Bill Text: IA SSB1199 | 2019-2020 | 88th General Assembly | Introduced

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Bill Title: A bill for an act relating to business entities, by providing for different types of limited liability companies and the dissolution of limited liability companies, providing for fees, and including effective date provisions.

Spectrum: Committee Bill

Status: (N/A - Dead) 2019-02-26 - Subcommittee recommends amendment and passage. [SSB1199 Detail]

Download: Iowa-2019-SSB1199-Introduced.html

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Senate Study Bill 1199 - Introduced
SENATE FILE _____
BY (PROPOSED COMMITTEE
ON JUDICIARY BILL BY
CHAIRPERSON ZAUN)
A BILL FOR
An Act relating to business entities, by providing for
different types of limited liability companies and the
dissolution of limited liability companies, providing for
fees, and including effective date provisions.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
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DIVISION I
UNIFORM PROTECTED SERIES ACT —— ENACTMENT
ARTICLE 12
PART 1
UNIFORM PROTECTED SERIES ACT
SUBPART A
GENERAL PROVISIONS
Section 1. NEW SECTION . 489.12101 Short title.
This part may be cited as the “Uniform Protected Series Act” .
Sec. 2. NEW SECTION . 489.12102 Definitions.
As used in this part, unless the context otherwise requires:
1. “Asset” means any of the following:
a. Property in which a series limited liability company or
protected series has rights.
b. Property as to which the company or protected series has
the power to transfer rights.
2. “Associated asset” means an asset that meets the
requirements of section 489.12301.
3. “Associated member” means a member that meets the
requirements of section 489.12302.
4. “Foreign protected series” means an arrangement,
configuration, or other structure established by a foreign
limited liability company which has attributes comparable to a
protected series established under this part. The term applies
whether or not the law under which the foreign company is
organized refers to “protected series”.
5. “Foreign series limited liability company” means a
foreign limited liability company that has at least one foreign
protected series.
6. “Nonassociated asset” means any of the following:
a. An asset of a series limited liability company which is
not an associated asset of the company.
b. An asset of a protected series of the company which is
not an associated asset of the protected series.
7. “Person” means the same as defined in section 4.1 and
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includes a protected series.
8. “Protected series” , except in the phrase “foreign
protected series” , means a protected series established under
section 489.12201.
9. “Protected-series manager” means a person under whose
authority the powers of a protected series are exercised
and under whose direction the activities and affairs of the
protected series are managed under the operating agreement,
this part, and this chapter.
10. “Protected-series transferable interest” means a right to
receive a distribution from a protected series.
11. “Protected-series transferee” means a person to which
all or part of a protected-series transferable interest of a
protected series of a series limited liability company has
been transferred, other than the company. The term includes a
person that owns a protected-series transferable interest as
a result of ceasing to be an associated member of a protected
series.
12. “Series limited liability company” , except in the phrase
“foreign series limited liability company” , means a limited
liability company that has at least one protected series.
Sec. 3. NEW SECTION . 489.12103 Nature of protected series.
A protected series of a series limited liability company is a
person distinct from all of the following:
1. The company, subject to section 489.12104, subsection
3, section 489.12501, subsection 1, and section 489.12502,
subsection 4.
2. Another protected series of the company.
3. A member of the company, whether or not the member is an
associated member of the protected series.
4. A protected-series transferee of a protected series of
the company.
5. A transferee of a transferable interest of the company.
Sec. 4. NEW SECTION . 489.12104 Powers and duration of
protected series.
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1. A protected series of a series limited liability company
has the capacity to sue and be sued in its own name.
2. Except as otherwise provided in subsections 3 and 4, a
protected series of a series limited liability company has the
same powers and purposes as the company.
3. A protected series of a series limited liability company
ceases to exist not later than when the company completes its
winding up.
4. A protected series of a series limited liability company
shall not do any of the following:
a. Be a member of the company.
b. Establish a protected series.
c. Except as permitted by law of this state other than this
part, have a purpose or power that the law of this state other
than this part prohibits a limited liability company from doing
or having.
Sec. 5. NEW SECTION . 489.12105 Governing law.
The law of this state governs all of the following:
1. The internal affairs of a protected series of a series
limited liability company, including all of the following:
a. Relations among any associated members of the protected
series.
b. Relations among the protected series and any of the
following:
(1) Any associated member.
(2) The protected-series manager.
(3) Any protected-series transferee.
c. Relations between any associated member and any of the
following:
(1) The protected-series manager.
(2) Any protected-series transferee.
d. The rights and duties of a protected-series manager.
e. Governance decisions affecting the activities and affairs
of the protected series and the conduct of those activities and
affairs.
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f. Procedures and conditions for becoming an associated
member or protected-series transferee.
2. The relations between a protected series of a series
limited liability company and each of the following:
a. The company.
b. Another protected series of the company.
c. A member of the company which is not an associated member
of the protected series.
d. A protected-series manager that is not a protected-series
manager of the protected series.
e. A protected-series transferee that is not a
protected-series transferee of the protected series.
3. The liability of a person for a debt, obligation, or
other liability of a protected series of a series limited
liability company if the debt, obligation, or liability is
asserted solely by reason of the person being or acting as any
of the following:
a. An associated member, protected-series transferee, or
protected-series manager of the protected series.
b. A member of the company which is not an associated member
of the protected series.
c. A protected-series manager that is not a protected-series
manager of the protected series.
d. A protected-series transferee that is not a
protected-series transferee of the protected series.
e. A manager of the company.
f. A transferee of a transferable interest of the company.
4. The liability of a series limited liability company for
a debt, obligation, or other liability of a protected series of
the company if the debt, obligation, or liability is asserted
solely by reason of the company doing any of the following:
a. Having delivered to the secretary of state for filing
under section 489.12201, subsection 2, a protected series
designation pertaining to the protected series or under section
489.12201, subsection 4, or section 489.12202, subsection 3,
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a statement of designation change pertaining to the protected
series.
b. Being or acting as a protected-series manager of the
protected series.
c. Having the protected series be or act as a manager of the
company.
d. Owning a protected-series transferable interest of the
protected series.
5. The liability of a protected series of a series limited
liability company for a debt, obligation, or other liability of
the company or of another protected series of the company if
the debt, obligation, or liability is asserted solely by reason
of any of the following:
a. The protected series is any of the following:
(1) A protected series of the company or having as a
protected-series manager the company or another protected
series of the company.
(2) Acting as a protected-series manager of another
protected series of the company or a manager of the company.
b. The company owning a protected-series transferable
interest of the protected series.
Sec. 6. NEW SECTION . 489.12106 Relation of operating
agreement, this part, and this chapter.
1. Except as otherwise provided in this section and subject
to sections 489.12107 and 489.12108, the operating agreement
of a series limited liability company governs all of the
following:
a. The internal affairs of a protected series, including all
of the following:
(1) Relations among any associated members of the protected
series.
(2) Relations among the protected series and any of the
following:
(a) Any associated member.
(b) The protected-series manager.
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(c) Any protected-series transferee.
(3) Relations between any associated member and any of the
following:
(a) The protected-series manager.
(b) Any protected-series transferee.
(4) The rights and duties of a protected-series manager.
(5) Governance decisions affecting the activities and
affairs of the protected series and the conduct of those
activities and affairs.
(6) Procedures and conditions for becoming an associated
member or protected-series transferee.
b. Relations among the protected series, the company, and
any other protected series of the company.
c. Relations between all of the following:
(1) The protected series, its protected-series manager,
any associated member of the protected series, or any
protected-series transferee of the protected series.
(2) A person in the person’s capacity as any of the
following:
(a) A member of the company which is not an associated
member of the protected series.
(b) A protected-series transferee or protected-series
manager of another protected series.
(c) A transferee of the company.
2. If this chapter otherwise restricts the power of an
operating agreement to affect a matter, the restriction
applies to a matter under this part in accordance with section
489.12108.
3. If law of this state other than this part imposes a
prohibition, limitation, requirement, condition, obligation,
liability, or other restriction on a limited liability
company, a member, manager, or other agent of the company, or a
transferee of the company, except as otherwise provided in law
of this state other than this part, the restriction applies in
accordance with section 489.12108.
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4. Except as otherwise provided in section 489.12107, if
the operating agreement of a series limited liability company
does not provide for a matter described in subsection 1 in a
manner permitted by this article, the matter is determined in
accordance with the following rules:
a. To the extent this part addresses the matter, this part
governs.
b. To the extent this part does not address the matter, the
other articles of this chapter governs the matter in accordance
with section 489.12108.
Sec. 7. NEW SECTION . 489.12107 Additional limitations on
operating agreement.
1. An operating agreement shall not vary the effect of any
of the following:
a. This section.
b. Section 489.12103.
c. Section 489.12104, subsection 1.
d. Section 489.12104, subsection 2, to provide a protected
series a power beyond the powers this chapter provides a
limited liability company.
e. Section 489.12104, subsection 3 or 4.
f. Section 489.12105.
g. Section 489.12106.
h. Section 489.12108.
i. Section 489.12201, except to vary the manner in which
a limited liability company approves establishing a protected
series.
j. Section 489.12202.
k. Section 489.12301.
l. Section 489.12302.
m. Section 489.12303, subsection 1 or 2.
n. Section 489.12304, subsection 3 or 6.
o. Section 489.12401, except to decrease or eliminate a
limitation of liability stated in section 489.12401.
p. Section 489.12402.
