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Senate Study Bill 1199 - IntroducedA Bill ForAn Act 1relating to business entities, by providing for
2different types of limited liability companies and the
3dissolution of limited liability companies, providing for
4fees, and including effective date provisions.
5BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
1DIVISION I
2UNIFORM PROTECTED SERIES ACT — ENACTMENT
3ARTICLE 12
4PART 1
5UNIFORM PROTECTED SERIES ACT
6SUBPART A
7GENERAL PROVISIONS
8 Section 1. NEW SECTION. 489.12101 Short title.
9This part may be cited as the “Uniform Protected Series Act”.
10 Sec. 2. NEW SECTION. 489.12102 Definitions.
11As used in this part, unless the context otherwise requires:
121. “Asset” means any of the following:
13a. Property in which a series limited liability company or
14protected series has rights.
15b. Property as to which the company or protected series has
16the power to transfer rights.
172. “Associated asset” means an asset that meets the
18requirements of section 489.12301.
193. “Associated member” means a member that meets the
20requirements of section 489.12302.
214. “Foreign protected series” means an arrangement,
22configuration, or other structure established by a foreign
23limited liability company which has attributes comparable to a
24protected series established under this part. The term applies
25whether or not the law under which the foreign company is
26organized refers to “protected series”.
275. “Foreign series limited liability company” means a
28foreign limited liability company that has at least one foreign
29protected series.
306. “Nonassociated asset” means any of the following:
31a. An asset of a series limited liability company which is
32not an associated asset of the company.
33b. An asset of a protected series of the company which is
34not an associated asset of the protected series.
357. “Person” means the same as defined in section 4.1 and
-1-1includes a protected series.
28. “Protected series”, except in the phrase “foreign
3protected series”, means a protected series established under
4section 489.12201.
59. “Protected-series manager” means a person under whose
6authority the powers of a protected series are exercised
7and under whose direction the activities and affairs of the
8protected series are managed under the operating agreement,
9this part, and this chapter.
1010. “Protected-series transferable interest” means a right to
11receive a distribution from a protected series.
1211. “Protected-series transferee” means a person to which
13all or part of a protected-series transferable interest of a
14protected series of a series limited liability company has
15been transferred, other than the company. The term includes a
16person that owns a protected-series transferable interest as
17a result of ceasing to be an associated member of a protected
18series.
1912. “Series limited liability company”, except in the phrase
20“foreign series limited liability company”, means a limited
21liability company that has at least one protected series.
22 Sec. 3. NEW SECTION. 489.12103 Nature of protected series.
23A protected series of a series limited liability company is a
24person distinct from all of the following:
251. The company, subject to section 489.12104, subsection
263, section 489.12501, subsection 1, and section 489.12502,
27subsection 4.
282. Another protected series of the company.
293. A member of the company, whether or not the member is an
30associated member of the protected series.
314. A protected-series transferee of a protected series of
32the company.
335. A transferee of a transferable interest of the company.
34 Sec. 4. NEW SECTION. 489.12104 Powers and duration of
35protected series.
-2- 11. A protected series of a series limited liability company
2has the capacity to sue and be sued in its own name.
32. Except as otherwise provided in subsections 3 and 4, a
4protected series of a series limited liability company has the
5same powers and purposes as the company.
63. A protected series of a series limited liability company
7ceases to exist not later than when the company completes its
8winding up.
94. A protected series of a series limited liability company
10shall not do any of the following:
11a. Be a member of the company.
12b. Establish a protected series.
13c. Except as permitted by law of this state other than this
14part, have a purpose or power that the law of this state other
15than this part prohibits a limited liability company from doing
16or having.
17 Sec. 5. NEW SECTION. 489.12105 Governing law.
18The law of this state governs all of the following:
191. The internal affairs of a protected series of a series
20limited liability company, including all of the following:
21a. Relations among any associated members of the protected
22series.
23b. Relations among the protected series and any of the
24following:
25(1) Any associated member.
26(2) The protected-series manager.
27(3) Any protected-series transferee.
28c. Relations between any associated member and any of the
29following:
30(1) The protected-series manager.
31(2) Any protected-series transferee.
32d. The rights and duties of a protected-series manager.
33e. Governance decisions affecting the activities and affairs
34of the protected series and the conduct of those activities and
35affairs.
-3- 1f. Procedures and conditions for becoming an associated
2member or protected-series transferee.
32. The relations between a protected series of a series
4limited liability company and each of the following:
5a. The company.
6b. Another protected series of the company.
7c. A member of the company which is not an associated member
8of the protected series.
9d. A protected-series manager that is not a protected-series
10manager of the protected series.
11e. A protected-series transferee that is not a
12protected-series transferee of the protected series.
133. The liability of a person for a debt, obligation, or
14other liability of a protected series of a series limited
15liability company if the debt, obligation, or liability is
16asserted solely by reason of the person being or acting as any
17of the following:
18a. An associated member, protected-series transferee, or
19protected-series manager of the protected series.
20b. A member of the company which is not an associated member
21of the protected series.
22c. A protected-series manager that is not a protected-series
23manager of the protected series.
24d. A protected-series transferee that is not a
25protected-series transferee of the protected series.
26e. A manager of the company.
27f. A transferee of a transferable interest of the company.
284. The liability of a series limited liability company for
29a debt, obligation, or other liability of a protected series of
30the company if the debt, obligation, or liability is asserted
31solely by reason of the company doing any of the following:
32a. Having delivered to the secretary of state for filing
33under section 489.12201, subsection 2, a protected series
34designation pertaining to the protected series or under section
35489.12201, subsection 4, or section 489.12202, subsection 3,
-4-1a statement of designation change pertaining to the protected
2series.
3b. Being or acting as a protected-series manager of the
4protected series.
5c. Having the protected series be or act as a manager of the
6company.
7d. Owning a protected-series transferable interest of the
8protected series.
95. The liability of a protected series of a series limited
10liability company for a debt, obligation, or other liability of
11the company or of another protected series of the company if
12the debt, obligation, or liability is asserted solely by reason
13of any of the following:
14a. The protected series is any of the following:
15(1) A protected series of the company or having as a
16protected-series manager the company or another protected
17series of the company.
18(2) Acting as a protected-series manager of another
19protected series of the company or a manager of the company.
20b. The company owning a protected-series transferable
21interest of the protected series.
22 Sec. 6. NEW SECTION. 489.12106 Relation of operating
23agreement, this part, and this chapter.
241. Except as otherwise provided in this section and subject
25to sections 489.12107 and 489.12108, the operating agreement
26of a series limited liability company governs all of the
27following:
28a. The internal affairs of a protected series, including all
29of the following:
30(1) Relations among any associated members of the protected
31series.
32(2) Relations among the protected series and any of the
33following:
34(a) Any associated member.
35(b) The protected-series manager.
-5- 1(c) Any protected-series transferee.
2(3) Relations between any associated member and any of the
3following:
4(a) The protected-series manager.
5(b) Any protected-series transferee.
6(4) The rights and duties of a protected-series manager.
7(5) Governance decisions affecting the activities and
8affairs of the protected series and the conduct of those
9activities and affairs.
10(6) Procedures and conditions for becoming an associated
11member or protected-series transferee.
12b. Relations among the protected series, the company, and
13any other protected series of the company.
14c. Relations between all of the following:
15(1) The protected series, its protected-series manager,
16any associated member of the protected series, or any
17protected-series transferee of the protected series.
18(2) A person in the person’s capacity as any of the
19following:
20(a) A member of the company which is not an associated
21member of the protected series.
22(b) A protected-series transferee or protected-series
23manager of another protected series.
24(c) A transferee of the company.
252. If this chapter otherwise restricts the power of an
26operating agreement to affect a matter, the restriction
27applies to a matter under this part in accordance with section
28489.12108.
293. If law of this state other than this part imposes a
30prohibition, limitation, requirement, condition, obligation,
31liability, or other restriction on a limited liability
32company, a member, manager, or other agent of the company, or a
33transferee of the company, except as otherwise provided in law
34of this state other than this part, the restriction applies in
35accordance with section 489.12108.
-6- 14. Except as otherwise provided in section 489.12107, if
2the operating agreement of a series limited liability company
3does not provide for a matter described in subsection 1 in a
4manner permitted by this article, the matter is determined in
5accordance with the following rules:
6a. To the extent this part addresses the matter, this part
7governs.
8b. To the extent this part does not address the matter, the
9other articles of this chapter governs the matter in accordance
10with section 489.12108.
11 Sec. 7. NEW SECTION. 489.12107 Additional limitations on
12operating agreement.
131. An operating agreement shall not vary the effect of any
14of the following:
15a. This section.
16b. Section 489.12103.
17c. Section 489.12104, subsection 1.
18d. Section 489.12104, subsection 2, to provide a protected
19series a power beyond the powers this chapter provides a
20limited liability company.
21e. Section 489.12104, subsection 3 or 4.
22f. Section 489.12105.
23g. Section 489.12106.
24h. Section 489.12108.
25i. Section 489.12201, except to vary the manner in which
26a limited liability company approves establishing a protected
27series.
28j. Section 489.12202.
29k. Section 489.12301.
30l. Section 489.12302.
31m. Section 489.12303, subsection 1 or 2.
32n. Section 489.12304, subsection 3 or 6.
33o. Section 489.12401, except to decrease or eliminate a
34limitation of liability stated in section 489.12401.
35p. Section 489.12402.
-7- 1q. Section 489.12403.
2r. Section 489.12404.
3s. Section 489.12501, subsections 1, 4, and 5.
4t. Section 489.12502, except to designate a different person
5to manage winding up.
6u. Section 489.12503.
7v. Article 6.
8w. Article 7.
9x. Article 8, except to vary any of the following:
10(1) The manner in which a series limited liability company
11may elect under section 489.12803, subsection 1, paragraph “b”,
12to be subject to this part.
13(2) The person that has the right to sign and deliver to the
14secretary of state for filing a record under section 489.12803,
15subsection 2, paragraph “b”.
16y. A provision of this part pertaining to any of the
17following:
18(1) Registered agents.
19(2) The secretary of state, including provisions pertaining
20to records authorized or required to be delivered to the
21secretary of state for filing under this part.
222. An operating agreement shall not unreasonably restrict
23the duties and rights under section 489.12305 but may impose
24reasonable restrictions on the availability and use of
25information obtained under section 489.12305 and may provide
26appropriate remedies, including liquidated damages, for a
27breach of any reasonable restriction on use.
28 Sec. 8. NEW SECTION. 489.12108 Rules for applying to
29specified provisions of this chapter to specified provisions of
30this part.
311. Except as otherwise provided in subsection 2 and section
32489.12107, the following rules apply in applying section
33489.12106, section 489.12304, subsections 3 and 6, section
34489.12501, subsection 4, paragraph “a”, section 489.12502,
35subsection 1, and section 489.12503, subsection 2:
-8- 1a. A protected series of a series limited liability company
2is deemed to be a limited liability company that is formed
3separately from the series limited liability company and is
4distinct from the series limited liability company and any
5other protected series of the series limited liability company.
6b. An associated member of the protected series is deemed to
7be a member of the company deemed to exist under paragraph “a”.
8c. A protected-series transferee of the protected series is
9deemed to be a transferee of the company deemed to exist under
10paragraph “a”.
11d. A protected-series transferable interest of the protected
12series is deemed to be a transferable interest of the company
13deemed to exist under paragraph “a”.
14e. A protected-series manager is deemed to be a manager of
15the company deemed to exist under paragraph “a”.
16f. An asset of the protected series is deemed to be an asset
17of the company deemed to exist under paragraph “a”, whether or
18not the asset is an associated asset of the protected series.
19g. Any creditor or other obligee of the protected series
20is deemed to be a creditor or obligee of the company deemed to
21exist under paragraph “a”.
222. Subsection 1 does not apply if its application would do
23any of the following:
24a. Contravene section 489.110.
25b. Authorize or require the secretary of state to do any of
26the following:
27(1) Accept for filing a type of record that neither this
28part nor any of the other articles of this chapter authorizes
29or requires a person to deliver to the secretary of state for
30filing.
31(2) Make or deliver a record that neither this part nor
32the other articles of this chapter authorizes or requires the
33secretary of state to make or deliver.
34SUBPART B
35ESTABLISHING PROTECTED SERIES
-9-1 Sec. 9. NEW SECTION. 489.12201 Protected series designation
2— amendment.
31. With the affirmative vote or consent of all members
4of a limited liability company, the company may establish a
5protected series.
62. To establish a protected series, a limited liability
7company shall deliver to the secretary of state for filing a
8protected series designation, signed by the company, stating
9the name of the company and the name of the protected series to
10be established.
113. A protected series is established when the protected
12series designation takes effect under section 489.205.
134. To amend a protected series designation, a series limited
14liability company shall deliver to the secretary of state
15for filing a statement of designation change, signed by the
16company, that changes the name of the company, the name of the
17protected series to which the designation applies, or both.
18The change takes effect when the statement of designation
19change takes effect under section 489.205.
20 Sec. 10. NEW SECTION. 489.12202 Name.
211. Except as otherwise provided in subsection 2, the name of
22a protected series must comply with section 489.108.
232. The name of a protected series of a series limited
24liability company must do all of the following:
25a. Begin with the name of the company, including any word or
26abbreviation required by section 489.108.
27b. Contain the phrase “Protected Series” or “protected
28series” or the abbreviation “P.S.” or “PS”.
293. If a series limited liability company changes its name,
30the company shall deliver to the secretary of state for filing
31a statement of designation change for each of the company’s
32protected series, changing the name of each protected series to
33comply with this section.
34 Sec. 11. NEW SECTION. 489.12203 Registered agent.
351. The registered agent in this state for a series limited
-10-1liability company is the registered agent in this state for
2each protected series of the company.
32. Before delivering a protected series designation to the
4secretary of state for filing, a limited liability company
5shall agree with a registered agent that the agent will serve
6as the registered agent in this state for both the company and
7the protected series.
83. A person that signs a protected series designation
9delivered to the secretary of state for filing affirms as a
10fact that the limited liability company on whose behalf the
11designation is delivered has complied with subsection 2.
124. A person that ceases to be the registered agent for a
13series limited liability company ceases to be the registered
14agent for each protected series of the company.
155. A person that ceases to be the registered agent for a
16protected series of a series limited liability company, other
17than as a result of the termination of the protected series,
18ceases to be the registered agent of the company and any other
19protected series of the company.
206. Except as otherwise agreed by a series limited liability
21company and its registered agent, the agent is not obligated to
22distinguish between a process, notice, demand, or other record
23concerning the company and a process, notice, demand, or other
24record concerning a protected series of the company.
25 Sec. 12. NEW SECTION. 489.12204 Service of process, notice,
26demand, or other record.
271. A protected series of a series limited liability company
28may be served with a process, notice, demand, or other record
29required or permitted by law by any of the following:
30a. Serving the company.
31b. Serving the registered agent of the protected series.
32c. Other means authorized by law of this state other than
33the other articles of this chapter.
342. Service of a summons and complaint on a series limited
35liability company is notice to each protected series of
-11-1the company of service of the summons and complaint and the
2contents of the complaint.
33. Service of a summons and complaint on a protected series
4of a series limited liability company is notice to the company
5and any other protected series of the company of service of the
6summons and complaint and the contents of the complaint.
74. Service of a summons and complaint on a foreign series
8limited liability company is notice to each foreign protected
9series of the foreign company of service of the summons and
10complaint and the contents of the complaint.
115. Service of a summons and complaint on a foreign protected
12series of a foreign series limited liability company is notice
13to the foreign company and any other foreign protected series
14of the company of service of the summons and complaint and the
15contents of the complaint.
166. Notice to a person under subsection 2, 3, 4, or 5 is
17effective whether or not the summons and complaint identify
18the person if the summons and complaint name as a party and
19identify any of the following:
20a. The series limited liability company or a protected
21series of the company.
22b. The foreign series limited liability company or a foreign
23protected series of the foreign company.
24 Sec. 13. NEW SECTION. 489.12205 Certificate of existence
25for protected series.
261. On request of any person, the secretary of state shall
27issue a certificate of existence for a protected series of a
28series limited liability company or a certificate of authority
29for a foreign protected series in the following circumstances:
30a. In the case of a protected series, if all of the
31following apply:
32(1) No statement of dissolution, termination, or relocation
33pertaining to the protected series has been filed.
34(2) The company has delivered to the secretary of state
35for filing the most recent biennial report required by section
-12-1489.209 and the report includes the name of the protected
2series, unless any of the following applies:
3(a) When the company delivered the report for filing, the
4protected series designation pertaining to the protected series
5had not yet taken effect.
6(b) After the company delivered the report for filing,
7the company delivered to the secretary of state for filing
8a statement of designation change changing the name of the
9protected series.
10b. In the case of a foreign protected series, it is
11authorized to do business in this state.
122. A certificate issued under subsection 1 must state all
13of the following:
14a. In the case of a protected series, all of the following:
15(1) The name of the protected series of the series limited
16liability company and the name of the company.
17(2) That the requirements of subsection 1 are met.
18(3) The date the protected series designation pertaining to
19the protected series took effect.
20(4) If a statement of designation change pertaining to
21the protected series has been filed, the effective date and
22contents of the statement.
23b. In the case of a foreign protected series, that it is
24authorized to do business in this state.
25c. That all fees, taxes, interest, and penalties due under
26this chapter or other law to the secretary of state have been
27paid if all of the following apply:
28(1) Payment is reflected in the records of the secretary of
29state.
30(2) Nonpayment affects the existence or good standing of the
31protected series.
32d. Other facts reflected in the records of the secretary of
33state pertaining to the protected series or foreign protected
34series which the person requesting the certificate reasonably
35requests.
-13- 13. Subject to any qualification stated by the secretary
2of state in a certificate issued under subsection 1, the
3certificate may be relied on as conclusive evidence of the
4facts stated in the certificate.
5 Sec. 14. NEW SECTION. 489.12206 Information required in
6biennial report — effect of failure to provide.
71. In the biennial report required by section 489.209, a
8series limited liability company shall include the name of each
9protected series of the company for which all of the following
10applies:
11a. For which the company has previously delivered to the
12secretary of state for filing a protected series designation.
13b. Which has not dissolved and completed winding up.
142. A failure by a series limited liability company to comply
15with subsection 1 with regard to a protected series prevents
16issuance of a certificate of good standing pertaining to the
17protected series but does not otherwise affect the protected
18series.
19SUBPART C
20ASSOCIATED ASSET, ASSOCIATED MEMBER, PROTECTED-SERIES
21TRANSFERABLE INTEREST, MANAGEMENT, and RIGHT OF INFORMATION
22 Sec. 15. NEW SECTION. 489.12301 Associated asset.
231. Only an asset of a protected series may be an associated
24asset of the protected series. Only an asset of a series
25limited liability company may be an associated asset of the
26company.
