AB854: Bill Text

AB854,415,20 183.0707 Disposition of assets in winding up. (1) In winding up its activities and affairs, a limited liability company shall apply its assets to discharge its obligations to creditors, including members that are creditors.

AB854,415,23 (2) After a limited liability company complies with sub. (1), any surplus must be distributed in the following order, subject to any charging order in effect under s. 183.0503:

AB854,415,25 (a) To members and dissociated members in satisfaction of liabilities for distributions previously approved under s. 183.0404.

AB854,416,4 (b) To members and dissociated members first for the return of their contributions in proportion to their respective values as specified in the records required to be kept under s. 183.0402 (2), or, in the case of a company treated as a partnership for tax purposes, the partnership capital account of each such member.

AB854,416,8 (c) To members and dissociated members for their transferable interests in proportion to their respective rights to share in distributions from the limited liability company before dissolution, except to the extent necessary to comply with any transfer effective under s. 183.0502.

AB854,416,11 (3) If a limited liability company does not have sufficient surplus to comply with sub. (2) (a), any surplus must be distributed among the owners of transferable interests in proportion to the value of the respective unreturned contributions.

AB854,416,12 (4) All distributions made under subs. (2) and (3) must be paid in money.

AB854,416,15 183.0708 Administrative dissolution. (1) The department may commence a proceeding under sub. (2) to dissolve a limited liability company administratively if any of the following applies:

AB854,416,17 (a) The company does not pay, within one year after they are due, any fees or penalties required to be paid to the department under this chapter.

AB854,416,19 (b) The company does not have on file with the department its annual report within one year after it is due.

AB854,416,20 (c) The company is without a registered agent in this state for at least one year.

AB854,416,23 (d) The company does not notify the department within one year that its registered agent or registered office has been changed, that its registered agent has resigned, or that its registered office has been discontinued.

AB854,416,24 (e) The company violates s. 940.302 (2) or 948.051 (2).

AB854,417,4 (2) If the department determines that one or more grounds exist for administratively dissolving a limited liability company, the department may give the company notice of the determination. The notice shall be in writing and addressed to the registered agent of the limited liability company.

AB854,417,8 (3) (a) Within 60 days after the notice under sub. (2) takes effect under s. 183.0103 (5), the limited liability company shall, with respect to each ground for administrative dissolution, either correct it or demonstrate to the reasonable satisfaction of the department that it does not exist.

AB854,417,13 (b) If the limited liability company fails to satisfy par. (a), the department may administratively dissolve the company. The department shall enter a notation in its records to reflect each ground for administrative dissolution and the effective date of dissolution and shall give the company notice of those facts. The notice shall be in writing and addressed to the registered agent of the limited liability company.

AB854,417,17 (3m) (a) If a notice under sub. (2) or (3) (b) is returned to the department as undeliverable, the department shall again give notice to the limited liability company. Except as provided under par. (b), this notice shall be in writing and addressed to the principal office of the company.

AB854,417,21 (b) If the notice under par. (a) is returned to the department as undeliverable or if the limited liability company's principal office cannot be determined from the records of the department, the department shall give notice by posting the notice on the department's Internet site.

AB854,417,25 (4) A limited liability company that is administratively dissolved continues in existence as an entity but may not carry on any activities except as necessary to wind up its activities and affairs and liquidate its assets under ss. 183.0702, 183.0704, 183.0705, 183.0706, and 183.0707, or to apply for reinstatement under s. 183.0709.

AB854,418,2 (4m) A limited liability company's right to the exclusive use of its name terminates on the date of the administrative dissolution under sub. (3) (b).

AB854,418,4 (5) The administrative dissolution of a limited liability company does not terminate the authority of its registered agent.

AB854,418,7 183.0709 Reinstatement. (1) A limited liability company that is administratively dissolved under s. 183.0708 may apply to the department for reinstatement. The application shall include all of the following:

AB854,418,9 (a) The name of the company and the effective date of its administrative dissolution.

AB854,418,11 (b) A statement that each ground for dissolution either did not exist or has been cured.

AB854,418,12 (c) A statement that the company's name satisfies s. 183.0112.

AB854,418,14 (2) (a) Upon application, the department shall reinstate a limited liability company if the department determines all of the following:

AB854,418,16 1. That the application contains the information required by sub. (1) and the information is correct.

AB854,418,18 2. That all fees and penalties owed by the company to the department under this chapter have been paid.

