SB566: Bill Text

SB566,383,2 (3) A statement of authority affects only the power of a person to bind a limited liability company to persons that are not members.

SB566,383,6 (4) Subject to sub. (3) and s. 183.0103 (4), and except as otherwise provided in subs. (6) to (8), a limitation on the authority of a person or a position contained in an effective statement of authority is not by itself evidence of any person's knowledge or notice of the limitation.

SB566,383,10 (5) Subject to sub. (3), a grant of authority not pertaining to transfers of real property and contained in an effective statement of authority is conclusive in favor of a person that gives value in reliance on the grant, except to the extent that when the person gives value any of the following applies:

SB566,383,11 (a) The person has knowledge to the contrary.

SB566,383,12 (b) The statement has been canceled or restrictively amended under sub. (2).

SB566,383,14 (c) A limitation on the grant is contained in another statement of authority that became effective after the statement containing the grant became effective.

SB566,383,20 (6) Subject to sub. (3), an effective statement of authority that grants authority to transfer real property held in the name of the limited liability company, a certified copy of which statement is recorded in the office of the register of deeds for the county in which the property is located, is conclusive in favor of a person that gives value in reliance on the grant without knowledge to the contrary, except to the extent that when the person gives value any of the following applies:

SB566,383,23 (a) The statement has been canceled or restrictively amended under sub. (2) and a certified copy of the cancellation or restrictive amendment has been recorded in the office of the register of deeds for the county in which the property is located.

SB566,384,2 (b) A limitation on the grant is contained in another statement of authority that became effective after the statement containing the grant became effective, and a certified copy of the later-effective statement is recorded in the office of the register of deeds for the county in which the property is located.

SB566,384,6 (7) Subject to sub. (3), if a certified copy of an effective statement containing a limitation on the authority to transfer real property held in the name of a limited liability company is recorded in the office of the register of deeds for the county in which the property is located, all persons are deemed to know of the limitation.

SB566,384,9 (8) Subject to sub. (9), an effective statement of dissolution or termination is a cancellation of any filed statement of authority for the purposes of sub. (6) and is a limitation on authority for the purposes of sub. (7).

SB566,384,13 (9) After a statement of dissolution becomes effective, a limited liability company may deliver to the department for filing and, if appropriate, may record a statement of authority that is designated as a post-dissolution statement of authority. The statement operates as provided in subs. (6) and (7).

SB566,384,17 (10) Unless earlier canceled, an effective statement of authority is canceled by operation of law 5 years after the date on which the statement, or its most recent amendment or renewal, becomes effective. This cancellation operates without need for any recording under sub. (6) or (7).

SB566,384,19 (11) An effective statement of denial operates as a restrictive amendment under this section and may be recorded by certified copy for purposes of sub. (6) (a).

SB566,384,22 183.0303 Statement of denial. A person named in a filed statement of authority granting that person authority may deliver to the department for filing a statement of denial that does all of the following:

SB566,384,24 (1) Provides the name of the limited liability company and the caption of the statement of authority to which the statement of denial pertains.

SB566,384,25 (2) Denies the grant of authority.

SB566,385,7 183.0304 Liability of members and managers. (1) A debt, obligation, or other liability of a limited liability company is solely the debt, obligation, or other liability of the company. Except as provided in ss. 73.0306, 183.0403, and 183.0406, a member or manager is not personally liable, directly or indirectly, by way of contribution or otherwise, for a debt, obligation, or other liability of the company solely by reason of being or acting as a member or manager. This subsection applies regardless of the dissolution of the company.

SB566,385,11 (2) The failure of a limited liability company to observe formalities relating to the exercise of its powers or management of its activities and affairs is not a ground for imposing liability on a member or manager for a debt, obligation, or other liability of the company.

SB566,385,12 subchapter IV

SB566,385,15 RELATIONS OF MEMBERS TO EACH OTHER AND TO LIMITED LIABILITY COMPANY

SB566,385,20 183.0401 Becoming member. (1) If a limited liability company is to have only one member upon formation, the person becomes a member as agreed by that person and the organizer of the company. That person and the organizer may be, but need not be, different persons. If different, the organizer acts on behalf of the initial member.

SB566,385,24 (2) If a limited liability company is to have more than one member upon formation, those persons become members as agreed by the persons before the formation of the company. The organizer acts on behalf of the persons in forming the company and may be, but need not be, one of the persons.

SB566,386,3 (3) A person becomes an initial member of a limited liability company with the consent of a majority of the organizers. The organizers may consent to more than one person simultaneously becoming the company's initial members.

