The State of New Hampshire has passed this past summer a new Limited Liability Company Statute. The “New Act” replaces and supersedes the old Act. The New Act will be phased in over the next two years. All companies that have been formed or will be formed prior to the end of this year may elect under Section 5 of the New Act to “opt in” with an effective date of January 1, 2013. If your company does not elect to opt in it will be governed by and subject to the New Act as of January 1. 2014. All companies formed after the first of the year in 2013 will automatically be governed by the New Act.
How does this affect you and your company? Well the changes are significant and will have a great impact on single member LLC’s as well as multi-member LLC’s. The New Act is organized so that all the sections that deal with single member LLC’s are together and adds more and better default provisions. These so-called “off the shelf” provisions fill the gaps that may not always be covered, even if you have a written operating agreement.
Why do you want to opt in? If your single member company does not have a written agreement you may want to adopt one now and at the same time elect to be governed by the New Act. If you have a written agreement in place, it should be reviewed by an attorney with an eye towards some incorporating some of the key elements of the New Act.
If you have a multiple member company, some key areas where the New Act either changes the previous Act or implements new provisions not previously covered and that may impact you as well include, such issues as: (i) clearer fiduciary duties such as duties of care and loyalty; (ii) stronger protections against the claims of third party creditors; (iii) increased flexibility in dealing with the death or disability of a member; and (iv) better dispute resolution procedures.
In either case you may want to talk to your attorney and consider opting in now and at a minimum you should review your agreement to make sure that you will have the maximum benefit of the New Act.
If you have any questions or would like additional information on this issue or other corporate challenges, please contact Paul D. Creme.
Paul D. Creme is an attorney with Hamblett & Kerrigan PA. His practice is focused on business and corporate law. Of particular interest are the areas of software and emerging technologies. You can reach Attorney Creme at [email protected].