House Bill hb0787

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    Florida House of Representatives - 2002                 HB 787

        By Representative Rubio






  1                      A bill to be entitled

  2         An act relating to limited liability companies;

  3         amending s. 608.401, F.S.; conforming a

  4         cross-reference to changes made by the act;

  5         amending s. 608.402, F.S.; revising

  6         definitions; amending s. 608.404, F.S.;

  7         authorizing a limited liability company to

  8         select managing members; amending s. 608.407,

  9         F.S.; revising requirements of the articles of

10         organization for a company managed by one or

11         more managers; amending s. 608.408, F.S.;

12         providing requirements for executing articles

13         of organization; amending s. 608.4081, F.S.;

14         providing for filing a document with the

15         Department of State; amending s. 608.409, F.S.;

16         prohibiting the transaction of business or

17         incurrence of debt until the effective date of

18         the company's existence; amending s. 608.4101,

19         F.S.; providing additional requirements with

20         respect to recordkeeping; amending s. 608.411,

21         F.S.; providing for amendments to or

22         restatements of articles of organization;

23         amending s. 608.422, F.S.; providing

24         requirements for a member-managed company;

25         providing for appointing a proxy; amending s.

26         608.4225, F.S.; providing standards for

27         managers and managing members; amending s.

28         608.4226, F.S.; providing for validity of

29         contracts and other transactions

30         notwithstanding certain conflicts of interest;

31         amending s. 608.4227, F.S.; providing for

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  1         liability of managing members; amending s.

  2         608.4228, F.S.; limiting the liability of

  3         managers and managing members; amending s.

  4         608.4229, F.S.; providing for indemnification

  5         of members of a limited liability company;

  6         amending s. 608.423, F.S.; providing

  7         requirements for operating agreements by

  8         members of a limited liability company;

  9         amending s. 608.4231, F.S.; providing for

10         voting by managing members; authorizing a vote

11         by proxy; amending s. 608.4235, F.S.;

12         authorizing a managing member to act as an

13         agent of the limited liability company;

14         amending s. 608.4238, F.S.; providing liability

15         for unauthorized actions; amending s. 608.425,

16         F.S.; providing for validity of certain

17         instruments and documents; amending s. 608.428,

18         F.S.; prohibiting certain distributions from a

19         limited liability company; amending s. 608.432,

20         F.S.; providing for assignment of a member's

21         interest in a limited liability company;

22         amending s. 608.438, F.S.; requiring that a

23         plan of merger specify the managing members;

24         amending s. 608.441, F.S.; providing for

25         dissolution of a limited liability company;

26         amending s. 608.444, F.S.; providing for

27         distribution of assets upon dissolution;

28         amending ss. 608.445, 608.446, F.S.; providing

29         requirements for articles of dissolution and

30         for filing the articles; amending s. 608.449,

31         F.S.; providing grounds for judicial

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  1         dissolution; amending s. 608.463, F.S.;

  2         providing for service of process; amending s.

  3         608.504, F.S.; providing for an amended

  4         certificate of authority; amending s. 608.507,

  5         F.S.; revising requirements for the registered

  6         office of a domestic company; creating s.

  7         608.704, F.S.; specifying the Legislature's

  8         power to amend or repeal ch. 608, F.S.;

  9         creating s. 608.705, F.S.; providing for the

10         effect of the repeal of a prior act; providing

11         an effective date.

12

13  Be It Enacted by the Legislature of the State of Florida:

14

15         Section 1.  Section 608.401, Florida Statutes, is

16  amended to read:

17         608.401  Short title.--Sections 608.401-608.705

18  608.401-608.703 may be cited as the "Florida Limited Liability

19  Company Act."

20         Section 2.  Subsections (1), (2), (3), (14), (19),

21  (21), and (24) of section 608.402, Florida Statutes, are

22  amended to read:

23         608.402  Definitions.--As used in this chapter:

24         (1)  "Articles of merger" means initial, amended, and

25  restated articles of merger of a limited liability company

26  delivered to the Department of State in accordance with s.

27  608.4382. In the case of a foreign limited liability company,

28  the term includes all records serving a similar function

29  required to be filed with the Department of State or other

30  official having custody of the company records of the foreign

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  1  limited liability company in the state or country under whose

  2  law it is organized.

  3         (2)  "Articles of organization" means initial, amended,

  4  and restated articles of organization of a limited liability

  5  company, including initial, amended, or restated articles of

  6  merger, if any. In the case of a foreign limited liability

  7  company, the term includes all records serving a similar

  8  function required to be filed with the Department of State or

  9  other official having custody of the company records of the

10  foreign limited liability company in the state or country

11  under whose law it is organized.

12         (3)  "Authorized representative" means one or more

13  persons acting to form a limited liability company by

14  executing and filing the articles of organization of such

15  limited liability company in accordance with this chapter and

16  authorized by a member identified in the articles of

17  organization or operating agreement of such limited liability

18  company, which authorized representative may, but need not be,

19  a member of the limited liability company that the authorized

20  representative forms.

21         (14)  "Insolvent" means the inability of a limited

22  liability company to pay the limited liability company's debts

23  as they become due in the ordinary course of business or that

24  the fair value of the limited liability company's total assets

25  would be less than the sum of its total liabilities plus the

26  amount that would be needed, if the limited liability company

27  were to be dissolved and terminated at the time of the

28  distribution, to satisfy the preferential distribution rights

29  of the limited liability company's members accrued through

30  such dissolution and termination.

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  1         (19)  "Manager-managed company" means a limited

  2  liability company that which is designated to be managed by

  3  one or more managers in its articles of organization or

  4  operating agreement.

