SB566: Bill Text

SB566,345,4 (14) “Organizer" means a person that acts under s. 183.0201 to form a limited liability company.

SB566,345,10 (15) “Person" means an individual, business corporation, nonprofit or nonstock corporation, partnership, limited partnership, limited liability company, general cooperative association, limited cooperative association, unincorporated association, statutory trust, business trust, common-law business trust, estate, trust, association, joint venture, public corporation, government or governmental subdivision, agency, or instrumentality, or any other legal or commercial entity.

SB566,345,13 (16) “Principal office" means the principal executive office of a limited liability company or foreign limited liability company, whether or not the office is located in this state.

SB566,345,15 (17) “Property" means all property, whether real, personal, or mixed or tangible or intangible, or any right or interest therein.

SB566,345,18 (18) “Record," used as a noun, means information that is inscribed on a tangible medium or that is stored in an electronic or other medium and is retrievable in perceivable form.

SB566,345,21 (19) “Registered agent" means an agent of a limited liability company or foreign limited liability company that is authorized to receive service of any process, notice, or demand required or permitted by law to be served on the company.

SB566,345,24 (20) “Registered foreign limited liability company" means a foreign limited liability company that is registered to do business in this state pursuant to a statement of registration filed by the department.

SB566,346,2 (21) “Sign" means, with present intent to authenticate or adopt a record, any of the following:

SB566,346,3 (a) To execute or adopt a tangible symbol.

SB566,346,5 (b) To attach to or logically associate with the record an electronic symbol, sound, or process.

SB566,346,8 (22) “State" means a state of the United States, the District of Columbia, Puerto Rico, the U.S. Virgin Islands, or any territory or insular possession subject to the jurisdiction of the United States.

SB566,346,9 (23) “Transfer" includes all of the following:

SB566,346,10 (a) An assignment.

SB566,346,11 (b) A conveyance.

SB566,346,12 (c) A sale.

SB566,346,13 (d) A lease.

SB566,346,14 (e) An encumbrance, including a mortgage or security interest.

SB566,346,15 (f) A gift.

SB566,346,16 (g) A transfer by operation of law.

SB566,346,20 (24) “Transferable interest" means the right, as initially owned by a person in the person's capacity as a member, to receive distributions from a limited liability company, whether or not the person remains a member or continues to own any part of the right. The term applies to any fraction of the interest, by whomever owned.

SB566,346,23 (25) “Transferee" means a person to which all or part of a transferable interest has been transferred, whether or not the transferor is a member. The term includes a person that owns a transferable interest under s. 183.0603 (1) (c).

SB566,346,25 (26) “Written operating agreement" means an operating agreement, or part thereof, that is set forth in a record.

SB566,347,2 183.0103 Knowledge; notice. (1) A person knows a fact if any of the following applies:

SB566,347,3 (a) The person has actual knowledge of the fact.

SB566,347,4 (b) The person is deemed to know the fact under law other than this chapter.

SB566,347,5 (2) A person has notice of a fact if any of the following applies:

SB566,347,7 (a) The person has reason to know the fact from all the facts known to the person at the time in question.

SB566,347,8 (b) The person is deemed to have notice of the fact under sub. (2m) or (4) (b).

SB566,347,12 (2m) A statement of authority under s. 183.0302 or statement of denial under s. 183.0303 on file in the office of the department is notice of the matters identified in such statements. Except as otherwise provided in sub. (4), such statements are not notice of any other fact.

SB566,347,15 (3) Subject to s. 183.0210 (6), a person notifies another person of a fact by taking steps reasonably required to inform the other person in ordinary course, whether or not those steps cause the other person to know the fact.

SB566,347,17 (4) (a) A person not a member is deemed to know of a limitation on authority to transfer real property as provided in s. 183.0302 (7).

SB566,347,19 (b) A person not a member is deemed to have notice of all of the following as follows:

SB566,347,21 1. A limited liability company's dissolution 90 days after a statement of dissolution under s. 183.0702 (2) (b) 1. becomes effective.

SB566,347,23 2. A limited liability company's termination 90 days after a statement of termination under s. 183.0702 (2) (b) 6. becomes effective.