272. An asset of a protected series of a series limited
28liability company is an associated asset of the protected
29series only if the protected series creates and maintains
30records that state the name of the protected series and
31describe the asset with sufficient specificity to permit
32a disinterested, reasonable individual to do all of the
33following:
34a. Identify the asset and distinguish it from any other
35asset of the protected series, any asset of the company, and
-14-1any asset of any other protected series of the company.
2b. Determine when and from what person the protected series
3acquired the asset or how the asset otherwise became an asset
4of the protected series.
5c. If the protected series acquired the asset from the
6company or another protected series of the company, determine
7any consideration paid, the payor, and the payee.
83. An asset of a series limited liability company is an
9associated asset of the company only if the company creates
10and maintains records that state the name of the company and
11describe the asset with sufficient specificity to permit
12a disinterested, reasonable individual to do all of the
13following:
14a. Identify the asset and distinguish it from any other
15asset of the company and any asset of any protected series of
16the company.
17b. Determine when and from what person the company acquired
18the asset or how the asset otherwise became an asset of the
19company.
20c. If the company acquired the asset from a protected series
21of the company, determine any consideration paid, the payor,
22and the payee.
234. The records and recordkeeping required by subsections
242 and 3 may be organized by specific listing, category,
25type, quantity, or computational or allocational formula or
26procedure, including a percentage or share of any asset, or in
27any other reasonable manner.
285. To the extent permitted by this section and law of this
29state other than this part, a series limited liability company
30or protected series of the company may hold an associated asset
31directly or indirectly, through a representative, nominee, or
32similar arrangement, except that all of the following applies:
33a. A protected series shall not hold an associated asset
34in the name of the company or another protected series of the
35company.
-15- 1b. The company shall not hold an associated asset in the
2name of a protected series of the company.
3 Sec. 16. NEW SECTION. 489.12302 Associated member.
41. Only a member of a series limited liability company may
5be an associated member of a protected series of the company.
62. A member of a series limited liability company becomes an
7associated member of a protected series of the company if the
8operating agreement or a procedure established by the agreement
9states all of the following:
10a. That the member is an associated member of the protected
11series.
12b. The date on which the member became an associated member.
13c. Any protected-series transferable interest the associated
14member has in connection with becoming or being an associated
15member.
163. If a person that is an associated member of a protected
17series of a series limited liability company is dissociated
18from the company, the person ceases to be an associated member
19of the protected series.
20 Sec. 17. NEW SECTION. 489.12303 Protected-series
21transferable interest.
221. A protected-series transferable interest of a protected
23series of a series limited liability company must be owned
24initially by an associated member of the protected series or
25the company.
262. If a protected series of a series limited liability
27company has no associated members when established, the
28company owns the protected-series transferable interests in the
29protected series.
303. In addition to acquiring a protected series transferable
31series interest under subsection 2, a series limited liability
32company may acquire a protected-series transferable interest
33through a transfer from another person or as provided in the
34operating agreement.
354. Except for section 489.12108, subsection 1,
-16-1paragraph “c”, a provision of this part which applies to
2a protected-series transferee of a protected series of a
3series limited liability company applies to the company in
4its capacity as an owner of a protected-series transferable
5interest of the protected series. A provision of the operating
6agreement of a series limited liability company which applies
7to a protected-series transferee of a protected series of the
8company applies to the company in its capacity as an owner of a
9protected-series transferable interest of the protected series.
10 Sec. 18. NEW SECTION. 489.12304 Management.
111. A protected series may have more than one
12protected-series manager.
132. If a protected series has no associated members, the
14series limited liability company is the protected-series
15manager.
163. Section 489.12108 applies to determine any duties of
17a protected-series manager of a protected series of a series
18limited liability company to all of the following:
19a. The protected series.
20b. Any associated member of the protected series.
21c. Any protected-series transferee of the protected series.
224. Solely by reason of being or acting as a protected-series
23manager of a protected series of a series limited liability
24company, a person owes no duty to any of the following:
25a. The company.
26b. Another protected series of the company.
27c. Another person in that person’s capacity as any of the
28following:
29(1) A member of the company which is not an associated
30member of the protected series.
31(2) A protected-series transferee or protected-series
32manager of another protected series.
33(3) A transferee of the company.
345. An associated member of a protected series of a series
35limited liability company has the same rights as any other
-17-1member of the company to vote on or consent to an amendment to
2the company’s operating agreement or any other matter being
3decided by the members, whether or not the amendment or matter
4affects the interests of the protected series or the associated
5member.
66. Article 9 applies to a protected series in accordance
7with section 489.12108.
8 Sec. 19. NEW SECTION. 489.12305 Right of person not
9associated member of protected series to information concerning
10protected series.
111. A member of a series limited liability company which
12is not an associated member of a protected series of the
13company has a right to information concerning the protected
14series to the same extent, in the same manner, and under
15the same conditions that a member that is not a manager of
16a manager-managed limited liability company has a right to
17information concerning the company under section 489.410,
18subsection 2.
192. A person formerly an associated member of a protected
20series has a right to information concerning the protected
21series to the same extent, in the same manner, and under
22the same conditions that a person dissociated as a member of
23a manager-managed limited liability company has a right to
24information concerning the company under section 489.410,
25subsection 3.
263. If an associated member of a protected series dies, the
27legal representative of the deceased associated member has a
28right to information concerning the protected series to the
29same extent, in the same manner, and under the same conditions
30that the legal representative of a deceased member of a limited
31liability company has a right to information concerning the
32company under section 489.504.
334. A protected-series manager of a protected series has a
34right to information concerning the protected series to the
35same extent, in the same manner, and under the same conditions
-18-1that a manager of a manager-managed limited liability company
2has a right to information concerning the company under section
3489.410, subsection 2.
4subpart D
5LIMITATION ON LIABILITY AND ENFORCEMENT OF CLAIMS
6 Sec. 20. NEW SECTION. 489.12401 Limitations on liability.
71. A person is not liable, directly or indirectly, by way
8of contribution or otherwise, for a debt, obligation, or other
9liability of any of the following:
10a. A protected series of a series limited liability company
11solely by reason of being or acting as any of the following:
12(1) An associated member, protected-series manager, or
13protected-series transferee of the protected series.
14(2) A member, manager, or a transferee of the company.
15b. A series limited liability company solely by reason
16of being or acting as an associated member, protected-series
17manager, or protected-series transferee of a protected series
18of the company.
192. Subject to section 489.12404, all of the following rules
20apply:
21a. A debt, obligation, or other liability of a series
22limited liability company is solely the debt, obligation, or
23liability of the company.
24b. A debt, obligation, or other liability of a protected
25series is solely the debt, obligation, or liability of the
26protected series.
27c. A series limited liability company is not liable,
28directly or indirectly, by way of contribution or otherwise,
29for a debt, obligation, or other liability of a protected
30series of the company solely by reason of the protected series
31being a protected series of the company or the company for any
32of the following:
33(1) Being or acting as a protected-series manager of the
34protected series.
35(2) Having the protected series manage the company.
-19- 1(3) Owning a protected-series transferable interest of the
2protected series.
3d. A protected series of a series limited liability company
4is not liable, directly or indirectly, by way of contribution
5or otherwise, for a debt, obligation, or other liability of the
6company or another protected series of the company solely by
7reason of any of the following:
8(1) Being a protected series of the company.
9(2) Being or acting as a manager of the company or a
10protected-series manager of another protected series of the
11company.
12(3) Having the company or another protected series of
13the company be or act as a protected-series manager of the
14protected series.
15 Sec. 21. NEW SECTION. 489.12402 Claim seeking to disregard
16limitation of liability.
171. Except as otherwise provided in subsection 2, a claim
18seeking to disregard a limitation in section 489.12401 is
19governed by the principles of law and equity, including a
20principle providing a right to a creditor or holding a person
21liable for a debt, obligation, or other liability of another
22person, which would apply if each protected series of a series
23limited liability company were a limited liability company
24formed separately from the series limited liability company
25and distinct from the series limited liability company and any
26other protected series of the series limited liability company.
272. The failure of a limited liability company or a protected
28series to observe formalities relating to the exercise of
29its powers or management of its activities and affairs is
30not a ground to disregard a limitation in section 489.12401,
31subsection 1, but may be a ground to disregard a limitation in
32section 489.12401, subsection 2.
333. This section applies to a claim seeking to disregard a
34limitation of liability applicable to a foreign series limited
35liability company or foreign protected series and comparable
-20-1to a limitation stated in section 489.12401, if any of the
2following apply:
3a. The claimant is a resident of this state or doing
4business or authorized to do business in this state.
5b. The claim is to establish or enforce a liability arising
6under law of this state other than this part or from an act or
7omission in this state.
8 Sec. 22. NEW SECTION. 489.12403 Remedies of judgment
9creditor of associated member or protected-series transferee.
10Section 489.503 applies to a judgment creditor of any of the
11following:
121. An associated member or protected-series transferee of a
13protected series.
142. A series limited liability company, to the extent the
15company owns a protected-series transferable interest of a
16protected series.
17 Sec. 23. NEW SECTION. 489.12404 Enforcement against
18nonassociated asset.
191. As used in this section:
20a. “Enforcement date” means 12:01 a.m.on the date on which
21a claimant first serves process on a series limited liability
22company or protected series in an action seeking to enforce
23under this section a claim against an asset of the company or
24protected series by attachment, levy, or the like.
25b. Subject to section 489.12608, subsection 2, “incurrence
26date” means the date on which a series limited liability company
27or protected series incurred the liability giving rise to a
28claim that a claimant seeks to enforce under this section.
292. If a claim against a series limited liability company or
30a protected series of the company has been reduced to judgment,
31in addition to any other remedy provided by law or equity,
32the judgment may be enforced in accordance with the following
33rules:
34a. A judgment against the company may be enforced against
35an asset of a protected series of the company if any of the
-21-1following applies:
2(1) The asset was a nonassociated asset of the protected
3series on the incurrence date.
4(2) The asset is a nonassociated asset of the protected
5series on the enforcement date.
6b. A judgment against a protected series may be enforced
7against an asset of the company if any of the following apply:
8(1) The asset was a nonassociated asset of the company on
9the incurrence date.
10(2) The asset is a nonassociated asset of the company on the
11enforcement date.
12c. A judgment against a protected series may be enforced
13against an asset of another protected series of the company if
14any of the following applies:
15(1) The asset was a nonassociated asset of the other
16protected series on the incurrence date.
17(2) The asset is a nonassociated asset of the other
18protected series on the enforcement date.
193. In addition to any other remedy provided by law or
20equity, if a claim against a series limited liability company
21or a protected series has not been reduced to a judgment
22and law other than this part permits a prejudgment remedy by
23attachment, levy, or the like, the court may apply subsection 2
24as a prejudgment remedy.
254. In a proceeding under this section, the party asserting
26that an asset is or was an associated asset of a series limited
27liability company or a protected series of the company has the
28burden of proof on the issue.
295. This section applies to an asset of a foreign series
30limited liability company or foreign protected series if all of
31the following applies:
32a. The asset is real or tangible property located in this
33state.
34b. The claimant is a resident of this state or doing
35business or authorized to do business in this state, or the
-22-1claim under section 489.12404 is to enforce a judgment, or to
2seek a prejudgment remedy, pertaining to a liability arising
3from law of this state other than this part or an act or
4omission in this state.
5c. The asset is not identified in the records of the foreign
6series limited liability company or foreign protected series
7in a manner comparable to the manner required by section
8489.12301.
9subpart E
10DISSOLUTION AND WINDING UP OF PROTECTED SERIES
11 Sec. 24. NEW SECTION. 489.12501 Events causing dissolution
12of protected series.
13A protected series of a series limited liability company is
14dissolved, and its activities and affairs must be wound up,
15only on any of the following:
161. Dissolution of the company.
172. Occurrence of an event or circumstance the operating
18agreement states causes dissolution of the protected series.
193. Affirmative vote or consent of all members.
204. Entry by the court of an order dissolving the
21protected series on application by an associated member or
22protected-series manager of the protected series subject to all
23of the following:
24a. In accordance with section 489.12108.
25b. To the same extent, in the same manner, and on the same
26grounds the court would enter an order dissolving a limited
27liability company on application by a member or manager of the
28company.
295. Entry by the court of an order dissolving the protected
30series on application by the company or a member of the company
31on the ground that the conduct of all or substantially all the
32activities and affairs of the protected series is illegal.
33 Sec. 25. NEW SECTION. 489.12502 Winding up dissolved
34protected series.
351. Subject to subsections 2 and 3 and in accordance with
-23-1section 489.12108 all of the following apply:
2a. A dissolved protected series shall wind up its activities
3and affairs in the same manner that a limited liability company
4winds up its activities and affairs under sections 489.702
5through 489.704 subject to the same requirements and conditions
6and with the same effects.
7b. Judicial supervision or another judicial remedy is
8available in the winding up of the protected series to the same
9extent, in the same manner, under the same conditions, and with
10the same effects that apply under section 489.702, subsection
115.
122. When a protected series of a series limited liability
13company dissolves, the company may deliver to the secretary of
14state for filing a statement of protected series dissolution
15stating the name of the company and the protected series
16and that the protected series is dissolved. The filing of
17the statement by the secretary of state has the same effect
18as the filing by the secretary of state of a statement of
19dissolution under section 489.103, subsection 4, paragraph “b”,
20subparagraph (1).
213. When a protected series of a series limited liability
22company has completed winding up, the company may deliver to
23the secretary of state for filing a statement of designation
24cancellation stating the name of the company and the protected
25series and that the protected series is terminated. The filing
26of the statement by the secretary of state has the same effect
27as the filing by the secretary of state of a statement of
28termination under section 489.103, subsection 4, paragraph “b”,
29subparagraph (2).
304. A series limited liability company has not completed its
31winding up until each of the protected series of the company
32has completed its winding up.
33 Sec. 26. NEW SECTION. 489.12503 Effect of reinstatement
34of series limited liability company or revocation of voluntary
35dissolution.
-24- 1If a series limited liability company that has been
2administratively dissolved is reinstated, or a series limited
3liability company that voluntarily dissolved rescinds its
4dissolution both of the following apply:
51. Each protected series of the company ceases winding up.
62. The provisions of section 489.706 apply to each protected
7series of the company in accordance with section 489.12108.
8subpart F
9ENTITY TRANSACTIONS RESTRICTED
10 Sec. 27. NEW SECTION. 489.12601 Definitions.
11As used in this subpart:
121. “After a merger” or “after the merger” means when a merger
13under section 489.12604 becomes effective and afterwards.
142. “Before a merger” or “before the merger” means before a
15merger under section 489.12604 becomes effective.
163. “Continuing protected series” means a protected series of
17a surviving company which continues in uninterrupted existence
18after a merger under section 489.12604.
194. “Merging company” means a limited liability company that
20is party to a merger under section 489.12604.
215. “Nonsurviving company” means a merging company that
22does not continue in existence after a merger under section
23489.12604.
246. “Relocated protected series” means a protected series
25of a nonsurviving company which, after a merger under section
26489.12604, continues in uninterrupted existence as a protected
27series of the surviving company.
287. “Surviving company” means a merging company that
29continues in existence after a merger under section 489.12604.
30 Sec. 28. NEW SECTION. 489.12602 Protected series shall not
31be party to entity transaction.
32A protected series shall not do any of the following:
331. Be an acquiring, acquired, converting, converted,
34merging, or surviving entity.
352. Participate in a domestication.
-25- 13. Be a party to or be formed, organized, established, or
2created in a transaction substantially like a merger, interest
3exchange, conversion, or domestication.
4 Sec. 29. NEW SECTION. 489.12603 Restriction on entity
5transaction involving protected series.
6A series limited liability company shall not be any of the
7following:
81. An acquiring, acquired, converting, converted,
9domesticating, or domesticated entity.
102. Except as otherwise provided in section 489.12604, a
11party to or the surviving company of a merger.
12 Sec. 30. NEW SECTION. 489.12604 Merger authorized —
13parties restricted.
14A series limited liability company may be party to a merger
15in accordance with sections 489.1001 through 489.1005, this
16section, and sections 489.12605 through 489.12608 only if all
17of the following apply:
181. Each other party to the merger is a limited liability
19company.
202. The surviving company is not created in the merger.
21 Sec. 31. NEW SECTION. 489.12605 Plan of merger.
22In a merger under section 489.12604, the plan of merger must
23do all of the following:
241. Comply with section 489.1002.
252. State in a record all of the following:
26a. For any protected series of a nonsurviving company,
27whether after the merger the protected series will be a
28relocated protected series or be dissolved, wound up, and
29terminated.
30b. For any protected series of the surviving company
31which exists before the merger, whether after the merger the
32protected series will be a continuing protected series or be
33dissolved, wound up, and terminated.
34c. For each relocated protected series or continuing
35protected series all of the following:
-26- 1(1) The name of any person that becomes an associated member
2or protected-series transferee of the protected series after
3the merger, any consideration to be paid by, on behalf of, or
4in respect of the person, the name of the payor, and the name
5of the payee.
6(2) The name of any person whose rights or obligations
7in the person’s capacity as an associated member or
8protected-series transferee will change after the merger.
9(3) Any consideration to be paid to a person who before the
10merger was an associated member or protected-series transferee
11of the protected series and the name of the payor.
12(4) If after the merger the protected series will be a
13relocated protected series, its new name.
14d. For any protected series to be established by the
15surviving company as a result of the merger all of the
16following:
17(1) The name of the protected series.
18(2) Any protected-series transferable interest to be
19owned by the surviving company when the protected series is
20established.
21(3) The name of and any protected-series transferable
22interest owned by any person that will be an associated
23member of the protected series when the protected series is
24established.
25e. For any person that is an associated member of a
26relocated protected series and will remain a member after
27the merger, any amendment to the operating agreement of the
28surviving company which is all of the following:
29(1) Is or is proposed to be in a record.
30(2) Is necessary or appropriate to state the rights and
31obligations of the person as a member of the surviving company.
32 Sec. 32. NEW SECTION. 489.12606 Articles of merger.
33In a merger under section 489.12604, the articles of merger
34must do all of the following:
351. Comply with section 489.1004.
-27- 12. Include as an attachment the following records, each to
2become effective when the merger becomes effective upon any of
3the following:
4a. For a protected series of a merging company being
5terminated as a result of the merger, a statement of
6termination signed by the company.
7b. For a protected series of a nonsurviving company which
8after the merger will be a relocated protected series all of
9the following:
10(1) A statement of relocation signed by the nonsurviving
11company which contains the name of the company and the name of
12the protected series before and after the merger.
13(2) A statement of protected series designation signed by
14the surviving company.
15c. For a protected series being established by the
16surviving company as a result of the merger, a protected series
17designation signed by the company.