  5         (21)  "Member" means any person who has been admitted

  6  to a limited liability company as a member in accordance with

  7  this chapter as provided in s. 608.4232 and has an economic

  8  interest in a limited liability company which may, but need

  9  not, be represented by a capital account or, in the case of a

10  foreign limited liability company, has been admitted to a

11  limited liability company as a member in accordance with the

12  laws of the state or foreign country or other foreign

13  jurisdiction under which the foreign limited liability company

14  is organized.

15         (24)  "Operating agreement" means, subject to s.

16  608.423, written or oral provisions that which are adopted for

17  the management and regulation of the affairs of the limited

18  liability company and that which set forth the relationships

19  of the members, managers, or managing members and the limited

20  liability company.  The term includes amendments to the

21  operating agreement, subject to s. 608.423.

22         Section 3.  Subsection (8) of section 608.404, Florida

23  Statutes, is amended to read:

24         608.404  Powers.--Unless its articles of organization

25  or operating agreement provide otherwise, each limited

26  liability company organized and existing under this chapter

27  shall have the same powers as an individual to do all things

28  necessary to carry out its business and affairs, including,

29  without limitation, the power to:

30         (8)  Select managers or managing members and appoint

31  officers, directors, employees, and agents of the limited

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  1  liability company, define their duties, fix their

  2  compensation, and lend them money and credit.

  3         Section 4.  Section 608.407, Florida Statutes, is

  4  amended to read:

  5         608.407  Articles of organization.--

  6         (1)  In order to form a limited liability company,

  7  articles of organization of a limited liability company shall

  8  be executed and filed with the Department of State by one or

  9  more members or authorized representatives of the limited

10  liability company.  The articles of organization shall set

11  forth:

12         (a)  The name of the limited liability company.

13         (b)  The mailing address and the street address of the

14  principal office of the limited liability company.

15         (c)  The name and street address of its initial

16  registered agent for service of process in the state. The

17  articles of organization shall include or be accompanied by

18  the written statement required by s. 608.415.

19         (d)  If the limited liability company is to be managed

20  by one or more managers, a statement that the company is to be

21  a manager-managed company.

22         (d)(e)  Any other matters that the members elect to

23  include in the articles of organization.

24         (2)  A limited liability company is formed at the time

25  described in s. 608.409 if the person filing the articles of

26  organization has substantially complied with the requirements

27  of this section.

28         (3)  The articles of organization shall be executed by

29  at least one member or the authorized representative of a

30  member.

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  1         (4)  If the limited liability company is to be managed

  2  by one or more managers, the articles of organization may, but

  3  need not, include a statement that the limited liability

  4  company is to be a manager-managed company.

  5         (5)  The fact that articles of organization are on file

  6  with the Department of State is notice that the entity formed

  7  in connection with the filing of the articles of organization

  8  is a limited liability company formed under the laws of this

  9  state and is notice of all other facts set forth in the

10  articles of organization.

11         Section 5.  Section 608.408, Florida Statutes, is

12  amended to read:

13         608.408  Execution of articles, certificate, or

14  statement.--

15         (1)  Any articles, A certificate, or statement required

16  by this chapter to be filed with the Department of State must

17  be executed in the following manner:

18         (a)  If it is the articles of organization, a

19  certificate of conversion, or a statement of change of

20  registered agent or registered office, it must be signed by a

21  member or by the authorized representative of a member, and by

22  the new registered agent, if applicable; and

23         (b)  If it is the articles a certificate of dissolution

24  or revocation of dissolution, it must be signed by members

25  having the same percentage of membership interests necessary

26  to approve the dissolution or revocation of dissolution.

27         (2)  Any person may sign a certificate through an

28  attorney in fact, but a power of attorney to sign a

29  certificate or statement authorizing the admission of a member

30  must specifically describe the admission.

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  1         (3)  The execution of a certificate constitutes an

  2  affirmation by the person executing the certificate, under the

  3  penalties of perjury, that the facts stated therein are true.

  4         (4)  If the articles of organization contain or any

  5  other document authorized or required to be filed under this

  6  chapter contains a false statement, one who suffers loss by

  7  reliance on the statement may recover damages for the loss

  8  from a person who signed the record or caused another to sign

  9  it on the person's behalf and knew the statement to be false

10  at the time the record was signed.

11         Section 6.  Paragraphs (b) and (c) of subsection (1) of

12  section 608.4081, Florida Statutes, are amended to read:

13         608.4081  Filing requirements.--

14         (1)  To be filed by the Department of State, a document

15  must satisfy the following requirements, as supplemented or

16  modified by any other section of this chapter:

17         (b)  The document must be executed as required by s.

18  608.408 s. 608.407.

19         (c)  The document must contain any information required

20  by this chapter and may contain other information the limited

21  liability company elects to include.

22         Section 7.  Subsections (2) and (4) of section 608.409,

23  Florida Statutes, are amended to read:

24         608.409  Effect of filing and issuance of time and date

25  endorsement on the articles of organization.--

26         (2)  The articles of organization may specify a delayed

27  effective time and date of commencement of the limited

28  liability company's existence, and if so specified, the

29  articles of organization shall become effective, and the

30  limited liability company's existence shall commence, at the

31  time and date specified. If a delayed effective date, but no

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  1  time, is specified, the articles of organization shall become

  2  effective, and the limited liability company's existence shall

  3  commence, at the close of business on the delayed effective

  4  date. Unless otherwise permitted by this chapter, a delayed

  5  effective date for a document may not be later than the 90th

  6  day after the date on which the document is filed.

