Bill > S316

Introduced Session

This bill makes various revisions to the laws governing partnerships, limited partnerships, and limited liability companies. The revisions permit partnerships and limited partnerships to convert to and from other business entities and clarify indemnification standards, address notice issues, and make certain other changes to the "Revised Uniform Limited Liability Company Act." The bill provides that, pursuant to a plan of conversion, a partnership or limited partnership may convert into another business entity formed or organized under the laws of this State or any other state of the United States or any foreign country or other foreign jurisdiction, as provided in the plan of conversion. The bill also provides that, pursuant to a plan of conversion, another business entity formed or organized under the laws of this State or any other state of the United States or any foreign country or other foreign jurisdiction may convert into a domestic partnership or limited partnership, as provided in the plan of conversion. Under the bill, "other business entity" means a business corporation, partnership, limited partnership, or a limited liability company. The bill provides that, in order for a limited liability company to use a name that is similar to that of another entity, a limited liability company must submit to the filing office a signed record of consent from the entity currently using the name in a form satisfactory to the filing office. The bill eliminates the requirement that a limited liability company must have a member before it may be formed. Instead, a limited liability company is formed when the filing office has filed the certificate of formation, unless the certificate states a delayed effective date. Under the bill, a limited liability company shall indemnify a company agent against any debt, obligation, expense or other liability incurred by that company agent in the course of the company agent's activities on behalf of the limited liability company or another enterprise at the request of the limited liability company, if, in making the payment or incurring the debt, obligation, expense or other liability, the company agent: (1) is a member of a member-managed limited liability company or a manager of a manager-managed limited liability company and complied with certain duties or (2) is other than a member of a member-managed limited liability company or a manager of a manager-managed limited liability company and acted in good faith and in a manner the company agent reasonably believed to be in the best interests of the limited liability company. The bill provides that a member of a member-managed limited liability company and a manager of a manager-managed limited liability company shall be fully protected in relying in good faith upon certain information and records of the limited liability company. This protection extends to claims that the applicable member or manager breached duty of care required of that member or manager. The bill shortens the time following the newspaper publication of notice of the dissolution of a limited liability company in which a claim against the limited liability company must be brought before the claim is barred, currently five years. Under the bill, the claim must be received not less than six months following newspaper publication of notice.

Committee Categories

Patrick Diegnan (D)*,  Linda Greenstein (D)*,  Parker Space (R), 

Introduced in the Senate, Referred to Senate Commerce Committee (on 01/09/2024)

Official Document