AB854,418,24 (b) Upon reinstatement of a limited liability company under par. (a), the department shall enter a notation in its records revising the notation specified in s. 183.0708 (3) (b) to reflect cancellation of the dissolution and reinstatement of the company. The notation shall state both the department's determination under par. (a) and the effective date of reinstatement. The department shall provide notice of the reinstatement to the company or its representative.

AB854,419,2 (4) When reinstatement under this section is effective, all of the following rules apply:

AB854,419,4 (a) Except as provided in par. (c), the reinstatement relates back to and takes effect as of the effective date of the administrative dissolution.

AB854,419,7 (b) Except as provided in par. (c), the limited liability company resumes carrying on its activities and affairs as if the administrative dissolution had never occurred.

AB854,419,10 (c) The rights of a person arising out of an act or omission in reliance on the dissolution before the person knew or had notice of the reinstatement are not affected.

AB854,419,14 183.0710 Appeal from denial of reinstatement. (1) If the department denies a limited liability company's application for reinstatement under s. 183.0709, the department shall serve the company with a written notice, addressed to the registered agent of the company, that explains each reason for the denial.

AB854,419,22 (2) The company may appeal the denial of reinstatement to the circuit court for the county where the company's principal office or, if none in this state, the office of its registered agent is located, within 30 days after service of the notice of denial is effective under s. 183.0103 (5). To appeal, the company shall petition the court to set aside the administrative dissolution and attach to the petition copies of the department's notice of administrative dissolution under s. 183.0708 (3) (b), the company's application for reinstatement under s. 183.0709 (1), and the department's notice of denial under sub. (1).

AB854,419,24 (3) The court may order the department to reinstate the company or may take other action that the court considers appropriate.

AB854,419,25 (4) The court's final decision may be appealed as in other civil proceedings.

AB854,420,1 subchapter VIII

AB854,420,2 ACTIONS BY MEMBERS

AB854,420,7 183.0801 Direct action by member. (1) Subject to sub. (2), a member may maintain a direct action against another member, a manager, or the limited liability company to enforce the member's rights and protect the member's interests, including rights and interests under the operating agreement or this chapter or arising independently of the membership relationship.

AB854,420,10 (2) A member maintaining a direct action under this section must plead and prove an actual or threatened injury that is not solely the result of an injury suffered or threatened to be suffered by the limited liability company.

AB854,420,12 183.0802 Derivative action. A member may maintain a derivative action to enforce a right of a limited liability company if any of the following applies:

AB854,420,17 (1) The member first makes a demand on the other members of a member-managed limited liability company, or the managers of a manager-managed limited liability company, requesting that they cause the limited liability company to bring an action to enforce the right, and the managers or other members do not bring the action within a reasonable time.

AB854,420,18 (2) A demand under sub. (1) would be futile.

AB854,420,21 183.0803 Proper plaintiff. A derivative action to enforce a right of a limited liability company may be maintained only by a person that is a member at the time the action is commenced and to which any of the following applies:

AB854,420,23 (1) The person was a member when the conduct giving rise to the action occurred.

AB854,421,3 (2) The person's status as a member devolved on the person by operation of law or pursuant to the terms of the operating agreement from a person that was a member at the time of the conduct.

AB854,421,5 183.0804 Pleading. In a derivative action under s. 183.0802, the complaint must state with particularity one of the following:

AB854,421,7 (1) The date and content of plaintiff's demand and the response to the demand by the managers or other members.

AB854,421,8 (2) Why demand should be excused as futile.

AB854,421,17 183.0805 Special litigation committee. (1) If a limited liability company is named as or made a party in a derivative proceeding, the company may appoint a special litigation committee to investigate the claims asserted in the proceeding and determine whether pursuing the action is in the best interests of the company. If the company appoints a special litigation committee, on motion by the committee made in the name of the company, except for good cause shown, the court shall stay discovery for the time reasonably necessary to permit the committee to make its investigation. This subsection does not prevent the court from doing any of the following:

AB854,421,18 (a) Enforcing a person's right to information under s. 183.0410.

AB854,421,20 (b) Granting extraordinary relief in the form of a temporary restraining order or preliminary injunction.

AB854,421,22 (2) A special litigation committee must be composed of one or more disinterested and independent individuals, who may be members.

AB854,421,24 (3) (a) In a member-managed limited liability company, a special litigation committee may be appointed as follows:

AB854,422,2 1. By the affirmative vote or consent of a majority of the transferable interests of the members not named as parties in the proceeding.

AB854,422,4 2. If all members are named as parties in the proceeding, by a majority of the transferable interests of the members named as defendants.