  7         (4)  A limited liability company shall not transact

  8  business or incur indebtedness, except that which is

  9  incidental to its organization or to obtaining subscriptions

10  for or payment of contributions, until the effective date and

11  time of the commencement of the limited liability company's

12  existence articles of organization have been filed by the

13  Department of State.

14         Section 8.  Paragraphs (a) and (b) of subsection (1)

15  and subsections (2) and (3) of section 608.4101, Florida

16  Statutes, are amended to read:

17         608.4101  Records to be kept; right to information.--

18         (1)  Each limited liability company shall keep at its

19  principal office the following records:

20         (a)  A current list of the full names and last known

21  business, residence, or mailing addresses of all members, and

22  managers, and managing members.

23         (b)  A copy of the articles of organization, and all

24  certificates of conversion, and any other documents filed with

25  the Department of State concerning the limited liability

26  company, together with executed copies of any powers of

27  attorney pursuant to which any articles of organization or

28  certificates were executed.

29         (2)  A limited liability company shall provide members

30  and their agents and attorneys access to its records at the

31  limited liability company's principal office or other

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  1  reasonable locations specified in the operating agreement. The

  2  limited liability company shall provide former members and

  3  their agents and attorneys access for proper purposes to

  4  records pertaining to the period during which they were

  5  members. The right of access provides the opportunity to

  6  inspect and copy records during ordinary business hours. The

  7  limited liability company may impose a reasonable charge,

  8  limited to the costs of labor and material, for copies of

  9  records furnished.

10         (3)  A limited liability company shall furnish to a

11  member, and to the legal representative of a deceased member

12  or member under legal disability:

13         (a)  Without demand, information concerning the limited

14  liability company's business or affairs reasonably required

15  for the proper exercise of the member's rights and performance

16  of the member's duties under the operating agreement or this

17  chapter; and

18         (b)  On demand, other information concerning the

19  limited liability company's business or affairs, except to the

20  extent the demand or the information demanded is unreasonable

21  or otherwise improper under the circumstances.

22         Section 9.  Subsections (4) and (6) of section 608.411,

23  Florida Statutes, are amended to read:

24         608.411  Amendments to or restatements of articles of

25  organization.--

26         (4)  If the restated articles of organization merely

27  restate and integrate but do not further amend the

28  then-effective articles of organization, the limited liability

29  company shall title the filing "Restated Articles of

30  Organization," together with such other words as the limited

31  liability company deems appropriate.  If the restated articles

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  1  restate and integrate and also further amend in any respect

  2  the then-effective articles of organization, the limited

  3  liability company shall title the filing "Amended and Restated

  4  Articles of Organization," together with such other words as

  5  the limited liability company deems appropriate. In each case

  6  described in this subsection, the document shall be executed

  7  as provided in this chapter for articles of organization and

  8  filed as provided by this chapter with the Department of

  9  State.

10         (6)  Upon the filing of the restated articles of

11  organization with the Department of State, or upon any future

12  effective date or time provided in restated articles of

13  organization, the articles of organization existing prior to

14  such filing shall be superseded and the restated articles of

15  organization, including any further amendment or changes made

16  thereby, shall become the limited liability company's articles

17  of organization. The original effective date of the limited

18  liability company's formation shall remain unchanged.

19         Section 10.  Section 608.422, Florida Statutes, is

20  amended to read:

21         608.422  Management of the limited liability company.--

22         (1)  Unless otherwise provided in its articles of

23  organization or the operating agreement, the limited liability

24  company shall be a member-managed company.

25         (2)  In a member-managed company, unless otherwise

26  provided in its articles of organization or operating

27  agreement:

28         (a)  Unless otherwise provided in the articles of

29  organization or operating agreement, Management shall be

30  vested in its members or elected managing members in

31  proportion to the then-current percentage or other interest of

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  1  members in the profits of the limited liability company owned

  2  by all of the members or elected managing members.

  3         (b)  Except as otherwise provided in subsection (3) or

  4  in this chapter, the decision of a majority-in-interest of the

  5  members or elected managing members shall be controlling.

  6         (3)  If the articles of organization or the operating

  7  agreement provide for the management of the limited liability

  8  company by a manager or managers, the management of the

  9  limited liability company shall be vested in a manager or

10  managers and the limited liability company shall be a

11  manager-managed company.

12         (4)  In a manager-managed company, unless otherwise

13  provided in its articles of organization or operating

14  agreement:

15         (a)  Each manager has equal rights in the management

16  and conduct of the limited liability company's business.

17         (b)  Except as otherwise provided in subsection (3) or

18  in this chapter, any matter relating to the business of the

19  limited liability company may be exclusively decided by the

20  manager or, if there is more than one manager, by a majority

21  of the managers.

22         (c)  A manager:

23         1.  Must be designated, appointed, elected, removed, or

24  replaced by a vote, approval, or consent of a

25  majority-in-interest of the members; and

26         2.  Holds office until a successor has been elected and

27  qualified, unless the manager sooner resigns or is removed.

28         (5)  Action requiring the consent of members or

29  managers under this chapter may be taken without a meeting,

30  subject to the limitations of s. 608.4231.

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  1         (6)  Unless otherwise provided in the articles of

  2  organization or operating agreement, a member, managing

  3  member, or manager may appoint a proxy to vote or otherwise

  4  act for the member, managing member, or manager by signing an

  5  appointment instrument, either personally or by the member's,

  6  managing member's, or manager's attorney-in-fact.

  7         (7)  Unless otherwise provided in the articles of

  8  organization or operating agreement, a member, managing

  9  member, or The manager or managers may also hold the offices

10  and have such other responsibilities accorded to them by the

11  members and set out in the articles of organization or the

12  operating agreement of the limited liability company.