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q. Section 489.12403.
r. Section 489.12404.
s. Section 489.12501, subsections 1, 4, and 5.
t. Section 489.12502, except to designate a different person
to manage winding up.
u. Section 489.12503.
v. Article 6.
w. Article 7.
x. Article 8, except to vary any of the following:
(1) The manner in which a series limited liability company
may elect under section 489.12803, subsection 1, paragraph “b” ,
to be subject to this part.
(2) The person that has the right to sign and deliver to the
secretary of state for filing a record under section 489.12803,
subsection 2, paragraph “b” .
y. A provision of this part pertaining to any of the
following:
(1) Registered agents.
(2) The secretary of state, including provisions pertaining
to records authorized or required to be delivered to the
secretary of state for filing under this part.
2. An operating agreement shall not unreasonably restrict
the duties and rights under section 489.12305 but may impose
reasonable restrictions on the availability and use of
information obtained under section 489.12305 and may provide
appropriate remedies, including liquidated damages, for a
breach of any reasonable restriction on use.
Sec. 8. NEW SECTION . 489.12108 Rules for applying to
specified provisions of this chapter to specified provisions of
this part.
1. Except as otherwise provided in subsection 2 and section
489.12107, the following rules apply in applying section
489.12106, section 489.12304, subsections 3 and 6, section
489.12501, subsection 4, paragraph “a” , section 489.12502,
subsection 1, and section 489.12503, subsection 2:
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a. A protected series of a series limited liability company
is deemed to be a limited liability company that is formed
separately from the series limited liability company and is
distinct from the series limited liability company and any
other protected series of the series limited liability company.
b. An associated member of the protected series is deemed to
be a member of the company deemed to exist under paragraph “a” .
c. A protected-series transferee of the protected series is
deemed to be a transferee of the company deemed to exist under
paragraph “a” .
d. A protected-series transferable interest of the protected
series is deemed to be a transferable interest of the company
deemed to exist under paragraph “a” .
e. A protected-series manager is deemed to be a manager of
the company deemed to exist under paragraph “a” .
f. An asset of the protected series is deemed to be an asset
of the company deemed to exist under paragraph “a” , whether or
not the asset is an associated asset of the protected series.
g. Any creditor or other obligee of the protected series
is deemed to be a creditor or obligee of the company deemed to
exist under paragraph “a” .
2. Subsection 1 does not apply if its application would do
any of the following:
a. Contravene section 489.110.
b. Authorize or require the secretary of state to do any of
the following:
(1) Accept for filing a type of record that neither this
part nor any of the other articles of this chapter authorizes
or requires a person to deliver to the secretary of state for
filing.
(2) Make or deliver a record that neither this part nor
the other articles of this chapter authorizes or requires the
secretary of state to make or deliver.
SUBPART B
ESTABLISHING PROTECTED SERIES
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Sec. 9. NEW SECTION . 489.12201 Protected series designation
—— amendment.
1. With the affirmative vote or consent of all members
of a limited liability company, the company may establish a
protected series.
2. To establish a protected series, a limited liability
company shall deliver to the secretary of state for filing a
protected series designation, signed by the company, stating
the name of the company and the name of the protected series to
be established.
3. A protected series is established when the protected
series designation takes effect under section 489.205.
4. To amend a protected series designation, a series limited
liability company shall deliver to the secretary of state
for filing a statement of designation change, signed by the
company, that changes the name of the company, the name of the
protected series to which the designation applies, or both.
The change takes effect when the statement of designation
change takes effect under section 489.205.
Sec. 10. NEW SECTION . 489.12202 Name.
1. Except as otherwise provided in subsection 2, the name of
a protected series must comply with section 489.108.
2. The name of a protected series of a series limited
liability company must do all of the following:
a. Begin with the name of the company, including any word or
abbreviation required by section 489.108.
b. Contain the phrase “Protected Series” or “protected
series” or the abbreviation “P.S.” or “PS”.
3. If a series limited liability company changes its name,
the company shall deliver to the secretary of state for filing
a statement of designation change for each of the company’s
protected series, changing the name of each protected series to
comply with this section.
Sec. 11. NEW SECTION . 489.12203 Registered agent.
1. The registered agent in this state for a series limited
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liability company is the registered agent in this state for
each protected series of the company.
2. Before delivering a protected series designation to the
secretary of state for filing, a limited liability company
shall agree with a registered agent that the agent will serve
as the registered agent in this state for both the company and
the protected series.
3. A person that signs a protected series designation
delivered to the secretary of state for filing affirms as a
fact that the limited liability company on whose behalf the
designation is delivered has complied with subsection 2.
4. A person that ceases to be the registered agent for a
series limited liability company ceases to be the registered
agent for each protected series of the company.
5. A person that ceases to be the registered agent for a
protected series of a series limited liability company, other
than as a result of the termination of the protected series,
ceases to be the registered agent of the company and any other
protected series of the company.
6. Except as otherwise agreed by a series limited liability
company and its registered agent, the agent is not obligated to
distinguish between a process, notice, demand, or other record
concerning the company and a process, notice, demand, or other
record concerning a protected series of the company.
Sec. 12. NEW SECTION . 489.12204 Service of process, notice,
demand, or other record.
1. A protected series of a series limited liability company
may be served with a process, notice, demand, or other record
required or permitted by law by any of the following:
a. Serving the company.
b. Serving the registered agent of the protected series.
c. Other means authorized by law of this state other than
the other articles of this chapter.
2. Service of a summons and complaint on a series limited
liability company is notice to each protected series of
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the company of service of the summons and complaint and the
contents of the complaint.
3. Service of a summons and complaint on a protected series
of a series limited liability company is notice to the company
and any other protected series of the company of service of the
summons and complaint and the contents of the complaint.
4. Service of a summons and complaint on a foreign series
limited liability company is notice to each foreign protected
series of the foreign company of service of the summons and
complaint and the contents of the complaint.
5. Service of a summons and complaint on a foreign protected
series of a foreign series limited liability company is notice
to the foreign company and any other foreign protected series
of the company of service of the summons and complaint and the
contents of the complaint.
6. Notice to a person under subsection 2, 3, 4, or 5 is
effective whether or not the summons and complaint identify
the person if the summons and complaint name as a party and
identify any of the following:
a. The series limited liability company or a protected
series of the company.
b. The foreign series limited liability company or a foreign
protected series of the foreign company.
Sec. 13. NEW SECTION . 489.12205 Certificate of existence
for protected series.
1. On request of any person, the secretary of state shall
issue a certificate of existence for a protected series of a
series limited liability company or a certificate of authority
for a foreign protected series in the following circumstances:
a. In the case of a protected series, if all of the
following apply:
(1) No statement of dissolution, termination, or relocation
pertaining to the protected series has been filed.
(2) The company has delivered to the secretary of state
for filing the most recent biennial report required by section
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489.209 and the report includes the name of the protected
series, unless any of the following applies:
(a) When the company delivered the report for filing, the
protected series designation pertaining to the protected series
had not yet taken effect.
(b) After the company delivered the report for filing,
the company delivered to the secretary of state for filing
a statement of designation change changing the name of the
protected series.
b. In the case of a foreign protected series, it is
authorized to do business in this state.
2. A certificate issued under subsection 1 must state all
of the following:
a. In the case of a protected series, all of the following:
(1) The name of the protected series of the series limited
liability company and the name of the company.
(2) That the requirements of subsection 1 are met.
(3) The date the protected series designation pertaining to
the protected series took effect.
(4) If a statement of designation change pertaining to
the protected series has been filed, the effective date and
contents of the statement.
b. In the case of a foreign protected series, that it is
authorized to do business in this state.
c. That all fees, taxes, interest, and penalties due under
this chapter or other law to the secretary of state have been
paid if all of the following apply:
(1) Payment is reflected in the records of the secretary of
state.
(2) Nonpayment affects the existence or good standing of the
protected series.
d. Other facts reflected in the records of the secretary of
state pertaining to the protected series or foreign protected
series which the person requesting the certificate reasonably
requests.
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3. Subject to any qualification stated by the secretary
of state in a certificate issued under subsection 1, the
certificate may be relied on as conclusive evidence of the
facts stated in the certificate.
Sec. 14. NEW SECTION . 489.12206 Information required in
biennial report —— effect of failure to provide.
1. In the biennial report required by section 489.209, a
series limited liability company shall include the name of each
protected series of the company for which all of the following
applies:
a. For which the company has previously delivered to the
secretary of state for filing a protected series designation.
b. Which has not dissolved and completed winding up.
2. A failure by a series limited liability company to comply
with subsection 1 with regard to a protected series prevents
issuance of a certificate of good standing pertaining to the
protected series but does not otherwise affect the protected
series.
