SB566: Bill Text

SB566,349,14 (e) Mergers, interest exchanges, conversions, and domestications under subch. X.

SB566,349,16 (2) To the extent the operating agreement does not provide for a matter described in sub. (1), this chapter governs the matter.

SB566,349,17 (3) An operating agreement may not do any of the following:

SB566,349,18 (a) Vary the law applicable under s. 183.0104 or 183.0110.

SB566,349,19 (am) Vary the provisions of this section.

SB566,349,21 (b) Vary a limited liability company's capacity under s. 183.0109 to sue and be sued in its own name.

SB566,349,23 (c) Vary any requirement, procedure, or other provision of this chapter pertaining to any of the following:

SB566,349,25 1. Registered agents, except to require some form of vote or consent of the members notwithstanding s. 183.0116 (2).

SB566,350,2 2. The department, including provisions pertaining to records authorized or required to be delivered to the department for filing under this chapter.

SB566,350,3 (d) Vary the provisions of s. 183.0204.

SB566,350,5 (e) Alter or eliminate, or restrict the remedies for breach of, the duty of loyalty or the duty of care, except as otherwise provided in sub. (4).

SB566,350,9 (f) Eliminate, or restrict remedies for the breach of, the contractual obligation of good faith and fair dealing under s. 183.0409 (4), but a written operating agreement may prescribe the standards, if not manifestly unreasonable, by which the performance of the obligation is to be measured.

SB566,350,11 (g) Relieve or exonerate a person from liability for conduct that constitutes any of the following:

SB566,350,13 1. A willful failure to deal fairly with the company or its members in connection with a matter in which the person has a material conflict of interest.

SB566,350,16 2. A violation of the criminal law, unless the person had reasonable cause to believe that the person's conduct was lawful or no reasonable cause to believe that the person's conduct was unlawful.

SB566,350,17 3. A transaction from which the person derived an improper personal profit.

SB566,350,18 4. Willful misconduct.

SB566,350,24 (h) Vary the information required under s. 183.01075 or unreasonably restrict the duties and rights under s. 183.0410, but the operating agreement may impose reasonable restrictions on the availability and use of information obtained under that section and may define appropriate remedies, including liquidated damages and security for liquidated damages, for a breach of any reasonable restriction on use.

SB566,350,25 (i) Vary the causes of dissolution specified in s. 183.0701 (1) (d).

SB566,351,2 (j) Vary the requirement to wind up the company's activities and affairs as specified in s. 183.0702 (1), (2) (a), and (5).

SB566,351,4 (k) Unreasonably restrict the right of a member to maintain an action under subch. VIII.

SB566,351,8 (m) Vary the right of a member to approve a merger, interest exchange, conversion, or domestication under s. 183.1023 (1), 183.1033 (1), 183.1043 (1), or 183.1053 (1), except by provision in a written operating agreement that does not impair the rights of a member under s. 183.1061.

SB566,351,11 (n) Vary the required contents of a plan of merger under s. 183.1022 (1), plan of interest exchange under s. 183.1032 (1), plan of conversion under s. 183.1042 (1), or plan of domestication under s. 183.1052 (1).

SB566,351,13 (o) Except as otherwise provided in ss. 183.0106 and 183.0107 (2), restrict the rights under this chapter of a person other than a member or manager.

SB566,351,15 (4) Subject to sub. (3) (g), without limiting other terms that may be included in an operating agreement, the following rules apply:

SB566,351,16 (a) The operating agreement may do any of the following:

SB566,351,19 1. Specify the method by which a specific act or transaction that would otherwise violate the duty of loyalty may be authorized or ratified by one or more disinterested and independent persons after full disclosure of all material facts.

SB566,351,21 2. Alter the prohibition in s. 183.0405 (1) (b) so that the prohibition requires only that the company's total assets not be less than the sum of its total liabilities.