SB566,348,3 3. A limited liability company's participation in a merger, interest exchange, conversion, or domestication 90 days after the articles of merger, interest exchange, conversion, or domestication under subch. X become effective.

SB566,348,6 (5) This subsection applies to notice that is required under this chapter and that is made subject to this subsection by express reference to this subsection. Written notice is effective at the earliest of the following:

SB566,348,7 (a) When received.

SB566,348,9 (b) Five days after its deposit in the U.S. mail, if mailed postpaid and correctly addressed.

SB566,348,12 (c) On the date shown on the return receipt, if sent by registered or certified mail, return receipt requested, and the receipt is signed by or on behalf of the addressee.

SB566,348,14 (d) For notices from the department, upon successful transmission by e-mail as provided in this chapter.

SB566,348,16 183.0104 Governing law. (1) The law of this state governs all of the following:

SB566,348,17 (a) The internal affairs of a limited liability company.

SB566,348,19 (b) The liability of a member as member and a manager as manager for a debt, obligation, or other liability of a limited liability company.

SB566,348,23 (2m) Except as otherwise provided in ss. 183.0404 (1), 183.0407 (2) (b), and 183.0707 (2) (b), the fact that one or more of the members of a limited liability company are, or are not, subject to tax on the income of the limited liability company shall, of itself, not alter the governing law applicable under sub. (1).

SB566,349,2 (3m) The operating agreement may require, consistent with applicable jurisdictional requirements, that any or all claims involving the governing law applicable under sub. (1) shall be brought solely and exclusively in the courts of this state.

SB566,349,5 183.0105 Operating agreement; scope, function, and limitations. (1) Except as otherwise provided in subs. (3) and (4), the operating agreement governs all of the following:

SB566,349,7 (a) Relations among the members as members and between the members and the limited liability company.

SB566,349,9 (b) The rights and duties under this chapter of a person in the capacity of manager.

SB566,349,11 (c) The activities and affairs of the company and the conduct of those activities and affairs.

SB566,349,12 (d) The means and conditions for amending the operating agreement.

SB566,349,14 (e) Mergers, interest exchanges, conversions, and domestications under subch. X.

SB566,349,16 (2) To the extent the operating agreement does not provide for a matter described in sub. (1), this chapter governs the matter.

SB566,349,17 (3) An operating agreement may not do any of the following:

SB566,349,18 (a) Vary the law applicable under s. 183.0104 or 183.0110.

SB566,349,19 (am) Vary the provisions of this section.

SB566,349,21 (b) Vary a limited liability company's capacity under s. 183.0109 to sue and be sued in its own name.

SB566,349,23 (c) Vary any requirement, procedure, or other provision of this chapter pertaining to any of the following:

SB566,349,25 1. Registered agents, except to require some form of vote or consent of the members notwithstanding s. 183.0116 (2).

SB566,350,2 2. The department, including provisions pertaining to records authorized or required to be delivered to the department for filing under this chapter.

SB566,350,3 (d) Vary the provisions of s. 183.0204.

SB566,350,5 (e) Alter or eliminate, or restrict the remedies for breach of, the duty of loyalty or the duty of care, except as otherwise provided in sub. (4).

SB566,350,9 (f) Eliminate, or restrict remedies for the breach of, the contractual obligation of good faith and fair dealing under s. 183.0409 (4), but a written operating agreement may prescribe the standards, if not manifestly unreasonable, by which the performance of the obligation is to be measured.

SB566,350,11 (g) Relieve or exonerate a person from liability for conduct that constitutes any of the following:

SB566,350,13 1. A willful failure to deal fairly with the company or its members in connection with a matter in which the person has a material conflict of interest.

SB566,350,16 2. A violation of the criminal law, unless the person had reasonable cause to believe that the person's conduct was lawful or no reasonable cause to believe that the person's conduct was unlawful.

SB566,350,17 3. A transaction from which the person derived an improper personal profit.

SB566,350,18 4. Willful misconduct.