18 Sec. 33. NEW SECTION. 489.12607 Effect of merger.
19When a merger under section 489.12604 becomes effective, in
20addition to the effects stated in section 489.1005, all of the
21following apply:
221. As provided in the plan of merger, each protected series
23of each merging company which was established before the merger
24is any of the following:
25a. Is a relocated protected series or continuing protected
26series.
27b. Is dissolved, wound up, and terminated.
282. Any protected series to be established as a result of the
29merger is established.
303. Any relocated protected series or continuing protected
31series is the same person without interruption as it was before
32the merger.
334. All property of a relocated protected series or
34continuing protected series continues to be vested in the
35protected series without transfer, reversion, or impairment.
-28- 15. All debts, obligations, and other liabilities of a
2relocated protected series or continuing protected series
3continue as debts, obligations, and other liabilities of the
4protected series.
56. Except as otherwise provided by law or the plan of
6merger, all the rights, privileges, immunities, powers,
7and purposes of a relocated protected series or continuing
8protected series remain in the protected series.
97. The new name of a relocated protected series may be
10substituted for the former name of the protected series in any
11pending action or proceeding.
128. If provided in the plan of merger all of the following
13apply:
14a. A person becomes an associated member or protected-series
15transferee of a relocated protected series or continuing
16protected series.
17b. A person becomes an associated member of a protected
18series established by the surviving company as a result of the
19merger.
20c. Any change in the rights or obligations of a person
21in the person’s capacity as an associated member or
22protected-series transferee of a relocated protected series or
23continuing protected series take effect.
24d. Any consideration to be paid to a person that before the
25merger was an associated member or protected-series transferee
26of a relocated protected series or continuing protected series
27is due.
289. Any person that is a member of a relocated protected
29series becomes a member of the surviving company, if not
30already a member.
31 Sec. 34. NEW SECTION. 489.12608 Application of section
32489.12404 after merger.
331. A creditor’s right that existed under section 489.12404
34immediately before a merger under section 489.12604 may
35be enforced after the merger in accordance with all of the
-29-1following:
2a. A creditor’s right that existed immediately before the
3merger against the surviving company, a continuing protected
4series, or a relocated protected series continues without
5change after the merger.
6b. A creditor’s right that existed immediately before the
7merger against a nonsurviving company all of the following
8apply:
9(1) May be asserted against an asset of the nonsurviving
10company which vested in the surviving company as a result of
11the merger.
12(2) Does not otherwise change.
13c. Subject to subsection 2, all of the following apply:
14(1) In addition to the remedy stated in paragraph “a”, a
15creditor with a right under section 489.12404 which existed
16immediately before the merger against a nonsurviving company or
17a relocated protected series may assert the right against any
18of the following:
19(a) An asset of the surviving company, other than an asset
20of the nonsurviving company which vested in the surviving
21company as a result of the merger.
22(b) An asset of a continuing protected series.
23(c) An asset of a protected series established by the
24surviving company as a result of the merger.
25(d) If the creditor’s right was against an asset of the
26nonsurviving company, an asset of a relocated series.
27(e) If the creditor’s right was against an asset of a
28relocated protected series, an asset of another relocated
29protected series.
30(2) In addition to the remedy stated in paragraph “b”,
31a creditor with a right that existed immediately before the
32merger against the surviving company or a continuing protected
33series may assert the right against any of the following:
34(a) An asset of a relocated protected series.
35(b) An asset of a nonsurviving company which vested in the
-30-1surviving company as a result of the merger.
22. For the purposes of subsection 1, paragraph “c”, and
3section 489.12404, subsection 2, paragraph “a”, subparagraph
4(1); section 489.12404, subsection 2, paragraph “b”,
5subparagraph (1); and section 489.12404, subsection 2,
6paragraph “c”, subparagraph (1), the incurrence date is deemed
7to be the date on which the merger becomes effective.
83. A merger under section 489.12604 does not affect the
9manner in which section 489.12404 applies to a liability
10incurred after the merger.
11subpart G
12FOREIGN PROTECTED SERIES
13 Sec. 35. NEW SECTION. 489.12701 Governing law.
14The law of the jurisdiction of formation of a foreign series
15limited liability company governs all of the following:
161. The internal affairs of a foreign protected series of the
17company, including all of the following:
18a. Relations among any associated members of the foreign
19protected series.
20b. Relations between the foreign protected series and any
21of the following:
22(1) Any associated member.
23(2) The protected-series manager.
24(3) Any protected-series transferee.
25c. Relations between any associated member and any of the
26following:
27(1) The protected-series manager.
28(2) Any protected-series transferee.
29d. The rights and duties of a protected-series manager.
30e. Governance decisions affecting the activities and affairs
31of the foreign protected series and the conduct of those
32activities and affairs.
33f. Procedures and conditions for becoming an associated
34member or protected-series transferee.
352. Relations between the foreign protected series and all
-31-1of the following:
2a. The company.
3b. Another foreign protected series of the company.
4c. A member of the company which is not an associated member
5of the foreign protected series.
6d. A foreign protected-series manager that is not a
7protected-series manager of the protected series.
8e. A foreign protected-series transferee that is not a
9foreign protected-series transferee of the protected series.
10f. A transferee of a transferable interest of the company.
113. Except as otherwise provided in sections 489.12402 and
12489.12404, the liability of a person for a debt, obligation,
13or other liability of a foreign protected series of a foreign
14series limited liability company if the debt, obligation, or
15liability is asserted solely by reason of the person being or
16acting as any of the following:
17a. An associated member, protected-series transferee, or
18protected-series manager of the foreign protected series.
19b. A member of the company which is not an associated member
20of the foreign protected series.
21c. A protected-series manager of another foreign protected
22series of the company.
23d. A protected-series transferee of another foreign
24protected series of the company.
25e. A manager of the company.
26f. A transferee of a transferable interest of the company.
274. Except as otherwise provided in sections 489.12402 and
28489.12404 all of the following apply:
29a. The liability of the foreign series limited liability
30company for a debt, obligation, or other liability of a foreign
31protected series of the company if the debt, obligation, or
32liability is asserted solely by reason of the foreign protected
33series being a foreign protected series of the company or the
34company as a consequence of any of the following:
35(1) Being or acting as a foreign protected-series manager of
-32-1the foreign protected series.
2(2) Having the foreign protected series manage the company.
3(3) Owning a protected-series transferable interest of the
4foreign protected series.
5b. The liability of a foreign protected series for a
6debt, obligation, or other liability of the company or
7another foreign protected series of the company if the debt,
8obligation, or liability is asserted solely by reason of
9the foreign protected series as a consequence of any of the
10following:
11(1) Being a foreign protected series of the company or
12having the company or another foreign protected series of the
13company be or act as foreign protected-series manager of the
14foreign protected series.
15(2) Managing the company or being or acting as a foreign
16protected-series manager of another foreign protected series
17of the company.
18 Sec. 36. NEW SECTION. 489.12702 No attribution of
19activities constituting doing business or for establishing
20jurisdiction.
21In determining whether a foreign series limited liability
22company or foreign protected series of the company does
23business in this state or is subject to the personal
24jurisdiction of the courts of this state all of the following
25apply:
261. The activities and affairs of the company are not
27attributable to a foreign protected series of the company
28solely by reason of the foreign protected series being a
29foreign protected series of the company.
302. The activities and affairs of a foreign protected
31series are not attributable to the company or another foreign
32protected series of the company solely by reason of the foreign
33protected series being a foreign protected series of the
34company.
35 Sec. 37. NEW SECTION. 489.12703 Authorization of foreign
-33-1protected series.
21. Except as otherwise provided in this section and
3subject to sections 489.12402 and 489.12404, the law of this
4state governing the filing of a certificate of authority of
5a foreign limited liability company to do business in this
6state, including the consequences of not complying with that
7law, applies to a foreign protected series of a foreign series
8limited liability company as if the foreign protected series
9were a foreign limited liability company formed separately
10from the foreign series limited liability company and distinct
11from the foreign series limited liability company and any
12other foreign protected series of the foreign series limited
13liability company.
142. An application by a foreign protected series of a foreign
15series limited liability company for a certificate of authority
16to do business in this state must include all of the following:
17a. The name and jurisdiction of formation of the foreign
18series limited liability company.
19b. If the company has other foreign protected series,
20the name and street and mailing address of an individual who
21knows the name and street and mailing address of all of the
22following:
23(1) Each other foreign protected series of the foreign
24series limited liability company.
25(2) The foreign protected-series manager of and agent for
26service of process for each other foreign protected series of
27the foreign series limited liability company.
282A. If the jurisdiction under whose law the foreign
29protected series was organized does not provide for the
30protected series to obtain a certificate of existence,
31the foreign protected series shall attach a certificate of
32existence for the series limited liability company of which
33it is a protected series. In that case, a foreign protected
34series of the foreign series limited liability company will
35be deemed to be in existence and good standing as long as the
-34-1series limited liability company is in existence and good
2standing.
33. The name of a foreign protected series applying for a
4certificate of authority or authorized to do business in this
5state must comply with section 489.12202 and may do so using a
6fictitious name pursuant to section 489.108, if the fictitious
7name complies with section 489.12202.
84. A foreign protected series that has in effect a
9certificate of authority pursuant to this section shall file
10with the secretary of state an amendment to its application if
11there is any change in the information required by subsection
122.
13 Sec. 38. NEW SECTION. 489.12704 Disclosure required when
14foreign series limited liability company or foreign protected
15series party to proceeding.
161. Not later than thirty days after becoming a party
17to a proceeding before a civil, administrative, or other
18adjudicative tribunal of or located in this state or a tribunal
19of the United States located in this state all of the following
20apply:
21a. A foreign series limited liability company shall disclose
22to each other party the name and street and mailing address of
23all of the following:
24(1) Each foreign protected series of the company.
25(2) Each foreign protected-series manager of and a
26registered agent for service of process for each foreign
27protected series of the company.
28b. A foreign protected series of a foreign series limited
29liability company shall disclose to each other party the name
30and street and mailing address of all of the following:
31(1) The company and each manager of the company and an agent
32for service of process for the company.
33(2) Any other foreign protected series of the company and
34each foreign protected-series manager of and an agent for
35service of process for the other foreign protected series.
-35- 12. If a foreign series limited liability company or foreign
2protected series challenges the personal jurisdiction of
3the tribunal, the requirement that the foreign company or
4foreign protected series make disclosure under subsection 1 is
5tolled until the tribunal determines whether it has personal
6jurisdiction.
73. If a foreign series limited liability company or foreign
8protected series does not comply with subsection 1, a party to
9the proceeding may do any of the following:
10a. Request the tribunal to treat the noncompliance as a
11failure to comply with the tribunal’s discovery rules.
12b. Bring a separate proceeding in the court to enforce
13subsection 1.
14subpart H
15TRANSITIONAL PROVISIONS
16 Sec. 39. NEW SECTION. 489.12803 Transitional provisions.
171. Before January 1, 2021, this part governs only the
18following:
19a. A series limited liability company formed, or a protected
20series established, on or after January 1, 2020.
21b. A limited liability company that is a series limited
22liability company before January 1, 2020, and elects, in the
23manner provided in its operating agreement or by law for
24amending the operating agreement, to be subject to this part.
252. If a series limited liability company elects under
26subsection 1, paragraph “b”, to be subject to this part:
27a. The election applies to each protected series of the
28company, whenever established.
29b. A manager of the company has the right to sign and
30deliver to the secretary of state for filing any record
31necessary to comply with this part, whether the record pertains
32to the company, a protected series of the company, or both.
333. On and after January 1, 2021, this part governs all
34series limited liability companies and protected series.
354. Until January 1, 2021, sections 489.12402 and 489.12404
-36-1do not apply to a foreign protected series that was established
2before January 1, 2020, or a foreign limited liability company
3that became a foreign series limited liability company before
4January 1, 2020.
55. This section is repealed on January 1, 2021.
6 Sec. 40. NEW SECTION. 489.12804 Savings clause.
7This part does not affect an action commenced, proceeding
8brought, or right accrued before January 1, 2020.
9 Sec. 41. EFFECTIVE DATE. This division of this Act takes
10effect January 1, 2020.
11DIVISION II
12UNIFORM PROTECTED SERIES ACT — CONFORMING AMENDMENTS
13 Sec. 42. Section 10.1, subsections 9 and 17, Code 2019, are
14amended to read as follows:
159. a. “Farmers cooperative limited liability company”
16means a limited liability company organized under chapter 489,
17if cooperative associations hold one hundred percent of all
18membership interests in the limited liability company. Farmers
19cooperative associations must hold at least seventy percent
20of all membership interests in the limited liability company.
21If more than one type of membership interest is established,
22including any series as provided in section 489.1201 or
23any class or group as provided in section 489.1201, farmers
24cooperative associations must hold at least seventy percent of
25all membership interests of each type.
26b. As used in paragraph “a”, a type of membership interest
27in a limited liability company includes any of the following:
28(1) (a) A series as provided in chapter 489, article 12.
29(b) This subparagraph is repealed on January 1, 2021.
30(2) A protected series as provided in chapter 489, article
3112.
3217. “Networking farmers limited liability company” means a
33limited liability company, other than a family farm limited
34liability company as defined in section 9H.1, organized under
35chapter 489 if all of the following conditions are satisfied:
-37- 1a. (1) Qualified farmers must hold at least fifty-one
2percent of all membership interests in the limited liability
3company. If more than one type of membership interest is
4established, including any series as provided in section
5489.1201 or any class or group as provided in section 489.1201,
6 qualified farmers must hold at least fifty-one percent of all
7membership interests of each type.
8b. (2) Qualified persons must hold at least seventy percent
9of all membership interests in the limited liability company.
10If more than one type of membership interest is established,
11including any series as provided in section 489.1201 or any
12class or group as provided in section 489.1201, qualified
13persons must hold at least seventy percent of all membership
14interests of each type.
15b. As used in paragraph “a”, a type of membership interest
16in a limited liability company includes any of the following:
17(1) (a) A series as provided in chapter 489, article 12.
18(b) This subparagraph is repealed on January 1, 2021.
19(2) A protected series of a series limited liability company
20as provided in chapter 489, article 12.
21 Sec. 43. Section 10.10, subsection 1, paragraph c, Code
222019, is amended to read as follows:
23c. (1) Less than fifty percent of the interest in the
24farmers cooperative limited liability company is held by
25members which are parties to intra-company loan agreements.
26If more than one type of membership interest is established,
27including any series as provided in section 489.1201 or any
28class or group as provided in section 489.1201, less than
29fifty percent of the interest in each type of membership shall
30be held by members which are parties to intra-company loan
31agreements.
32(2) As used in subparagraph (1), a type of membership
33interest in a limited liability company includes any of the
34following:
35(a) (i) A series as provided in chapter 489, article 12.
-38- 1(ii) This subparagraph division is repealed on January 1,
22021.
3(b) A protected series of a series limited liability company
4as provided in chapter 489, article 12.
5 Sec. 44. Section 489.101, Code 2019, is amended to read as
6follows:
7489.101 Short title.
81. This chapter may be cited as the “Revised Uniform Limited
9Liability Company Act”.
102. In addition, article 12, part 1, of this chapter may be
11cited as provided in section 489.1201.
12 Sec. 45. Section 489.801, subsection 1, Code 2019, is
13amended to read as follows:
141. The Subject to sections 489.12402 and 489.12404, the
15 law of the state or other jurisdiction under which a foreign
16limited liability company is formed governs all of the
17following:
18a. The internal affairs of the company.
19b. The liability of a member as member and a manager as
20manager for the debts, obligations, or other liabilities of the
21company.
22 Sec. 46. Section 489.1201, Code 2019, is amended by adding
23the following new subsection:
24 NEW SUBSECTION. 8. This section is repealed on January 1,
252021.
26 Sec. 47. Section 489.1202, Code 2019, is amended by adding
27the following new subsection:
28 NEW SUBSECTION. 7. This section is repealed on January 1,
292021.
30 Sec. 48. Section 489.1203, Code 2019, is amended by adding
31the following new subsection:
32 NEW SUBSECTION. 14. This section is repealed on January 1,
332021.
34 Sec. 49. Section 489.1204, Code 2019, is amended to read as
35follows:
-39- 1489.1204 Dissociation from a series.
21. Unless otherwise provided in the operating agreement,
3a member shall cease to be associated with a series and to
4have the power to exercise any rights or powers of a member
5with respect to such series upon the assignment of all of the
6member’s transferable interest with respect to such series.
7Except as otherwise provided in an operating agreement,
8an event under this chapter or identified in an operating
9agreement that causes a member to cease to be associated with
10a series, by itself, shall not cause such member to cease to
11be associated with any other series or terminate the continued
12membership of a member in the limited liability company.
132. This section is repealed on January 1, 2021.
14 Sec. 50. Section 489.1205, Code 2019, is amended by adding
15the following new subsection:
16 NEW SUBSECTION. 4. This section is repealed on January 1,
172021.
18 Sec. 51. Section 489.1206, Code 2019, is amended to read as
19follows:
20489.1206 Foreign series.
211. A foreign limited liability company that is authorized
22to do business in this state under article 8 which is governed
23by an operating agreement that establishes or provides for the
24establishment of designated series of transferable interests
25having separate rights, powers, or duties with respect to
26specified property or obligations of the foreign limited
27liability company, or profits and losses associated with the
28specified property or obligations, shall indicate that fact on
29the application for a certificate of authority as a foreign
30limited liability company. In addition, the foreign limited
31liability company shall state on the application whether the
32debts, liabilities, and obligations incurred, contracted for,
33or otherwise existing with respect to a particular series, if
34any, are enforceable against the assets of such series only,
35and not against the assets of the foreign limited liability
-40-1company generally.
22. This section is repealed on January 1, 2021.
3 Sec. 52. CODE EDITOR DIRECTIVE.
41. The Code editor is directed to make the following
5transfers:
6a. Section 489.1201, as amended by this division of this
7Act, to section 489.12901.
8b. Section 489.1202, as amended by this division of this
9Act, to section 489.12902.
10c. Section 489.1203, as amended by this division of this
11Act, to section 489.12903.
12d. Section 489.1204, as amended by this division of this
13Act, to section 489.12904.
14e. Section 489.1205, as amended by this division of this
15Act, to section 489.12905.
16f. Section 489.1206, as amended by this division of this
17Act, to section 489.12906.
182. The Code editor shall codify the sections described in
19subsection 1 as new part 2 of article 12 of chapter 489.
203. The Code editor shall correct internal references in the
21Code and in any enacted legislation as necessary due to the
22enactment of this section.
23 Sec. 53. EFFECTIVE DATE. This division of this Act takes
24effect January 1, 2020.
25DIVISION III
26MANAGEMENT OF LIMITED LIABILITY COMPANIES
27 Sec. 54. Section 489.407, subsection 2, paragraph f, Code
282019, is amended by striking the paragraph.