13         Section 11.  Subsection (1) of section 608.4225,

14  Florida Statutes, is amended to read:

15         608.4225  General standards for managers and managing

16  members.--

17         (1)  Subject to ss. 608.4226 and 608.423, each manager

18  and managing member shall owe a duty of loyalty and a duty of

19  care to the limited liability company and all of the other

20  members of the limited liability company.

21         (a)  The duty of loyalty includes, without limitation:

22         1.  Accounting to the limited liability company and

23  holding as trustee for the limited liability company any

24  property, profit, or benefit derived by such manager or

25  managing member in the conduct or winding up of the limited

26  liability company business or derived from a use by such

27  manager or managing member of limited liability company

28  property, including the appropriation of a limited liability

29  company opportunity.

30         2.  Refraining from dealing with the limited liability

31  company in the conduct or winding up of the limited liability

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  1  company business as or on behalf of a party having an interest

  2  adverse to the limited liability company.

  3         3.  Refraining from competing with the limited

  4  liability company in the conduct of the limited liability

  5  company business before the dissolution of the limited

  6  liability company.

  7         (b)  The duty of care is limited to refraining from

  8  engaging in grossly negligent or reckless conduct, intentional

  9  misconduct, or a knowing violation of law.

10         (c)  Each manager and managing member shall discharge

11  the duties to the limited liability company and its other

12  members under this chapter or under the articles of

13  organization or operating agreement and exercise any rights

14  consistent with the obligation of good faith and fair dealing.

15         (d)  A manager or managing member does not violate a

16  duty or obligation under this chapter or under the articles of

17  organization or operating agreement merely because the

18  manager's or managing member's conduct furthers such manager's

19  or managing member's own interest.

20         (e)  A manager or managing member may lend money to and

21  transact other business with the limited liability company. As

22  to each loan or transaction, the rights and obligations of the

23  manager or managing member are the same as those of a person

24  who is not a member, subject to other applicable law.

25         (f)  This section applies to a person winding up the

26  limited liability company business as the personal or other

27  legal representative of the last surviving member as if such

28  person were a manager or managing member.

29         Section 12.  Subsections (1) and (3) of section

30  608.4226, Florida Statutes, are amended to read:

31         608.4226  Conflicts of interest.--

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  1         (1)  No contract or other transaction between a limited

  2  liability company and one or more of its members, managers, or

  3  managing members or any other limited liability company,

  4  corporation, firm, association, or entity in which one or more

  5  of its members, managers, or managing members are managers,

  6  managing members, directors, or officers or are financially

  7  interested shall be either void or voidable because of such

  8  relationship or interest, because such members, managers, or

  9  managing members are present at the meeting of the members,

10  managers, or managing members or a committee thereof which

11  authorizes, approves, or ratifies such contract or

12  transaction, or because their votes are counted for such

13  purpose, if:

14         (a)  The fact of such relationship or interest is

15  disclosed or known to the managers or managing members or

16  committee which authorizes, approves, or ratifies the contract

17  or transaction by a vote or consent sufficient for the purpose

18  without counting the votes or consents of such interested

19  members, managers, or managing members;

20         (b)  The fact of such relationship or interest is

21  disclosed or known to the members entitled to vote and they

22  authorize, approve, or ratify such contract or transaction by

23  vote or written consent; or

24         (c)  The contract or transaction is fair and reasonable

25  as to the limited liability company at the time it is

26  authorized by the managers, managing members, a committee, or

27  the members.

28         (3)  For purposes of paragraph (1)(b) only, a conflict

29  of interest transaction is authorized, approved, or ratified

30  if it receives the vote of a majority-in-interest of the

31  members entitled to be counted under this subsection.

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  1  Membership interests owned by or voted under the control of a

  2  manager or managing member who has a relationship or interest

  3  in the transaction described in subsection (1) may not be

  4  counted in a vote of members to determine whether to

  5  authorize, approve, or ratify a conflict of interest

  6  transaction under paragraph (1)(b). The vote of those

  7  membership interests, however, is counted in determining

  8  whether the transaction is approved under other sections of

  9  this act. A majority-in-interest of the members, whether or

10  not present, that are entitled to be counted in a vote on the

11  transaction under this subsection constitutes a quorum for the

12  purpose of taking action under this section.

13         Section 13.  Section 608.4227, Florida Statutes, is

14  amended to read:

15         608.4227  Liability of members, managing members, and

16  managers.--

17         (1)  Except as provided in this chapter, neither the

18  members or managing members of a limited liability company nor

19  the managers of a limited liability company managed by a

20  manager or managing member are not liable, solely by reason of

21  being a member or serving as a manager or managing member,

22  under a judgment, decree, or order of a court, or in any other

23  manner, for a debt, obligation, or liability of the limited

24  liability company;

25         (2)  Any such member, managing member, or manager, or

26  other person acting under the articles of organization or

27  operating agreement of a limited liability company is shall

28  not be liable to the limited liability company or to any such

29  other member, managing member, or manager for the member's,

30  managing member's, or manager's, or other person's good faith

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  1  reliance on the provisions of the limited liability company's

  2  articles of organization or operating agreement; and

  3         (3)  The member's, managing member's, or manager's, or

  4  other person's duties and liabilities may be expanded or

  5  restricted by provisions in a limited liability company's

  6  articles of organization or operating agreement.