SB566,352,2 (b) To the extent a written operating agreement of a member-managed limited liability company expressly relieves a member of a responsibility that the member otherwise would have under this chapter and imposes the responsibility on one or more other members, the written operating agreement also may eliminate or limit any fiduciary duty of the member relieved of the responsibility which would have pertained to the responsibility.

SB566,352,4 (c) Except as provided in sub. (3) (g), a written operating agreement may do any of the following:

SB566,352,6 1. Alter or eliminate the aspects of, or restrict remedies with respect to, the duty of loyalty stated in s. 183.0409 (2) and (9).

SB566,352,8 2. Identify specific types or categories of activities that do not violate the duty of loyalty or the contractual obligation of good faith and fair dealing.

SB566,352,10 3. Alter the duty of care, but may not authorize conduct described in sub. (3) (g).

SB566,352,11 4. Alter or eliminate any other fiduciary duty.

SB566,352,19 (5) The court shall decide as a matter of law whether a term of an operating agreement is manifestly unreasonable under sub. (3) (f). The court shall make its determination as of the time the challenged term became part of the operating agreement and by considering only circumstances existing at that time. The court may invalidate the term only if, in light of the purposes, activities, and affairs of the limited liability company, it is readily apparent that the objective of the term is unreasonable or that the term is an unreasonable means to achieve the term's objective.

SB566,352,23 183.0106 Operating agreement; effect on limited liability company and person becoming member; preformation agreement. (1) A limited liability company is bound by and may enforce the operating agreement, whether or not the company has itself manifested assent to the operating agreement.

SB566,352,25 (2) A person that becomes a member is deemed to assent to the operating agreement.

SB566,353,6 (3) Two or more persons intending to become the initial members of a limited liability company may make an agreement providing that upon the formation of the company the agreement will become the operating agreement. One person intending to become the initial member of a limited liability company may assent to terms providing that upon the formation of the company the terms will become the operating agreement.

SB566,353,12 183.0107 Operating agreement; effect on 3rd parties and relationship to records effective on behalf of limited liability company. (1) A written operating agreement may specify that its amendment requires the approval of a person that is not a party to the agreement or the satisfaction of a condition. An amendment is ineffective if its adoption does not include the required approval or satisfy the specified condition.

SB566,353,18 (2) The obligations of a limited liability company and its members to a person in the person's capacity as a transferee or a person dissociated as a member are governed by the operating agreement. Subject only to a court order issued under s. 183.0503 (2) (b) to effectuate a charging order, all of the following apply to an amendment to the operating agreement made after a person becomes a transferee or is dissociated as a member:

SB566,353,21 (a) Except as provided in par. (b), the amendment is effective with regard to any debt, obligation, or other liability of the limited liability company or its members to the person in the person's capacity as a transferee or person dissociated as a member.

SB566,353,24 (b) The amendment is not effective to the extent the amendment imposes a new debt, obligation, or other liability on the transferee or person dissociated as a member.

SB566,354,4 (3) If a record delivered by a limited liability company to the department for filing becomes effective and contains a provision that would be ineffective under s. 183.0105 (3) or (4) (c) if contained in the operating agreement, the provision is ineffective in the record.

SB566,354,7 (4) Subject to sub. (3), if a record delivered by a limited liability company to the department for filing becomes effective and conflicts with a provision of the operating agreement, all of the following apply:

SB566,354,9 (a) The agreement prevails as to members, persons dissociated as members, transferees, and managers.

SB566,354,11 (b) The record prevails as to other persons to the extent they reasonably rely on the record.

SB566,354,13 183.01075 Required information. A limited liability company shall maintain at its principal office all of the following information:

SB566,354,15 (1) A list showing the full name and last-known street and mailing addresses of each past and present member and, if applicable, manager, in alphabetical order.

SB566,354,18 (2) A copy of the articles of organization and all amendments to and restatements of the articles, together with signed copies of any powers of attorney under which any articles, amendments, or restatements have been signed.

SB566,354,20 (3) A copy of any filed articles of merger, interest exchange, conversion, or domestication.