29DIVISION IV
30DISSOLUTION
31 Sec. 55. Section 489.105, subsection 2, paragraph a, Code
322019, is amended to read as follows:
33a. Delivering to the secretary of state for filing a
34statement of change under section 489.114, an amendment to the
35certificate under section 489.202, a statement of correction
-41-1under section 489.206, a biennial report under section 489.209,
2a statement of withdrawal or a statement of rescission under
3section 489.701A, or a statement of termination under section
4489.702, subsection 2, paragraph “b”, subparagraph (6).
5 Sec. 56. Section 489.117, subsection 1, Code 2019, is
6amended by adding the following new paragraphs:
7 NEW PARAGRAPH. 0a. Statement of rescission No fee
8 NEW PARAGRAPH. 00a. Statement of withdrawal No fee
9 Sec. 57. NEW SECTION. 489.701A Rescinding dissolution.
101. A limited liability company may rescind its dissolution,
11unless a statement of termination applicable to the company has
12become effective, a district court has entered an order under
13section 489.701, subsection 1, paragraph “d”, dissolving the
14company, or the secretary of state has dissolved the company
15under section 489.705.
162. Rescinding dissolution under this section requires all
17of the following:
18a. The affirmative vote or consent of each member.
19b. If the limited liability company has delivered to the
20secretary of state for filing a statement of dissolution and
21any of the following applies:
22(1) The statement has not become effective, delivery
23to the secretary of state for filing of a statement of
24withdrawal under section 489.205 applicable to the statement
25of dissolution.
26(2) If the statement of dissolution has become effective,
27delivery to the secretary of state for filing of a statement of
28rescission stating the name of the company and that dissolution
29has been rescinded under this section.
303. If a limited liability company rescinds its dissolution
31all of the following apply:
32a. The company resumes carrying on its activities and
33affairs as if the dissolution had never occurred.
34b. Subject to paragraph “c”, any liability incurred by the
35company after the dissolution and before the rescission has
-42-1become effective is determined as if dissolution had never
2occurred.
3c. The rights of a third party arising out of conduct in
4reliance on the dissolution before the third party knew or had
5notice of the rescission may not be adversely affected.
6EXPLANATION
7The inclusion of this explanation does not constitute agreement with
8the explanation’s substance by the members of the general assembly.
9GENERAL — “REVISED UNIFORM LIMITED LIABILITY COMPANY
10ACT”. This bill enacts new or amends existing sections in
11the “Revised Uniform Limited Liability Company Act” (RULLCA)
12as adopted by the national conference on commissioners of
13uniform state laws, more commonly referred to as the uniform
14law commissioners (ULC) (see Code chapter 5), enacted by the
15General Assembly by 2008 Iowa Acts, chapter 1162, and codified
16in Code chapter 489.
17IOWA’S RULLCA. Code chapter 489 includes 13 articles
18governing limited liability companies (LLCs), including their
19formation; relations between members, managers, and other
20persons (e.g., creditors) dealing with an LLC; transferrable
21interests and rights; members’ dissociations; the LLC’s
22dissolution and windup; foreign LLCs; actions by members;
23mergers, conversions, and domestication; and professional LLCs.
24Article 12 provides for a special type of business organization
25referred to as a “series LLC”. Article 13 includes a number
26of miscellaneous provisions, including providing for the
27uniformity of the Code chapter’s application and construction,
28the relationship of Code chapter 489 to the federal Electronic
29Signatures in Global and National Commerce Act, and a savings
30clause (allowing actions commenced prior to the Act’s effective
31date). The bill enacts the Uniform Protected Series Act (UPSA)
32and amends provisions allowing for the cancellation of an LLC’s
33voluntary dissolution.
34GENERAL — LLC DESCRIPTION. An LLC is a type of
35unincorporated business organization that combines features
-43-1associated with for-profit corporations (Code chapter 490) and
2partnerships (Code chapter 486A). When adequately capitalized
3and operating pursuant to its operating agreement, an LLC
4resembles a corporation operating under its articles of
5incorporation and bylaws, by shielding its members (equity
6holders) from the organization’s liabilities (debts). It
7also resembles a partnership in that business income passes
8through the organization to its members who report their
9respective share of profits or losses on individual rather
10than the organization’s (corporate) tax returns. An LLC
11is formed by filing a certificate of organization with the
12secretary of state (comparable to a corporation’s articles
13of incorporation), while many of its powers and duties are
14governed by contract (referred to as an operating agreement
15and generally comparable to a partnership agreement). The
16operating agreement may control the LLC’s governance (e.g.,
17whether it is member-managed or manager-managed) and the rights
18and duties of its members and managers. A member’s interest
19refers to the member’s proportionate equity position in the LLC
20and associated control of its business decisions (affairs and
21internal activities). A transferable interest refers to the
22right of a member or former member to receive distributions
23from the LLC in accordance with the LLC’s operating agreement.
24Absent a provision in the operating agreement to the contrary,
25a transferable interest does not include a unilateral
26transfer of control rights. Dissociation occurs when a member
27withdraws from an LLC which may be on either a voluntary or an
28involuntary basis.
29GENERAL — IOWA SERIES (ARTICLE 12). Under Code chapter 489,
30article 12, an LLC’s operating agreement may provide for the
31establishment of a designated series. Under this arrangement,
32an LLC acts as an umbrella organization for any number of
33segregated transferable interests. The term commonly used to
34describe the umbrella organization is a series LLC. So long
35as certain conditions are satisfied, the liabilities (e.g.,
-44-1debts) and obligations (e.g., contractual promises) by one
2series cannot be imputed to either the series LLC or another
3series under its umbrella (Code section 489.1201). Likewise,
4as far as income, any gain or loss of a series may be allocated
5directly to the members of the series rather than to the series
6LLC or another series. Because a series is a component of a
7series LLC it cannot be completely independent. The article
8includes special provisions for a series LLC, including for its
9formation (Code section 489.1201), management (Code section
10489.1202), distributions conducted as part of a dissolution
11(Code section 489.1203), a member’s dissociation (Code section
12489.1204), its termination (Code section 489.1205), and a
13foreign series LLC (Code section 489.1206).
14DIVISION I — UNIFORM PROTECTED SERIES ACT — GENERAL.
15 Division I enacts the UPSA adopted by the ULC which in time
16will entirely replace current article 12. The provisions of
17the UPSA are codified and fit within the other provisions of
18the RULLCA. The article as amended contains two parts: part 1
19includes the sections of the UPSA taking the place of current
20Iowa series LLC sections and part 2 includes the current Iowa
21series sections temporarily transferred to another part of
22article 12 until repealed on January 1, 2021.
23PART 1, SUBPART A — GENERAL PROVISIONS. This subpart
24includes definitions, a description of the nature of a
25protected series; its power, purpose, and duration; how the
26protected series is governed by the LLC’s operating agreement;
27and rules for applying certain provisions of an existing LLC to
28a protected series. Specifically, it includes the article’s
29short title (new Code section 489.12101), describes terms used
30in the article (new Code sections 489.12102 and 489.12103),
31including defining “protected series” which replaces the term
32“series” (new Code section 489.12102(18)). It defines “series
33limited liability company” to mean a LLC that has at least one
34protected series (or is structured to have a protected series)
35under its umbrella (new Code section 489.12102(12)). The bill
-45-1defines a number of other terms such as “asset” which includes
2property in which a series LLC or protected series holds title
3and therefore may exercise certain rights including transfer
4(new Code section 489.12102(1)). An “associated asset” of a
5series LLC belongs only to (i.e., is “associated with”) the
6series LLC and an “associated asset” of a protected series
7belongs only to (i.e., is “associated with”) that protected
8series (new Code sections 489.12102(2) and 489.12301(1)).
9A “protected-series transferable interest” is a type of
10transferable interest in which an associated member has a
11right to receive a distribution (share of an asset) from a
12protected series under an operating agreement (Code section
13489.12101(10)). A “protected-series manager” (new Code section
14489.12102(9)) is a type of manager (Code section 489.102) who
15exercises all powers necessary to direct the activities and
16affairs of the protected series (Code section 489.12102(9)). A
17protected series may sue and be sued in its own name (new Code
18section 489.12104(1)) and has the same powers and purposes as
19the series LLC (new Code section 489.12104(2)). Generally, a
20protected series cannot survive the termination of its umbrella
21series (new Code section 489.12104(3)). A protected series
22cannot be a member of another series LLC or establish another
23protected series (new Code section 489.12104(4)). A protected
24series is subject to choice of law rules in cases where a
25dispute arises between parties from different states (new Code
26section 489.12105). A series LLC is governed by an operating
27agreement (new Code section 489.12106). In certain cases,
28the UPSA controls the series LLC and any protected series
29regardless of the terms of an operating agreement (new Code
30section 489.12107(1)). Various provisions govern how the UPSA
31and the RULLCA are to be interpreted in harmony.
32PART 1, SUBPART B — ESTABLISHING PROTECTED SERIES. This
33subpart provides for how a protected series is established.
34First, it requires a vote of the series LLC’s membership (new
35Code section 489.12201(1)). A protected series designation
-46-1must be filed with the secretary of state (new Code section
2489.12201(2)). The name of a protected series must comply with
3the naming conventions applicable to an ordinary LLC but have
4a “protected series” or “PS” designation (new Code section
5489.12202). A series LLC (acting through its own registered
6agent) serves as the recipient for service for all its umbrella
7protected series (new Code section 489.12203(1)). A number
8of provisions govern how a protected series receives service
9of process (new Code sections 489.12203 and 489.12204). A
10protected series may obtain a certificate of existence from
11the secretary of state (new Code section 489.12205). An LLC
12is required to file a biennial report with the secretary of
13state under Code section 489.209. The report must include
14information regarding its series (new Code section 489.12206).
15PART 1, SUBPART C — ASSETS, MEMBERS, MANAGEMENT, AND
16INFORMATION. Unless provided otherwise in an operating
17agreement, the owner of an asset is responsible for meeting
18the record-keeping requirements for that asset. An asset
19is only associated with a protected series or series LLC
20if there are adequate records describing the asset (new
21Code section 489.12301(2)). Only a member of a series LLC
22may be an associated member of a protected series holding
23a transferrable interest in the protected series (new Code
24section 489.12302(1)). A transferable interest in a protected
25series must initially be owned either by the series LLC or
26by an associated member of the protected series (new Code
27section 489.12303(1)). A protected series may have multiple
28managers (new Code section 489.12304(1)) in the same manner as
29an ordinary LLC under Code section 489.407. A manager of a
30protected series owes a fiduciary duty to the protected series
31rather than to the series LLC or any other protected series
32unless the manager also manages that protected series (new
33Code section 489.12304(4)). Any derivative claim under RULLCA
34(article 9) applies to such claim brought against a protected
35series (Code section 489.12304(6)). The bill does not include
-47-1a provision in the UPSA that states an associated member of a
2protected series has the same power to act as an agent and may
3bind the protected series in the same manner as a member of
4an ordinary LLC (presumably member-managed under Code section
5489.407). Various parties have a limited right to acquire
6information regarding a protected series, including a member
7of the series LLC, a former associated member of a protected
8series, the legal representative of an associated member of a
9protected series, and a protected-series manager of a protected
10series (new Code section 489.12305).
11PART 1, SUBPART D — LIABILITY LIMITATIONS AND CLAIMS.
12 This subpart limits the liability of certain persons and the
13enforcement of claims, by creating two types of liability
14shields: vertical and horizontal. A vertical shield applies
15to members and managers from liability in the same manner as
16an ordinary LLC. A horizontal shield applies to a protected
17series of a series LLC and its associated assets from liability
18for the debts or obligations of the series LLC or another
19protected series. A person is not liable for the debts and
20obligations of a protected series or a series LLC solely
21because the person is an associated member, protected-series
22manager, or protected-series transferee of a protected series
23(new Code section 489.12401(1)). However, notwithstanding
24these shields, a claimant could bring an action against a
25protected series under certain circumstances if the same
26action could be brought against an ordinary LLC (new Code
27section 489.12402(1)). Remedies afforded a judgment creditor
28of an associated member, protected-series transferee, or
29series limited liability company holding a protected-series
30transferable interest are the same as afforded to a judgment
31creditor in the case of an ordinary LLC under Code section
32489.503 (new Code section 489.12403). Creditors are provided
33different rights to assets if they are asserting a claim to
34pierce the organization’s veil under principles of equity (new
35Code section 489.12402) or are asserting a claim to reach
-48-1“nonassociated assets” meaning that the series LLC or protected
2series has not acquired title (new Code section 489.12404).
3PART 1, SUBPART E — DISSOLUTION AND WINDING UP AFFAIRS.
4 If a series LLC dissolves then each protected series under
5its umbrella dissolves simultaneously (new Code section
6489.12501(1)). The dissolution of a protected series occurs
7due to a provision in its operating agreement, the unanimous
8action of its members, or pursuant to court order (new Code
9section 489.12501(2)-(5)). Once the protected series is to be
10dissolved, its activities and affairs are to be wound up in the
11same manner as an ordinary LLC (new Code section 489.12502(1))
12referring to Code sections 489.702 through 489.704. In the
13case of the dissolution of a series LLC, it cannot wind up
14until each of its protected series has wound up (new Code
15section 489.12502(4)). If a series LLC is administratively
16dissolved by the secretary of state, and later reinstated,
17its protected series ceases winding up (new Code section
18489.12503).
19PART 1, SUBPART F — CHANGING TRANSACTIONS. This subpart
20restricts mergers and other changing transactions involving
21LLCs and protected series. A number of new definitions apply.
22A “continuing protected series” refers to a protected series
23that continues as part of the surviving series LLC (new Code
24section 489.12601(3)). A “relocated protected series” refers
25to a protected series which was part of a nonsurviving series
26LLC and becomes part of the surviving series LLC (new Code
27section 489.12601(6)). A protected series is prohibited from
28being a direct party to an acquisition, conversion, or merger
29(new Code section 489.12602(1)). It also cannot be a direct
30party to a domestication (a business organization formed in
31multiple states) (new Code section 489.12602(2)). One type of
32allowed merger involves two existing LLCs, even if one LLC is
33not a series LLC (new Code sections 489.12603 and 489.12604).
34A plan of merger must comply with the same requirements
35applicable to an ordinary LLC under Code sections 489.1001
-49-1through 489.1005 as well as a number of other requirements
2stated in a plan of merger (new Code section 489.12605) and
3articles of merger (new Code section 489.12606). A plan of
4merger sets forth the management and affairs or affairs of the
5protected series, including its termination, establishment, or
6relocation, assets and liabilities, powers and rights, and name
7(new Code section 489.12607). Generally, a creditor that has a
8right against an LLC or protected series that was terminated
9because of a merger may retain rights against the surviving
10series LLC or protected series (new Code section 489.12608(1)).
11In other cases, a creditor’s rights are not affected so long as
12the liability was incurred after the merger (new Code section
13489.12608(3)).
14PART 1, SUBPART G — FOREIGN PROTECTED SERIES. The law where
15a foreign (out-of-state) series LLC is created (referred to as
16the “law of the jurisdiction of formation”) generally governs
17its protected series, including its formation and governance,
18as well as the rights and duties of its associated members,
19protected series managers, or protected-series transferees
20(new Code section 489.12701(1)). A foreign protected series
21doing business in another state cannot assert that its law
22governs another foreign protected series not doing business
23in that state (new Code section 489.12702). Generally, a
24foreign protected series is to be treated like a foreign LLC
25for purposes of registering to do in-state business (new Code
26section 489.12703). In the case of litigation, within 30 days
27after becoming a party, a foreign series LLC or a foreign
28protected series must disclose to any adverse party identifying
29information regarding the foreign series LLC and each of its
30foreign series (new Code section 489.12704(1)).
31PART 1, SUBPART H — TRANSITIONAL PROVISIONS. This subpart
32does not include two sections of the UPSA that are already
33included in Code chapter 489, article 13, including section
34801 that addresses uniformity of application (Code section
35489.1301) and section 802 that addresses the federal Electronic
-50-1Signatures in Global and National Commerce Act (Code section
2489.1302). It also does not include a severability clause
3(that would provide for the retention of other provisions
4in the part if one provision were held invalid) since that
5provision already applies throughout the Code (Code section
64.12).
7The provisions of UPSA, codified as new sections in article
812, part 1, take effect on January 1, 2020, and applies only
9to a series LLC formed or a protected series established on or
10after that date. One exception applies if a series LLC formed
11prior to that date elects to be governed under the new part
12(new Code section 489.12803(1)). Otherwise on or after January
131, 2021, all series LLCs and each protected series are governed
14under the new part (new Code section 489.12803(1)). However,
15until January 1, 2021, certain claims authorized under new
16Code sections 489.12402 and 489.12404 cannot proceed against a
17foreign series LLC formed prior to January 1, 2020, or foreign
18LLC series that became a foreign series before that date (new
19Code section 489.12803(4)).
20DIVISION II — UNIFORM PROTECTED SERIES ACT — CONFORMING
21AMENDMENTS. The bill amends the sections currently codified
22in article 12 (Iowa series) to provide for their repeal on
23January 1, 2021, the date when all series LLC and umbrella
24series must comply with the new Code sections codified in
25part 1 (UPSA). It also provides for the transfer of current
26sections to new part 2. It amends other provisions in the
27Code to conform with part 1, including sections that restrict
28agricultural landholding by LLCs (Code chapter 10). It also
29amends provisions relating to the law governing foreign LLCs by
30referencing foreign series LLCs (Code section 489.801). The
31division takes effect January 1, 2020.
32DIVISION III — DISASSOCIATION — MANAGEMENT. The bill
33eliminates a provision which provides for member-managed
34limited liability companies, by removing a reference to
35approving a merger, conversion, or domestication (Code section
-51-1489.407(2)(f)). There are two different methods of managing
2a LLC. By statutory default (Code section 489.407(1)), a
3LLC is member-managed, meaning that all members participate
4in decisions managing the activities and affairs to the
5organization (a partnership model). Alternatively, a
6manager-managed LLC, formed and governed under an operating
7agreement, provides that certain members or nonmembers are
8designated to take such actions while the remaining members act
9as passive investors (corporate model).
10DIVISION IV — DISSOLUTION. The bill provides that an LLC
11may rescind a voluntary dissolution (new Code section 489.701A)
12and consequently the winding up of its affairs and activities
13(Code section 489.702). A dissolution is a fundamental
14change transaction that triggers the LLC’s termination. It is
15accomplished by a provision in the operating agreement, the
16unanimous consent of its members, by district court order in
17an action for dissolution, or by an administrative declaration
18issued by the secretary of state (e.g., for nonpayment of
19a fee). The bill provides that in cases of a voluntary
20dissolution in which a statement of dissolution is filed, an
21LLC may rescind such a statement by filing with the secretary
22of state a statement of rescission. Generally, once an LLC
23rescinds its dissolution, the LLC carries on its affairs as if
24the dissolution had never occurred. One exception applies to
25protect a person (creditor) who would be adversely affected by
26the retroactive effect of the statement of rescission.
