liability of a service corporation for the omissions, negligence, wrongful acts, misconduct and malpractice of a shareholder, director, officer or employe while the person, on behalf of the service corporation, provides professional services.

(2) The personal liability of a shareholder, director, officer or employe of a service corporation for his or her own omissions, negligence, wrongful acts, misconduct and malpractice and for the omissions, negligence, wrongful acts, misconduct and malpractice of any person acting under his or her actual supervision and control in the specific activity in which the omissions, negligence, wrongful acts, misconduct and malpractice occurred.

400,16 Section 16 . 183.0105 (3) (intro.) of the statutes is amended to read:

183.0105 (3) (intro.) Except as provided in sub. (4), a A statement of change delivered under sub. (2) (a) shall include all of the following information:

400,17 Section 17 . 183.0107 (1) (intro.) and (a) of the statutes, as affected by 1995 Wisconsin Act 27, are consolidated, renumbered 183.0107 (1) and amended to read:

183.0107 (1) Except as provided in this chapter, any document required or permitted by this chapter to be delivered for filing to the department shall be executed by any of the following: (a) Any a manager, if management of the limited liability company is vested in a manager or managers, or by a any member, if management of the limited liability company is reserved to the members.

400,18 Section 18 . 183.0107 (1) (b) of the statutes is repealed.

400,19 Section 19 . 183.0201 of the statutes, as affected by 1995 Wisconsin Act 27, is amended to read:

183.0201 Organization. One or more persons may organize a limited liability company by signing and delivering articles of organization to the department for filing. The organizer or organizers need not be members of the limited liability company at the time of organization or thereafter. A limited liability company shall have 2 or more members.

400,20 Section 20 . 183.0202 (6) of the statutes is created to read:

183.0202 (6) If applicable, the delayed effective date and time of the articles of organization permitted under s. 183.0111 (2).

400,21 Section 21 . 183.0301 (1) (b) of the statutes is amended to read:

183.0301 (1) (b) The act of any member, including the execution in the name of the limited liability company of any instrument, for apparently carrying on in the ordinary course of business the business of the limited liability company, binds the limited liability company unless the member has, in fact, no authority to act for the limited liability company in the particular matter, and the person with whom the member is dealing has knowledge that the member has no authority to act in the matter.

400,22 Section 22 . 183.0301 (2) (b) of the statutes is amended to read:

183.0301 (2) (b) Each manager is an agent of the limited liability company, but not of the members or any of them, for the purpose of its business. The act of any manager, including the execution in the name of the limited liability company of any instrument, for apparently carrying on in the ordinary course of business the business of the limited liability company, binds the limited liability company unless the manager has, in fact, no authority to act for the limited liability company in the particular matter, and the person with whom the manager is dealing has knowledge that the manager has no authority to act in the matter.

400,23 Section 23 . 183.0304 (2) of the statutes is amended to read:

183.0304 (2) Notwithstanding sub. (1), nothing in this chapter shall preclude a court from ignoring the limited liability company entity under principles of common law of this state that are similar to those applicable to business corporations and shareholders in this state and under circumstances that are not inconsistent with the purposes of this chapter.

400,24 Section 24 . 183.0401 (2) (c) of the statutes is amended to read:

183.0401 (2) (c) Unless earlier removed or earlier resigned, shall Shall hold office until a successor is elected and qualified, or until prior death, resignation or removal.

400,25 Section 25 . 183.0402 (3) of the statutes is amended to read:

183.0402 (3) An operating agreement may impose duties on its members and managers that are in addition to, but not in abrogation of, those provided under sub. (1).

400,26 Section 26 . 183.0403 (1) of the statutes is renumbered 183.0403 (1) (intro.) and amended to read:

183.0403 (1) (intro.) In this section, “ expenses”:

(a) “Expenses” has the meaning given in s. 180.0850 (3).

400,27 Section 27 . 183.0403 (1) (b) of the statutes is created to read:

183.0403 (1) (b) “Liabilities” include the obligation to pay a judgment, settlement, penalty, assessment, forfeiture or fine, including an excise tax assessed with respect to an employe benefit plan.

400,28 Section 28 . 183.0403 (2) of the statutes is amended to read:

183.0403 (2) A limited liability company shall indemnify or allow reasonable expenses to and pay liabilities of each member and, if management of the limited liability company is vested in one or more managers, of each manager for all reasonable expenses, incurred with respect to a proceeding if that member or manager was a party to the proceeding in the capacity of a member or manager.

400,29 Section 29 . 183.0403 (3) of the statutes is amended to read:

183.0403 (3) An operating agreement may alter or provide additional rights to indemnification of liabilities or allowance of expenses to members and managers.

400,30 Section 30 . 183.0403 (4) of the statutes is amended to read:

183.0403 (4) Notwithstanding subs. (2) and (3), a limited liability company may not indemnify a member or manager for liabilities or permit a member or manager to retain any allowance for expenses provided under those subsections unless it is determined by or on behalf of the limited liability company that the member or manager did not the liabilities or expenses did not result from the member's or manager's breach or fail failure to perform a duty to the limited liability company as provided in s. 183.0402.

400,31 Section 31 . 183.0403 (5) (b) of the statutes is amended to read:

183.0403 (5) (b) In situations not described in par. (a), the determination of whether a member or manager, who is a party to a proceeding because the person is a member or manager, has breached or failed to perform a duty to the limited liability company, or whether the liability or expenses resulted from the breach or failure, shall be made by the vote of the members that meets the requirements under s. 183.0404 (1) (a), except that the vote of any member who is a party to the same or a related proceeding shall be excluded unless all members are parties.

400,32 Section 32 . 183.0405 (1) (b) of the statutes is amended to read:

183.0405 (1) (b) A copy of the articles of organization and all amendments to the articles, together with executed copies of any powers of attorney under which any articles have been executed.

400,33 Section 33. 183.0405 (1) (e) (intro.) of the statutes is amended to read:

183.0405 (1) (e) (intro.) Unless already set forth in an operating agreement, a writing written records containing all of the following information:

400,34 Section 34 . 183.0405 (1) (e) 4. of the statutes is amended to read:

183.0405 (1) (e) 4. Other writings prepared under a requirement, if any, in as required by an operating agreement.

400,35 Section 35 . 183.0601 of the statutes is amended to read:

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).

400,36 Section 36 . 183.0602 of the statutes is amended to read:

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 on the basis of the value, as stated in the records required to be kept under s. 183.0405 (1), of the contributions made by each member in the same manner that profits are allocated under s. 183.0503.

400,37 Section 37 . 183.0702 (2) (b) of the statutes is amended to read:

183.0702 (2) (b) A member who is not a manager does not have authority, in the member's capacity as a member, to transfer title to property of the limited liability company.

400,38 Section 38 . 183.0706 (2) (a) of the statutes is amended to read:

183.0706 (2) (a) An assignee of a limited liability company interest who becomes a member has, to the extent assigned, the rights and powers, and is subject to the restrictions and liabilities, of the assignor under an operating agreement and this chapter. An assignee who becomes a member is liable for any of the assignor's obligations under an operating agreement and this chapter to the limited liability company.

400,39 Section 39 . 183.0707 of the statutes is amended to read:

183.0707 Powers of legal representative. If a member who is an individual dies or is adjudged to be incompetent to manage his or her person or estate by a court of competent jurisdiction adjudges the member to be incompetent to manage his or her person or property, the member's personal representative, administrator, guardian, conservator, trustee or other legal representative shall have all of the rights of an assignee of the member's interest. If a member is a corporation, trust, partnership, limited liability company or other entity and is dissolved or terminated, the powers of that member may be exercised by its legal representative or successor shall have all of the rights of an assignee of the member's interest.

400,40 Section 40 . 183.0801 (1) (b) of the statutes is amended to read:

183.0801 (1) (b) The time provided in and upon compliance with an operating agreement or, if the limited liability company does not have an operating agreement or an operating agreement does not so provide, when on the effective date of the person's admission is as reflected in the records of the limited liability company maintained under s. 183.0405 (1).

400,41 Section 41 . 183.0801 (2) (a) of the statutes is amended to read: