SB566: Bill Text

SB566,396,9 3. The appropriation of a limited liability company opportunity.

SB566,396,12 (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.

SB566,396,14 (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.

SB566,396,18 (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).

SB566,396,21 (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.

SB566,396,24 (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.

SB566,397,5 (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.

SB566,397,8 (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.

SB566,397,12 (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.

SB566,397,13 (9) In a manager-managed limited liability company, the following rules apply:

SB566,397,15 (a) Subsections (1), (2), (3), and (7) apply to the manager or managers and not the members.

SB566,397,16 (b) The duty stated under sub. (2) (c) continues until winding up is completed.

SB566,397,17 (c) Subsection (4) applies to managers and members.

SB566,397,18 (d) Subsection (5) applies only to members.

SB566,397,19 (e) The power to ratify under sub. (6) applies only to the members.

SB566,397,21 (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.

SB566,397,24 183.0410 Rights to information of member, manager, and person dissociated as member. (1) In a member-managed limited liability company, the following rules apply:

SB566,398,5 (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.

SB566,398,6 (b) The company shall furnish to each member all of the following:

SB566,398,12 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.

SB566,398,16 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.

SB566,398,18 (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).

SB566,398,19 (2) In a manager-managed limited liability company, the following rules apply:

SB566,398,21 (a) The informational rights stated in sub. (1) and the duty stated in sub. (1) (c) apply to the managers and not the members.

SB566,398,25 (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:

SB566,399,2 1. The member seeks the information for a purpose material to the member's interest as a member.

SB566,399,5 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.

SB566,399,6 3. The information sought is directly connected to the member's purpose.

SB566,399,9 (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:

SB566,399,11 1. What information the company will provide in response to the demand and when and where the company will provide the information.

SB566,399,13 2. The company's reasons for declining, if the company declines to provide any demanded information.

SB566,399,18 (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.

SB566,399,22 (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:

SB566,399,24 (a) The information pertains to the period during which the person was a member.

SB566,399,25 (b) The person seeks the information in good faith.

SB566,400,1 (c) The person satisfies the requirements imposed on a member by sub. (2) (b).

SB566,400,3 (4) A limited liability company shall respond to a demand made pursuant to sub. (3) in the manner provided in sub. (2) (c).

SB566,400,6 (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.

SB566,400,11 (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.

SB566,400,13 (7) Subject to s. 183.0504, the rights under this section do not extend to a person as transferee.

SB566,400,20 (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.

SB566,400,21 subchapter V

SB566,400,24 TRANSFERABLE INTERESTS AND RIGHTS OF TRANSFEREES AND CREDITORS

SB566,401,2 183.0501 Nature of transferable interest. A transferable interest is personal property.

SB566,401,4 183.0502 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:

SB566,401,5 (a) It is permissible.

SB566,401,7 (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.

SB566,401,9 (c) Subject to s. 183.0504, it does not entitle the transferee to any of the following:

SB566,401,11 1. Participate in the management or conduct of the company's activities and affairs.

SB566,401,13 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.

SB566,401,15 (2) A transferee has the right to receive, in accordance with the transfer, distributions to which the transferor would otherwise be entitled.

SB566,401,18 (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.

SB566,401,22 (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.

SB566,401,24 (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.

SB566,402,3 (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.

SB566,402,8 (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.

SB566,402,12 (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.

SB566,402,19 183.0503 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.

SB566,402,21 (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:

SB566,402,23 (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.

SB566,402,24 (b) Make all other orders necessary to give effect to the charging order.

SB566,403,5 (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.

SB566,403,9 (4) At any time before foreclosure under sub. (3), the member or transferee whose transferable interest is subject to a charging order under sub. (1) may extinguish the charging order by satisfying the judgment and filing a certified copy of the satisfaction with the court that issued the charging order.

SB566,403,13 (5) At any time before foreclosure under sub. (3), a limited liability company or one or more members whose transferable interests are not subject to the charging order may pay to the judgment creditor the full amount due under the judgment and thereby succeed to the rights of the judgment creditor, including the charging order.

SB566,403,15 (6) If a court orders foreclosure of a charging order lien against the sole member of a limited liability company, all of the following apply:

SB566,403,16 (a) The court shall confirm the sale.

SB566,403,18 (b) The purchaser at the sale obtains the member's entire interest, not only the member's transferable interest.

SB566,403,19 (c) The purchaser thereby becomes a member.

SB566,403,21 (d) The person whose interest was subject to the foreclosed charging order is dissociated as a member.

SB566,403,23 (7) This chapter does not deprive any member or transferee of the benefit of any exemption law applicable to the transferable interest of the member or transferee.

SB566,404,3 (8) This section provides the exclusive remedy by which a person seeking to enforce a judgment against a member or transferee may, in the capacity of judgment creditor, satisfy the judgment from the judgment debtor's transferable interest.

SB566,404,6 183.0504 Power of legal representative of deceased member. If a member dies, the deceased member's legal representative may exercise all of the following rights:

SB566,404,7 (1) The rights of a transferee provided in s. 183.0502 (3).

SB566,404,9 (2) For the purposes of settling the estate, the rights the deceased member had under s. 183.0410.

SB566,404,10 subchapter VI

SB566,404,11 DISSOCIATION

SB566,404,14 183.0601 Power to dissociate as member; wrongful dissociation. (1) A person has the power to dissociate as a member at any time, rightfully or wrongfully, by withdrawing as a member by express will under s. 183.0602 (1).

SB566,404,16 (2) A person's dissociation as a member is wrongful only if any of the following applies:

SB566,404,18 (a) The dissociation is in breach of an express provision of a written operating agreement.

SB566,404,20 (b) The dissociation occurs before completion of the winding up of the limited liability company and any of the following applies:

SB566,404,21 1. The person is expelled as a member by judicial order under s. 183.0602 (6).

SB566,404,22 2. The person is dissociated under s. 183.0602 (8).

SB566,405,2 (3) A person that wrongfully dissociates as a member is liable to the limited liability company and, subject to s. 183.0801, to the other members for damages caused by the dissociation. The liability is in addition to any debt, obligation, or other liability of the member to the company or the other members.

SB566,405,4 183.0602 Events causing dissociation. A person is dissociated as a member from a limited liability company when any of the following applies:

SB566,405,7 (1) The limited liability company knows or has notice of the person's express will to withdraw as a member, but, if the person has specified a withdrawal date later than the date the company knew or had notice, on that later date.

SB566,405,9 (2) An event stated in the operating agreement as causing the person's dissociation occurs.

SB566,405,11 (3) The person's entire interest is transferred in a foreclosure sale under s. 183.0503 (6).

SB566,405,12 (4) The person is expelled as a member pursuant to the operating agreement.

SB566,405,14 (5) The person is expelled as a member by the affirmative vote or consent of all the other members if any of the following applies: