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Archive for August, 2017

Minnesota LLCs subject to new law.

Thursday, August 17, 2017 @ 11:08 AM
Author: kayla.muchka

Beginning January 1, 2018 all limited liability companies formed prior to August 1, 2015 will be subject to new law passed by the 2015 Legislature.

 

The most significant changes will be to the governance structure of LLCs. The new act says that Minnesota LLCs can be managed by its members, a board of governors, or managers. The new default is that the LLC will be member managed.  This change allows LLCs to avoid multiple layers of governance and will let LLC members operate more as business partners.  Other changes include:

  1. The operating agreement can be oral or even implied. This means that any oral or written communication among the members could fall within the definition of operating agreement and would be enforceable.
  2. Unless the operating agreement provides otherwise, each member has equal voting rights in the management and operations of the LLC.
  3. Under new 322C, unless the operating agreement provides otherwise, distributions prior to termination of an LLC are to be made on a “per capita” basis, or in equal shares among members.
  4. The new statute does not provide to dissenter’s rights.
  5. The members of an LLC will also be able to limit or eliminate certain fiduciary duties, including: duties of care, loyalty, and good faith and fair dealing.

Actions to take place before January 1, 2018

All owners of an interest in an LLC should consult with a business attorney, and review the governing documents of the LLC to determine whether any adjustments are necessary.

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