  7         Section 14.  Section 608.4228, Florida Statutes, is

  8  amended to read:

  9         608.4228  Limitation of liability of managers and

10  managing members.--

11         (1)  A manager or a managing member shall not be

12  personally liable for monetary damages to the limited

13  liability company, its members, or any other person for any

14  statement, vote, decision, or failure to act regarding

15  management or policy decisions by a manager or a managing

16  member, unless:

17         (a)  The manager or managing member breached or failed

18  to perform the duties as a manager or managing member; and

19         (b)  The manager's or managing member's breach of, or

20  failure to perform, those duties constitutes any of the

21  following:

22         1.  A violation of the criminal law, unless the manager

23  or managing member had a reasonable cause to believe his or

24  her conduct was lawful or had no reasonable cause to believe

25  such conduct was unlawful. A judgment or other final

26  adjudication against a manager or managing member in any

27  criminal proceeding for a violation of the criminal law estops

28  that manager or managing member from contesting the fact that

29  such breach, or failure to perform, constitutes a violation of

30  the criminal law, but does not estop the manager or managing

31  member from establishing that he or she had reasonable cause

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  1  to believe that his or her conduct was lawful or had no

  2  reasonable cause to believe that such conduct was unlawful.

  3         2.  A transaction from which the manager or managing

  4  member derived an improper personal benefit, either directly

  5  or indirectly.

  6         3.  A distribution in violation of s. 608.426.

  7         4.  In a proceeding by or in the right of the limited

  8  liability company to procure a judgment in its favor or by or

  9  in the right of a member, conscious disregard of the best

10  interest of the limited liability company, or willful

11  misconduct.

12         5.  In a proceeding by or in the right of someone other

13  than the limited liability company or a member, recklessness

14  or an act or omission which was committed in bad faith or with

15  malicious purpose or in a manner exhibiting wanton and willful

16  disregard of human rights, safety, or property.

17         (2)  For the purposes of this section, the term

18  "recklessness" means acting, or failing to act, in conscious

19  disregard of a risk known, or so obvious that it should have

20  been known, to the manager or managing member, and known to

21  the manager or managing member, or so obvious that it should

22  have been known, to be so great as to make it highly probable

23  that harm would follow from such action or failure to act.

24         (3)  A manager or managing member is deemed not to have

25  derived an improper personal benefit from any transaction if

26  the transaction and the nature of any personal benefit derived

27  by the manager or managing member are not prohibited by state

28  or federal law or the articles of organization or operating

29  agreement and, without further limitation, the transaction and

30  the nature of any personal benefit derived by a manager or

31  managing member are disclosed or known to the members, and the

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  1  transaction was authorized, approved, or ratified by the vote

  2  of a majority-in-interest of the members other than the

  3  managing member, or the transaction was fair and reasonable to

  4  the limited liability company at the time it was authorized by

  5  the manager or managing member, notwithstanding that a manager

  6  or managing member received a personal benefit.

  7         (4)  The circumstances set forth in subsection (3) are

  8  not exclusive and do not preclude the existence of other

  9  circumstances under which a manager will be deemed not to have

10  derived an improper benefit.

11         Section 15.  Section 608.4229, Florida Statutes, is

12  amended to read:

13         608.4229  Indemnification of members, managers,

14  managing members, officers, employees, and agents.--

15         (1)  Subject to such standards and restrictions, if

16  any, as are set forth in its articles of organization or

17  operating agreement, a limited liability company may, and

18  shall have the power to, but shall not be required to,

19  indemnify and hold harmless any member or manager or other

20  person from and against any and all claims and demands

21  whatsoever.

22         (2)  Notwithstanding subsection (1), indemnification or

23  advancement of expenses shall not be made to or on behalf of

24  any member, manager, managing member, officer, employee, or

25  agent if a judgment or other final adjudication establishes

26  that the actions, or omissions to act, of such member,

27  manager, managing member, officer, employee, or agent were

28  material to the cause of action so adjudicated and constitute

29  any of the following:

30

31

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  1         (a)  A violation of criminal law, unless the member,

  2  manager, managing member, officer, employee, or agent had no

  3  reasonable cause to believe such conduct was unlawful.

  4         (b)  A transaction from which the member, manager,

  5  managing member, officer, employee, or agent derived an

  6  improper personal benefit.

  7         (c)  In the case of a manager or managing member, a

  8  circumstance under which the liability provisions of s.

  9  608.426 are applicable.

10         (d)  Willful misconduct or a conscious disregard for

11  the best interests of the limited liability company in a

12  proceeding by or in the right of the limited liability company

13  to procure a judgment in its favor or in a proceeding by or in

14  the right of a member.

15         Section 16.  Subsections (1), (2), (3), and (6) of

16  section 608.423, Florida Statutes, are amended to read:

17         608.423  Limited liability company operating agreement;

18  nonwaivable provisions.--

19         (1)  Except as otherwise provided in subsection (2),

20  all members of a limited liability company may enter into an

21  operating agreement, which need not be in writing, to regulate

22  the affairs of the limited liability company and the conduct

23  of its business, establish duties in addition to those set

24  forth in this chapter, and to govern relations among the

25  members, managers, and company. Any inconsistency between

26  written and oral operating agreements shall be resolved in

27  favor of the written agreement. The members of a limited

28  liability company may enter into an operating agreement

29  before, after, or at the time the articles of organization are

30  filed, and the operating agreement takes effect on the date of

31  the formation of the limited liability company or on any other

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  1  date provided in the operating agreement. To the extent the

  2  operating agreement does not otherwise provide, this chapter

  3  governs relations among the members, managers, and limited

  4  liability company.

  5         (2)  The operating agreement may not:

  6         (a)  Unreasonably restrict a right to information or

  7  access to records under s. 608.4101;

  8         (b)  Eliminate the duty of loyalty under s. 608.4225,

  9  but the agreement may:

10         1.  Identify specific types or categories of activities

11  that do not violate the duty of loyalty, if not manifestly

12  unreasonable; and

13         2.  Specify the number or percentage of members or

14  disinterested managers that may authorize or ratify, after

15  full disclosure of all material facts, a specific act or

16  transaction that otherwise would violate the duty of loyalty;

17         (c)  Unreasonably reduce the duty of care under s.