-52-da/jh
2different types of limited liability companies and the
3dissolution of limited liability companies, providing for
4fees, and including effective date provisions.
5BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
1DIVISION I
2UNIFORM PROTECTED SERIES ACT — ENACTMENT
3ARTICLE 12
4PART 1
5UNIFORM PROTECTED SERIES ACT
6SUBPART A
7GENERAL PROVISIONS
8 Section 1. NEW SECTION. 489.12101 Short title.
9This part may be cited as the “Uniform Protected Series Act”.
10 Sec. 2. NEW SECTION. 489.12102 Definitions.
11As used in this part, unless the context otherwise requires:
121. “Asset” means any of the following:
13a. Property in which a series limited liability company or
14protected series has rights.
15b. Property as to which the company or protected series has
16the power to transfer rights.
172. “Associated asset” means an asset that meets the
18requirements of section 489.12301.
193. “Associated member” means a member that meets the
20requirements of section 489.12302.
214. “Foreign protected series” means an arrangement,
22configuration, or other structure established by a foreign
23limited liability company which has attributes comparable to a
24protected series established under this part. The term applies
25whether or not the law under which the foreign company is
26organized refers to “protected series”.
275. “Foreign series limited liability company” means a
28foreign limited liability company that has at least one foreign
29protected series.
306. “Nonassociated asset” means any of the following:
31a. An asset of a series limited liability company which is
32not an associated asset of the company.
33b. An asset of a protected series of the company which is
34not an associated asset of the protected series.
357. “Person” means the same as defined in section 4.1 and
-1-1includes a protected series.
28. “Protected series”, except in the phrase “foreign
3protected series”, means a protected series established under
4section 489.12201.
59. “Protected-series manager” means a person under whose
6authority the powers of a protected series are exercised
7and under whose direction the activities and affairs of the
8protected series are managed under the operating agreement,
9this part, and this chapter.
1010. “Protected-series transferable interest” means a right to
11receive a distribution from a protected series.
1211. “Protected-series transferee” means a person to which
13all or part of a protected-series transferable interest of a
14protected series of a series limited liability company has
15been transferred, other than the company. The term includes a
16person that owns a protected-series transferable interest as
17a result of ceasing to be an associated member of a protected
18series.
1912. “Series limited liability company”, except in the phrase
20“foreign series limited liability company”, means a limited
21liability company that has at least one protected series.
22 Sec. 3. NEW SECTION. 489.12103 Nature of protected series.
23A protected series of a series limited liability company is a
24person distinct from all of the following:
251. The company, subject to section 489.12104, subsection
263, section 489.12501, subsection 1, and section 489.12502,
27subsection 4.
282. Another protected series of the company.
293. A member of the company, whether or not the member is an
30associated member of the protected series.
314. A protected-series transferee of a protected series of
32the company.
335. A transferee of a transferable interest of the company.
34 Sec. 4. NEW SECTION. 489.12104 Powers and duration of
35protected series.
-2- 11. A protected series of a series limited liability company
2has the capacity to sue and be sued in its own name.
32. Except as otherwise provided in subsections 3 and 4, a
4protected series of a series limited liability company has the
5same powers and purposes as the company.
63. A protected series of a series limited liability company
7ceases to exist not later than when the company completes its
8winding up.
94. A protected series of a series limited liability company
10shall not do any of the following:
11a. Be a member of the company.
12b. Establish a protected series.
13c. Except as permitted by law of this state other than this
14part, have a purpose or power that the law of this state other
15than this part prohibits a limited liability company from doing
16or having.
17 Sec. 5. NEW SECTION. 489.12105 Governing law.
18The law of this state governs all of the following:
191. The internal affairs of a protected series of a series
20limited liability company, including all of the following:
21a. Relations among any associated members of the protected
22series.
23b. Relations among the protected series and any of the
24following:
25(1) Any associated member.
26(2) The protected-series manager.
27(3) Any protected-series transferee.
28c. Relations between any associated member and any of the
29following:
30(1) The protected-series manager.
31(2) Any protected-series transferee.
32d. The rights and duties of a protected-series manager.
33e. Governance decisions affecting the activities and affairs
34of the protected series and the conduct of those activities and
35affairs.
-3- 1f. Procedures and conditions for becoming an associated
2member or protected-series transferee.
32. The relations between a protected series of a series
4limited liability company and each of the following:
5a. The company.
6b. Another protected series of the company.
7c. A member of the company which is not an associated member
8of the protected series.
9d. A protected-series manager that is not a protected-series
10manager of the protected series.
11e. A protected-series transferee that is not a
12protected-series transferee of the protected series.
133. The liability of a person for a debt, obligation, or
14other liability of a protected series of a series limited
15liability company if the debt, obligation, or liability is
16asserted solely by reason of the person being or acting as any
17of the following:
18a. An associated member, protected-series transferee, or
19protected-series manager of the protected series.
20b. A member of the company which is not an associated member
21of the protected series.
22c. A protected-series manager that is not a protected-series
23manager of the protected series.
24d. A protected-series transferee that is not a
25protected-series transferee of the protected series.
26e. A manager of the company.
27f. A transferee of a transferable interest of the company.
284. The liability of a series limited liability company for
29a debt, obligation, or other liability of a protected series of
30the company if the debt, obligation, or liability is asserted
31solely by reason of the company doing any of the following:
32a. Having delivered to the secretary of state for filing
33under section 489.12201, subsection 2, a protected series
34designation pertaining to the protected series or under section
35489.12201, subsection 4, or section 489.12202, subsection 3,
-4-1a statement of designation change pertaining to the protected
2series.
3b. Being or acting as a protected-series manager of the
4protected series.
5c. Having the protected series be or act as a manager of the
6company.
7d. Owning a protected-series transferable interest of the
8protected series.
95. The liability of a protected series of a series limited
10liability company for a debt, obligation, or other liability of
11the company or of another protected series of the company if
12the debt, obligation, or liability is asserted solely by reason
13of any of the following:
14a. The protected series is any of the following:
15(1) A protected series of the company or having as a
16protected-series manager the company or another protected
17series of the company.
18(2) Acting as a protected-series manager of another
19protected series of the company or a manager of the company.
20b. The company owning a protected-series transferable
21interest of the protected series.
22 Sec. 6. NEW SECTION. 489.12106 Relation of operating
23agreement, this part, and this chapter.
241. Except as otherwise provided in this section and subject
25to sections 489.12107 and 489.12108, the operating agreement
26of a series limited liability company governs all of the
27following:
28a. The internal affairs of a protected series, including all
29of the following:
30(1) Relations among any associated members of the protected
31series.
32(2) Relations among the protected series and any of the
33following:
34(a) Any associated member.
35(b) The protected-series manager.
-5- 1(c) Any protected-series transferee.
2(3) Relations between any associated member and any of the
3following:
4(a) The protected-series manager.
5(b) Any protected-series transferee.
6(4) The rights and duties of a protected-series manager.
7(5) Governance decisions affecting the activities and
8affairs of the protected series and the conduct of those
9activities and affairs.
10(6) Procedures and conditions for becoming an associated
11member or protected-series transferee.
12b. Relations among the protected series, the company, and
13any other protected series of the company.
14c. Relations between all of the following:
15(1) The protected series, its protected-series manager,
16any associated member of the protected series, or any
17protected-series transferee of the protected series.
18(2) A person in the person’s capacity as any of the
19following:
20(a) A member of the company which is not an associated
21member of the protected series.
22(b) A protected-series transferee or protected-series
23manager of another protected series.
24(c) A transferee of the company.
252. If this chapter otherwise restricts the power of an
26operating agreement to affect a matter, the restriction
27applies to a matter under this part in accordance with section
28489.12108.
293. If law of this state other than this part imposes a
30prohibition, limitation, requirement, condition, obligation,
31liability, or other restriction on a limited liability
32company, a member, manager, or other agent of the company, or a
33transferee of the company, except as otherwise provided in law
34of this state other than this part, the restriction applies in
35accordance with section 489.12108.
-6- 14. Except as otherwise provided in section 489.12107, if
2the operating agreement of a series limited liability company
3does not provide for a matter described in subsection 1 in a
4manner permitted by this article, the matter is determined in
5accordance with the following rules:
6a. To the extent this part addresses the matter, this part
7governs.
8b. To the extent this part does not address the matter, the
9other articles of this chapter governs the matter in accordance
10with section 489.12108.
11 Sec. 7. NEW SECTION. 489.12107 Additional limitations on
12operating agreement.
131. An operating agreement shall not vary the effect of any
14of the following:
15a. This section.
16b. Section 489.12103.
17c. Section 489.12104, subsection 1.
18d. Section 489.12104, subsection 2, to provide a protected
19series a power beyond the powers this chapter provides a
20limited liability company.
21e. Section 489.12104, subsection 3 or 4.
22f. Section 489.12105.
23g. Section 489.12106.
24h. Section 489.12108.
25i. Section 489.12201, except to vary the manner in which
26a limited liability company approves establishing a protected
27series.
28j. Section 489.12202.
29k. Section 489.12301.
30l. Section 489.12302.
31m. Section 489.12303, subsection 1 or 2.
32n. Section 489.12304, subsection 3 or 6.
33o. Section 489.12401, except to decrease or eliminate a
34limitation of liability stated in section 489.12401.
35p. Section 489.12402.
-7- 1q. Section 489.12403.
2r. Section 489.12404.
3s. Section 489.12501, subsections 1, 4, and 5.
4t. Section 489.12502, except to designate a different person
5to manage winding up.
6u. Section 489.12503.
7v. Article 6.
8w. Article 7.
9x. Article 8, except to vary any of the following:
10(1) The manner in which a series limited liability company
11may elect under section 489.12803, subsection 1, paragraph “b”,
12to be subject to this part.
13(2) The person that has the right to sign and deliver to the
14secretary of state for filing a record under section 489.12803,
15subsection 2, paragraph “b”.
16y. A provision of this part pertaining to any of the
17following:
18(1) Registered agents.
19(2) The secretary of state, including provisions pertaining
20to records authorized or required to be delivered to the
21secretary of state for filing under this part.
222. An operating agreement shall not unreasonably restrict
23the duties and rights under section 489.12305 but may impose
24reasonable restrictions on the availability and use of
25information obtained under section 489.12305 and may provide
26appropriate remedies, including liquidated damages, for a
27breach of any reasonable restriction on use.
28 Sec. 8. NEW SECTION. 489.12108 Rules for applying to
29specified provisions of this chapter to specified provisions of
30this part.
311. Except as otherwise provided in subsection 2 and section
32489.12107, the following rules apply in applying section
33489.12106, section 489.12304, subsections 3 and 6, section
34489.12501, subsection 4, paragraph “a”, section 489.12502,
35subsection 1, and section 489.12503, subsection 2:
-8- 1a. A protected series of a series limited liability company
2is deemed to be a limited liability company that is formed
3separately from the series limited liability company and is
4distinct from the series limited liability company and any
5other protected series of the series limited liability company.
6b. An associated member of the protected series is deemed to
7be a member of the company deemed to exist under paragraph “a”.
8c. A protected-series transferee of the protected series is
9deemed to be a transferee of the company deemed to exist under
10paragraph “a”.
11d. A protected-series transferable interest of the protected
12series is deemed to be a transferable interest of the company
13deemed to exist under paragraph “a”.
14e. A protected-series manager is deemed to be a manager of
15the company deemed to exist under paragraph “a”.
16f. An asset of the protected series is deemed to be an asset
17of the company deemed to exist under paragraph “a”, whether or
18not the asset is an associated asset of the protected series.
19g. Any creditor or other obligee of the protected series
20is deemed to be a creditor or obligee of the company deemed to
21exist under paragraph “a”.
222. Subsection 1 does not apply if its application would do
23any of the following:
24a. Contravene section 489.110.
25b. Authorize or require the secretary of state to do any of
26the following:
27(1) Accept for filing a type of record that neither this
28part nor any of the other articles of this chapter authorizes
29or requires a person to deliver to the secretary of state for
30filing.
31(2) Make or deliver a record that neither this part nor
32the other articles of this chapter authorizes or requires the
33secretary of state to make or deliver.
34SUBPART B
35ESTABLISHING PROTECTED SERIES
-9-1 Sec. 9. NEW SECTION. 489.12201 Protected series designation
2— amendment.
31. With the affirmative vote or consent of all members
4of a limited liability company, the company may establish a
5protected series.
62. To establish a protected series, a limited liability
7company shall deliver to the secretary of state for filing a
8protected series designation, signed by the company, stating
9the name of the company and the name of the protected series to
10be established.
113. A protected series is established when the protected
12series designation takes effect under section 489.205.
134. To amend a protected series designation, a series limited
14liability company shall deliver to the secretary of state
15for filing a statement of designation change, signed by the
16company, that changes the name of the company, the name of the
17protected series to which the designation applies, or both.
18The change takes effect when the statement of designation
19change takes effect under section 489.205.
20 Sec. 10. NEW SECTION. 489.12202 Name.
211. Except as otherwise provided in subsection 2, the name of
22a protected series must comply with section 489.108.
232. The name of a protected series of a series limited
24liability company must do all of the following:
25a. Begin with the name of the company, including any word or
26abbreviation required by section 489.108.
27b. Contain the phrase “Protected Series” or “protected
28series” or the abbreviation “P.S.” or “PS”.
293. If a series limited liability company changes its name,
30the company shall deliver to the secretary of state for filing
31a statement of designation change for each of the company’s
32protected series, changing the name of each protected series to
33comply with this section.
34 Sec. 11. NEW SECTION. 489.12203 Registered agent.
351. The registered agent in this state for a series limited
-10-1liability company is the registered agent in this state for
2each protected series of the company.
32. Before delivering a protected series designation to the
4secretary of state for filing, a limited liability company
5shall agree with a registered agent that the agent will serve
6as the registered agent in this state for both the company and
7the protected series.
83. A person that signs a protected series designation
9delivered to the secretary of state for filing affirms as a
10fact that the limited liability company on whose behalf the
11designation is delivered has complied with subsection 2.
124. A person that ceases to be the registered agent for a
13series limited liability company ceases to be the registered
14agent for each protected series of the company.
155. A person that ceases to be the registered agent for a
16protected series of a series limited liability company, other
17than as a result of the termination of the protected series,
18ceases to be the registered agent of the company and any other
19protected series of the company.
206. Except as otherwise agreed by a series limited liability
21company and its registered agent, the agent is not obligated to
22distinguish between a process, notice, demand, or other record
23concerning the company and a process, notice, demand, or other
24record concerning a protected series of the company.
25 Sec. 12. NEW SECTION. 489.12204 Service of process, notice,
26demand, or other record.
271. A protected series of a series limited liability company
28may be served with a process, notice, demand, or other record
29required or permitted by law by any of the following:
30a. Serving the company.
31b. Serving the registered agent of the protected series.
32c. Other means authorized by law of this state other than
33the other articles of this chapter.
342. Service of a summons and complaint on a series limited
35liability company is notice to each protected series of
-11-1the company of service of the summons and complaint and the
2contents of the complaint.
33. Service of a summons and complaint on a protected series
4of a series limited liability company is notice to the company
5and any other protected series of the company of service of the
6summons and complaint and the contents of the complaint.
74. Service of a summons and complaint on a foreign series
8limited liability company is notice to each foreign protected
9series of the foreign company of service of the summons and
10complaint and the contents of the complaint.
115. Service of a summons and complaint on a foreign protected
12series of a foreign series limited liability company is notice
13to the foreign company and any other foreign protected series
14of the company of service of the summons and complaint and the
15contents of the complaint.
166. Notice to a person under subsection 2, 3, 4, or 5 is
17effective whether or not the summons and complaint identify
18the person if the summons and complaint name as a party and
19identify any of the following:
20a. The series limited liability company or a protected
21series of the company.
22b. The foreign series limited liability company or a foreign
23protected series of the foreign company.
24 Sec. 13. NEW SECTION. 489.12205 Certificate of existence
25for protected series.
261. On request of any person, the secretary of state shall
27issue a certificate of existence for a protected series of a
28series limited liability company or a certificate of authority
29for a foreign protected series in the following circumstances:
30a. In the case of a protected series, if all of the
31following apply:
32(1) No statement of dissolution, termination, or relocation
33pertaining to the protected series has been filed.
34(2) The company has delivered to the secretary of state
35for filing the most recent biennial report required by section
-12-1489.209 and the report includes the name of the protected
2series, unless any of the following applies:
3(a) When the company delivered the report for filing, the
4protected series designation pertaining to the protected series
5had not yet taken effect.
6(b) After the company delivered the report for filing,
7the company delivered to the secretary of state for filing
8a statement of designation change changing the name of the
9protected series.
10b. In the case of a foreign protected series, it is
11authorized to do business in this state.
122. A certificate issued under subsection 1 must state all
13of the following:
14a. In the case of a protected series, all of the following:
15(1) The name of the protected series of the series limited
16liability company and the name of the company.
17(2) That the requirements of subsection 1 are met.
18(3) The date the protected series designation pertaining to
19the protected series took effect.
20(4) If a statement of designation change pertaining to
21the protected series has been filed, the effective date and
22contents of the statement.
23b. In the case of a foreign protected series, that it is
24authorized to do business in this state.
25c. That all fees, taxes, interest, and penalties due under
26this chapter or other law to the secretary of state have been
27paid if all of the following apply:
28(1) Payment is reflected in the records of the secretary of
29state.
30(2) Nonpayment affects the existence or good standing of the
31protected series.
32d. Other facts reflected in the records of the secretary of
33state pertaining to the protected series or foreign protected
34series which the person requesting the certificate reasonably
35requests.
-13- 13. Subject to any qualification stated by the secretary
2of state in a certificate issued under subsection 1, the
3certificate may be relied on as conclusive evidence of the
4facts stated in the certificate.
5 Sec. 14. NEW SECTION. 489.12206 Information required in
6biennial report — effect of failure to provide.
71. In the biennial report required by section 489.209, a
8series limited liability company shall include the name of each
9protected series of the company for which all of the following
10applies:
11a. For which the company has previously delivered to the
12secretary of state for filing a protected series designation.
13b. Which has not dissolved and completed winding up.
142. A failure by a series limited liability company to comply
15with subsection 1 with regard to a protected series prevents
16issuance of a certificate of good standing pertaining to the
17protected series but does not otherwise affect the protected
18series.
19SUBPART C
20ASSOCIATED ASSET, ASSOCIATED MEMBER, PROTECTED-SERIES
21TRANSFERABLE INTEREST, MANAGEMENT, and RIGHT OF INFORMATION
22 Sec. 15. NEW SECTION. 489.12301 Associated asset.
231. Only an asset of a protected series may be an associated
24asset of the protected series. Only an asset of a series
25limited liability company may be an associated asset of the
26company.
