Dissolution is a common issue in LLC litigation (and probably in LLC arbitration). In the new blog post under the link below, Peter Mahler provides a brief but excellent discussion of minority bad faith in minority claims for dissolution.
Attorney/client privilege issues arise in every area of legal practice, including, of course, LLC formation practice. The post under the link below addresses briefly an interesting attorney/client privilege question that more than a few lawyers might answer incorrectly.
Below are the citation to a new law journal article about the Minnesota LLC Act and the first couple of paragraphs of the article. The article will of course be of interest to Minnesota LLCs but also to LLC lawyers (like me) who are interested in the evolution of LLC statutory law.
9 Wm. Mitchell J. L. & Prac. 1
William Mitchell Journal of Law & Practice
THE NEW MINNESOTA LLC ACT: FLEXIBILITY AND CONTROL FOR MINNESOTA BUSINESS OWNERS
Copyright © 2016 Mitchell Hamline School of Law, Leanne Fuith
In April 2014, the Minnesota legislature introduced the Minnesota Revised Uniform Limited Liability Company Act (herein “the New Act”) which became effective on August 1, 2015 for all new LLCs formed on or after that date.1 LLCs already in existence prior to August 1, 2015, will be governed by the New Act as of January 1, 2018, or sooner if they so elect.2
The New Act provides LLC member owners with a greater ability to create the business that they want by agreement (rather than being subject to statutorily set restrictions) while maintaining the key benefits of LLCs such as limited liability and pass-through partnership taxation. The introduction of the New Act allows for greater flexibility and less formality in the formation and management of the LLC than the corporate-based model to which Minnesota LLC owners had become accustomed and it is also a step toward achieving great uniformity with LLC law in other states.
The actual impact of the New Act on Minnesota businesses, however, is yet to be determined. Attorney practitioners across the state of Minnesota are closely evaluating how these changes should be implemented within their clients’ businesses and when the right time is to do so. For many clients, the introduction of the New Act will bring increased flexibility in being able to manage their business, but may also increase cost in making the transition from the current corporate-like model to a more partnership-based model.
This article will highlight some of the key changes in the Minnesota Revised Uniform Limited Liability Company Act and discuss the reasons for the change and how some of those changes may impact Minnesota business owners.
The new law journal article cited and quoted below will be of particular interest to Idaho LLC lawyers, but also to lawyers in every state who are interested in LLC fiduciary law; in RULLCA; and in the Harmonized Uniform Business Organizations Code.
59-SEP Advocate (Idaho) 32
FAMILIAR WATERS OR UNCHARTED TERRITORY? NAVIGATING THE REVISIONS TO THE DUTIES OF LLC MEMBERS AND MANAGERS UNDER THE HARMONIZED UNIFORM BUSINESS ORGANIZATIONS CODE
Kara M. Gleckler & David M. Gadd
Copyright © 2016 by The Idaho State Bar; Kara M. Gleckler, David M. Gadd
In May 2008, Idaho became the first state in the Union to adopt the Revised Uniform Limited Liability Company Act (RULLCA).1 A short seven years later, the state legislature adopted the Harmonized Uniform Business Organizations Code (the “New Act”),2 which went into effect on July 1, 2015. The stated purpose of the adoption of the New Act was to “harmonize Idaho’s unincorporated and incorporated entity statutes so they can be integrated into a single code of entity laws.”3 While the Legislature characterized the New Act as making only “technical revisions,”4 it does make some substantive, and potentially significant, revisions to the RULLCA. The corporate practitioner should become familiar with those important changes.
In this article, we identify and discuss the New Act’s provisions that address the duties owed by members and managers of a Limited Liability Company (LLC) to the LLC and its other members, including the fiduciary duty of loyalty, the contractual duty of good faith and fair dealing, and the duty of care. While the first two are largely unchanged by the New Act, the duty of care has undergone some noteworthy revisions. Savvy attorneys will familiarize themselves with these statutory, “default” duties and, when appropriate, craft an operating agreement that modifies them.
The proposed new Treasury regulations under IRC Section 2704 are important not only for estate planners but also for LLC lawyers concerned about asset valuation issues. See new blog post under the following link:
Our LLC formation clients should be prepared for data breaches, and so should we. Below is a link to a recent blog post about that risk:
From time to time, I advise my LLCs about issues under non-LLC that may be relevant to their LLCs. The post under the link below contains an excellent—and timely—discussion of when office “locker room talk” may be actionable sexual harassment.
Every operating agreement for a multi-member LLC taxable as a partnership should contain comprehensive partnership audit provisions under TEFRA and under the Bipartisan Budget Act of 2015. Once reason that, as of January 1, 2018, BBA will replace TEFRA for most such LLCs is the unending tax litigation that TEFRA has inspired over the past 34 years. A very recent example of this litigation is the case discussed under the link below.
It is often useful for LLCs—including even single-member LLCs—to hold their assets in a holding company and to conduct their operations through a single-member LLC. The relationship between the holding company and the subsidiary should be covered in one or more intercompany agreements. The Delaware case discussed in the post under the link below provides an excellent discussion of the right and wrong way to draft these agreements.