AB854,422,6 (b) In a manager-managed limited liability company, a special litigation committee may be appointed as follows:

AB854,422,7 1. By a majority of the managers not named as parties in the proceeding.

AB854,422,9 2. If all managers are named as parties in the proceeding, by a majority of the managers named as defendants.

AB854,422,12 (4) After appropriate investigation, a special litigation committee may determine that any of the following is in the best interests of the limited liability company:

AB854,422,13 (a) That the proceeding continue under the control of the plaintiff.

AB854,422,14 (b) That the proceeding continue under the control of the committee.

AB854,422,15 (c) That the proceeding be settled on terms approved by the committee.

AB854,422,16 (d) That the proceeding be dismissed.

AB854,423,3 (5) After making a determination under sub. (4), a special litigation committee shall file with the court a statement of its determination and its report supporting its determination and shall serve each party with a copy of the determination and report. The court shall determine whether the members of the committee were disinterested and independent and whether the committee conducted its investigation and made its recommendation in good faith, independently, and with reasonable care, with the committee having the burden of proof. If the court finds that the members of the committee were disinterested and independent and that the committee acted in good faith, independently, and with reasonable care, the court shall enforce the determination of the committee. Otherwise, the court shall dissolve the stay of discovery entered under sub. (1) and allow the action to continue under the control of the plaintiff.

AB854,423,7 183.0806 Proceeds and expenses. (1) (a) Except as otherwise provided in sub. (2), any proceeds or other benefits of a derivative action, whether by judgment, compromise, or settlement, belong to the limited liability company and not to the plaintiff.

AB854,423,9 (b) Except as otherwise provided in sub. (2), if the plaintiff receives any proceeds, the plaintiff shall remit them immediately to the company.

AB854,423,12 (2) If a derivative action is successful in whole or in part, the court may award the plaintiff reasonable expenses, including reasonable attorney fees and costs, from the recovery of the limited liability company.

AB854,423,13 subchapter IX

AB854,423,15 FOREIGN LIMITED LIABILITY COMPANIES

AB854,423,17 183.0901 Governing law. (1) The governing law of a foreign limited liability company governs all of the following:

AB854,423,18 (a) The internal affairs of the company.

AB854,423,20 (b) The liability of a member as member and a manager as manager for a debt, obligation, or other liability of the company.

AB854,423,23 (2) A foreign limited liability company is not precluded from registering to do business in this state because of any difference between its governing law and the law of this state.

AB854,424,2 (3) Registration of a foreign limited liability company to do business in this state does not authorize the foreign company to engage in any activities and affairs or exercise any power that a limited liability company may not engage in or exercise in this state.

AB854,424,5 183.0902 Registration to do business in this state. (1) A foreign limited liability company may not do business in this state until it registers with the department under this subchapter.

AB854,424,8 (2) A foreign limited liability company doing business in this state may not maintain an action or proceeding in this state unless it has registered to do business in this state.

AB854,424,12 (3) The failure of a foreign limited liability company to register to do business in this state does not impair the validity of a contract or act of the foreign limited liability company or its title to property in this state or preclude it from defending an action or proceeding in this state.

AB854,424,15 (4) A limitation on the liability of a member or manager of a foreign limited liability company is not waived solely because the company does business in this state without registering to do business in this state.

AB854,424,17 (5) Section 183.0901 (1) and (2) applies even if a foreign limited liability company fails to register under this subchapter.

AB854,424,21 (6) (a) A foreign limited liability company that does business in this state without registering to do business in this state is liable to this state, for each year or any part of a year during which it did business in this state without registration, in an amount equal to all of the following:

AB854,424,25 1. All fees and other charges that would have been imposed by this chapter on the foreign limited liability company had it properly filed a foreign registration statement as required by this section and thereafter filed all reports required by this chapter.

AB854,425,1 2. Fifty percent of the amount owed under subd. 1. or $5,000, whichever is less.

AB854,425,6 (b) The foreign limited liability company shall pay the amount owed under par. (a) to the department, and the department may not file a foreign registration statement for the foreign limited liability company until the amount owed is paid. The attorney general may enforce a foreign limited liability company's obligation to pay to the department any amount owed under this subsection.

AB854,425,9 183.0903 Foreign registration statement. To register to do business in this state, a foreign limited liability company must deliver a foreign registration statement to the department for filing. The statement must state all of the following:

AB854,425,11 (1) The name of the company and, if the name does not comply with s. 183.0112, a fictitious name adopted pursuant to s. 183.0906 (1).

AB854,425,12 (2) That the company is a foreign limited liability company.

AB854,425,13 (3) The jurisdiction of the company's governing law.