SUBPART C
ASSOCIATED ASSET, ASSOCIATED MEMBER, PROTECTED-SERIES
TRANSFERABLE INTEREST, MANAGEMENT, AND RIGHT OF INFORMATION
Sec. 15. NEW SECTION . 489.12301 Associated asset.
1. Only an asset of a protected series may be an associated
asset of the protected series. Only an asset of a series
limited liability company may be an associated asset of the
company.
2. An asset of a protected series of a series limited
liability company is an associated asset of the protected
series only if the protected series creates and maintains
records that state the name of the protected series and
describe the asset with sufficient specificity to permit
a disinterested, reasonable individual to do all of the
following:
a. Identify the asset and distinguish it from any other
asset of the protected series, any asset of the company, and
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any asset of any other protected series of the company.
b. Determine when and from what person the protected series
acquired the asset or how the asset otherwise became an asset
of the protected series.
c. If the protected series acquired the asset from the
company or another protected series of the company, determine
any consideration paid, the payor, and the payee.
3. An asset of a series limited liability company is an
associated asset of the company only if the company creates
and maintains records that state the name of the company and
describe the asset with sufficient specificity to permit
a disinterested, reasonable individual to do all of the
following:
a. Identify the asset and distinguish it from any other
asset of the company and any asset of any protected series of
the company.
b. Determine when and from what person the company acquired
the asset or how the asset otherwise became an asset of the
company.
c. If the company acquired the asset from a protected series
of the company, determine any consideration paid, the payor,
and the payee.
4. The records and recordkeeping required by subsections
2 and 3 may be organized by specific listing, category,
type, quantity, or computational or allocational formula or
procedure, including a percentage or share of any asset, or in
any other reasonable manner.
5. To the extent permitted by this section and law of this
state other than this part, a series limited liability company
or protected series of the company may hold an associated asset
directly or indirectly, through a representative, nominee, or
similar arrangement, except that all of the following applies:
a. A protected series shall not hold an associated asset
in the name of the company or another protected series of the
company.
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b. The company shall not hold an associated asset in the
name of a protected series of the company.
Sec. 16. NEW SECTION . 489.12302 Associated member.
1. Only a member of a series limited liability company may
be an associated member of a protected series of the company.
2. A member of a series limited liability company becomes an
associated member of a protected series of the company if the
operating agreement or a procedure established by the agreement
states all of the following:
a. That the member is an associated member of the protected
series.
b. The date on which the member became an associated member.
c. Any protected-series transferable interest the associated
member has in connection with becoming or being an associated
member.
3. If a person that is an associated member of a protected
series of a series limited liability company is dissociated
from the company, the person ceases to be an associated member
of the protected series.
Sec. 17. NEW SECTION . 489.12303 Protected-series
transferable interest.
1. A protected-series transferable interest of a protected
series of a series limited liability company must be owned
initially by an associated member of the protected series or
the company.
2. If a protected series of a series limited liability
company has no associated members when established, the
company owns the protected-series transferable interests in the
protected series.
3. In addition to acquiring a protected series transferable
series interest under subsection 2, a series limited liability
company may acquire a protected-series transferable interest
through a transfer from another person or as provided in the
operating agreement.
4. Except for section 489.12108, subsection 1,
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paragraph “c” , a provision of this part which applies to
a protected-series transferee of a protected series of a
series limited liability company applies to the company in
its capacity as an owner of a protected-series transferable
interest of the protected series. A provision of the operating
agreement of a series limited liability company which applies
to a protected-series transferee of a protected series of the
company applies to the company in its capacity as an owner of a
protected-series transferable interest of the protected series.
Sec. 18. NEW SECTION . 489.12304 Management.
1. A protected series may have more than one
protected-series manager.
2. If a protected series has no associated members, the
series limited liability company is the protected-series
manager.
3. Section 489.12108 applies to determine any duties of
a protected-series manager of a protected series of a series
limited liability company to all of the following:
a. The protected series.
b. Any associated member of the protected series.
c. Any protected-series transferee of the protected series.
4. Solely by reason of being or acting as a protected-series
manager of a protected series of a series limited liability
company, a person owes no duty to any of the following:
a. The company.
b. Another protected series of the company.
c. Another person in that person’s capacity as any of the
following:
(1) A member of the company which is not an associated
member of the protected series.
(2) A protected-series transferee or protected-series
manager of another protected series.
(3) A transferee of the company.
5. An associated member of a protected series of a series
limited liability company has the same rights as any other
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member of the company to vote on or consent to an amendment to
the company’s operating agreement or any other matter being
decided by the members, whether or not the amendment or matter
affects the interests of the protected series or the associated
member.
6. Article 9 applies to a protected series in accordance
with section 489.12108.
Sec. 19. NEW SECTION . 489.12305 Right of person not
associated member of protected series to information concerning
protected series.
1. A member of a series limited liability company which
is not an associated member of a protected series of the
company has a right to information concerning the protected
series to the same extent, in the same manner, and under
the same conditions that a member that is not a manager of
a manager-managed limited liability company has a right to
information concerning the company under section 489.410,
subsection 2.
2. A person formerly an associated member of a protected
series has a right to information concerning the protected
series to the same extent, in the same manner, and under
the same conditions that a person dissociated as a member of
a manager-managed limited liability company has a right to
information concerning the company under section 489.410,
subsection 3.
3. If an associated member of a protected series dies, the
legal representative of the deceased associated member has a
right to information concerning the protected series to the
same extent, in the same manner, and under the same conditions
that the legal representative of a deceased member of a limited
liability company has a right to information concerning the
company under section 489.504.
4. A protected-series manager of a protected series has a
right to information concerning the protected series to the
same extent, in the same manner, and under the same conditions
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that a manager of a manager-managed limited liability company
has a right to information concerning the company under section
489.410, subsection 2.
SUBPART D
LIMITATION ON LIABILITY AND ENFORCEMENT OF CLAIMS
Sec. 20. NEW SECTION . 489.12401 Limitations on liability.
1. A person is not liable, directly or indirectly, by way
of contribution or otherwise, for a debt, obligation, or other
liability of any of the following:
a. A protected series of a series limited liability company
solely by reason of being or acting as any of the following:
(1) An associated member, protected-series manager, or
protected-series transferee of the protected series.
(2) A member, manager, or a transferee of the company.
b. A series limited liability company solely by reason
of being or acting as an associated member, protected-series
manager, or protected-series transferee of a protected series
of the company.
2. Subject to section 489.12404, all of the following rules
apply:
a. A debt, obligation, or other liability of a series
limited liability company is solely the debt, obligation, or
liability of the company.
b. A debt, obligation, or other liability of a protected
series is solely the debt, obligation, or liability of the
protected series.
c. A series limited liability company is not liable,
directly or indirectly, by way of contribution or otherwise,
for a debt, obligation, or other liability of a protected
series of the company solely by reason of the protected series
being a protected series of the company or the company for any
of the following:
(1) Being or acting as a protected-series manager of the
protected series.
(2) Having the protected series manage the company.
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(3) Owning a protected-series transferable interest of the
protected series.
d. A protected series of a series limited liability company
is not liable, directly or indirectly, by way of contribution
or otherwise, for a debt, obligation, or other liability of the
company or another protected series of the company solely by
reason of any of the following:
(1) Being a protected series of the company.
(2) Being or acting as a manager of the company or a
protected-series manager of another protected series of the
company.
(3) Having the company or another protected series of
the company be or act as a protected-series manager of the
protected series.
Sec. 21. NEW SECTION . 489.12402 Claim seeking to disregard
limitation of liability.
1. Except as otherwise provided in subsection 2, a claim
seeking to disregard a limitation in section 489.12401 is
governed by the principles of law and equity, including a
principle providing a right to a creditor or holding a person
liable for a debt, obligation, or other liability of another
person, which would apply if each protected series of a series
limited liability company were a limited liability company
formed separately from the series limited liability company
and distinct from the series limited liability company and any
other protected series of the series limited liability company.
2. The failure of a limited liability company or a protected
series to observe formalities relating to the exercise of
its powers or management of its activities and affairs is
not a ground to disregard a limitation in section 489.12401,
subsection 1, but may be a ground to disregard a limitation in
section 489.12401, subsection 2.
3. This section applies to a claim seeking to disregard a
limitation of liability applicable to a foreign series limited
liability company or foreign protected series and comparable
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to a limitation stated in section 489.12401, if any of the
following apply:
a. The claimant is a resident of this state or doing
business or authorized to do business in this state.
b. The claim is to establish or enforce a liability arising
under law of this state other than this part or from an act or
omission in this state.
Sec. 22. NEW SECTION . 489.12403 Remedies of judgment
creditor of associated member or protected-series transferee.
Section 489.503 applies to a judgment creditor of any of the
following:
1. An associated member or protected-series transferee of a
protected series.
2. A series limited liability company, to the extent the
company owns a protected-series transferable interest of a
protected series.
Sec. 23. NEW SECTION . 489.12404 Enforcement against
nonassociated asset.