272. An asset of a protected series of a series limited
28liability company is an associated asset of the protected
29series only if the protected series creates and maintains
30records that state the name of the protected series and
31describe the asset with sufficient specificity to permit
32a disinterested, reasonable individual to do all of the
33following:
34a. Identify the asset and distinguish it from any other
35asset of the protected series, any asset of the company, and
-14-1any asset of any other protected series of the company.
2b. Determine when and from what person the protected series
3acquired the asset or how the asset otherwise became an asset
4of the protected series.
5c. If the protected series acquired the asset from the
6company or another protected series of the company, determine
7any consideration paid, the payor, and the payee.
83. An asset of a series limited liability company is an
9associated asset of the company only if the company creates
10and maintains records that state the name of the company and
11describe the asset with sufficient specificity to permit
12a disinterested, reasonable individual to do all of the
13following:
14a. Identify the asset and distinguish it from any other
15asset of the company and any asset of any protected series of
16the company.
17b. Determine when and from what person the company acquired
18the asset or how the asset otherwise became an asset of the
19company.
20c. If the company acquired the asset from a protected series
21of the company, determine any consideration paid, the payor,
22and the payee.
234. The records and recordkeeping required by subsections
242 and 3 may be organized by specific listing, category,
25type, quantity, or computational or allocational formula or
26procedure, including a percentage or share of any asset, or in
27any other reasonable manner.
285. To the extent permitted by this section and law of this
29state other than this part, a series limited liability company
30or protected series of the company may hold an associated asset
31directly or indirectly, through a representative, nominee, or
32similar arrangement, except that all of the following applies:
33a. A protected series shall not hold an associated asset
34in the name of the company or another protected series of the
35company.
-15- 1b. The company shall not hold an associated asset in the
2name of a protected series of the company.
3 Sec. 16. NEW SECTION. 489.12302 Associated member.
41. Only a member of a series limited liability company may
5be an associated member of a protected series of the company.
62. A member of a series limited liability company becomes an
7associated member of a protected series of the company if the
8operating agreement or a procedure established by the agreement
9states all of the following:
10a. That the member is an associated member of the protected
11series.
12b. The date on which the member became an associated member.
13c. Any protected-series transferable interest the associated
14member has in connection with becoming or being an associated
15member.
163. If a person that is an associated member of a protected
17series of a series limited liability company is dissociated
18from the company, the person ceases to be an associated member
19of the protected series.
20 Sec. 17. NEW SECTION. 489.12303 Protected-series
21transferable interest.
221. A protected-series transferable interest of a protected
23series of a series limited liability company must be owned
24initially by an associated member of the protected series or
25the company.
262. If a protected series of a series limited liability
27company has no associated members when established, the
28company owns the protected-series transferable interests in the
29protected series.
303. In addition to acquiring a protected series transferable
31series interest under subsection 2, a series limited liability
32company may acquire a protected-series transferable interest
33through a transfer from another person or as provided in the
34operating agreement.
354. Except for section 489.12108, subsection 1,
-16-1paragraph “c”, a provision of this part which applies to
2a protected-series transferee of a protected series of a
3series limited liability company applies to the company in
4its capacity as an owner of a protected-series transferable
5interest of the protected series. A provision of the operating
6agreement of a series limited liability company which applies
7to a protected-series transferee of a protected series of the
8company applies to the company in its capacity as an owner of a
9protected-series transferable interest of the protected series.
10 Sec. 18. NEW SECTION. 489.12304 Management.
111. A protected series may have more than one
12protected-series manager.
132. If a protected series has no associated members, the
14series limited liability company is the protected-series
15manager.
163. Section 489.12108 applies to determine any duties of
17a protected-series manager of a protected series of a series
18limited liability company to all of the following:
19a. The protected series.
20b. Any associated member of the protected series.
21c. Any protected-series transferee of the protected series.
224. Solely by reason of being or acting as a protected-series
23manager of a protected series of a series limited liability
24company, a person owes no duty to any of the following:
25a. The company.
26b. Another protected series of the company.
27c. Another person in that person’s capacity as any of the
28following:
29(1) A member of the company which is not an associated
30member of the protected series.
31(2) A protected-series transferee or protected-series
32manager of another protected series.
33(3) A transferee of the company.
345. An associated member of a protected series of a series
35limited liability company has the same rights as any other
-17-1member of the company to vote on or consent to an amendment to
2the company’s operating agreement or any other matter being
3decided by the members, whether or not the amendment or matter
4affects the interests of the protected series or the associated
5member.
66. Article 9 applies to a protected series in accordance
7with section 489.12108.
8 Sec. 19. NEW SECTION. 489.12305 Right of person not
9associated member of protected series to information concerning
10protected series.
111. A member of a series limited liability company which
12is not an associated member of a protected series of the
13company has a right to information concerning the protected
14series to the same extent, in the same manner, and under
15the same conditions that a member that is not a manager of
16a manager-managed limited liability company has a right to
17information concerning the company under section 489.410,
18subsection 2.
192. A person formerly an associated member of a protected
20series has a right to information concerning the protected
21series to the same extent, in the same manner, and under
22the same conditions that a person dissociated as a member of
23a manager-managed limited liability company has a right to
24information concerning the company under section 489.410,
25subsection 3.
263. If an associated member of a protected series dies, the
27legal representative of the deceased associated member has a
28right to information concerning the protected series to the
29same extent, in the same manner, and under the same conditions
30that the legal representative of a deceased member of a limited
31liability company has a right to information concerning the
32company under section 489.504.
334. A protected-series manager of a protected series has a
34right to information concerning the protected series to the
35same extent, in the same manner, and under the same conditions
-18-1that a manager of a manager-managed limited liability company
2has a right to information concerning the company under section
3489.410, subsection 2.
4subpart D
5LIMITATION ON LIABILITY AND ENFORCEMENT OF CLAIMS
6 Sec. 20. NEW SECTION. 489.12401 Limitations on liability.
71. A person is not liable, directly or indirectly, by way
8of contribution or otherwise, for a debt, obligation, or other
9liability of any of the following:
10a. A protected series of a series limited liability company
11solely by reason of being or acting as any of the following:
12(1) An associated member, protected-series manager, or
13protected-series transferee of the protected series.
14(2) A member, manager, or a transferee of the company.
15b. A series limited liability company solely by reason
16of being or acting as an associated member, protected-series
17manager, or protected-series transferee of a protected series
18of the company.
192. Subject to section 489.12404, all of the following rules
20apply:
21a. A debt, obligation, or other liability of a series
22limited liability company is solely the debt, obligation, or
23liability of the company.
24b. A debt, obligation, or other liability of a protected
25series is solely the debt, obligation, or liability of the
26protected series.
27c. A series limited liability company is not liable,
28directly or indirectly, by way of contribution or otherwise,
29for a debt, obligation, or other liability of a protected
30series of the company solely by reason of the protected series
31being a protected series of the company or the company for any
32of the following:
33(1) Being or acting as a protected-series manager of the
34protected series.
35(2) Having the protected series manage the company.
-19- 1(3) Owning a protected-series transferable interest of the
2protected series.
3d. A protected series of a series limited liability company
4is not liable, directly or indirectly, by way of contribution
5or otherwise, for a debt, obligation, or other liability of the
6company or another protected series of the company solely by
7reason of any of the following:
8(1) Being a protected series of the company.
9(2) Being or acting as a manager of the company or a
10protected-series manager of another protected series of the
11company.
12(3) Having the company or another protected series of
13the company be or act as a protected-series manager of the
14protected series.
15 Sec. 21. NEW SECTION. 489.12402 Claim seeking to disregard
16limitation of liability.
171. Except as otherwise provided in subsection 2, a claim
18seeking to disregard a limitation in section 489.12401 is
19governed by the principles of law and equity, including a
20principle providing a right to a creditor or holding a person
21liable for a debt, obligation, or other liability of another
22person, which would apply if each protected series of a series
23limited liability company were a limited liability company
24formed separately from the series limited liability company
25and distinct from the series limited liability company and any
26other protected series of the series limited liability company.
272. The failure of a limited liability company or a protected
28series to observe formalities relating to the exercise of
29its powers or management of its activities and affairs is
30not a ground to disregard a limitation in section 489.12401,
31subsection 1, but may be a ground to disregard a limitation in
32section 489.12401, subsection 2.
333. This section applies to a claim seeking to disregard a
34limitation of liability applicable to a foreign series limited
35liability company or foreign protected series and comparable
-20-1to a limitation stated in section 489.12401, if any of the
2following apply:
3a. The claimant is a resident of this state or doing
4business or authorized to do business in this state.
5b. The claim is to establish or enforce a liability arising
6under law of this state other than this part or from an act or
7omission in this state.
8 Sec. 22. NEW SECTION. 489.12403 Remedies of judgment
9creditor of associated member or protected-series transferee.
10Section 489.503 applies to a judgment creditor of any of the
11following:
121. An associated member or protected-series transferee of a
13protected series.
142. A series limited liability company, to the extent the
15company owns a protected-series transferable interest of a
16protected series.
17 Sec. 23. NEW SECTION. 489.12404 Enforcement against
18nonassociated asset.
191. As used in this section:
20a. “Enforcement date” means 12:01 a.m.on the date on which
21a claimant first serves process on a series limited liability
22company or protected series in an action seeking to enforce
23under this section a claim against an asset of the company or
24protected series by attachment, levy, or the like.
25b. Subject to section 489.12608, subsection 2, “incurrence
26date” means the date on which a series limited liability company
27or protected series incurred the liability giving rise to a
28claim that a claimant seeks to enforce under this section.
292. If a claim against a series limited liability company or
30a protected series of the company has been reduced to judgment,
31in addition to any other remedy provided by law or equity,
32the judgment may be enforced in accordance with the following
33rules:
34a. A judgment against the company may be enforced against
35an asset of a protected series of the company if any of the
-21-1following applies:
2(1) The asset was a nonassociated asset of the protected
3series on the incurrence date.
4(2) The asset is a nonassociated asset of the protected
5series on the enforcement date.
6b. A judgment against a protected series may be enforced
7against an asset of the company if any of the following apply:
8(1) The asset was a nonassociated asset of the company on
9the incurrence date.
10(2) The asset is a nonassociated asset of the company on the
11enforcement date.
12c. A judgment against a protected series may be enforced
13against an asset of another protected series of the company if
14any of the following applies:
15(1) The asset was a nonassociated asset of the other
16protected series on the incurrence date.
17(2) The asset is a nonassociated asset of the other
18protected series on the enforcement date.
193. In addition to any other remedy provided by law or
20equity, if a claim against a series limited liability company
21or a protected series has not been reduced to a judgment
22and law other than this part permits a prejudgment remedy by
23attachment, levy, or the like, the court may apply subsection 2
24as a prejudgment remedy.
254. In a proceeding under this section, the party asserting
26that an asset is or was an associated asset of a series limited
27liability company or a protected series of the company has the
28burden of proof on the issue.
295. This section applies to an asset of a foreign series
30limited liability company or foreign protected series if all of
31the following applies:
32a. The asset is real or tangible property located in this
33state.
34b. The claimant is a resident of this state or doing
35business or authorized to do business in this state, or the
-22-1claim under section 489.12404 is to enforce a judgment, or to
2seek a prejudgment remedy, pertaining to a liability arising
3from law of this state other than this part or an act or
4omission in this state.
5c. The asset is not identified in the records of the foreign
6series limited liability company or foreign protected series
7in a manner comparable to the manner required by section
8489.12301.
9subpart E
10DISSOLUTION AND WINDING UP OF PROTECTED SERIES
11 Sec. 24. NEW SECTION. 489.12501 Events causing dissolution
12of protected series.
13A protected series of a series limited liability company is
14dissolved, and its activities and affairs must be wound up,
15only on any of the following:
161. Dissolution of the company.
172. Occurrence of an event or circumstance the operating
18agreement states causes dissolution of the protected series.
193. Affirmative vote or consent of all members.
204. Entry by the court of an order dissolving the
21protected series on application by an associated member or
22protected-series manager of the protected series subject to all
23of the following:
24a. In accordance with section 489.12108.
25b. To the same extent, in the same manner, and on the same
26grounds the court would enter an order dissolving a limited
27liability company on application by a member or manager of the
28company.
295. Entry by the court of an order dissolving the protected
30series on application by the company or a member of the company
31on the ground that the conduct of all or substantially all the
32activities and affairs of the protected series is illegal.
33 Sec. 25. NEW SECTION. 489.12502 Winding up dissolved
34protected series.
351. Subject to subsections 2 and 3 and in accordance with
-23-1section 489.12108 all of the following apply:
2a. A dissolved protected series shall wind up its activities
3and affairs in the same manner that a limited liability company
4winds up its activities and affairs under sections 489.702
5through 489.704 subject to the same requirements and conditions
6and with the same effects.
7b. Judicial supervision or another judicial remedy is
8available in the winding up of the protected series to the same
9extent, in the same manner, under the same conditions, and with
10the same effects that apply under section 489.702, subsection
115.
122. When a protected series of a series limited liability
13company dissolves, the company may deliver to the secretary of
14state for filing a statement of protected series dissolution
15stating the name of the company and the protected series
16and that the protected series is dissolved. The filing of
17the statement by the secretary of state has the same effect
18as the filing by the secretary of state of a statement of
19dissolution under section 489.103, subsection 4, paragraph “b”,
20subparagraph (1).
213. When a protected series of a series limited liability
22company has completed winding up, the company may deliver to
23the secretary of state for filing a statement of designation
24cancellation stating the name of the company and the protected
25series and that the protected series is terminated. The filing
26of the statement by the secretary of state has the same effect
27as the filing by the secretary of state of a statement of
28termination under section 489.103, subsection 4, paragraph “b”,
29subparagraph (2).
304. A series limited liability company has not completed its
31winding up until each of the protected series of the company
32has completed its winding up.
33 Sec. 26. NEW SECTION. 489.12503 Effect of reinstatement
34of series limited liability company or revocation of voluntary
35dissolution.
-24- 1If a series limited liability company that has been
2administratively dissolved is reinstated, or a series limited
3liability company that voluntarily dissolved rescinds its
4dissolution both of the following apply:
51. Each protected series of the company ceases winding up.
62. The provisions of section 489.706 apply to each protected
7series of the company in accordance with section 489.12108.
8subpart F
9ENTITY TRANSACTIONS RESTRICTED
10 Sec. 27. NEW SECTION. 489.12601 Definitions.
11As used in this subpart:
121. “After a merger” or “after the merger” means when a merger
13under section 489.12604 becomes effective and afterwards.
142. “Before a merger” or “before the merger” means before a
15merger under section 489.12604 becomes effective.
163. “Continuing protected series” means a protected series of
17a surviving company which continues in uninterrupted existence
18after a merger under section 489.12604.
194. “Merging company” means a limited liability company that
20is party to a merger under section 489.12604.
215. “Nonsurviving company” means a merging company that
22does not continue in existence after a merger under section
23489.12604.
246. “Relocated protected series” means a protected series
25of a nonsurviving company which, after a merger under section
26489.12604, continues in uninterrupted existence as a protected
27series of the surviving company.
287. “Surviving company” means a merging company that
29continues in existence after a merger under section 489.12604.
30 Sec. 28. NEW SECTION. 489.12602 Protected series shall not
31be party to entity transaction.
32A protected series shall not do any of the following:
331. Be an acquiring, acquired, converting, converted,
34merging, or surviving entity.
352. Participate in a domestication.
-25- 13. Be a party to or be formed, organized, established, or
2created in a transaction substantially like a merger, interest
3exchange, conversion, or domestication.
4 Sec. 29. NEW SECTION. 489.12603 Restriction on entity
5transaction involving protected series.
6A series limited liability company shall not be any of the
7following:
81. An acquiring, acquired, converting, converted,
9domesticating, or domesticated entity.
102. Except as otherwise provided in section 489.12604, a
11party to or the surviving company of a merger.
12 Sec. 30. NEW SECTION. 489.12604 Merger authorized —
13parties restricted.
14A series limited liability company may be party to a merger
15in accordance with sections 489.1001 through 489.1005, this
16section, and sections 489.12605 through 489.12608 only if all
17of the following apply:
181. Each other party to the merger is a limited liability
19company.
202. The surviving company is not created in the merger.
21 Sec. 31. NEW SECTION. 489.12605 Plan of merger.
22In a merger under section 489.12604, the plan of merger must
23do all of the following:
241. Comply with section 489.1002.
252. State in a record all of the following:
26a. For any protected series of a nonsurviving company,
27whether after the merger the protected series will be a
28relocated protected series or be dissolved, wound up, and
29terminated.
30b. For any protected series of the surviving company
31which exists before the merger, whether after the merger the
32protected series will be a continuing protected series or be
33dissolved, wound up, and terminated.
34c. For each relocated protected series or continuing
35protected series all of the following:
-26- 1(1) The name of any person that becomes an associated member
2or protected-series transferee of the protected series after
3the merger, any consideration to be paid by, on behalf of, or
4in respect of the person, the name of the payor, and the name
5of the payee.
6(2) The name of any person whose rights or obligations
7in the person’s capacity as an associated member or
8protected-series transferee will change after the merger.
9(3) Any consideration to be paid to a person who before the
10merger was an associated member or protected-series transferee
11of the protected series and the name of the payor.
12(4) If after the merger the protected series will be a
13relocated protected series, its new name.
14d. For any protected series to be established by the
15surviving company as a result of the merger all of the
16following:
17(1) The name of the protected series.
18(2) Any protected-series transferable interest to be
19owned by the surviving company when the protected series is
20established.
21(3) The name of and any protected-series transferable
22interest owned by any person that will be an associated
23member of the protected series when the protected series is
24established.
25e. For any person that is an associated member of a
26relocated protected series and will remain a member after
27the merger, any amendment to the operating agreement of the
28surviving company which is all of the following:
29(1) Is or is proposed to be in a record.
30(2) Is necessary or appropriate to state the rights and
31obligations of the person as a member of the surviving company.
32 Sec. 32. NEW SECTION. 489.12606 Articles of merger.
33In a merger under section 489.12604, the articles of merger
34must do all of the following:
351. Comply with section 489.1004.
-27- 12. Include as an attachment the following records, each to
2become effective when the merger becomes effective upon any of
3the following:
4a. For a protected series of a merging company being
5terminated as a result of the merger, a statement of
6termination signed by the company.
7b. For a protected series of a nonsurviving company which
8after the merger will be a relocated protected series all of
9the following:
10(1) A statement of relocation signed by the nonsurviving
11company which contains the name of the company and the name of
12the protected series before and after the merger.
13(2) A statement of protected series designation signed by
14the surviving company.
15c. For a protected series being established by the
16surviving company as a result of the merger, a protected series
17designation signed by the company.
18 Sec. 33. NEW SECTION. 489.12607 Effect of merger.
19When a merger under section 489.12604 becomes effective, in
20addition to the effects stated in section 489.1005, all of the
21following apply:
221. As provided in the plan of merger, each protected series
23of each merging company which was established before the merger
24is any of the following:
25a. Is a relocated protected series or continuing protected
26series.