18  608.4225;

19         (d)  Eliminate the obligation of good faith and fair

20  dealing under s. 608.4225, but the operating agreement may

21  determine the standards by which the performance of the

22  obligation is to be measured, if the standards are not

23  manifestly unreasonable;

24         (e)  Vary the right to expel a member in an event

25  specified in this chapter;

26         (e)(f)  Vary the requirement to wind up the limited

27  liability company's business in a case specified in this

28  chapter; or

29         (f)(g)  Restrict rights of a person, other than a

30  manager, member, or transferee of a member's distributional

31  interest, under this chapter.

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  1         (3)  The power to adopt, alter, amend, or repeal the

  2  operating agreement of a limited liability company shall be

  3  vested in the members of the limited liability company unless

  4  vested in the manager or managers of the limited liability

  5  company by the articles of organization or operating

  6  agreement, provided that any amendment to a written operating

  7  agreement shall be in writing.  The operating agreement

  8  adopted by the members or by the manager or managers may be

  9  repealed or altered; a new operating agreement may be adopted

10  by the members; and the members may prescribe in any operating

11  agreement made by them that such operating agreement may not

12  be altered, amended, or repealed by the manager or managers.

13         (6)  Actions taken by the limited liability company in

14  good faith in accordance with the emergency operating

15  agreement have the effect of binding the limited liability

16  company and may not be used to impose liability on a manager,

17  employee, or agent of the limited liability company.

18         Section 17.  Subsections (3), (6), and (8) of section

19  608.4231, Florida Statutes, are amended to read:

20         608.4231  Voting by members and managers.--

21         (3)  If no conflicting voting provision is contained in

22  the articles of organization or operating agreement:

23         (a)  The members of a limited liability company shall

24  vote in proportion to their then-current percentage or other

25  allocable interest in the profits of the limited liability

26  company or, in the case of a member who has assigned the

27  member's entire economic interest in the limited liability

28  company to a person who has not been admitted as a member, in

29  proportion to the then-current percentage or other allocable

30  interest in the profits of the limited liability company that

31

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  1  the assigning member would have, had the assignment not been

  2  made.

  3         (b)  In all matters in which a vote is required, a vote

  4  of a majority-in-interest of the members shall be sufficient

  5  unless provided otherwise in the limited liability company's

  6  articles of organization or operating agreement or this

  7  chapter.

  8         (6)  Except as otherwise provided in the articles of

  9  organization or the operating agreement, if the members have

10  appointed more than one manager or managing member to manage

11  the business of the limited liability company, decisions of

12  the managers or managing members shall be made by majority

13  vote of the managers or managing members if at a meeting, or

14  by unanimous written consent. Unless otherwise provided in the

15  articles of organization or operating agreement, on any matter

16  that is to be voted on by one or more managers or managing

17  members, the managers or managing members may vote in person

18  or by proxy. Within 10 days after obtaining such authorization

19  by written consent, notice must be given to those managers or

20  managing members who have not consented in writing or who are

21  not entitled to vote on the action.

22         (8)  Unless otherwise provided in the articles of

23  organization or operating agreement, on any matter that is to

24  be voted on by members, the members may take such action

25  without a meeting, without prior notice, and without a vote if

26  a consent or consents in writing, setting forth the action so

27  taken, are signed by the members having not less than the

28  minimum number of votes that would be necessary to authorize

29  or take such action at a meeting, but in no event by a vote of

30  less than a majority-in-interest of the members that would be

31  necessary to authorize or take such action at a meeting.

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  1  Unless otherwise provided in the articles of organization or

  2  operating agreement, on any matter that is to be voted on by

  3  members or managers, the members or managers may vote in

  4  person or by proxy. Within 10 days after obtaining such

  5  authorization by written consent, notice must be given to

  6  those members who have not consented in writing or who are not

  7  entitled to vote on the action.

  8         Section 18.  Section 608.4235, Florida Statutes, is

  9  amended to read:

10         608.4235  Agency of members and managers or managing

11  members.--

12         (1)  Subject to subsections (2) and (3):

13         (a)  In a member-managed company, each member is an

14  agent of the limited liability company for the purpose of its

15  business, and an act of a member, including the signing of an

16  instrument in the limited liability company's name, for

17  apparently carrying on in the ordinary course the limited

18  liability company's business or business of the kind carried

19  on by the company binds the limited liability company, unless

20  the member had no authority to act for the limited liability

21  company in the particular matter and the person with whom the

22  member was dealing knew or had notice that the member lacked

23  authority.

24         (b)  An act of a member which is not apparently for

25  carrying on in the ordinary course the limited liability

26  company's business or business of the kind carried on by the

27  limited liability company binds the limited liability company

28  only if the act was authorized by appropriate vote of the

29  other members.

30         (2)  Subject to subsection (3), in a manager-managed

31  company:

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  1         (a)  A member is not an agent of the limited liability

  2  company for the purpose of its business solely by reason of

  3  being a member. Each manager is an agent of the limited

  4  liability company for the purpose of its business, and an act

  5  of a manager, including the signing of an instrument in the

  6  limited liability company's name, for apparently carrying on

  7  in the ordinary course the limited liability company's

  8  business or business of the kind carried on by the company

  9  binds the limited liability company, unless the manager had no

10  authority to act for the limited liability company in the

11  particular matter and the person with whom the manager was

12  dealing knew or had notice that the manager lacked authority.

13         (b)  An act of a manager which is not apparently for

14  carrying on in the ordinary course the limited liability

15  company's business or business of the kind carried on by the

16  limited liability company binds the limited liability company

17  only if the act was authorized under s. 608.422.