SB566,354,22 (4) A copy of the limited liability company's federal, state, and local income or franchise tax returns and financial statements, if any, for the 3 most recent years.

SB566,354,24 (5) A copy of all written operating agreements and any amendments to and restatements of such written operating agreements.

SB566,355,3 (6) A copy of any record made by the company during the past 3 years of any consent given by or vote taken of any member or manager pursuant to this chapter or the operating agreement.

SB566,355,5 (7) Unless contained in a written operating agreement, a record stating all of the following:

SB566,355,7 (a) A description and statement of the agreed value of contributions other than money made and agreed to be made by each member.

SB566,355,9 (b) The times at which, or events upon the occurrence of which, any additional contributions agreed to be made by each member are to be made.

SB566,355,11 183.0108 Nature, purpose, and duration of limited liability company. (1) A limited liability company is an entity distinct from its member or members.

SB566,355,15 (2) A limited liability company may have any lawful purpose, regardless of whether for profit. A limited liability company engaging in a business that is subject to the provisions of another chapter may organize under this chapter only if not prohibited by, and is subject to all limitations of, the other chapter.

SB566,355,16 (3) A limited liability company has perpetual duration.

SB566,355,18 (3m) An interest in a limited liability company may be a security, as specified in s. 551.102 (28) (e).

SB566,355,21 183.0109 Powers. A limited liability company has the capacity to sue and be sued in its own name and the power to do all things necessary or convenient to carry on its activities and affairs.

SB566,355,23 183.0110 Applicability. (1) This chapter applies to a limited liability company formed on or after January 1, 2023.

SB566,355,25 (2) On January 1, 2023, this chapter applies to a limited liability company formed before January 1, 2023, except as follows:

SB566,356,7 (a) If the effective date of this paragraph is before January 1, 2023, and a limited liability company elects, in a manner allowed by law for amending the operating agreement, to be subject to this chapter as of any date after the effective date of this paragraph and before January 1, 2023, and files with the department a statement of applicability to that effect, this chapter applies to the limited liability company as of the date that the statement of applicability is effective under s. 183.0207.

SB566,356,19 (b) If a limited liability company elects, in a manner allowed by law for amending the operating agreement, to continue to be subject to ch. 183, 2019 stats., and files with the department a statement of nonapplicability to that effect prior to January 1, 2023, the limited liability company shall not be subject to this chapter, except for requirements relating to filing or obtaining copies of records with the department, receiving or responding to notices from the department, and complying with administrative rules promulgated under this chapter. The limited liability company shall instead be and remain subject to ch. 183, 2019 stats. Thereafter, if the limited liability company elects, in such manner, to be subject to this chapter as of any subsequent date and files with the department a statement of applicability to that effect, this chapter applies to the limited liability company as of the date that the statement of applicability is effective under s. 183.0207.

SB566,356,21 (c) Any statement of applicability to be subject to this chapter pursuant to a valid election by the limited liability company shall be irrevocable upon such filing.

SB566,356,23 (d) Upon this chapter becoming applicable with respect to a limited liability company, all of the following apply:

SB566,357,3 1. This chapter shall not, and the corresponding provisions of ch. 183, 2019 stats., shall, be applicable with respect to obligations incurred by the limited liability company prior to such applicability.

SB566,357,7 2. Any provisions of an operating agreement that were valid and in effect immediately prior to this chapter becoming applicable with respect to the limited liability company shall continue to be valid and applicable to the extent allowed under prior law.

SB566,357,9 183.0111 Supplemental principles of law. Unless displaced by particular provisions of this chapter, the principles of law and equity supplement this chapter.

SB566,357,14 183.0112 Permitted names. (1) The name of a limited liability company must contain the phrase “limited liability company" or “limited company" or the abbreviation “LLC" or “LC" or a variation of these abbreviations that differs only with respect to capitalization of letters or punctuation. “Limited" may be abbreviated as “Ltd.," and “company" may be abbreviated as “Co."