27b. Is dissolved, wound up, and terminated.
282. Any protected series to be established as a result of the
29merger is established.
303. Any relocated protected series or continuing protected
31series is the same person without interruption as it was before
32the merger.
334. All property of a relocated protected series or
34continuing protected series continues to be vested in the
35protected series without transfer, reversion, or impairment.
-28- 15. All debts, obligations, and other liabilities of a
2relocated protected series or continuing protected series
3continue as debts, obligations, and other liabilities of the
4protected series.
56. Except as otherwise provided by law or the plan of
6merger, all the rights, privileges, immunities, powers,
7and purposes of a relocated protected series or continuing
8protected series remain in the protected series.
97. The new name of a relocated protected series may be
10substituted for the former name of the protected series in any
11pending action or proceeding.
128. If provided in the plan of merger all of the following
13apply:
14a. A person becomes an associated member or protected-series
15transferee of a relocated protected series or continuing
16protected series.
17b. A person becomes an associated member of a protected
18series established by the surviving company as a result of the
19merger.
20c. Any change in the rights or obligations of a person
21in the person’s capacity as an associated member or
22protected-series transferee of a relocated protected series or
23continuing protected series take effect.
24d. Any consideration to be paid to a person that before the
25merger was an associated member or protected-series transferee
26of a relocated protected series or continuing protected series
27is due.
289. Any person that is a member of a relocated protected
29series becomes a member of the surviving company, if not
30already a member.
31 Sec. 34. NEW SECTION. 489.12608 Application of section
32489.12404 after merger.
331. A creditor’s right that existed under section 489.12404
34immediately before a merger under section 489.12604 may
35be enforced after the merger in accordance with all of the
-29-1following:
2a. A creditor’s right that existed immediately before the
3merger against the surviving company, a continuing protected
4series, or a relocated protected series continues without
5change after the merger.
6b. A creditor’s right that existed immediately before the
7merger against a nonsurviving company all of the following
8apply:
9(1) May be asserted against an asset of the nonsurviving
10company which vested in the surviving company as a result of
11the merger.
12(2) Does not otherwise change.
13c. Subject to subsection 2, all of the following apply:
14(1) In addition to the remedy stated in paragraph “a”, a
15creditor with a right under section 489.12404 which existed
16immediately before the merger against a nonsurviving company or
17a relocated protected series may assert the right against any
18of the following:
19(a) An asset of the surviving company, other than an asset
20of the nonsurviving company which vested in the surviving
21company as a result of the merger.
22(b) An asset of a continuing protected series.
23(c) An asset of a protected series established by the
24surviving company as a result of the merger.
25(d) If the creditor’s right was against an asset of the
26nonsurviving company, an asset of a relocated series.
27(e) If the creditor’s right was against an asset of a
28relocated protected series, an asset of another relocated
29protected series.
30(2) In addition to the remedy stated in paragraph “b”,
31a creditor with a right that existed immediately before the
32merger against the surviving company or a continuing protected
33series may assert the right against any of the following:
34(a) An asset of a relocated protected series.
35(b) An asset of a nonsurviving company which vested in the
-30-1surviving company as a result of the merger.
22. For the purposes of subsection 1, paragraph “c”, and
3section 489.12404, subsection 2, paragraph “a”, subparagraph
4(1); section 489.12404, subsection 2, paragraph “b”,
5subparagraph (1); and section 489.12404, subsection 2,
6paragraph “c”, subparagraph (1), the incurrence date is deemed
7to be the date on which the merger becomes effective.
83. A merger under section 489.12604 does not affect the
9manner in which section 489.12404 applies to a liability
10incurred after the merger.
11subpart G
12FOREIGN PROTECTED SERIES
13 Sec. 35. NEW SECTION. 489.12701 Governing law.
14The law of the jurisdiction of formation of a foreign series
15limited liability company governs all of the following:
161. The internal affairs of a foreign protected series of the
17company, including all of the following:
18a. Relations among any associated members of the foreign
19protected series.
20b. Relations between the foreign protected series and any
21of the following:
22(1) Any associated member.
23(2) The protected-series manager.
24(3) Any protected-series transferee.
25c. Relations between any associated member and any of the
26following:
27(1) The protected-series manager.
28(2) Any protected-series transferee.
29d. The rights and duties of a protected-series manager.
30e. Governance decisions affecting the activities and affairs
31of the foreign protected series and the conduct of those
32activities and affairs.
33f. Procedures and conditions for becoming an associated
34member or protected-series transferee.
352. Relations between the foreign protected series and all
-31-1of the following:
2a. The company.
3b. Another foreign protected series of the company.
4c. A member of the company which is not an associated member
5of the foreign protected series.
6d. A foreign protected-series manager that is not a
7protected-series manager of the protected series.
8e. A foreign protected-series transferee that is not a
9foreign protected-series transferee of the protected series.
10f. A transferee of a transferable interest of the company.
113. Except as otherwise provided in sections 489.12402 and
12489.12404, the liability of a person for a debt, obligation,
13or other liability of a foreign protected series of a foreign
14series limited liability company if the debt, obligation, or
15liability is asserted solely by reason of the person being or
16acting as any of the following:
17a. An associated member, protected-series transferee, or
18protected-series manager of the foreign protected series.
19b. A member of the company which is not an associated member
20of the foreign protected series.
21c. A protected-series manager of another foreign protected
22series of the company.
23d. A protected-series transferee of another foreign
24protected series of the company.
25e. A manager of the company.
26f. A transferee of a transferable interest of the company.
274. Except as otherwise provided in sections 489.12402 and
28489.12404 all of the following apply:
29a. The liability of the foreign series limited liability
30company for a debt, obligation, or other liability of a foreign
31protected series of the company if the debt, obligation, or
32liability is asserted solely by reason of the foreign protected
33series being a foreign protected series of the company or the
34company as a consequence of any of the following:
35(1) Being or acting as a foreign protected-series manager of
-32-1the foreign protected series.
2(2) Having the foreign protected series manage the company.
3(3) Owning a protected-series transferable interest of the
4foreign protected series.
5b. The liability of a foreign protected series for a
6debt, obligation, or other liability of the company or
7another foreign protected series of the company if the debt,
8obligation, or liability is asserted solely by reason of
9the foreign protected series as a consequence of any of the
10following:
11(1) Being a foreign protected series of the company or
12having the company or another foreign protected series of the
13company be or act as foreign protected-series manager of the
14foreign protected series.
15(2) Managing the company or being or acting as a foreign
16protected-series manager of another foreign protected series
17of the company.
18 Sec. 36. NEW SECTION. 489.12702 No attribution of
19activities constituting doing business or for establishing
20jurisdiction.
21In determining whether a foreign series limited liability
22company or foreign protected series of the company does
23business in this state or is subject to the personal
24jurisdiction of the courts of this state all of the following
25apply:
261. The activities and affairs of the company are not
27attributable to a foreign protected series of the company
28solely by reason of the foreign protected series being a
29foreign protected series of the company.
302. The activities and affairs of a foreign protected
31series are not attributable to the company or another foreign
32protected series of the company solely by reason of the foreign
33protected series being a foreign protected series of the
34company.
35 Sec. 37. NEW SECTION. 489.12703 Authorization of foreign
-33-1protected series.
21. Except as otherwise provided in this section and
3subject to sections 489.12402 and 489.12404, the law of this
4state governing the filing of a certificate of authority of
5a foreign limited liability company to do business in this
6state, including the consequences of not complying with that
7law, applies to a foreign protected series of a foreign series
8limited liability company as if the foreign protected series
9were a foreign limited liability company formed separately
10from the foreign series limited liability company and distinct
11from the foreign series limited liability company and any
12other foreign protected series of the foreign series limited
13liability company.
142. An application by a foreign protected series of a foreign
15series limited liability company for a certificate of authority
16to do business in this state must include all of the following:
17a. The name and jurisdiction of formation of the foreign
18series limited liability company.
19b. If the company has other foreign protected series,
20the name and street and mailing address of an individual who
21knows the name and street and mailing address of all of the
22following:
23(1) Each other foreign protected series of the foreign
24series limited liability company.
25(2) The foreign protected-series manager of and agent for
26service of process for each other foreign protected series of
27the foreign series limited liability company.
282A. If the jurisdiction under whose law the foreign
29protected series was organized does not provide for the
30protected series to obtain a certificate of existence,
31the foreign protected series shall attach a certificate of
32existence for the series limited liability company of which
33it is a protected series. In that case, a foreign protected
34series of the foreign series limited liability company will
35be deemed to be in existence and good standing as long as the
-34-1series limited liability company is in existence and good
2standing.
33. The name of a foreign protected series applying for a
4certificate of authority or authorized to do business in this
5state must comply with section 489.12202 and may do so using a
6fictitious name pursuant to section 489.108, if the fictitious
7name complies with section 489.12202.
84. A foreign protected series that has in effect a
9certificate of authority pursuant to this section shall file
10with the secretary of state an amendment to its application if
11there is any change in the information required by subsection
122.
13 Sec. 38. NEW SECTION. 489.12704 Disclosure required when
14foreign series limited liability company or foreign protected
15series party to proceeding.
161. Not later than thirty days after becoming a party
17to a proceeding before a civil, administrative, or other
18adjudicative tribunal of or located in this state or a tribunal
19of the United States located in this state all of the following
20apply:
21a. A foreign series limited liability company shall disclose
22to each other party the name and street and mailing address of
23all of the following:
24(1) Each foreign protected series of the company.
25(2) Each foreign protected-series manager of and a
26registered agent for service of process for each foreign
27protected series of the company.
28b. A foreign protected series of a foreign series limited
29liability company shall disclose to each other party the name
30and street and mailing address of all of the following:
31(1) The company and each manager of the company and an agent
32for service of process for the company.
33(2) Any other foreign protected series of the company and
34each foreign protected-series manager of and an agent for
35service of process for the other foreign protected series.
-35- 12. If a foreign series limited liability company or foreign
2protected series challenges the personal jurisdiction of
3the tribunal, the requirement that the foreign company or
4foreign protected series make disclosure under subsection 1 is
5tolled until the tribunal determines whether it has personal
6jurisdiction.
73. If a foreign series limited liability company or foreign
8protected series does not comply with subsection 1, a party to
9the proceeding may do any of the following:
10a. Request the tribunal to treat the noncompliance as a
11failure to comply with the tribunal’s discovery rules.
12b. Bring a separate proceeding in the court to enforce
13subsection 1.
14subpart H
15TRANSITIONAL PROVISIONS
16 Sec. 39. NEW SECTION. 489.12803 Transitional provisions.
171. Before January 1, 2021, this part governs only the
18following:
19a. A series limited liability company formed, or a protected
20series established, on or after January 1, 2020.
21b. A limited liability company that is a series limited
22liability company before January 1, 2020, and elects, in the
23manner provided in its operating agreement or by law for
24amending the operating agreement, to be subject to this part.
252. If a series limited liability company elects under
26subsection 1, paragraph “b”, to be subject to this part:
27a. The election applies to each protected series of the
28company, whenever established.
29b. A manager of the company has the right to sign and
30deliver to the secretary of state for filing any record
31necessary to comply with this part, whether the record pertains
32to the company, a protected series of the company, or both.
333. On and after January 1, 2021, this part governs all
34series limited liability companies and protected series.
354. Until January 1, 2021, sections 489.12402 and 489.12404
-36-1do not apply to a foreign protected series that was established
2before January 1, 2020, or a foreign limited liability company
3that became a foreign series limited liability company before
4January 1, 2020.
55. This section is repealed on January 1, 2021.
6 Sec. 40. NEW SECTION. 489.12804 Savings clause.
7This part does not affect an action commenced, proceeding
8brought, or right accrued before January 1, 2020.
9 Sec. 41. EFFECTIVE DATE. This division of this Act takes
10effect January 1, 2020.
11DIVISION II
12UNIFORM PROTECTED SERIES ACT — CONFORMING AMENDMENTS
13 Sec. 42. Section 10.1, subsections 9 and 17, Code 2019, are
14amended to read as follows:
159. a. “Farmers cooperative limited liability company”
16means a limited liability company organized under chapter 489,
17if cooperative associations hold one hundred percent of all
18membership interests in the limited liability company. Farmers
19cooperative associations must hold at least seventy percent
20of all membership interests in the limited liability company.
21If more than one type of membership interest is established,
22including any series as provided in section 489.1201 or
23any class or group as provided in section 489.1201, farmers
24cooperative associations must hold at least seventy percent of
25all membership interests of each type.
26b. As used in paragraph “a”, a type of membership interest
27in a limited liability company includes any of the following:
28(1) (a) A series as provided in chapter 489, article 12.
29(b) This subparagraph is repealed on January 1, 2021.
30(2) A protected series as provided in chapter 489, article
3112.
3217. “Networking farmers limited liability company” means a
33limited liability company, other than a family farm limited
34liability company as defined in section 9H.1, organized under
35chapter 489 if all of the following conditions are satisfied:
-37- 1a. (1) Qualified farmers must hold at least fifty-one
2percent of all membership interests in the limited liability
3company. If more than one type of membership interest is
4established, including any series as provided in section
5489.1201 or any class or group as provided in section 489.1201,
6 qualified farmers must hold at least fifty-one percent of all
7membership interests of each type.
8b. (2) Qualified persons must hold at least seventy percent
9of all membership interests in the limited liability company.
10If more than one type of membership interest is established,
11including any series as provided in section 489.1201 or any
12class or group as provided in section 489.1201, qualified
13persons must hold at least seventy percent of all membership
14interests of each type.
15b. As used in paragraph “a”, a type of membership interest
16in a limited liability company includes any of the following:
17(1) (a) A series as provided in chapter 489, article 12.
18(b) This subparagraph is repealed on January 1, 2021.
19(2) A protected series of a series limited liability company
20as provided in chapter 489, article 12.
21 Sec. 43. Section 10.10, subsection 1, paragraph c, Code
222019, is amended to read as follows:
23c. (1) Less than fifty percent of the interest in the
24farmers cooperative limited liability company is held by
25members which are parties to intra-company loan agreements.
26If more than one type of membership interest is established,
27including any series as provided in section 489.1201 or any
28class or group as provided in section 489.1201, less than
29fifty percent of the interest in each type of membership shall
30be held by members which are parties to intra-company loan
31agreements.
32(2) As used in subparagraph (1), a type of membership
33interest in a limited liability company includes any of the
34following:
35(a) (i) A series as provided in chapter 489, article 12.
-38- 1(ii) This subparagraph division is repealed on January 1,
22021.
3(b) A protected series of a series limited liability company
4as provided in chapter 489, article 12.
5 Sec. 44. Section 489.101, Code 2019, is amended to read as
6follows:
7489.101 Short title.
81. This chapter may be cited as the “Revised Uniform Limited
9Liability Company Act”.
102. In addition, article 12, part 1, of this chapter may be
11cited as provided in section 489.1201.
12 Sec. 45. Section 489.801, subsection 1, Code 2019, is
13amended to read as follows:
141. The Subject to sections 489.12402 and 489.12404, the
15 law of the state or other jurisdiction under which a foreign
16limited liability company is formed governs all of the
17following:
18a. The internal affairs of the company.
19b. The liability of a member as member and a manager as
20manager for the debts, obligations, or other liabilities of the
21company.
22 Sec. 46. Section 489.1201, Code 2019, is amended by adding
23the following new subsection:
24 NEW SUBSECTION. 8. This section is repealed on January 1,
252021.
26 Sec. 47. Section 489.1202, Code 2019, is amended by adding
27the following new subsection:
28 NEW SUBSECTION. 7. This section is repealed on January 1,
292021.
30 Sec. 48. Section 489.1203, Code 2019, is amended by adding
31the following new subsection:
32 NEW SUBSECTION. 14. This section is repealed on January 1,
332021.
34 Sec. 49. Section 489.1204, Code 2019, is amended to read as
35follows:
-39- 1489.1204 Dissociation from a series.
21. Unless otherwise provided in the operating agreement,
3a member shall cease to be associated with a series and to
4have the power to exercise any rights or powers of a member
5with respect to such series upon the assignment of all of the
6member’s transferable interest with respect to such series.
7Except as otherwise provided in an operating agreement,
8an event under this chapter or identified in an operating
9agreement that causes a member to cease to be associated with
10a series, by itself, shall not cause such member to cease to
11be associated with any other series or terminate the continued
12membership of a member in the limited liability company.
132. This section is repealed on January 1, 2021.
14 Sec. 50. Section 489.1205, Code 2019, is amended by adding
15the following new subsection:
16 NEW SUBSECTION. 4. This section is repealed on January 1,
172021.
18 Sec. 51. Section 489.1206, Code 2019, is amended to read as
19follows:
20489.1206 Foreign series.
211. A foreign limited liability company that is authorized
22to do business in this state under article 8 which is governed
23by an operating agreement that establishes or provides for the
24establishment of designated series of transferable interests
25having separate rights, powers, or duties with respect to
26specified property or obligations of the foreign limited
27liability company, or profits and losses associated with the
28specified property or obligations, shall indicate that fact on
29the application for a certificate of authority as a foreign
30limited liability company. In addition, the foreign limited
31liability company shall state on the application whether the
32debts, liabilities, and obligations incurred, contracted for,
33or otherwise existing with respect to a particular series, if
34any, are enforceable against the assets of such series only,
35and not against the assets of the foreign limited liability
-40-1company generally.
22. This section is repealed on January 1, 2021.
3 Sec. 52. CODE EDITOR DIRECTIVE.
41. The Code editor is directed to make the following
5transfers:
6a. Section 489.1201, as amended by this division of this
7Act, to section 489.12901.
8b. Section 489.1202, as amended by this division of this
9Act, to section 489.12902.
10c. Section 489.1203, as amended by this division of this
11Act, to section 489.12903.
12d. Section 489.1204, as amended by this division of this
13Act, to section 489.12904.
14e. Section 489.1205, as amended by this division of this
15Act, to section 489.12905.
16f. Section 489.1206, as amended by this division of this
17Act, to section 489.12906.
182. The Code editor shall codify the sections described in
19subsection 1 as new part 2 of article 12 of chapter 489.
203. The Code editor shall correct internal references in the
21Code and in any enacted legislation as necessary due to the
22enactment of this section.
23 Sec. 53. EFFECTIVE DATE. This division of this Act takes
24effect January 1, 2020.
25DIVISION III
26MANAGEMENT OF LIMITED LIABILITY COMPANIES
27 Sec. 54. Section 489.407, subsection 2, paragraph f, Code
282019, is amended by striking the paragraph.