18         (3)  Unless the articles of organization or operating

19  agreement limit the authority of a member, any member of a

20  member-managed company or manager of a manager-managed company

21  may sign and deliver any instrument transferring or affecting

22  the limited liability company's interest in real property. The

23  instrument is conclusive in favor of a person who gives value

24  without knowledge of the lack of the authority of the person

25  signing and delivering the instrument.

26         Section 19.  Section 608.4238, Florida Statutes, is

27  amended to read:

28         608.4238  Unauthorized assumption of powers.--All

29  persons purporting to act as or on behalf of a limited

30  liability company, having actual knowledge that there was no

31  organization of a limited liability company under this

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  1  chapter, are jointly and severally liable for all liabilities

  2  created while so acting except for any liability to any person

  3  who also had actual knowledge that there was no organization

  4  of a limited liability company.

  5         Section 20.  Subsection (3) of section 608.425, Florida

  6  Statutes, is amended to read:

  7         608.425  Limited liability company property.--

  8         (3)  Instruments and documents providing for the

  9  acquisition, mortgage, or disposition of property of the

10  limited liability company shall be valid and binding upon the

11  limited liability company, if they are executed in accordance

12  with this chapter.

13         Section 21.  Subsection (2) of section 608.428, Florida

14  Statutes, is amended to read:

15         608.428  Liability upon wrongful distribution.--

16         (2)  A member may not receive a distribution from a

17  limited liability company to the extent that, after giving

18  effect to the distribution, all liabilities of the limited

19  liability company would be insolvent, other than liabilities

20  to members on account of their membership interests in the

21  limited liability company, exceed the value of the limited

22  liability company's assets.

23         Section 22.  Subsection (1) of section 608.432, Florida

24  Statutes, is amended to read:

25         608.432  Assignment of member's interest.--

26         (1)  A limited liability company interest is assignable

27  in whole or in part except as provided in the articles of

28  organization or operating agreement. The assignee of a

29  member's interest shall have no right to participate in the

30  management of the business and affairs of a limited liability

31

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  1  company except as provided in the articles of organization or

  2  operating agreement and upon:

  3         (a)  The approval of all of the members of the limited

  4  liability company other than the member assigning the limited

  5  liability company interest; or

  6         (b)  Compliance with any procedure provided for in the

  7  articles of organization or operating limited liability

  8  company agreement.

  9         Section 23.  Paragraph (e) of subsection (3) of section

10  608.438, Florida Statutes, is amended to read:

11         608.438  Merger of limited liability company.--

12         (3)  The plan of merger shall set forth:

13         (e)  If a limited liability company is to be the

14  surviving entity, and management thereof is vested in one or

15  more managers or managing members, the names and business

16  addresses of such managers or managing members.

17         Section 24.  Subsections (1) and (2) of section

18  608.441, Florida Statutes, are amended to read:

19         608.441  Dissolution.--

20         (1)  A limited liability company organized under this

21  chapter shall be dissolved, and the limited liability

22  company's affairs shall be concluded, upon the first to occur

23  of any of the following events:

24         (a)  At the time specified in the articles of

25  organization or operating agreement, but if no such time is

26  set forth in the articles of organization or operating

27  agreement, then the limited liability company shall have a

28  perpetual existence;

29         (b)  Upon the occurrence of events specified in the

30  articles of organization or operating agreement;

31

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  1         (c)  Unless otherwise provided in the articles of

  2  organization or operating agreement, upon the written consent

  3  of all of the members of the limited liability company;

  4         (d)  At any time there are no members; however, unless

  5  otherwise provided in the articles of organization or

  6  operating agreement, the limited liability company is not

  7  dissolved and is not required to be wound up if, within 90

  8  days, or such other period as provided in the articles of

  9  organization or operating agreement, after the occurrence of

10  the event that terminated the continued membership of the last

11  remaining member, the personal or other legal representative

12  of the last remaining member agrees in writing to continue the

13  limited liability company and agrees to the admission of the

14  personal representative of such member or its nominee or

15  designee to the limited liability company as a member,

16  effective as of the occurrence of the event that terminated

17  the continued membership of the last remaining member; or

18         (e)  The entry of an order of dissolution by a circuit

19  court pursuant to subsection (3).

20         (2)  So long as the limited liability company continues

21  to have at least one remaining member, and except as provided

22  in paragraph (1)(d) or as otherwise provided in the articles

23  of organization or operating agreement, the death, retirement,

24  resignation, expulsion, bankruptcy, or dissolution of any

25  member or the occurrence of any other event that terminates

26  the continued membership of any member shall not cause the

27  limited liability company to be dissolved, and upon the

28  occurrence of any such event, the limited liability company

29  shall be continued without dissolution.

30         Section 25.  Subsection (3) of section 608.444, Florida

31  Statutes, is amended to read:

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  1         608.444  Distribution of assets upon dissolution.--In

  2  settling accounts after dissolution of a limited liability

  3  company, the assets of the limited liability company must be

  4  distributed in the following order:

  5         (3)  Except as provided in the articles of organization

  6  or the operating agreement, to members pro rata in proportion

  7  to their then-current percentage, or other interests in the

  8  profits, of the limited liability company.

  9         Section 26.  Subsection (6) of section 608.445, Florida

10  Statutes, is amended to read:

11         608.445  Articles of dissolution.--The articles of

12  dissolution shall set forth:

13         (6)  The fact that there are no suits pending against

14  the limited liability company in any court or that adequate

15  provision has been made for the satisfaction of any judgment,

16  order, or decree which may be entered against it in any

17  pending suit.