1. As used in this section:
a. “Enforcement date” means 12:01 a.m. on the date on which
a claimant first serves process on a series limited liability
company or protected series in an action seeking to enforce
under this section a claim against an asset of the company or
protected series by attachment, levy, or the like.
b. Subject to section 489.12608, subsection 2, “incurrence
date” means the date on which a series limited liability company
or protected series incurred the liability giving rise to a
claim that a claimant seeks to enforce under this section.
2. If a claim against a series limited liability company or
a protected series of the company has been reduced to judgment,
in addition to any other remedy provided by law or equity,
the judgment may be enforced in accordance with the following
rules:
a. A judgment against the company may be enforced against
an asset of a protected series of the company if any of the
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following applies:
(1) The asset was a nonassociated asset of the protected
series on the incurrence date.
(2) The asset is a nonassociated asset of the protected
series on the enforcement date.
b. A judgment against a protected series may be enforced
against an asset of the company if any of the following apply:
(1) The asset was a nonassociated asset of the company on
the incurrence date.
(2) The asset is a nonassociated asset of the company on the
enforcement date.
c. A judgment against a protected series may be enforced
against an asset of another protected series of the company if
any of the following applies:
(1) The asset was a nonassociated asset of the other
protected series on the incurrence date.
(2) The asset is a nonassociated asset of the other
protected series on the enforcement date.
3. In addition to any other remedy provided by law or
equity, if a claim against a series limited liability company
or a protected series has not been reduced to a judgment
and law other than this part permits a prejudgment remedy by
attachment, levy, or the like, the court may apply subsection 2
as a prejudgment remedy.
4. In a proceeding under this section, the party asserting
that an asset is or was an associated asset of a series limited
liability company or a protected series of the company has the
burden of proof on the issue.
5. This section applies to an asset of a foreign series
limited liability company or foreign protected series if all of
the following applies:
a. The asset is real or tangible property located in this
state.
b. The claimant is a resident of this state or doing
business or authorized to do business in this state, or the
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claim under section 489.12404 is to enforce a judgment, or to
seek a prejudgment remedy, pertaining to a liability arising
from law of this state other than this part or an act or
omission in this state.
c. The asset is not identified in the records of the foreign
series limited liability company or foreign protected series
in a manner comparable to the manner required by section
489.12301.
SUBPART E
DISSOLUTION AND WINDING UP OF PROTECTED SERIES
Sec. 24. NEW SECTION . 489.12501 Events causing dissolution
of protected series.
A protected series of a series limited liability company is
dissolved, and its activities and affairs must be wound up,
only on any of the following:
1. Dissolution of the company.
2. Occurrence of an event or circumstance the operating
agreement states causes dissolution of the protected series.
3. Affirmative vote or consent of all members.
4. Entry by the court of an order dissolving the
protected series on application by an associated member or
protected-series manager of the protected series subject to all
of the following:
a. In accordance with section 489.12108.
b. To the same extent, in the same manner, and on the same
grounds the court would enter an order dissolving a limited
liability company on application by a member or manager of the
company.
5. Entry by the court of an order dissolving the protected
series on application by the company or a member of the company
on the ground that the conduct of all or substantially all the
activities and affairs of the protected series is illegal.
Sec. 25. NEW SECTION . 489.12502 Winding up dissolved
protected series.
1. Subject to subsections 2 and 3 and in accordance with
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section 489.12108 all of the following apply:
a. A dissolved protected series shall wind up its activities
and affairs in the same manner that a limited liability company
winds up its activities and affairs under sections 489.702
through 489.704 subject to the same requirements and conditions
and with the same effects.
b. Judicial supervision or another judicial remedy is
available in the winding up of the protected series to the same
extent, in the same manner, under the same conditions, and with
the same effects that apply under section 489.702, subsection
5.
2. When a protected series of a series limited liability
company dissolves, the company may deliver to the secretary of
state for filing a statement of protected series dissolution
stating the name of the company and the protected series
and that the protected series is dissolved. The filing of
the statement by the secretary of state has the same effect
as the filing by the secretary of state of a statement of
dissolution under section 489.103, subsection 4, paragraph “b” ,
subparagraph (1).
3. When a protected series of a series limited liability
company has completed winding up, the company may deliver to
the secretary of state for filing a statement of designation
cancellation stating the name of the company and the protected
series and that the protected series is terminated. The filing
of the statement by the secretary of state has the same effect
as the filing by the secretary of state of a statement of
termination under section 489.103, subsection 4, paragraph “b” ,
subparagraph (2).
4. A series limited liability company has not completed its
winding up until each of the protected series of the company
has completed its winding up.
Sec. 26. NEW SECTION . 489.12503 Effect of reinstatement
of series limited liability company or revocation of voluntary
dissolution.
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If a series limited liability company that has been
administratively dissolved is reinstated, or a series limited
liability company that voluntarily dissolved rescinds its
dissolution both of the following apply:
1. Each protected series of the company ceases winding up.
2. The provisions of section 489.706 apply to each protected
series of the company in accordance with section 489.12108.
SUBPART F
ENTITY TRANSACTIONS RESTRICTED
Sec. 27. NEW SECTION . 489.12601 Definitions.
As used in this subpart:
1. “After a merger” or “after the merger” means when a merger
under section 489.12604 becomes effective and afterwards.
2. “Before a merger” or “before the merger” means before a
merger under section 489.12604 becomes effective.
3. “Continuing protected series” means a protected series of
a surviving company which continues in uninterrupted existence
after a merger under section 489.12604.
4. “Merging company” means a limited liability company that
is party to a merger under section 489.12604.
5. “Nonsurviving company” means a merging company that
does not continue in existence after a merger under section
489.12604.
6. “Relocated protected series” means a protected series
of a nonsurviving company which, after a merger under section
489.12604, continues in uninterrupted existence as a protected
series of the surviving company.
7. “Surviving company” means a merging company that
continues in existence after a merger under section 489.12604.
Sec. 28. NEW SECTION . 489.12602 Protected series shall not
be party to entity transaction.
A protected series shall not do any of the following:
1. Be an acquiring, acquired, converting, converted,
merging, or surviving entity.
2. Participate in a domestication.
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3. Be a party to or be formed, organized, established, or
created in a transaction substantially like a merger, interest
exchange, conversion, or domestication.
Sec. 29. NEW SECTION . 489.12603 Restriction on entity
transaction involving protected series.
A series limited liability company shall not be any of the
following:
1. An acquiring, acquired, converting, converted,
domesticating, or domesticated entity.
2. Except as otherwise provided in section 489.12604, a
party to or the surviving company of a merger.
Sec. 30. NEW SECTION . 489.12604 Merger authorized ——
parties restricted.
A series limited liability company may be party to a merger
in accordance with sections 489.1001 through 489.1005, this
section, and sections 489.12605 through 489.12608 only if all
of the following apply:
1. Each other party to the merger is a limited liability
company.
2. The surviving company is not created in the merger.
Sec. 31. NEW SECTION . 489.12605 Plan of merger.
In a merger under section 489.12604, the plan of merger must
do all of the following:
1. Comply with section 489.1002.
2. State in a record all of the following:
a. For any protected series of a nonsurviving company,
whether after the merger the protected series will be a
relocated protected series or be dissolved, wound up, and
terminated.
b. For any protected series of the surviving company
which exists before the merger, whether after the merger the
protected series will be a continuing protected series or be
dissolved, wound up, and terminated.
c. For each relocated protected series or continuing
protected series all of the following:
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(1) The name of any person that becomes an associated member
or protected-series transferee of the protected series after
the merger, any consideration to be paid by, on behalf of, or
in respect of the person, the name of the payor, and the name
of the payee.
(2) The name of any person whose rights or obligations
in the person’s capacity as an associated member or
protected-series transferee will change after the merger.
(3) Any consideration to be paid to a person who before the
merger was an associated member or protected-series transferee
of the protected series and the name of the payor.
(4) If after the merger the protected series will be a
relocated protected series, its new name.
d. For any protected series to be established by the
surviving company as a result of the merger all of the
following:
(1) The name of the protected series.
(2) Any protected-series transferable interest to be
owned by the surviving company when the protected series is
established.
(3) The name of and any protected-series transferable
interest owned by any person that will be an associated
member of the protected series when the protected series is
established.
e. For any person that is an associated member of a
relocated protected series and will remain a member after
the merger, any amendment to the operating agreement of the
surviving company which is all of the following:
(1) Is or is proposed to be in a record.
(2) Is necessary or appropriate to state the rights and
obligations of the person as a member of the surviving company.
Sec. 32. NEW SECTION . 489.12606 Articles of merger.
In a merger under section 489.12604, the articles of merger
must do all of the following:
1. Comply with section 489.1004.
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2. Include as an attachment the following records, each to
become effective when the merger becomes effective upon any of
the following:
a. For a protected series of a merging company being
terminated as a result of the merger, a statement of
termination signed by the company.
b. For a protected series of a nonsurviving company which
after the merger will be a relocated protected series all of
the following:
(1) A statement of relocation signed by the nonsurviving
company which contains the name of the company and the name of
the protected series before and after the merger.
(2) A statement of protected series designation signed by
the surviving company.
c. For a protected series being established by the
surviving company as a result of the merger, a protected series
designation signed by the company.