29DIVISION IV
30DISSOLUTION
31 Sec. 55. Section 489.105, subsection 2, paragraph a, Code
322019, is amended to read as follows:
33a. Delivering to the secretary of state for filing a
34statement of change under section 489.114, an amendment to the
35certificate under section 489.202, a statement of correction
-41-1under section 489.206, a biennial report under section 489.209,
2a statement of withdrawal or a statement of rescission under
3section 489.701A, or a statement of termination under section
4489.702, subsection 2, paragraph “b”, subparagraph (6).
5 Sec. 56. Section 489.117, subsection 1, Code 2019, is
6amended by adding the following new paragraphs:
7 NEW PARAGRAPH. 0a. Statement of rescission No fee
8 NEW PARAGRAPH. 00a. Statement of withdrawal No fee
9 Sec. 57. NEW SECTION. 489.701A Rescinding dissolution.
101. A limited liability company may rescind its dissolution,
11unless a statement of termination applicable to the company has
12become effective, a district court has entered an order under
13section 489.701, subsection 1, paragraph “d”, dissolving the
14company, or the secretary of state has dissolved the company
15under section 489.705.
162. Rescinding dissolution under this section requires all
17of the following:
18a. The affirmative vote or consent of each member.
19b. If the limited liability company has delivered to the
20secretary of state for filing a statement of dissolution and
21any of the following applies:
22(1) The statement has not become effective, delivery
23to the secretary of state for filing of a statement of
24withdrawal under section 489.205 applicable to the statement
25of dissolution.
26(2) If the statement of dissolution has become effective,
27delivery to the secretary of state for filing of a statement of
28rescission stating the name of the company and that dissolution
29has been rescinded under this section.
303. If a limited liability company rescinds its dissolution
31all of the following apply:
32a. The company resumes carrying on its activities and
33affairs as if the dissolution had never occurred.
34b. Subject to paragraph “c”, any liability incurred by the
35company after the dissolution and before the rescission has
-42-1become effective is determined as if dissolution had never
2occurred.
3c. The rights of a third party arising out of conduct in
4reliance on the dissolution before the third party knew or had
5notice of the rescission may not be adversely affected.
6EXPLANATION
7The inclusion of this explanation does not constitute agreement with
8the explanation’s substance by the members of the general assembly.
9GENERAL — “REVISED UNIFORM LIMITED LIABILITY COMPANY
10ACT”. This bill enacts new or amends existing sections in
11the “Revised Uniform Limited Liability Company Act” (RULLCA)
12as adopted by the national conference on commissioners of
13uniform state laws, more commonly referred to as the uniform
14law commissioners (ULC) (see Code chapter 5), enacted by the
15General Assembly by 2008 Iowa Acts, chapter 1162, and codified
16in Code chapter 489.
17IOWA’S RULLCA. Code chapter 489 includes 13 articles
18governing limited liability companies (LLCs), including their
19formation; relations between members, managers, and other
20persons (e.g., creditors) dealing with an LLC; transferrable
21interests and rights; members’ dissociations; the LLC’s
22dissolution and windup; foreign LLCs; actions by members;
23mergers, conversions, and domestication; and professional LLCs.
24Article 12 provides for a special type of business organization
25referred to as a “series LLC”. Article 13 includes a number
26of miscellaneous provisions, including providing for the
27uniformity of the Code chapter’s application and construction,
28the relationship of Code chapter 489 to the federal Electronic
29Signatures in Global and National Commerce Act, and a savings
30clause (allowing actions commenced prior to the Act’s effective
31date). The bill enacts the Uniform Protected Series Act (UPSA)
32and amends provisions allowing for the cancellation of an LLC’s
33voluntary dissolution.
34GENERAL — LLC DESCRIPTION. An LLC is a type of
35unincorporated business organization that combines features
-43-1associated with for-profit corporations (Code chapter 490) and
2partnerships (Code chapter 486A). When adequately capitalized
3and operating pursuant to its operating agreement, an LLC
4resembles a corporation operating under its articles of
5incorporation and bylaws, by shielding its members (equity
6holders) from the organization’s liabilities (debts). It
7also resembles a partnership in that business income passes
8through the organization to its members who report their
9respective share of profits or losses on individual rather
10than the organization’s (corporate) tax returns. An LLC
11is formed by filing a certificate of organization with the
12secretary of state (comparable to a corporation’s articles
13of incorporation), while many of its powers and duties are
14governed by contract (referred to as an operating agreement
15and generally comparable to a partnership agreement). The
16operating agreement may control the LLC’s governance (e.g.,
17whether it is member-managed or manager-managed) and the rights
18and duties of its members and managers. A member’s interest
19refers to the member’s proportionate equity position in the LLC
20and associated control of its business decisions (affairs and
21internal activities). A transferable interest refers to the
22right of a member or former member to receive distributions
23from the LLC in accordance with the LLC’s operating agreement.
24Absent a provision in the operating agreement to the contrary,
25a transferable interest does not include a unilateral
26transfer of control rights. Dissociation occurs when a member
27withdraws from an LLC which may be on either a voluntary or an
28involuntary basis.
29GENERAL — IOWA SERIES (ARTICLE 12). Under Code chapter 489,
30article 12, an LLC’s operating agreement may provide for the
31establishment of a designated series. Under this arrangement,
32an LLC acts as an umbrella organization for any number of
33segregated transferable interests. The term commonly used to
34describe the umbrella organization is a series LLC. So long
35as certain conditions are satisfied, the liabilities (e.g.,
-44-1debts) and obligations (e.g., contractual promises) by one
2series cannot be imputed to either the series LLC or another
3series under its umbrella (Code section 489.1201). Likewise,
4as far as income, any gain or loss of a series may be allocated
5directly to the members of the series rather than to the series
6LLC or another series. Because a series is a component of a
7series LLC it cannot be completely independent. The article
8includes special provisions for a series LLC, including for its
9formation (Code section 489.1201), management (Code section
10489.1202), distributions conducted as part of a dissolution
11(Code section 489.1203), a member’s dissociation (Code section
12489.1204), its termination (Code section 489.1205), and a
13foreign series LLC (Code section 489.1206).
14DIVISION I — UNIFORM PROTECTED SERIES ACT — GENERAL.
15 Division I enacts the UPSA adopted by the ULC which in time
16will entirely replace current article 12. The provisions of
17the UPSA are codified and fit within the other provisions of
18the RULLCA. The article as amended contains two parts: part 1
19includes the sections of the UPSA taking the place of current
20Iowa series LLC sections and part 2 includes the current Iowa
21series sections temporarily transferred to another part of
22article 12 until repealed on January 1, 2021.
23PART 1, SUBPART A — GENERAL PROVISIONS. This subpart
24includes definitions, a description of the nature of a
25protected series; its power, purpose, and duration; how the
26protected series is governed by the LLC’s operating agreement;
27and rules for applying certain provisions of an existing LLC to
28a protected series. Specifically, it includes the article’s
29short title (new Code section 489.12101), describes terms used
30in the article (new Code sections 489.12102 and 489.12103),
31including defining “protected series” which replaces the term
32“series” (new Code section 489.12102(18)). It defines “series
33limited liability company” to mean a LLC that has at least one
34protected series (or is structured to have a protected series)
35under its umbrella (new Code section 489.12102(12)). The bill
-45-1defines a number of other terms such as “asset” which includes
2property in which a series LLC or protected series holds title
3and therefore may exercise certain rights including transfer
4(new Code section 489.12102(1)). An “associated asset” of a
5series LLC belongs only to (i.e., is “associated with”) the
6series LLC and an “associated asset” of a protected series
7belongs only to (i.e., is “associated with”) that protected
8series (new Code sections 489.12102(2) and 489.12301(1)).
9A “protected-series transferable interest” is a type of
10transferable interest in which an associated member has a
11right to receive a distribution (share of an asset) from a
12protected series under an operating agreement (Code section
13489.12101(10)). A “protected-series manager” (new Code section
14489.12102(9)) is a type of manager (Code section 489.102) who
15exercises all powers necessary to direct the activities and
16affairs of the protected series (Code section 489.12102(9)). A
17protected series may sue and be sued in its own name (new Code
18section 489.12104(1)) and has the same powers and purposes as
19the series LLC (new Code section 489.12104(2)). Generally, a
20protected series cannot survive the termination of its umbrella
21series (new Code section 489.12104(3)). A protected series
22cannot be a member of another series LLC or establish another
23protected series (new Code section 489.12104(4)). A protected
24series is subject to choice of law rules in cases where a
25dispute arises between parties from different states (new Code
26section 489.12105). A series LLC is governed by an operating
27agreement (new Code section 489.12106). In certain cases,
28the UPSA controls the series LLC and any protected series
29regardless of the terms of an operating agreement (new Code
30section 489.12107(1)). Various provisions govern how the UPSA
31and the RULLCA are to be interpreted in harmony.
32PART 1, SUBPART B — ESTABLISHING PROTECTED SERIES. This
33subpart provides for how a protected series is established.
34First, it requires a vote of the series LLC’s membership (new
35Code section 489.12201(1)). A protected series designation
-46-1must be filed with the secretary of state (new Code section
2489.12201(2)). The name of a protected series must comply with
3the naming conventions applicable to an ordinary LLC but have
4a “protected series” or “PS” designation (new Code section
5489.12202). A series LLC (acting through its own registered
6agent) serves as the recipient for service for all its umbrella
7protected series (new Code section 489.12203(1)). A number
8of provisions govern how a protected series receives service
9of process (new Code sections 489.12203 and 489.12204). A
10protected series may obtain a certificate of existence from
11the secretary of state (new Code section 489.12205). An LLC
12is required to file a biennial report with the secretary of
13state under Code section 489.209. The report must include
14information regarding its series (new Code section 489.12206).
15PART 1, SUBPART C — ASSETS, MEMBERS, MANAGEMENT, AND
16INFORMATION. Unless provided otherwise in an operating
17agreement, the owner of an asset is responsible for meeting
18the record-keeping requirements for that asset. An asset
19is only associated with a protected series or series LLC
20if there are adequate records describing the asset (new
21Code section 489.12301(2)). Only a member of a series LLC
22may be an associated member of a protected series holding
23a transferrable interest in the protected series (new Code
24section 489.12302(1)). A transferable interest in a protected
25series must initially be owned either by the series LLC or
26by an associated member of the protected series (new Code
27section 489.12303(1)). A protected series may have multiple
28managers (new Code section 489.12304(1)) in the same manner as
29an ordinary LLC under Code section 489.407. A manager of a
30protected series owes a fiduciary duty to the protected series
31rather than to the series LLC or any other protected series
32unless the manager also manages that protected series (new
33Code section 489.12304(4)). Any derivative claim under RULLCA
34(article 9) applies to such claim brought against a protected
35series (Code section 489.12304(6)). The bill does not include
-47-1a provision in the UPSA that states an associated member of a
2protected series has the same power to act as an agent and may
3bind the protected series in the same manner as a member of
4an ordinary LLC (presumably member-managed under Code section
5489.407). Various parties have a limited right to acquire
6information regarding a protected series, including a member
7of the series LLC, a former associated member of a protected
8series, the legal representative of an associated member of a
9protected series, and a protected-series manager of a protected
10series (new Code section 489.12305).
11PART 1, SUBPART D — LIABILITY LIMITATIONS AND CLAIMS.
12 This subpart limits the liability of certain persons and the
13enforcement of claims, by creating two types of liability
14shields: vertical and horizontal. A vertical shield applies
15to members and managers from liability in the same manner as
16an ordinary LLC. A horizontal shield applies to a protected
17series of a series LLC and its associated assets from liability
18for the debts or obligations of the series LLC or another
19protected series. A person is not liable for the debts and
20obligations of a protected series or a series LLC solely
21because the person is an associated member, protected-series
22manager, or protected-series transferee of a protected series
23(new Code section 489.12401(1)). However, notwithstanding
24these shields, a claimant could bring an action against a
25protected series under certain circumstances if the same
26action could be brought against an ordinary LLC (new Code
27section 489.12402(1)). Remedies afforded a judgment creditor
28of an associated member, protected-series transferee, or
29series limited liability company holding a protected-series
30transferable interest are the same as afforded to a judgment
31creditor in the case of an ordinary LLC under Code section
32489.503 (new Code section 489.12403). Creditors are provided
33different rights to assets if they are asserting a claim to
34pierce the organization’s veil under principles of equity (new
35Code section 489.12402) or are asserting a claim to reach
-48-1“nonassociated assets” meaning that the series LLC or protected
2series has not acquired title (new Code section 489.12404).
3PART 1, SUBPART E — DISSOLUTION AND WINDING UP AFFAIRS.
4 If a series LLC dissolves then each protected series under
5its umbrella dissolves simultaneously (new Code section
6489.12501(1)). The dissolution of a protected series occurs
7due to a provision in its operating agreement, the unanimous
8action of its members, or pursuant to court order (new Code
9section 489.12501(2)-(5)). Once the protected series is to be
10dissolved, its activities and affairs are to be wound up in the
11same manner as an ordinary LLC (new Code section 489.12502(1))
12referring to Code sections 489.702 through 489.704. In the
13case of the dissolution of a series LLC, it cannot wind up
14until each of its protected series has wound up (new Code
15section 489.12502(4)). If a series LLC is administratively
16dissolved by the secretary of state, and later reinstated,
17its protected series ceases winding up (new Code section
18489.12503).
19PART 1, SUBPART F — CHANGING TRANSACTIONS. This subpart
20restricts mergers and other changing transactions involving
21LLCs and protected series. A number of new definitions apply.
22A “continuing protected series” refers to a protected series
23that continues as part of the surviving series LLC (new Code
24section 489.12601(3)). A “relocated protected series” refers
25to a protected series which was part of a nonsurviving series
26LLC and becomes part of the surviving series LLC (new Code
27section 489.12601(6)). A protected series is prohibited from
28being a direct party to an acquisition, conversion, or merger
29(new Code section 489.12602(1)). It also cannot be a direct
30party to a domestication (a business organization formed in
31multiple states) (new Code section 489.12602(2)). One type of
32allowed merger involves two existing LLCs, even if one LLC is
33not a series LLC (new Code sections 489.12603 and 489.12604).
34A plan of merger must comply with the same requirements
35applicable to an ordinary LLC under Code sections 489.1001
-49-1through 489.1005 as well as a number of other requirements
2stated in a plan of merger (new Code section 489.12605) and
3articles of merger (new Code section 489.12606). A plan of
4merger sets forth the management and affairs or affairs of the
5protected series, including its termination, establishment, or
6relocation, assets and liabilities, powers and rights, and name
7(new Code section 489.12607). Generally, a creditor that has a
8right against an LLC or protected series that was terminated
9because of a merger may retain rights against the surviving
10series LLC or protected series (new Code section 489.12608(1)).
11In other cases, a creditor’s rights are not affected so long as
12the liability was incurred after the merger (new Code section
13489.12608(3)).
14PART 1, SUBPART G — FOREIGN PROTECTED SERIES. The law where
15a foreign (out-of-state) series LLC is created (referred to as
16the “law of the jurisdiction of formation”) generally governs
17its protected series, including its formation and governance,
18as well as the rights and duties of its associated members,
19protected series managers, or protected-series transferees
20(new Code section 489.12701(1)). A foreign protected series
21doing business in another state cannot assert that its law
22governs another foreign protected series not doing business
23in that state (new Code section 489.12702). Generally, a
24foreign protected series is to be treated like a foreign LLC
25for purposes of registering to do in-state business (new Code
26section 489.12703). In the case of litigation, within 30 days
27after becoming a party, a foreign series LLC or a foreign
28protected series must disclose to any adverse party identifying
29information regarding the foreign series LLC and each of its
30foreign series (new Code section 489.12704(1)).
31PART 1, SUBPART H — TRANSITIONAL PROVISIONS. This subpart
32does not include two sections of the UPSA that are already
33included in Code chapter 489, article 13, including section
34801 that addresses uniformity of application (Code section
35489.1301) and section 802 that addresses the federal Electronic
-50-1Signatures in Global and National Commerce Act (Code section
2489.1302). It also does not include a severability clause
3(that would provide for the retention of other provisions
4in the part if one provision were held invalid) since that
5provision already applies throughout the Code (Code section
64.12).
7The provisions of UPSA, codified as new sections in article
812, part 1, take effect on January 1, 2020, and applies only
9to a series LLC formed or a protected series established on or
10after that date. One exception applies if a series LLC formed
11prior to that date elects to be governed under the new part
12(new Code section 489.12803(1)). Otherwise on or after January
131, 2021, all series LLCs and each protected series are governed
14under the new part (new Code section 489.12803(1)). However,
15until January 1, 2021, certain claims authorized under new
16Code sections 489.12402 and 489.12404 cannot proceed against a
17foreign series LLC formed prior to January 1, 2020, or foreign
18LLC series that became a foreign series before that date (new
19Code section 489.12803(4)).
20DIVISION II — UNIFORM PROTECTED SERIES ACT — CONFORMING
21AMENDMENTS. The bill amends the sections currently codified
22in article 12 (Iowa series) to provide for their repeal on
23January 1, 2021, the date when all series LLC and umbrella
24series must comply with the new Code sections codified in
25part 1 (UPSA). It also provides for the transfer of current
26sections to new part 2. It amends other provisions in the
27Code to conform with part 1, including sections that restrict
28agricultural landholding by LLCs (Code chapter 10). It also
29amends provisions relating to the law governing foreign LLCs by
30referencing foreign series LLCs (Code section 489.801). The
31division takes effect January 1, 2020.
32DIVISION III — DISASSOCIATION — MANAGEMENT. The bill
33eliminates a provision which provides for member-managed
34limited liability companies, by removing a reference to
35approving a merger, conversion, or domestication (Code section
-51-1489.407(2)(f)). There are two different methods of managing
2a LLC. By statutory default (Code section 489.407(1)), a
3LLC is member-managed, meaning that all members participate
4in decisions managing the activities and affairs to the
5organization (a partnership model). Alternatively, a
6manager-managed LLC, formed and governed under an operating
7agreement, provides that certain members or nonmembers are
8designated to take such actions while the remaining members act
9as passive investors (corporate model).
10DIVISION IV — DISSOLUTION. The bill provides that an LLC
11may rescind a voluntary dissolution (new Code section 489.701A)
12and consequently the winding up of its affairs and activities
13(Code section 489.702). A dissolution is a fundamental
14change transaction that triggers the LLC’s termination. It is
15accomplished by a provision in the operating agreement, the
16unanimous consent of its members, by district court order in
17an action for dissolution, or by an administrative declaration
18issued by the secretary of state (e.g., for nonpayment of
19a fee). The bill provides that in cases of a voluntary
20dissolution in which a statement of dissolution is filed, an
21LLC may rescind such a statement by filing with the secretary
22of state a statement of rescission. Generally, once an LLC
23rescinds its dissolution, the LLC carries on its affairs as if
24the dissolution had never occurred. One exception applies to
25protect a person (creditor) who would be adversely affected by
26the retroactive effect of the statement of rescission.
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