House Study Bill 207 - Introduced HOUSE FILE _____ BY (PROPOSED COMMITTEE ON JUDICIARY BILL BY CHAIRPERSON HOLT) A BILL FOR An Act providing for business organizations, including limited 1 liability companies, providing penalties, and including 2 effective date provisions. 3 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 4 TLSB 1051YC (2) 90 da/jh
H.F. _____ DIVISION I 1 LIMITED LIABILITY COMPANIES 2 Section 1. Section 489.101, Code 2023, is amended to read 3 as follows: 4 489.101 Short title. 5 1. This chapter may be cited as the Revised Uniform 6 Uniform Limited Liability Company Act . 7 2. In addition, article 14 subchapter XIV of this chapter 8 may be cited as provided in section 489.14101 . 9 Sec. 2. Section 489.102, Code 2023, is amended to read as 10 follows: 11 489.102 Definitions. 12 As used in this chapter , unless the context otherwise 13 requires : 14 1. Certificate of organization means the certificate 15 required by section 489.201 . The term includes the certificate 16 as amended or restated. 17 2. Contribution means any benefit provided by a person to 18 a limited liability company that is any of the following: 19 a. In order to become a member upon formation of the company 20 and in accordance with an agreement between or among the 21 persons that have agreed to become the initial members of the 22 company. 23 b. In order to become a member after formation of the 24 company and in accordance with an agreement between the person 25 and the company. 26 c. In the persons capacity as a member and in accordance 27 with the operating agreement or an agreement between the member 28 and the company. 29 2. Contribution , except in the phrase right of 30 contribution , means property or a benefit described in section 31 489.402 which is provided by a person to a limited liability 32 company to become a member or in the persons capacity as a 33 member. 34 3. Debtor in bankruptcy means a person that is the subject 35 -1- LSB 1051YC (2) 90 da/jh 1/ 161
H.F. _____ of any of the following: 1 a. An order for relief under Tit. 11 of the United States 2 Code or a comparable order under a successor statute of general 3 application. 4 b. A comparable order under federal, state, or foreign law 5 governing insolvency. 6 4. Deliver or delivery means any method of delivery 7 used in conventional commercial practice, including delivery in 8 person, by hand, mail, commercial delivery, and if authorized 9 in accordance with section 489.120, by electronic transmission. 10 5. Distribution , except as otherwise provided in section 11 489.405, subsection 6 , means a transfer of money or other 12 property from a limited liability company to another a person 13 on account of a transferable interest or in the persons 14 capacity as a member . 15 a. Distribution includes all of the following: 16 (1) A redemption or other purchase by a limited liability 17 company of a transferable interest. 18 (2) A transfer to a member in return for the members 19 relinquishment of any right to participate as a member in 20 the management or conduct of the limited liability companys 21 activities and affairs or to have access to records or other 22 information concerning the companys activities and affairs. 23 b. Distribution does not include amounts constituting 24 reasonable compensation for present or past service or payments 25 made in the ordinary course of business under a bona fide 26 retirement plan or other bona fide benefits program. 27 6. Domestic cooperative means an entity organized on a 28 cooperative basis under chapter 497 , 498 , or 499 , a cooperative 29 organized under chapter 499A , or a cooperative organized under 30 chapter 501 or 501A . 31 7. Effective , with respect to a record required or 32 permitted to be delivered to the secretary of state for filing 33 under this chapter , means effective under section 489.205, 34 subsection 3 . 35 -2- LSB 1051YC (2) 90 da/jh 2/ 161
H.F. _____ 7. Electronic means relating to technology having 1 electrical, digital, magnetic, wireless, optical, 2 electromagnetic, or similar capabilities. 3 8. Electronic transmission or electronically transmitted 4 means any form or process of communication not directly 5 involving the physical transfer of paper that is suitable for 6 the retention, retrieval, and reproduction of information by 7 the recipient. or another tangible medium that is all of the 8 following: 9 a. Suitable for the retention, retrieval, and reproduction 10 of information by the recipient. 11 b. Retrievable in paper form by the recipient through an 12 automated process used in conventional commercial practice, 13 unless otherwise authorized in accordance with subsection 15. 14 9. Filing entity means an unincorporated entity, other 15 than a limited liability partnership, that is of a type that 16 is created by filing a public organic record or is required to 17 file a public organic record that evidences its creation. 18 9. 10. Foreign limited liability company means an 19 unincorporated entity formed under the law of a jurisdiction 20 other than this state and denominated by that law as a limited 21 liability company which would be a limited liability company if 22 formed under the law of this state . 