AB566: Bill Text

AB566,392,13 5. Value the contributions of members under s. 183.0402 (2).

AB566,392,15 6. Approve a merger, interest exchange, conversion, or domestication under subch. X.

AB566,392,20 7. Authorize a manager, member, or other person to do any act on behalf of the limited liability company that contravenes an operating agreement, including any provision of the operating agreement that expressly limits the purpose or business of the limited liability company or the conduct of the business of the limited liability company.

AB566,392,22 (e) The operating agreement may be amended only with the consent of all members.

AB566,392,24 (3) In a manager-managed limited liability company, all of the following rules apply:

AB566,393,3 (a) Except as expressly provided in this chapter, any matter relating to the activities and affairs of the company is decided exclusively by the manager, or, if there is more than one manager, by a majority of the managers.

AB566,393,5 (b) Each manager has equal rights in the management and conduct of the company's activities and affairs.

AB566,393,7 (c) The affirmative vote or consent of all members is required to do any of the following:

AB566,393,10 1. Sell, lease, exchange, or otherwise dispose of all or substantially all of the company's property, with or without the goodwill, outside the ordinary course of the company's activities.

AB566,393,12 2. Approve a merger, interest exchange, conversion, or domestication under subch. X.

AB566,393,13 3. Undertake any activity described in sub. (2) (d).

AB566,393,14 4. Amend the operating agreement.

AB566,393,20 (d) A manager may be chosen at any time by the affirmative vote or consent of a majority of the members' transferable interests and remains a manager until a successor has been chosen, unless the manager at an earlier time resigns, is removed, or dies, or, in the case of a manager that is not an individual, terminates. A manager may be removed at any time by the consent of a majority of the members' transferable interests without notice or cause.

AB566,393,24 (e) A person need not be a member to be a manager, but the dissociation of a member that is also a manager removes the person as a manager. If a person that is both a manager and a member ceases to be a manager, that cessation does not by itself dissociate the person as a member.

AB566,394,3 (f) A person's ceasing to be a manager does not discharge any debt, obligation, or other liability to the limited liability company or members which the person incurred while a manager.

AB566,394,18 (4) Unless otherwise provided in a written operating agreement, an action requiring the vote or consent of members under this chapter may be taken without a meeting if all of such members consent to the action, and a member may appoint a proxy or other agent to consent or otherwise act for the member by signing an appointing record, personally or by the member's agent. The consent shall be evidenced by one or more written consents describing the action, signed by each of such members, and delivered to the limited liability company for inclusion in the limited liability company records. Unless otherwise provided in a written operating agreement, if a person, whether or not then a member, so consenting directs, whether through instruction to a proxy or other agent, that such consent will be effective at a future time, including a time determined upon the happening of an event, then the person shall be deemed to have consented as a member at this future time so long as the person is then a member and did not revoke the consent prior to that time. Any such consent shall be revocable prior to its becoming effective, unless the written consent provides otherwise.

AB566,394,22 (5) The dissolution of a limited liability company does not affect the applicability of this section. However, a person that wrongfully causes dissolution of the company loses the right to participate in management as a member and a manager.

AB566,394,24 (8) This chapter does not entitle a member to remuneration for services performed for a member-managed limited liability company.

AB566,395,6 183.0408 Reimbursement; indemnification; advancement; and insurance. (1) A limited liability company shall reimburse a member of a member-managed company or the manager of a manager-managed company for any payment made by the member or manager in the course of the member's or manager's activities on behalf of the company, if the member or manager complied with ss. 183.0405, 183.0407, and 183.0409 in making the payment.

AB566,395,11 (2) A limited liability company shall indemnify and hold harmless a person with respect to any claim or demand against the person and any debt, obligation, or other liability incurred by the person by reason of the person's former or present capacity as a member or manager, if the claim, demand, debt, obligation, or other liability does not arise from the person's breach of s. 183.0405, 183.0407, or 183.0409.

AB566,395,17 (3) In the ordinary course of its activities and affairs, a limited liability company may advance reasonable expenses, including attorney fees and costs, incurred by a person in connection with a claim or demand against the person by reason of the person's former or present capacity as a member or manager, if the person promises to repay the company if the person ultimately is determined not to be entitled to be indemnified under sub. (2).

AB566,395,22 (4) A limited liability company may purchase and maintain insurance on behalf of a member or manager against liability asserted against or incurred by the member or manager in that capacity or arising from that status even if, under s. 183.0105 (3) (g), the operating agreement could not eliminate or limit the person's liability to the company for the conduct giving rise to the liability.

AB566,396,2 183.0409 Standards of conduct for members and managers. (1) A member of a member-managed limited liability company owes to the company and, subject to s. 183.0801, the other members the fiduciary duties of loyalty and care stated in subs. (2) and (3).

