Chapter 183

subch. VIII of ch. 183 SUBCHAPTER VIII

ACTIONS BY MEMBERS

183.0801 183.0801 Direct action by member.

183.0801(1) (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.

183.0801(2) (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.

183.0801 History History: 2021 a. 258.

183.0802 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:

183.0802(1) (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.

183.0802(2) (2) A demand under sub. (1) would be futile.

183.0802 History History: 2021 a. 258.

183.0803 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:

183.0803(1) (1) The person was a member when the conduct giving rise to the action occurred.

183.0803(2) (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.

183.0803 History History: 2021 a. 258.

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

183.0804(1) (1) The date and content of plaintiff’s demand and the response to the demand by the managers or other members.

183.0804(2) (2) Why demand should be excused as futile.

183.0804 History History: 2021 a. 258.

183.0805 183.0805 Special litigation committee.

183.0805(1) (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:

183.0805(1)(a) (a) Enforcing a person’s right to information under s. 183.0410.

183.0805(1)(b) (b) Granting extraordinary relief in the form of a temporary restraining order or preliminary injunction.

183.0805(2) (2) A special litigation committee must be composed of one or more disinterested and independent individuals, who may be members.

183.0805(3) (3) 

183.0805(3)(a) (a) In a member-managed limited liability company, a special litigation committee may be appointed as follows:

183.0805(3)(a)1. 1. By the affirmative vote or consent of a majority of the transferable interests of the members not named as parties in the proceeding.

183.0805(3)(a)2. 2. If all members are named as parties in the proceeding, by a majority of the transferable interests of the members named as defendants.

183.0805(3)(b) (b) In a manager-managed limited liability company, a special litigation committee may be appointed as follows:

183.0805(3)(b)1. 1. By a majority of the managers not named as parties in the proceeding.

183.0805(3)(b)2. 2. If all managers are named as parties in the proceeding, by a majority of the managers named as defendants.

183.0805(4) (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:

183.0805(4)(a) (a) That the proceeding continue under the control of the plaintiff.

183.0805(4)(b) (b) That the proceeding continue under the control of the committee.

183.0805(4)(c) (c) That the proceeding be settled on terms approved by the committee.

183.0805(4)(d) (d) That the proceeding be dismissed.

183.0805(5) (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.

183.0805 History History: 2021 a. 258.

183.0806 183.0806 Proceeds and expenses.

183.0806(1) (1) 

183.0806(1)(a) (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.

183.0806(1)(b) (b) Except as otherwise provided in sub. (2), if the plaintiff receives any proceeds, the plaintiff shall remit them immediately to the company.

183.0806(2) (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.

183.0806 History History: 2021 a. 258.

subch. IX of ch. 183 SUBCHAPTER IX

FOREIGN LIMITED
LIABILITY COMPANIES

183.0901 183.0901 Governing law.

183.0901(1) (1) The governing law of a foreign limited liability company governs all of the following:

183.0901(1)(a) (a) The internal affairs of the company.

183.0901(1)(b) (b) The liability of a member as member and a manager as manager for a debt, obligation, or other liability of the company.

183.0901(2) (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.

183.0901(3) (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.

183.0901 History History: 2021 a. 258.

183.0902 183.0902 Registration to do business in this state.

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

183.0902(2) (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.

183.0902(3) (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.

183.0902(4) (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.

183.0902(5) (5) Section 183.0901 (1) and (2) applies even if a foreign limited liability company fails to register under this subchapter.

183.0902(6) (6) 

183.0902(6)(a) (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:

183.0902(6)(a)1. 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.

183.0902(6)(a)2. 2. Fifty percent of the amount owed under subd. 1. or $5,000, whichever is less.

183.0902(6)(b) (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.

183.0902 History History: 2021 a. 258.

183.0903 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:

183.0903(1) (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).

183.0903(2) (2) That the company is a foreign limited liability company.

183.0903(3) (3) The jurisdiction of the company’s governing law.

183.0903(4) (4) The street and mailing addresses of the company’s principal office and, if the company’s governing law requires the company to maintain an office in the jurisdiction of such governing law, the street and mailing addresses of the required office.

183.0903(5) (5) The address of the company’s registered office in this state and the name and e-mail address of its registered agent at that office.

183.0903 History History: 2021 a. 258.

183.0904 183.0904 Amendment or cancellation of foreign registration statement. A registered foreign limited liability company shall deliver to the department for filing an amendment to, or cancellation of, as appropriate, its foreign registration statement if there is a change in any of the following:

183.0904(1) (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).

183.0904(1m) (1m) The company’s status as a foreign limited liability company.

183.0904(2) (2) The jurisdiction of the company’s governing law.

183.0904(3) (3) An address required by s. 183.0903 (4).

183.0904(4) (4) The information required by s. 183.0903 (5), unless this information has previously been changed pursuant to s. 183.0116 or 183.0212.

183.0904 History History: 2021 a. 258.

183.0905 183.0905 Activities not constituting doing business.

183.0905(1) (1) Activities of a foreign limited liability company which do not constitute doing business in this state under this subchapter include all of the following:

183.0905(1)(a) (a) Maintaining, defending, mediating, arbitrating, or settling an action or proceeding.

183.0905(1)(b) (b) Carrying on any activity concerning its internal affairs, including holding meetings of its members or managers.

183.0905(1)(c) (c) Maintaining accounts in financial institutions.

183.0905(1)(d) (d) Maintaining offices or agencies for the transfer, exchange, and registration of securities of the company or maintaining trustees or depositaries with respect to those securities.

183.0905(1)(e) (e) Selling through independent contractors.

183.0905(1)(f) (f) Soliciting or obtaining orders by any means if the orders require acceptance outside this state before they become contracts.

183.0905(1)(g) (g) Creating or acquiring indebtedness, mortgages, or security interests in property.

183.0905(1)(h) (h) Securing or collecting debts or enforcing mortgages or security interests in property securing the debts and holding, protecting, or maintaining property.

183.0905(1)(i) (i) Conducting an isolated transaction that is not in the course of similar transactions.