18         Section 27.  Subsection (2) of section 608.446, Florida

19  Statutes, is amended to read:

20         608.446  Filing of articles of dissolution.--

21         (2)  The certificate of dissolution shall be returned

22  to the representative of the dissolved limited liability

23  company. Upon the issuance of such certificate of dissolution,

24  the existence of the limited liability company shall cease,

25  except for the purpose of suits, other proceedings, and

26  appropriate action as provided in this chapter. The manager or

27  managers in office at the time of dissolution, or the

28  survivors of them, or, if none, the members, shall thereafter

29  be trustees for the members and creditors of the dissolved

30  limited liability company; and as such the trustees shall have

31  authority to distribute any company property of the limited

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  1  liability company discovered after dissolution, to convey real

  2  estate, and to take such other action as may be necessary on

  3  behalf of and in the name of such dissolved limited liability

  4  company.

  5         Section 28.  Subsection (2) of section 608.449, Florida

  6  Statutes, is amended to read:

  7         608.449  Grounds for judicial dissolution.--A circuit

  8  court may dissolve a limited liability company:

  9         (2)  In a proceeding by a manager or member if it is

10  established that:

11         (a)  The managers, managing members, or members are

12  deadlocked in the management of the limited liability company

13  affairs, the members are unable to break the deadlock, and

14  irreparable injury to the limited liability company is

15  threatened or being suffered; or

16         (b)  The limited liability company's assets are being

17  misappropriated or wasted.

18         Section 29.  Subsections (1) and (2) of section

19  608.463, Florida Statutes, are amended to read:

20         608.463  Service of process.--

21         (1)  Process against a limited liability company may be

22  served:

23         (a)  In accordance with chapter 48 or chapter 49, as if

24  the limited liability company were a partnership.

25         (b)  Upon the registered agent at the agent's street

26  address.

27         (2)  Any notice to or demand on a limited liability

28  company organized pursuant to this chapter may be made:

29         (a)  By delivery to a manager of the limited liability

30  company, if the management of the limited liability company is

31  vested in one or more managers a manager, or by delivery to a

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  1  member, if the management of the limited liability company is

  2  vested in the members.

  3         (b)  By mailing a writing, which notice or demand in

  4  writing is mailed to the registered office of the limited

  5  liability company in this state or to another address in this

  6  state which is the principal office of the limited liability

  7  company.

  8         Section 30.  Subsection (1) of section 608.504, Florida

  9  Statutes, is amended to read:

10         608.504  Amended certificate of authority.--

11         (1)  A foreign limited liability company authorized to

12  transact business in this state shall make application to the

13  Department of State to obtain an amended certificate of

14  authority if any statement in the limited liability company's

15  application was false or becomes false due to change in

16  circumstances or if the foreign limited liability company

17  changes:

18         (a)  Its limited liability company name.

19         (b)  The period of its duration.

20         (c)  The jurisdiction of its organization.

21         Section 31.  Subsection (2) of section 608.507, Florida

22  Statutes, is amended to read:

23         608.507  Registered office and registered agent of

24  foreign limited liability company.--Each foreign limited

25  liability company in this state must continuously maintain in

26  this state:

27         (2)  A registered agent, who may be:

28         (a)  An individual who resides in this state and whose

29  business office is identical with the registered office; or

30

31

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  1         (b)  A domestic corporation or domestic limited

  2  liability company the business office of which is identical

  3  with the registered office; or

  4         (b)(c)  A foreign or domestic entity corporation or

  5  foreign limited liability company authorized to transact

  6  business in this state which has a the business office of

  7  which is identical with the registered office.

  8         Section 32.  Section 608.704, Florida Statutes, is

  9  created to read:

10         608.704  Reservation of power to amend or repeal.--The

11  Legislature may amend or repeal all or part of this chapter at

12  any time, and all domestic and foreign corporations subject to

13  this chapter shall be governed by the amendment or repeal.

14         Section 33.  Section 608.705, Florida Statutes, is

15  created to read:

16         608.705  Effect of repeal of prior acts.--

17         (1)  Except as provided in subsection (2), the repeal

18  of a statute by this chapter does not affect:

19         (a)  The operation of the statute or any action taken

20  under it before its repeal, including, without limiting the

21  generality of the foregoing, the continuing validity of any

22  provision of the articles of incorporation or bylaws of a

23  corporation authorized by the statute at the time of its

24  adoption;

25         (b)  Any ratification, right remedy, privilege,

26  obligation, or liability acquired, accrued, or incurred under

27  the statute before its repeal;

28         (c)  Any violation of the statute, or any penalty,

29  forfeiture, or punishment incurred because of the violation,

30  before its repeal;

31

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  1         (d)  Any proceeding, merger, consolidation, sale of

  2  assets, reorganization, or dissolution commenced under the

  3  statute before its repeal, and the proceeding, merger,

  4  consolidation, sale of assets, reorganization, or dissolution

  5  may be completed in accordance with the statute as if it had

  6  not been repealed.

  7         (2)  If a penalty or punishment imposed for violation

  8  of a statute is reduced by this chapter, the penalty or

  9  punishment if not already imposed shall be imposed in

10  accordance with this chapter.

11         Section 34.  This act shall take effect October 1,

12  2002.

13

14            *****************************************

15                          SENATE SUMMARY

16    Revises various provisions of ch. 608, F.S., which
      governs limited liability companies in this state.
17    Authorizes a limited liability company to select managing
      members. Revises requirements for executing articles of
18    organization. Prohibits a limited liability company from
      transacting business or incurring debt until its
19    effective date of existence. Provides for voting by
      managing members and for the appointment of proxies.
20    Revises certain requirements for the registered office of
      a domestic limited liability company. (See bill for
21    details.)

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CODING: Words stricken are deletions; words underlined are additions.