Sec. 33. NEW SECTION . 489.12607 Effect of merger.
When a merger under section 489.12604 becomes effective, in
addition to the effects stated in section 489.1005, all of the
following apply:
1. As provided in the plan of merger, each protected series
of each merging company which was established before the merger
is any of the following:
a. Is a relocated protected series or continuing protected
series.
b. Is dissolved, wound up, and terminated.
2. Any protected series to be established as a result of the
merger is established.
3. Any relocated protected series or continuing protected
series is the same person without interruption as it was before
the merger.
4. All property of a relocated protected series or
continuing protected series continues to be vested in the
protected series without transfer, reversion, or impairment.
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5. All debts, obligations, and other liabilities of a
relocated protected series or continuing protected series
continue as debts, obligations, and other liabilities of the
protected series.
6. Except as otherwise provided by law or the plan of
merger, all the rights, privileges, immunities, powers,
and purposes of a relocated protected series or continuing
protected series remain in the protected series.
7. The new name of a relocated protected series may be
substituted for the former name of the protected series in any
pending action or proceeding.
8. If provided in the plan of merger all of the following
apply:
a. A person becomes an associated member or protected-series
transferee of a relocated protected series or continuing
protected series.
b. A person becomes an associated member of a protected
series established by the surviving company as a result of the
merger.
c. Any change in the rights or obligations of a person
in the person’s capacity as an associated member or
protected-series transferee of a relocated protected series or
continuing protected series take effect.
d. Any consideration to be paid to a person that before the
merger was an associated member or protected-series transferee
of a relocated protected series or continuing protected series
is due.
9. Any person that is a member of a relocated protected
series becomes a member of the surviving company, if not
already a member.
Sec. 34. NEW SECTION . 489.12608 Application of section
489.12404 after merger.
1. A creditor’s right that existed under section 489.12404
immediately before a merger under section 489.12604 may
be enforced after the merger in accordance with all of the
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following:
a. A creditor’s right that existed immediately before the
merger against the surviving company, a continuing protected
series, or a relocated protected series continues without
change after the merger.
b. A creditor’s right that existed immediately before the
merger against a nonsurviving company all of the following
apply:
(1) May be asserted against an asset of the nonsurviving
company which vested in the surviving company as a result of
the merger.
(2) Does not otherwise change.
c. Subject to subsection 2, all of the following apply:
(1) In addition to the remedy stated in paragraph “a” , a
creditor with a right under section 489.12404 which existed
immediately before the merger against a nonsurviving company or
a relocated protected series may assert the right against any
of the following:
(a) An asset of the surviving company, other than an asset
of the nonsurviving company which vested in the surviving
company as a result of the merger.
(b) An asset of a continuing protected series.
(c) An asset of a protected series established by the
surviving company as a result of the merger.
(d) If the creditor’s right was against an asset of the
nonsurviving company, an asset of a relocated series.
(e) If the creditor’s right was against an asset of a
relocated protected series, an asset of another relocated
protected series.
(2) In addition to the remedy stated in paragraph “b” ,
a creditor with a right that existed immediately before the
merger against the surviving company or a continuing protected
series may assert the right against any of the following:
(a) An asset of a relocated protected series.
(b) An asset of a nonsurviving company which vested in the
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surviving company as a result of the merger.
2. For the purposes of subsection 1, paragraph “c” , and
section 489.12404, subsection 2, paragraph “a” , subparagraph
(1); section 489.12404, subsection 2, paragraph “b” ,
subparagraph (1); and section 489.12404, subsection 2,
paragraph “c” , subparagraph (1), the incurrence date is deemed
to be the date on which the merger becomes effective.
3. A merger under section 489.12604 does not affect the
manner in which section 489.12404 applies to a liability
incurred after the merger.
SUBPART G
FOREIGN PROTECTED SERIES
Sec. 35. NEW SECTION . 489.12701 Governing law.
The law of the jurisdiction of formation of a foreign series
limited liability company governs all of the following:
1. The internal affairs of a foreign protected series of the
company, including all of the following:
a. Relations among any associated members of the foreign
protected series.
b. Relations between the foreign protected series and any
of the following:
(1) Any associated member.
(2) The protected-series manager.
(3) Any protected-series transferee.
c. Relations between any associated member and any of the
following:
(1) The protected-series manager.
(2) Any protected-series transferee.
d. The rights and duties of a protected-series manager.
e. Governance decisions affecting the activities and affairs
of the foreign protected series and the conduct of those
activities and affairs.
f. Procedures and conditions for becoming an associated
member or protected-series transferee.
2. Relations between the foreign protected series and all
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of the following:
a. The company.
b. Another foreign protected series of the company.
c. A member of the company which is not an associated member
of the foreign protected series.
d. A foreign protected-series manager that is not a
protected-series manager of the protected series.
e. A foreign protected-series transferee that is not a
foreign protected-series transferee of the protected series.
f. A transferee of a transferable interest of the company.
3. Except as otherwise provided in sections 489.12402 and
489.12404, the liability of a person for a debt, obligation,
or other liability of a foreign protected series of a foreign
series limited liability company if the debt, obligation, or
liability is asserted solely by reason of the person being or
acting as any of the following:
a. An associated member, protected-series transferee, or
protected-series manager of the foreign protected series.
b. A member of the company which is not an associated member
of the foreign protected series.
c. A protected-series manager of another foreign protected
series of the company.
d. A protected-series transferee of another foreign
protected series of the company.
e. A manager of the company.
f. A transferee of a transferable interest of the company.
4. Except as otherwise provided in sections 489.12402 and
489.12404 all of the following apply:
a. The liability of the foreign series limited liability
company for a debt, obligation, or other liability of a foreign
protected series of the company if the debt, obligation, or
liability is asserted solely by reason of the foreign protected
series being a foreign protected series of the company or the
company as a consequence of any of the following:
(1) Being or acting as a foreign protected-series manager of
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the foreign protected series.
(2) Having the foreign protected series manage the company.
(3) Owning a protected-series transferable interest of the
foreign protected series.
b. The liability of a foreign protected series for a
debt, obligation, or other liability of the company or
another foreign protected series of the company if the debt,
obligation, or liability is asserted solely by reason of
the foreign protected series as a consequence of any of the
following:
(1) Being a foreign protected series of the company or
having the company or another foreign protected series of the
company be or act as foreign protected-series manager of the
foreign protected series.
(2) Managing the company or being or acting as a foreign
protected-series manager of another foreign protected series
of the company.
Sec. 36. NEW SECTION . 489.12702 No attribution of
activities constituting doing business or for establishing
jurisdiction.
In determining whether a foreign series limited liability
company or foreign protected series of the company does
business in this state or is subject to the personal
jurisdiction of the courts of this state all of the following
apply:
1. The activities and affairs of the company are not
attributable to a foreign protected series of the company
solely by reason of the foreign protected series being a
foreign protected series of the company.
2. The activities and affairs of a foreign protected
series are not attributable to the company or another foreign
protected series of the company solely by reason of the foreign
protected series being a foreign protected series of the
company.
Sec. 37. NEW SECTION . 489.12703 Authorization of foreign
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protected series.
1. Except as otherwise provided in this section and
subject to sections 489.12402 and 489.12404, the law of this
state governing the filing of a certificate of authority of
a foreign limited liability company to do business in this
state, including the consequences of not complying with that
law, applies to a foreign protected series of a foreign series
limited liability company as if the foreign protected series
were a foreign limited liability company formed separately
from the foreign series limited liability company and distinct
from the foreign series limited liability company and any
other foreign protected series of the foreign series limited
liability company.
2. An application by a foreign protected series of a foreign
series limited liability company for a certificate of authority
to do business in this state must include all of the following:
a. The name and jurisdiction of formation of the foreign
series limited liability company.
b. If the company has other foreign protected series,
the name and street and mailing address of an individual who
knows the name and street and mailing address of all of the
following:
(1) Each other foreign protected series of the foreign
series limited liability company.
(2) The foreign protected-series manager of and agent for
service of process for each other foreign protected series of
the foreign series limited liability company.
2A. If the jurisdiction under whose law the foreign
protected series was organized does not provide for the
protected series to obtain a certificate of existence,
the foreign protected series shall attach a certificate of
existence for the series limited liability company of which
it is a protected series. In that case, a foreign protected
series of the foreign series limited liability company will
be deemed to be in existence and good standing as long as the
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series limited liability company is in existence and good
standing.
3. The name of a foreign protected series applying for a
certificate of authority or authorized to do business in this
state must comply with section 489.12202 and may do so using a
fictitious name pursuant to section 489.108, if the fictitious
name complies with section 489.12202.
4. A foreign protected series that has in effect a
certificate of authority pursuant to this section shall file
with the secretary of state an amendment to its application if
there is any change in the information required by subsection
2.
Sec. 38. NEW SECTION . 489.12704 Disclosure required when
foreign series limited liability company or foreign protected
series party to proceeding.
1. Not later than thirty days after becoming a party
to a proceeding before a civil, administrative, or other
adjudicative tribunal of or located in this state or a tribunal
of the United States located in this state all of the following
apply:
a. A foreign series limited liability company shall disclose
to each other party the name and street and mailing address of
all of the following:
(1) Each foreign protected series of the company.