SB566,386,5 (4) After formation of a limited liability company, a person becomes a member in any of the following ways:

SB566,386,6 (a) As provided in the operating agreement.

SB566,386,7 (b) As the result of a transaction effective under subch. X.

SB566,386,8 (c) With the affirmative vote or consent of all the members.

SB566,386,9 (d) As provided in s. 183.0701 (1) (c).

SB566,386,10 (e) As provided in s. 183.0503 (6) (c).

SB566,386,11 (5) A person may become a member without doing any of the following:

SB566,386,12 (a) Acquiring a transferable interest.

SB566,386,14 (b) Making or being obligated to make a contribution to the limited liability company.

SB566,386,18 183.0402 Form of contribution. (1) A contribution may consist of money or property transferred to, services performed for, or another benefit provided to the limited liability company or an agreement to transfer money or property to, perform services for, or provide another benefit to the company.

SB566,386,24 (2) The value of a member's contribution shall be determined in the manner provided in an operating agreement. If the operating agreement does not so provide, the value of a contribution shall be approved by the members under s. 183.0407 (2) (d). This value shall be properly reflected in the records and information kept by the limited liability company at its principal place of business or activity, and this value shall be binding and conclusive on the limited liability company and its members.

SB566,387,3 183.0403 Liability for contributions. (1) A person's obligation to make a contribution to a limited liability company is not excused by the person's death, disability, termination, or other inability to perform personally.

SB566,387,7 (2) If a person does not fulfill an obligation to make a contribution other than money, the person is obligated at the option of the limited liability company to contribute money equal to the value of the part of the contribution which has not been made.

SB566,387,16 (3) Unless otherwise provided in a written operating agreement, a member's obligation to provide tangible or intangible property or other benefit to a limited liability company, including money, services performed, promissory notes, other agreements to contribute money or property, and contracts for services to be performed, as a contribution to the limited liability company may be compromised only by the written consent of all the members. If a creditor of a limited liability company extends credit or otherwise acts in reliance on an obligation described in sub. (1) without knowledge or notice of a compromise under this subsection, the creditor may enforce the obligation.

SB566,387,25 183.0404 Sharing of and right to distributions before dissolution. (1) Except to the extent necessary to comply with any transfer effective under s. 183.0502 or charging order in effect under s. 183.0503, any distributions made by a limited liability company before its dissolution and winding up must be made proportionally among members and dissociated members on the basis of the value of the contributions made by each such member, as stated 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 as computed for tax reporting purposes.

SB566,388,3 (2) A person has a right to a distribution before the dissolution and winding up of a limited liability company only if the company decides to make an interim distribution. A person's dissociation does not entitle the person to a distribution.

SB566,388,8 (3) A person does not have a right to demand or receive a distribution from a limited liability company in any form other than money. Except as otherwise provided in s. 183.0707 (4), a limited liability company may distribute an asset in kind if each part of the asset is fungible with each other part and each person receives a percentage of the asset equal in value to the person's share of distributions.

SB566,388,14 (4) If a member or transferee becomes entitled to receive a distribution, the member or transferee has the status of, and is entitled to all remedies available to, a creditor of the limited liability company with respect to the distribution. However, the company's obligation to make a distribution is subject to offset for any amount owed to the company by the member or a person dissociated as a member on whose account the distribution is made.

SB566,388,17 183.0405 Limitations on distributions. (1) A limited liability company may not make a distribution, including a distribution under s. 183.0707, if after the distribution any of the following applies:

SB566,388,19 (a) The company would not be able to pay its debts as they become due in the ordinary course of the company's activities and affairs.

SB566,388,24 (b) The company's total assets would be less than or equal to the sum of its total liabilities plus the amount that would be needed, if the company were to be dissolved and wound up at the time of the distribution, to satisfy the preferential rights upon dissolution and winding up of members and transferees whose preferential rights are superior to the rights of persons receiving the distribution.

SB566,389,2 (2) A limited liability company may base a determination that a distribution is not prohibited under sub. (1) on any of the following:

SB566,389,4 (a) Financial statements prepared on the basis of accounting practices and principles that are reasonable in the circumstances.

SB566,389,6 (b) A fair valuation or other method that is reasonable under the circumstances.

SB566,389,8 (3) Except as otherwise provided in sub. (5), the effect of a distribution under sub. (1) is measured as follows:

SB566,389,10 (a) In the case of a distribution as described in s. 183.0102 (4) (a) 1. and 2., as of the earlier of the following:

SB566,389,12 1. The date money or other property is transferred or debt is incurred by the limited liability company.

SB566,389,14 2. The date the person entitled to the distribution ceases to own the interest or right being acquired by the company in return for the distribution.