SB566,350,24 (h) Vary the information required under s. 183.01075 or unreasonably restrict the duties and rights under s. 183.0410, but the operating agreement may impose reasonable restrictions on the availability and use of information obtained under that section and may define appropriate remedies, including liquidated damages and security for liquidated damages, for a breach of any reasonable restriction on use.

SB566,350,25 (i) Vary the causes of dissolution specified in s. 183.0701 (1) (d).

SB566,351,2 (j) Vary the requirement to wind up the company's activities and affairs as specified in s. 183.0702 (1), (2) (a), and (5).

SB566,351,4 (k) Unreasonably restrict the right of a member to maintain an action under subch. VIII.

SB566,351,8 (m) Vary the right of a member to approve a merger, interest exchange, conversion, or domestication under s. 183.1023 (1), 183.1033 (1), 183.1043 (1), or 183.1053 (1), except by provision in a written operating agreement that does not impair the rights of a member under s. 183.1061.

SB566,351,11 (n) Vary the required contents of a plan of merger under s. 183.1022 (1), plan of interest exchange under s. 183.1032 (1), plan of conversion under s. 183.1042 (1), or plan of domestication under s. 183.1052 (1).

SB566,351,13 (o) Except as otherwise provided in ss. 183.0106 and 183.0107 (2), restrict the rights under this chapter of a person other than a member or manager.

SB566,351,15 (4) Subject to sub. (3) (g), without limiting other terms that may be included in an operating agreement, the following rules apply:

SB566,351,16 (a) The operating agreement may do any of the following:

SB566,351,19 1. Specify the method by which a specific act or transaction that would otherwise violate the duty of loyalty may be authorized or ratified by one or more disinterested and independent persons after full disclosure of all material facts.

SB566,351,21 2. Alter the prohibition in s. 183.0405 (1) (b) so that the prohibition requires only that the company's total assets not be less than the sum of its total liabilities.

SB566,352,2 (b) To the extent a written operating agreement of a member-managed limited liability company expressly relieves a member of a responsibility that the member otherwise would have under this chapter and imposes the responsibility on one or more other members, the written operating agreement also may eliminate or limit any fiduciary duty of the member relieved of the responsibility which would have pertained to the responsibility.

SB566,352,4 (c) Except as provided in sub. (3) (g), a written operating agreement may do any of the following:

SB566,352,6 1. Alter or eliminate the aspects of, or restrict remedies with respect to, the duty of loyalty stated in s. 183.0409 (2) and (9).

SB566,352,8 2. Identify specific types or categories of activities that do not violate the duty of loyalty or the contractual obligation of good faith and fair dealing.

SB566,352,10 3. Alter the duty of care, but may not authorize conduct described in sub. (3) (g).

SB566,352,11 4. Alter or eliminate any other fiduciary duty.

SB566,352,19 (5) The court shall decide as a matter of law whether a term of an operating agreement is manifestly unreasonable under sub. (3) (f). The court shall make its determination as of the time the challenged term became part of the operating agreement and by considering only circumstances existing at that time. The court may invalidate the term only if, in light of the purposes, activities, and affairs of the limited liability company, it is readily apparent that the objective of the term is unreasonable or that the term is an unreasonable means to achieve the term's objective.

SB566,352,23 183.0106 Operating agreement; effect on limited liability company and person becoming member; preformation agreement. (1) A limited liability company is bound by and may enforce the operating agreement, whether or not the company has itself manifested assent to the operating agreement.

SB566,352,25 (2) A person that becomes a member is deemed to assent to the operating agreement.

SB566,353,6 (3) Two or more persons intending to become the initial members of a limited liability company may make an agreement providing that upon the formation of the company the agreement will become the operating agreement. One person intending to become the initial member of a limited liability company may assent to terms providing that upon the formation of the company the terms will become the operating agreement.

SB566,353,12 183.0107 Operating agreement; effect on 3rd parties and relationship to records effective on behalf of limited liability company. (1) A written operating agreement may specify that its amendment requires the approval of a person that is not a party to the agreement or the satisfaction of a condition. An amendment is ineffective if its adoption does not include the required approval or satisfy the specified condition.