SB566,357,17 (2) The name of a limited liability company, and the name under which a foreign limited liability company may register to do business in this state, must be distinguishable on the records of the department from all of the following:

SB566,357,19 (a) Any name of an existing person whose formation required the filing of a record by the department and which is not at the time administratively dissolved.

SB566,357,21 (b) Any name of a limited liability partnership whose statement of qualification is in effect.

SB566,357,23 (c) Any name under which a person is registered to do business in this state by the filing of a record by the department.

SB566,357,25 (d) Any name reserved under s. 183.0113 or other law of this state providing for the reservation of a name by the filing of a record by the department.

SB566,358,2 (e) Any name registered under s. 183.0114 or other law of this state providing for the registration of a name by the filing of a record by the department.

SB566,358,7 (3m) A limited liability company or foreign limited liability company may apply to the department for authorization to use in this state a name that is not distinguishable upon the records of the department from one or more of the names described in sub. (2). The department shall authorize use of the name applied for if any of the following occurs:

SB566,358,14 (a) The corporation, limited liability company, nonstock corporation, limited partnership, limited liability partnership, foreign limited partnership, general cooperative association, or limited cooperative association that has or has registered or reserved the name consents in writing to the use and submits an undertaking in a form satisfactory to the department to change its name to a name that is distinguishable upon the records of the department from the name of the applicant, or to cancel the registration or reservation.

SB566,358,17 (b) The applicant delivers to the department a certified copy of a final judgment of a court of competent jurisdiction establishing the applicant's right to use the name applied for in this state.

SB566,359,2 (4) In determining whether a name is the same as or not distinguishable on the records of the department from the name of another person, words, phrases, or abbreviations indicating the type of person, such as “corporation," “ Corp.," “incorporated," “Inc.," “service corporation," “SC," “ Limited," “Ltd.," “limited partnership," “LP," “limited liability partnership," “LLP," “ registered limited liability partnership," “RLLP," “limited liability limited partnership," “ LLLP," “registered limited liability limited partnership," “RLLLP," “limited liability company," “LLC," “cooperative association," or “cooperative," or a variation of these abbreviations that differs only with respect to capitalization of letters or punctuation, may not be taken into account.

SB566,359,7 (6) The name of a limited liability company or foreign limited liability company may not contain language stating or implying that the limited liability company is organized for a purpose subject to regulation under another statute of this state, unless its purpose is not prohibited by, and the entity is subject to all the limitations of, the other statute.

SB566,359,14 (9m) A limited liability company or foreign limited liability company may use in this state the name, including the fictitious name, that is used in this state by a corporation, limited liability company, nonstock corporation, limited partnership, limited liability partnership, foreign limited liability company, general cooperative association, or limited cooperative association if the limited liability company or foreign limited liability company proposing to use the name has done any of the following:

SB566,359,15 (a) Merged with the other business entity.

SB566,359,16 (b) Been formed by reorganization of the other business entity.

SB566,359,18 (c) Acquired all or substantially all of the assets, including the name, of the other business entity.

SB566,360,2 183.0113 Reservation of name. (1) A person may reserve the exclusive use of a name that complies with s. 183.0112, including a fictitious name for a foreign limited liability company whose company name is not available, by delivering an application to the department for filing. The application shall include the name and address of the applicant and the name proposed to be reserved. If the department finds that the name is available, the department shall reserve the name for the applicant's exclusive use for a 120-day period, which may be renewed by the applicant or a transferee under sub. (2) from time to time.

SB566,360,6 (2) The person who has the right to exclusive use of a reserved name under sub. (1) may transfer the reservation to another person by delivering to the department a signed notice in a record of the transfer which states the name and address of the person to which the reservation is being transferred.

SB566,360,10 183.0114 Registration of name. (1) A foreign limited liability company not registered to do business in this state under subch. IX may register its name, or a fictitious name adopted pursuant to s. 183.0906, if the name is distinguishable on the records of the department from the names that are not available under s. 183.0112.