(2) Each foreign protected-series manager of and a
registered agent for service of process for each foreign
protected series of the company.
b. A foreign protected series of a foreign series limited
liability company shall disclose to each other party the name
and street and mailing address of all of the following:
(1) The company and each manager of the company and an agent
for service of process for the company.
(2) Any other foreign protected series of the company and
each foreign protected-series manager of and an agent for
service of process for the other foreign protected series.
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2. If a foreign series limited liability company or foreign
protected series challenges the personal jurisdiction of
the tribunal, the requirement that the foreign company or
foreign protected series make disclosure under subsection 1 is
tolled until the tribunal determines whether it has personal
jurisdiction.
3. If a foreign series limited liability company or foreign
protected series does not comply with subsection 1, a party to
the proceeding may do any of the following:
a. Request the tribunal to treat the noncompliance as a
failure to comply with the tribunal’s discovery rules.
b. Bring a separate proceeding in the court to enforce
subsection 1.
SUBPART H
TRANSITIONAL PROVISIONS
Sec. 39. NEW SECTION . 489.12803 Transitional provisions.
1. Before January 1, 2021, this part governs only the
following:
a. A series limited liability company formed, or a protected
series established, on or after January 1, 2020.
b. A limited liability company that is a series limited
liability company before January 1, 2020, and elects, in the
manner provided in its operating agreement or by law for
amending the operating agreement, to be subject to this part.
2. If a series limited liability company elects under
subsection 1, paragraph “b” , to be subject to this part:
a. The election applies to each protected series of the
company, whenever established.
b. A manager of the company has the right to sign and
deliver to the secretary of state for filing any record
necessary to comply with this part, whether the record pertains
to the company, a protected series of the company, or both.
3. On and after January 1, 2021, this part governs all
series limited liability companies and protected series.
4. Until January 1, 2021, sections 489.12402 and 489.12404
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do not apply to a foreign protected series that was established
before January 1, 2020, or a foreign limited liability company
that became a foreign series limited liability company before
January 1, 2020.
5. This section is repealed on January 1, 2021.
Sec. 40. NEW SECTION . 489.12804 Savings clause.
This part does not affect an action commenced, proceeding
brought, or right accrued before January 1, 2020.
Sec. 41. EFFECTIVE DATE. This division of this Act takes
effect January 1, 2020.
DIVISION II
UNIFORM PROTECTED SERIES ACT —— CONFORMING AMENDMENTS
Sec. 42. Section 10.1, subsections 9 and 17, Code 2019, are
amended to read as follows:
9. a. “Farmers cooperative limited liability company”
means a limited liability company organized under chapter 489 ,
if cooperative associations hold one hundred percent of all
membership interests in the limited liability company. Farmers
cooperative associations must hold at least seventy percent
of all membership interests in the limited liability company.
If more than one type of membership interest is established,
including any series as provided in section 489.1201 or
any class or group as provided in section 489.1201 , farmers
cooperative associations must hold at least seventy percent of
all membership interests of each type.
b. As used in paragraph “a” , a type of membership interest
in a limited liability company includes any of the following:
(1) (a) A series as provided in chapter 489, article 12.
(b) This subparagraph is repealed on January 1, 2021.
(2) A protected series as provided in chapter 489, article
12.
17. “Networking farmers limited liability company” means a
limited liability company, other than a family farm limited
liability company as defined in section 9H.1 , organized under
chapter 489 if all of the following conditions are satisfied:
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a. (1) Qualified farmers must hold at least fifty-one
percent of all membership interests in the limited liability
company. If more than one type of membership interest is
established, including any series as provided in section
489.1201 or any class or group as provided in section 489.1201 ,
qualified farmers must hold at least fifty-one percent of all
membership interests of each type.
b. (2) Qualified persons must hold at least seventy percent
of all membership interests in the limited liability company.
If more than one type of membership interest is established,
including any series as provided in section 489.1201 or any
class or group as provided in section 489.1201 , qualified
persons must hold at least seventy percent of all membership
interests of each type.
b. As used in paragraph “a” , a type of membership interest
in a limited liability company includes any of the following:
(1) (a) A series as provided in chapter 489, article 12.
(b) This subparagraph is repealed on January 1, 2021.
(2) A protected series of a series limited liability company
as provided in chapter 489, article 12.
Sec. 43. Section 10.10, subsection 1, paragraph c, Code
2019, is amended to read as follows:
c. (1) Less than fifty percent of the interest in the
farmers cooperative limited liability company is held by
members which are parties to intra-company loan agreements.
If more than one type of membership interest is established,
including any series as provided in section 489.1201 or any
class or group as provided in section 489.1201 , less than
fifty percent of the interest in each type of membership shall
be held by members which are parties to intra-company loan
agreements.
(2) As used in subparagraph (1), a type of membership
interest in a limited liability company includes any of the
following:
(a) (i) A series as provided in chapter 489, article 12.
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(ii) This subparagraph division is repealed on January 1,
2021.
(b) A protected series of a series limited liability company
as provided in chapter 489, article 12.
Sec. 44. Section 489.101, Code 2019, is amended to read as
follows:
489.101 Short title.
1. This chapter may be cited as the “Revised Uniform Limited
Liability Company Act” .
2. In addition, article 12, part 1, of this chapter may be
cited as provided in section 489.1201.
Sec. 45. Section 489.801, subsection 1, Code 2019, is
amended to read as follows:
1. The Subject to sections 489.12402 and 489.12404, the
law of the state or other jurisdiction under which a foreign
limited liability company is formed governs all of the
following:
a. The internal affairs of the company.
b. The liability of a member as member and a manager as
manager for the debts, obligations, or other liabilities of the
company.
Sec. 46. Section 489.1201, Code 2019, is amended by adding
the following new subsection:
NEW SUBSECTION . 8. This section is repealed on January 1,
2021.
Sec. 47. Section 489.1202, Code 2019, is amended by adding
the following new subsection:
NEW SUBSECTION . 7. This section is repealed on January 1,
2021.
Sec. 48. Section 489.1203, Code 2019, is amended by adding
the following new subsection:
NEW SUBSECTION . 14. This section is repealed on January 1,
2021.
Sec. 49. Section 489.1204, Code 2019, is amended to read as
follows:
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489.1204 Dissociation from a series.
1. Unless otherwise provided in the operating agreement,
a member shall cease to be associated with a series and to
have the power to exercise any rights or powers of a member
with respect to such series upon the assignment of all of the
member’s transferable interest with respect to such series.
Except as otherwise provided in an operating agreement,
an event under this chapter or identified in an operating
agreement that causes a member to cease to be associated with
a series, by itself, shall not cause such member to cease to
be associated with any other series or terminate the continued
membership of a member in the limited liability company.
2. This section is repealed on January 1, 2021.
Sec. 50. Section 489.1205, Code 2019, is amended by adding
the following new subsection:
NEW SUBSECTION . 4. This section is repealed on January 1,
2021.
Sec. 51. Section 489.1206, Code 2019, is amended to read as
follows:
489.1206 Foreign series.
1. A foreign limited liability company that is authorized
to do business in this state under article 8 which is governed
by an operating agreement that establishes or provides for the
establishment of designated series of transferable interests
having separate rights, powers, or duties with respect to
specified property or obligations of the foreign limited
liability company, or profits and losses associated with the
specified property or obligations, shall indicate that fact on
the application for a certificate of authority as a foreign
limited liability company. In addition, the foreign limited
liability company shall state on the application whether the
debts, liabilities, and obligations incurred, contracted for,
or otherwise existing with respect to a particular series, if
any, are enforceable against the assets of such series only,
and not against the assets of the foreign limited liability
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company generally.
2. This section is repealed on January 1, 2021.
Sec. 52. CODE EDITOR DIRECTIVE.
1. The Code editor is directed to make the following
transfers:
a. Section 489.1201, as amended by this division of this
Act, to section 489.12901.
b. Section 489.1202, as amended by this division of this
Act, to section 489.12902.
c. Section 489.1203, as amended by this division of this
Act, to section 489.12903.
d. Section 489.1204, as amended by this division of this
Act, to section 489.12904.
e. Section 489.1205, as amended by this division of this
Act, to section 489.12905.
f. Section 489.1206, as amended by this division of this
Act, to section 489.12906.
2. The Code editor shall codify the sections described in
subsection 1 as new part 2 of article 12 of chapter 489.
3. The Code editor shall correct internal references in the
Code and in any enacted legislation as necessary due to the
enactment of this section.
Sec. 53. EFFECTIVE DATE. This division of this Act takes
effect January 1, 2020.
DIVISION III
MANAGEMENT OF LIMITED LIABILITY COMPANIES
Sec. 54. Section 489.407, subsection 2, paragraph f, Code
2019, is amended by striking the paragraph.
