The New Act will become effective as of January 1. 2014.
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.
Even if you intend to form a single member company you will still want to have a written agreement. The new default provisions may not meet your estate planning requirements.
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 when forming a new limited liability company and draft an operating agreement that clearly reflects the agreements of the parties forming the company.
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 firstname.lastname@example.org.