183.0401(2)(c)
(c) Shall hold office until a successor is elected and qualified, or until prior death, resignation or removal.
183.0401 History
History: 1993 a. 112;
1995 a. 400.
183.0402
183.0402
Duties of managers and members. Unless otherwise provided in an operating agreement:
183.0402(1)
(1) No member or manager shall act or fail to act in a manner that constitutes any of the following:
183.0402(1)(a)
(a) A willful failure to deal fairly with the limited liability company or its members in connection with a matter in which the member or manager has a material conflict of interest.
183.0402(1)(b)
(b) A violation of criminal law, unless the member or manager had reasonable cause to believe that the person's conduct was lawful or no reasonable cause to believe that the conduct was unlawful.
183.0402(1)(c)
(c) A transaction from which the member or manager derived an improper personal profit.
183.0402(2)
(2) Every member and manager shall account to the limited liability company and hold as trustee for it any improper personal profit derived by that member or manager without the consent of a majority of the disinterested members or managers, or other persons participating in the management of the limited liability company, from any of the following:
183.0402(2)(a)
(a) A transaction connected with the organization, conduct or winding up of the limited liability company.
183.0402(2)(b)
(b) A use by a member or manager of the property of a limited liability company, including confidential or proprietary information or other matters entrusted to the person as a result of the person's status as member or manager.
183.0402(3)
(3) An operating agreement may impose duties on its members and managers that are in addition to those provided under sub.
(1).
183.0402 History
History: 1993 a. 112;
1995 a. 400.
183.0402 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.
183.0402 Annotation
Polishing Up Wisconsin's Fiduciary Duties in LLC Law to Attract New Suitors. Brunk. 101 MLR 863 (2018).
183.0402 Annotation
The First LLC Case. Boucher & Kamperschroer. Wis. Law. Sept. 2005.
183.0402 Annotation
Fiduciary Duties of LLC Members and Managers. Boucher & Kramer. Wis. Law. Jan. 2018.
183.0403
183.0403
Limitation of liability and indemnification of members and managers. 183.0403(1)(b)
(b) “Liabilities" include the obligation to pay a judgment, settlement, forfeiture, or fine, including an excise tax assessed with respect to an employee benefit plan, plus costs, fees, and surcharges imposed under ch.
814, and reasonable expenses.
183.0403(2)
(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, 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.
183.0403(3)
(3) An operating agreement may alter or provide additional rights to indemnification of liabilities or allowance of expenses to members and managers.
183.0403(4)
(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 liabilities or expenses did not result from the member's or manager's breach or failure to perform a duty to the limited liability company as provided in s.
183.0402.
183.0403(5)
(5) Unless otherwise provided in an operating agreement, all of the following apply:
183.0403(5)(a)
(a) A member or manager who is a party to a proceeding because the person is a member or manager shall be conclusively presumed not to have breached or failed to perform a duty to the limited liability company to the extent that the member or manager has been successful on the merits or otherwise in the defense of the proceeding.
183.0403(5)(b)
(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.
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 percent 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 percent 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)(b)
(b) Issue an interest in a limited liability company to any person.
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)(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 percent 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 percent 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 percent 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
This chapter, 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)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(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.
FINANCE
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.
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.