DIVISION IV
DISSOLUTION
Sec. 55. Section 489.105, subsection 2, paragraph a, Code
2019, is amended to read as follows:
a. Delivering to the secretary of state for filing a
statement of change under section 489.114 , an amendment to the
certificate under section 489.202 , a statement of correction
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under section 489.206 , a biennial report under section 489.209 ,
a statement of withdrawal or a statement of rescission under
section 489.701A, or a statement of termination under section
489.702, subsection 2 , paragraph “b” , subparagraph (6).
Sec. 56. Section 489.117, subsection 1, Code 2019, is
amended by adding the following new paragraphs:
NEW PARAGRAPH . 0a. Statement of rescission . . . . No fee
NEW PARAGRAPH . 00a. Statement of withdrawal . . . No fee
Sec. 57. NEW SECTION . 489.701A Rescinding dissolution.
1. A limited liability company may rescind its dissolution,
unless a statement of termination applicable to the company has
become effective, a district court has entered an order under
section 489.701, subsection 1, paragraph “d” , dissolving the
company, or the secretary of state has dissolved the company
under section 489.705.
2. Rescinding dissolution under this section requires all
of the following:
a. The affirmative vote or consent of each member.
b. If the limited liability company has delivered to the
secretary of state for filing a statement of dissolution and
any of the following applies:
(1) The statement has not become effective, delivery
to the secretary of state for filing of a statement of
withdrawal under section 489.205 applicable to the statement
of dissolution.
(2) If the statement of dissolution has become effective,
delivery to the secretary of state for filing of a statement of
rescission stating the name of the company and that dissolution
has been rescinded under this section.
3. If a limited liability company rescinds its dissolution
all of the following apply:
a. The company resumes carrying on its activities and
affairs as if the dissolution had never occurred.
b. Subject to paragraph “c” , any liability incurred by the
company after the dissolution and before the rescission has
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become effective is determined as if dissolution had never
occurred.
c. The rights of a third party arising out of conduct in
reliance on the dissolution before the third party knew or had
notice of the rescission may not be adversely affected.
EXPLANATION
The inclusion of this explanation does not constitute agreement with
the explanation’s substance by the members of the general assembly.
GENERAL —— “REVISED UNIFORM LIMITED LIABILITY COMPANY
ACT”. This bill enacts new or amends existing sections in
the “Revised Uniform Limited Liability Company Act” (RULLCA)
as adopted by the national conference on commissioners of
uniform state laws, more commonly referred to as the uniform
law commissioners (ULC) (see Code chapter 5), enacted by the
General Assembly by 2008 Iowa Acts, chapter 1162, and codified
in Code chapter 489.
IOWA’S RULLCA. Code chapter 489 includes 13 articles
governing limited liability companies (LLCs), including their
formation; relations between members, managers, and other
persons (e.g., creditors) dealing with an LLC; transferrable
interests and rights; members’ dissociations; the LLC’s
dissolution and windup; foreign LLCs; actions by members;
mergers, conversions, and domestication; and professional LLCs.
Article 12 provides for a special type of business organization
referred to as a “series LLC”. Article 13 includes a number
of miscellaneous provisions, including providing for the
uniformity of the Code chapter’s application and construction,
the relationship of Code chapter 489 to the federal Electronic
Signatures in Global and National Commerce Act, and a savings
clause (allowing actions commenced prior to the Act’s effective
date). The bill enacts the Uniform Protected Series Act (UPSA)
and amends provisions allowing for the cancellation of an LLC’s
voluntary dissolution.
GENERAL —— LLC DESCRIPTION. An LLC is a type of
unincorporated business organization that combines features
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associated with for-profit corporations (Code chapter 490) and
partnerships (Code chapter 486A). When adequately capitalized
and operating pursuant to its operating agreement, an LLC
resembles a corporation operating under its articles of
incorporation and bylaws, by shielding its members (equity
holders) from the organization’s liabilities (debts). It
also resembles a partnership in that business income passes
through the organization to its members who report their
respective share of profits or losses on individual rather
than the organization’s (corporate) tax returns. An LLC
is formed by filing a certificate of organization with the
secretary of state (comparable to a corporation’s articles
of incorporation), while many of its powers and duties are
governed by contract (referred to as an operating agreement
and generally comparable to a partnership agreement). The
operating agreement may control the LLC’s governance (e.g.,
whether it is member-managed or manager-managed) and the rights
and duties of its members and managers. A member’s interest
refers to the member’s proportionate equity position in the LLC
and associated control of its business decisions (affairs and
internal activities). A transferable interest refers to the
right of a member or former member to receive distributions
from the LLC in accordance with the LLC’s operating agreement.
Absent a provision in the operating agreement to the contrary,
a transferable interest does not include a unilateral
transfer of control rights. Dissociation occurs when a member
withdraws from an LLC which may be on either a voluntary or an
involuntary basis.
GENERAL —— IOWA SERIES (ARTICLE 12). Under Code chapter 489,
article 12, an LLC’s operating agreement may provide for the
establishment of a designated series. Under this arrangement,
an LLC acts as an umbrella organization for any number of
segregated transferable interests. The term commonly used to
describe the umbrella organization is a series LLC. So long
as certain conditions are satisfied, the liabilities (e.g.,
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debts) and obligations (e.g., contractual promises) by one
series cannot be imputed to either the series LLC or another
series under its umbrella (Code section 489.1201). Likewise,
as far as income, any gain or loss of a series may be allocated
directly to the members of the series rather than to the series
LLC or another series. Because a series is a component of a
series LLC it cannot be completely independent. The article
includes special provisions for a series LLC, including for its
formation (Code section 489.1201), management (Code section
489.1202), distributions conducted as part of a dissolution
(Code section 489.1203), a member’s dissociation (Code section
489.1204), its termination (Code section 489.1205), and a
foreign series LLC (Code section 489.1206).
DIVISION I —— UNIFORM PROTECTED SERIES ACT —— GENERAL.
Division I enacts the UPSA adopted by the ULC which in time
will entirely replace current article 12. The provisions of
the UPSA are codified and fit within the other provisions of
the RULLCA. The article as amended contains two parts: part 1
includes the sections of the UPSA taking the place of current
Iowa series LLC sections and part 2 includes the current Iowa
series sections temporarily transferred to another part of
article 12 until repealed on January 1, 2021.
PART 1, SUBPART A —— GENERAL PROVISIONS. This subpart
includes definitions, a description of the nature of a
protected series; its power, purpose, and duration; how the
protected series is governed by the LLC’s operating agreement;
and rules for applying certain provisions of an existing LLC to
a protected series. Specifically, it includes the article’s
short title (new Code section 489.12101), describes terms used
in the article (new Code sections 489.12102 and 489.12103),
including defining “protected series” which replaces the term
“series” (new Code section 489.12102(18)). It defines “series
limited liability company” to mean a LLC that has at least one
protected series (or is structured to have a protected series)
under its umbrella (new Code section 489.12102(12)). The bill
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defines a number of other terms such as “asset” which includes
property in which a series LLC or protected series holds title
and therefore may exercise certain rights including transfer
(new Code section 489.12102(1)). An “associated asset” of a
series LLC belongs only to (i.e., is “associated with”) the
series LLC and an “associated asset” of a protected series
belongs only to (i.e., is “associated with”) that protected
series (new Code sections 489.12102(2) and 489.12301(1)).
A “protected-series transferable interest” is a type of
transferable interest in which an associated member has a
right to receive a distribution (share of an asset) from a
protected series under an operating agreement (Code section
489.12101(10)). A “protected-series manager” (new Code section
489.12102(9)) is a type of manager (Code section 489.102) who
exercises all powers necessary to direct the activities and
affairs of the protected series (Code section 489.12102(9)). A
protected series may sue and be sued in its own name (new Code
section 489.12104(1)) and has the same powers and purposes as
the series LLC (new Code section 489.12104(2)). Generally, a
protected series cannot survive the termination of its umbrella
series (new Code section 489.12104(3)). A protected series
cannot be a member of another series LLC or establish another
protected series (new Code section 489.12104(4)). A protected
series is subject to choice of law rules in cases where a
dispute arises between parties from different states (new Code
section 489.12105). A series LLC is governed by an operating
agreement (new Code section 489.12106). In certain cases,
the UPSA controls the series LLC and any protected series
regardless of the terms of an operating agreement (new Code
section 489.12107(1)). Various provisions govern how the UPSA
and the RULLCA are to be interpreted in harmony.
PART 1, SUBPART B —— ESTABLISHING PROTECTED SERIES. This
subpart provides for how a protected series is established.
First, it requires a vote of the series LLC’s membership (new
Code section 489.12201(1)). A protected series designation
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must be filed with the secretary of state (new Code section
489.12201(2)). The name of a protected series must comply with
the naming conventions applicable to an ordinary LLC but have
a “protected series” or “PS” designation (new Code section
489.12202). A series LLC (acting through its own registered
agent) serves as the recipient for service for all its umbrella
protected series (new Code section 489.12203(1)). A number
of provisions govern how a protected series receives service
of process (new Code sections 489.12203 and 489.12204). A
protected series may obtain a certificate of existence from
the secretary of state (new Code section 489.12205). An LLC
is required to file a biennial report with the secretary of
state under Code section 489.209. The report must include
information regarding its series (new Code section 489.12206).
PART 1, SUBPART C —— ASSETS, MEMBERS, MANAGEMENT, AND
INFORMATION. Unless provided otherwise in an operating
agreement, the owner of an asset is responsible for meeting
the record-keeping requirements for that asset. An asset
is only associated with a protected series or series LLC
if there are adequate records describing the asset (new
Code section 489.12301(2)). Only a member of a series LLC
may be an associated member of a protected series holding
a transferrable interest in the protected series (new Code
section 489.12302(1)). A transferable interest in a protected
series must initially be owned either by the series LLC or
by an associated member of the protected series (new Code
section 489.12303(1)). A protected series may have multiple
managers (new Code section 489.12304(1)) in the same manner as
an ordinary LLC under Code section 489.407. A manager of a
protected series owes a fiduciary duty to the protected series
rather than to the series LLC or any other protected series
unless the manager also manages that protected series (new
Code section 489.12304(4)). Any derivative claim under RULLCA
(article 9) applies to such claim brought against a protected
series (Code section 489.12304(6)). The bill does not include
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a provision in the UPSA that states an associated member of a
protected series has the same power to act as an agent and may
bind the protected series in the same manner as a member of
an ordinary LLC (presumably member-managed under Code section
489.407). Various parties have a limited right to acquire
information regarding a protected series, including a member
of the series LLC, a former associated member of a protected
series, the legal representative of an associated member of a
protected series, and a protected-series manager of a protected
series (new Code section 489.12305).
PART 1, SUBPART D —— LIABILITY LIMITATIONS AND CLAIMS.
This subpart limits the liability of certain persons and the
enforcement of claims, by creating two types of liability
shields: vertical and horizontal. A vertical shield applies
to members and managers from liability in the same manner as
an ordinary LLC. A horizontal shield applies to a protected
series of a series LLC and its associated assets from liability
for the debts or obligations of the series LLC or another
protected series. A person is not liable for the debts and
obligations of a protected series or a series LLC solely
because the person is an associated member, protected-series
manager, or protected-series transferee of a protected series
(new Code section 489.12401(1)). However, notwithstanding
these shields, a claimant could bring an action against a
protected series under certain circumstances if the same
action could be brought against an ordinary LLC (new Code
section 489.12402(1)). Remedies afforded a judgment creditor
of an associated member, protected-series transferee, or
series limited liability company holding a protected-series
transferable interest are the same as afforded to a judgment
creditor in the case of an ordinary LLC under Code section
489.503 (new Code section 489.12403). Creditors are provided
different rights to assets if they are asserting a claim to
pierce the organization’s veil under principles of equity (new
Code section 489.12402) or are asserting a claim to reach
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“nonassociated assets” meaning that the series LLC or protected
series has not acquired title (new Code section 489.12404).
PART 1, SUBPART E —— DISSOLUTION AND WINDING UP AFFAIRS.
If a series LLC dissolves then each protected series under
its umbrella dissolves simultaneously (new Code section
489.12501(1)). The dissolution of a protected series occurs
due to a provision in its operating agreement, the unanimous
action of its members, or pursuant to court order (new Code
section 489.12501(2)-(5)). Once the protected series is to be
dissolved, its activities and affairs are to be wound up in the
same manner as an ordinary LLC (new Code section 489.12502(1))
referring to Code sections 489.702 through 489.704. In the
case of the dissolution of a series LLC, it cannot wind up
until each of its protected series has wound up (new Code
section 489.12502(4)). If a series LLC is administratively
dissolved by the secretary of state, and later reinstated,
its protected series ceases winding up (new Code section
489.12503).
PART 1, SUBPART F —— CHANGING TRANSACTIONS. This subpart
restricts mergers and other changing transactions involving
LLCs and protected series. A number of new definitions apply.
A “continuing protected series” refers to a protected series
that continues as part of the surviving series LLC (new Code
section 489.12601(3)). A “relocated protected series” refers
to a protected series which was part of a nonsurviving series
LLC and becomes part of the surviving series LLC (new Code
section 489.12601(6)). A protected series is prohibited from
being a direct party to an acquisition, conversion, or merger
(new Code section 489.12602(1)). It also cannot be a direct
party to a domestication (a business organization formed in
multiple states) (new Code section 489.12602(2)). One type of
allowed merger involves two existing LLCs, even if one LLC is
not a series LLC (new Code sections 489.12603 and 489.12604).
A plan of merger must comply with the same requirements
applicable to an ordinary LLC under Code sections 489.1001
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through 489.1005 as well as a number of other requirements
stated in a plan of merger (new Code section 489.12605) and
articles of merger (new Code section 489.12606). A plan of
merger sets forth the management and affairs or affairs of the
protected series, including its termination, establishment, or
relocation, assets and liabilities, powers and rights, and name
(new Code section 489.12607). Generally, a creditor that has a
right against an LLC or protected series that was terminated
because of a merger may retain rights against the surviving
series LLC or protected series (new Code section 489.12608(1)).
In other cases, a creditor’s rights are not affected so long as
the liability was incurred after the merger (new Code section
489.12608(3)).
PART 1, SUBPART G —— FOREIGN PROTECTED SERIES. The law where
a foreign (out-of-state) series LLC is created (referred to as
the “law of the jurisdiction of formation”) generally governs
its protected series, including its formation and governance,
as well as the rights and duties of its associated members,
protected series managers, or protected-series transferees
(new Code section 489.12701(1)). A foreign protected series
doing business in another state cannot assert that its law
governs another foreign protected series not doing business
in that state (new Code section 489.12702). Generally, a
foreign protected series is to be treated like a foreign LLC
for purposes of registering to do in-state business (new Code
section 489.12703). In the case of litigation, within 30 days
after becoming a party, a foreign series LLC or a foreign
protected series must disclose to any adverse party identifying
information regarding the foreign series LLC and each of its
foreign series (new Code section 489.12704(1)).
PART 1, SUBPART H —— TRANSITIONAL PROVISIONS. This subpart
does not include two sections of the UPSA that are already
included in Code chapter 489, article 13, including section
801 that addresses uniformity of application (Code section
489.1301) and section 802 that addresses the federal Electronic
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Signatures in Global and National Commerce Act (Code section
489.1302). It also does not include a severability clause
(that would provide for the retention of other provisions
in the part if one provision were held invalid) since that
provision already applies throughout the Code (Code section
4.12).
The provisions of UPSA, codified as new sections in article
12, part 1, take effect on January 1, 2020, and applies only
to a series LLC formed or a protected series established on or
after that date. One exception applies if a series LLC formed
prior to that date elects to be governed under the new part
(new Code section 489.12803(1)). Otherwise on or after January
1, 2021, all series LLCs and each protected series are governed
under the new part (new Code section 489.12803(1)). However,
until January 1, 2021, certain claims authorized under new
Code sections 489.12402 and 489.12404 cannot proceed against a
foreign series LLC formed prior to January 1, 2020, or foreign
LLC series that became a foreign series before that date (new
Code section 489.12803(4)).
DIVISION II —— UNIFORM PROTECTED SERIES ACT —— CONFORMING
AMENDMENTS. The bill amends the sections currently codified
in article 12 (Iowa series) to provide for their repeal on
January 1, 2021, the date when all series LLC and umbrella
series must comply with the new Code sections codified in
part 1 (UPSA). It also provides for the transfer of current
sections to new part 2. It amends other provisions in the
Code to conform with part 1, including sections that restrict
agricultural landholding by LLCs (Code chapter 10). It also
amends provisions relating to the law governing foreign LLCs by
referencing foreign series LLCs (Code section 489.801). The
division takes effect January 1, 2020.
DIVISION III —— DISASSOCIATION —— MANAGEMENT. The bill
eliminates a provision which provides for member-managed
limited liability companies, by removing a reference to
approving a merger, conversion, or domestication (Code section
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S.F. _____
489.407(2)(f)). There are two different methods of managing
a LLC. By statutory default (Code section 489.407(1)), a
LLC is member-managed, meaning that all members participate
in decisions managing the activities and affairs to the
organization (a partnership model). Alternatively, a
manager-managed LLC, formed and governed under an operating
agreement, provides that certain members or nonmembers are
designated to take such actions while the remaining members act
as passive investors (corporate model).
DIVISION IV —— DISSOLUTION. The bill provides that an LLC
may rescind a voluntary dissolution (new Code section 489.701A)
and consequently the winding up of its affairs and activities
(Code section 489.702). A dissolution is a fundamental
change transaction that triggers the LLC’s termination. It is
accomplished by a provision in the operating agreement, the
unanimous consent of its members, by district court order in
an action for dissolution, or by an administrative declaration
issued by the secretary of state (e.g., for nonpayment of
a fee). The bill provides that in cases of a voluntary
dissolution in which a statement of dissolution is filed, an
LLC may rescind such a statement by filing with the secretary
of state a statement of rescission. Generally, once an LLC
rescinds its dissolution, the LLC carries on its affairs as if
the dissolution had never occurred. One exception applies to
protect a person (creditor) who would be adversely affected by
the retroactive effect of the statement of rescission.
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