AB566,396,4 (2) The duty of loyalty of a member in a member-managed limited liability company includes all of the following duties:

AB566,396,6 (a) The duty to account to the company and hold as trustee for it any property, profit, or benefit derived by the member in or from any of the following:

AB566,396,7 1. The conduct or winding up of the company's activities and affairs.

AB566,396,8 2. A use by the member of the company's property.

AB566,396,9 3. The appropriation of a limited liability company opportunity.

AB566,396,12 (b) The duty to refrain from dealing with the company in the conduct or winding up of the company's activities and affairs as or on behalf of a person having an interest adverse to the company.

AB566,396,14 (c) The duty to refrain from competing with the company in the conduct of the company's activities and affairs before the dissolution of the company.

AB566,396,18 (3) The duty of care of a member of a member-managed limited liability company in the conduct or winding up of the company's activities and affairs is to refrain from engaging in conduct for which relief or exoneration from liability is not permitted under s. 183.0105 (3) (g).

AB566,396,21 (4) A member shall discharge the duties and obligations under this chapter and under the operating agreement and exercise any rights consistently with the contractual obligation of good faith and fair dealing.

AB566,396,24 (5) A member does not violate a duty or obligation under this chapter or under the operating agreement solely because the member's conduct furthers the member's own interest.

AB566,397,5 (6) All the members of a member-managed limited liability company or a manager-managed limited liability company may authorize or ratify, after full disclosure of all material facts, a specific act or transaction that otherwise would violate the duty of loyalty and this authorization or ratification precludes a claim for breach of the duty of loyalty for the act or transaction by such members.

AB566,397,8 (7) It is a defense to a claim under sub. (2) (b) and any comparable claim in equity or at common law that the transaction was fair to the limited liability company.

AB566,397,12 (8) If, as permitted by sub. (6) or (9) (e) or the operating agreement, a member enters into a transaction with the limited liability company which otherwise would be prohibited by sub. (2) (b), the member's rights and obligations arising from the transaction are the same as those of a person that is not a member.

AB566,397,13 (9) In a manager-managed limited liability company, the following rules apply:

AB566,397,15 (a) Subsections (1), (2), (3), and (7) apply to the manager or managers and not the members.

AB566,397,16 (b) The duty stated under sub. (2) (c) continues until winding up is completed.

AB566,397,17 (c) Subsection (4) applies to managers and members.

AB566,397,18 (d) Subsection (5) applies only to members.

AB566,397,19 (e) The power to ratify under sub. (6) applies only to the members.

AB566,397,21 (f) Subject to sub. (4), a member does not have any duty to the company or to any other member solely by reason of being a member.

AB566,397,24 183.0410 Rights to information of member, manager, and person dissociated as member. (1) In a member-managed limited liability company, the following rules apply:

AB566,398,5 (a) On reasonable notice, a member may inspect and copy during regular business hours, at a reasonable location specified by the company, any record maintained by the company regarding the company's activities, affairs, financial condition, and other circumstances, to the extent the information is material to the member's rights and duties under the operating agreement or this chapter.

AB566,398,6 (b) The company shall furnish to each member all of the following:

AB566,398,12 1. Without demand, any information concerning the company's activities, affairs, financial condition, and other circumstances which the company knows and is material to the proper exercise of the member's rights and duties under the operating agreement or this chapter, except to the extent the company can establish that it reasonably believes the member already knows or has notice of the information.

AB566,398,16 2. On demand, any other information concerning the company's activities, affairs, financial condition, and other circumstances, except to the extent the demand or the information demanded is unreasonable or otherwise improper under the circumstances.

AB566,398,18 (c) The duty to furnish information under par. (b) also applies to each member to the extent the member knows any of the information described in par. (b).

AB566,398,19 (2) In a manager-managed limited liability company, the following rules apply:

AB566,398,21 (a) The informational rights stated in sub. (1) and the duty stated in sub. (1) (c) apply to the managers and not the members.

AB566,398,25 (b) During regular business hours and at a reasonable location specified by the company, a member may obtain from the company and inspect and copy information regarding the company's activities, affairs, financial condition, and other circumstances of the company as is reasonable if all of the following apply:

AB566,399,2 1. The member seeks the information for a purpose material to the member's interest as a member.

AB566,399,5 2. The member makes a demand in a record received by the company, describing with reasonable particularity the information sought and the purpose for seeking the information.

AB566,399,6 3. The information sought is directly connected to the member's purpose.

AB566,399,9 (c) Not later than 10 days after receiving a demand pursuant to par. (b) 2., the company shall inform, in a record, the member that made the demand of all of the following:

AB566,399,11 1. What information the company will provide in response to the demand and when and where the company will provide the information.

AB566,399,13 2. The company's reasons for declining, if the company declines to provide any demanded information.

AB566,399,18 (d) Whenever this chapter or an operating agreement provides for a member to vote on or give or withhold consent to a matter, before the vote is cast or consent is given or withheld, the company shall, without demand, provide the member with all information that is known to the company and that is material to the member's decision.