SB566,389,16 (b) In the case of any distribution of indebtedness other than one under par. (a), as of the date the indebtedness is distributed.

SB566,389,17 (c) In all cases other than those under par. (a) or (b), as of the following:

SB566,389,19 1. The date the distribution is authorized, if the payment occurs not later than 120 days after that date.

SB566,389,21 2. The date the payment is made, if the payment occurs more than 120 days after the distribution is authorized.

SB566,389,25 (4) A limited liability company's indebtedness to a member or transferee incurred by reason of a distribution made in accordance with this section is at parity with the company's indebtedness to its general, unsecured creditors, except to the extent subordinated by agreement.

SB566,390,7 (5) A limited liability company's indebtedness, including indebtedness issued as a distribution, is not a liability for purposes of sub. (1) if the terms of the indebtedness provide that payment of principal and interest is made only if and to the extent that payment of a distribution could then be made under this section. If the indebtedness is issued as a distribution, each payment of principal or interest is treated as a distribution, the effect of which is measured on the date the payment is made.

SB566,390,10 (6) In measuring the effect of a distribution under s. 183.0707, the liabilities of a dissolved limited liability company do not include any claim that has been disposed of under s. 183.0704, 183.0705, or 183.0706.

SB566,390,17 183.0406 Liability for improper distributions. (1) Except as otherwise provided in sub. (2), if a member of a member-managed limited liability company or manager of a manager-managed limited liability company consents to a distribution made in violation of s. 183.0405 and in consenting to the distribution fails to comply with s. 183.0409, the member or manager is personally liable to the company for the amount of the distribution which exceeds the amount that could have been distributed without the violation of s. 183.0405.

SB566,390,23 (2) To the extent a written operating agreement of a member-managed limited liability company relieves a member of the authority and responsibility to consent to distributions and imposes that authority and responsibility on one or more other members, the liability stated in sub. (1) applies to the other members and not the member that the written operating agreement relieves of the authority and responsibility.

SB566,391,2 (3) A person that receives a distribution knowing that the distribution violated s. 183.0405 is personally liable to the limited liability company but only to the extent that the distribution received by the person exceeded the amount that could have been properly paid under s. 183.0405.

SB566,391,4 (4) A person against which an action is commenced because the person is liable under sub. (1) may do any of the following:

SB566,391,6 (a) Implead any other person that is subject to liability under sub. (1) and seek to enforce a right of contribution from the person.

SB566,391,9 (b) Implead any person that is subject to liability under sub. (3) and seek to enforce a right of contribution from the person in the amount of the liability under sub. (3).

SB566,391,11 (5) An action under this section is barred unless commenced not later than 2 years after the distribution.

SB566,391,14 183.0407 Management of limited liability company. (1) A limited liability company is a member-managed limited liability company unless a written operating agreement provides any of the following or includes words of similar import:

SB566,391,15 (a) That the company is or will be “manager-managed."

SB566,391,16 (b) That the company is or will be “managed by managers."

SB566,391,17 (c) That management of the company is or will be “vested in managers."

SB566,391,19 (2) In a member-managed limited liability company, all of the following rules apply:

SB566,391,21 (a) Except as expressly provided in this chapter, the management and conduct of the company are vested in the members.

SB566,392,2 (b) Each member has rights in the management and conduct of the company's activities and affairs proportional to the value of the contributions made by each such member, as stated 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.

SB566,392,4 (c) A difference arising among members as to a matter not described in par. (d) may be decided by a majority of the members' transferable interests.

SB566,392,6 (d) Except as otherwise provided in this chapter, the affirmative vote or consent of all members is required to do any of the following:

SB566,392,7 1. Amend the articles of organization.

SB566,392,8 2. Issue a transferable interest in the limited liability company to any person.

SB566,392,10 3. Allow the limited liability company to accept any additional contribution from a member.

SB566,392,12 4. Allow a partial redemption of a transferable interest in the limited liability company.

SB566,392,13 5. Value the contributions of members under s. 183.0402 (2).

SB566,392,15 6. Approve a merger, interest exchange, conversion, or domestication under subch. X.

SB566,392,20 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.

SB566,392,22 (e) The operating agreement may be amended only with the consent of all members.

SB566,392,24 (3) In a manager-managed limited liability company, all of the following rules apply:

SB566,393,3 (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.

SB566,393,5 (b) Each manager has equal rights in the management and conduct of the company's activities and affairs.

SB566,393,7 (c) The affirmative vote or consent of all members is required to do any of the following:

SB566,393,10 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.

SB566,393,12 2. Approve a merger, interest exchange, conversion, or domestication under subch. X.