AB566,399,22 (3) Subject to sub. (8), on 10 days' demand made in a record received by a limited liability company, a person dissociated as a member may have access to the information to which the person was entitled while a member if all of the following apply:

AB566,399,24 (a) The information pertains to the period during which the person was a member.

AB566,399,25 (b) The person seeks the information in good faith.

AB566,400,1 (c) The person satisfies the requirements imposed on a member by sub. (2) (b).

AB566,400,3 (4) A limited liability company shall respond to a demand made pursuant to sub. (3) in the manner provided in sub. (2) (c).

AB566,400,6 (5) A limited liability company may charge a person that makes a demand under this section the reasonable costs of copying, limited to the costs of labor and material.

AB566,400,11 (6) A member or person dissociated as a member may exercise the rights under this section through an agent or, in the case of an individual under legal disability, a legal representative. Any restriction or condition imposed by the operating agreement or under sub. (8) applies both to the agent or legal representative and to the member or person dissociated as a member.

AB566,400,13 (7) Subject to s. 183.0504, the rights under this section do not extend to a person as transferee.

AB566,400,20 (8) In addition to any restriction or condition stated in its operating agreement, a limited liability company, as a matter within the ordinary course of its activities and affairs, may impose reasonable restrictions and conditions on access to and use of information to be furnished under this section, including designating information confidential and imposing nondisclosure and safeguarding obligations on the recipient. In a dispute concerning the reasonableness of a restriction under this subsection, the company has the burden of proving reasonableness.

AB566,400,21 subchapter V

AB566,400,24 TRANSFERABLE INTERESTS AND RIGHTS OF TRANSFEREES AND CREDITORS

AB566,401,2 183.0501 Nature of transferable interest. A transferable interest is personal property.

AB566,401,4 183.0502 Transfer of transferable interest. (1) Subject to s. 183.0503 (6), all of the following apply to a transfer, in whole or in part, of a transferable interest:

AB566,401,5 (a) It is permissible.

AB566,401,7 (b) It does not by itself cause a member's dissociation or a dissolution and winding up of the limited liability company's activities and affairs.

AB566,401,9 (c) Subject to s. 183.0504, it does not entitle the transferee to any of the following:

AB566,401,11 1. Participate in the management or conduct of the company's activities and affairs.

AB566,401,13 2. Except as otherwise provided in sub. (3) and s. 183.0410 (3), have access to records or other information concerning the company's activities and affairs.

AB566,401,15 (2) A transferee has the right to receive, in accordance with the transfer, distributions to which the transferor would otherwise be entitled.

AB566,401,18 (3) In a dissolution and winding up of a limited liability company, a transferee is entitled to an account of the company's transactions only from the date of dissolution.

AB566,401,22 (4) A transferable interest may be evidenced by a certificate of the interest issued by a limited liability company in a record, and, subject to this section, the interest represented by the certificate may be transferred by a transfer of the certificate.

AB566,401,24 (5) A limited liability company need not give effect to a transferee's rights under this section until the company knows or has notice of the transfer.

AB566,402,3 (6) A transfer of a transferable interest in violation of a restriction on transfer contained in the operating agreement is ineffective if the intended transferee knows or has notice of the restriction at the time of the intended transfer.

AB566,402,8 (7) Except as otherwise provided in s. 183.0602 (5) (b), if a member transfers a transferable interest and the transferee does not become a member with respect to the transferred interest, the transferor retains the rights of a member other than the interest in distributions transferred and retains all the duties and obligations of a member.

AB566,402,12 (8) If a member transfers a transferable interest to a person that becomes a member with respect to the transferred interest, the transferee is liable for the member's obligations under ss. 183.0403 and 183.0406 known to the transferee when the transferee becomes a member.

AB566,402,19 183.0503 Charging order. (1) On application by a judgment creditor of a member or transferee, a court may enter a charging order against the transferable interest of the judgment debtor for the unsatisfied amount of the judgment. Except as otherwise provided in sub. (6), a charging order constitutes a lien on a judgment debtor's transferable interest and requires the limited liability company to pay over to the person to which the charging order was issued any distribution that otherwise would be paid to the judgment debtor.

AB566,402,21 (2) To the extent necessary to effectuate the collection of distributions pursuant to a charging order in effect under sub. (1), the court may do any of the following:

AB566,402,23 (a) Appoint a receiver of the distributions subject to the charging order, with the power to make all inquiries the judgment debtor might have made.

AB566,402,24 (b) Make all other orders necessary to give effect to the charging order.

AB566,403,5 (3) Upon a showing that distributions under a charging order will not pay the judgment debt within a reasonable time, the court may foreclose the lien and order the sale of the transferable interest. Except as otherwise provided in sub. (6), the purchaser at the foreclosure sale obtains only the transferable interest, does not thereby become a member, and is subject to s. 183.0502.