23 11. Jurisdiction , used to refer to a political entity, 24 means the United States, a state, a foreign county, or a 25 political subdivision of a foreign country. 26 12. Jurisdiction of formation means the jurisdiction whose 27 law governs the internal affairs of an entity. 28 10. 13. Limited liability company , except in the phrase 29 foreign limited liability company , and in subchapter X means 30 an entity formed under this chapter or which becomes subject to 31 this chapter under subchapter X or section 489.110 . 32 11. 14. Manager means a person that under the operating 33 agreement of a manager-managed limited liability company is 34 responsible, alone or in concert with others, for performing 35 -3- LSB 1051YC (2) 90 da/jh 3/ 161
H.F. _____ the management functions stated in section 489.407, subsection 1 3 . 2 12. 15. Manager-managed limited liability company means a 3 limited liability company that qualifies under section 489.407, 4 subsection 1 . 5 13. 16. Member means a person that has become a member 6 of a limited liability company under section 489.401 and has 7 not dissociated under section 489.602 . for whom all of the 8 following are true: 9 a. The person has become a member of a limited liability 10 company under section 489.401 or was a member in a limited 11 liability company when the company became subject to this 12 chapter under section 489.110. 13 b. The person is not dissociated under section 489.602. 14 14. 17. Member-managed limited liability company means a 15 limited liability company that is not a manager-managed limited 16 liability company. 17 18. Nonfiling entity means an unincorporated entity that 18 is of a type that is not created by filing a public organic 19 record. 20 15. 19. Operating agreement means the agreement, whether 21 or not referred to as an operating agreement and whether oral, 22 implied, in a record, implied, or in any combination thereof, 23 of all the members of a limited liability company, including 24 a sole member, concerning the matters described in section 25 489.110, subsection 1 . The term includes the agreement as 26 amended or restated. 27 16. 20. Organizer means a person that acts under section 28 489.201 to form a limited liability company. 29 17. 21. a. Person means an individual, business 30 corporation, business trust, estate, trust, nonprofit 31 corporation, partnership, limited partnership, limited 32 liability company, domestic cooperative, unincorporated 33 nonprofit association, statutory trust, business trust, 34 common-law business trust, estate, trust, association, joint 35 -4- LSB 1051YC (2) 90 da/jh 4/ 161
H.F. _____ venture, public corporation, government or governmental 1 subdivision, agency, or instrumentality, or any other legal or 2 commercial entity. 3 b. Person includes a protected series, however 4 denominated, of an entity if the protected series is 5 established under law that limits, or limits if conditions 6 specified under law are satisfied, the ability of a creditor 7 of the entity or of any other protected series of the entity to 8 satisfy a claim from assets of the protected series. 9 18. 22. Principal office means the principal executive 10 office of a limited liability company or foreign limited 11 liability company, whether or not the office is located in this 12 state. 13 23. Property means all property, whether real, personal, 14 or mixed or tangible or intangible, or any right or interest 15 therein. 16 19. 24. Record , used as a noun, means information that 17 is inscribed on a tangible medium or that is stored in an 18 electronic or other medium and is retrievable in perceivable 19 form. 20 20. Registered office means the office that a limited 21 liability company or foreign limited liability company is 22 required to designate and maintain under section 489.113 . 23 25. Registered agent means an agent of a limited 24 liability company or foreign limited liability company which is 25 authorized to receive service of any process, notice, or demand 26 required or permitted by law to be served on the company. 27 26. Registered foreign limited liability company means 28 a foreign limited liability company that is registered to do 29 business in this state pursuant to a statement of registration 30 filed by the secretary of state. 31 21. 27. Sign means, with the present intent to 32 authenticate or adopt a record, to do any of the following: 33 a. Execute or adopt a tangible symbol. 34 b. Attach to or logically associate with the record an 35 -5- LSB 1051YC (2) 90 da/jh 5/ 161
H.F. _____ electronic symbol, sound, or process. 1 22. 28. State means a state of the United States, the 2 District of Columbia, Puerto Rico, the United States Virgin 3 Islands, or any territory or insular possession subject to the 4 jurisdiction of the United States. 5 23. 29. Transfer includes an assignment, conveyance, 6 deed, bill of sale, lease, mortgage, security interest, 7 encumbrance, gift, or transfer by operation of law. any of the 8 following: 9 a. An assignment. 10 b. A conveyance. 11 c. A sale. 12 d. A lease. 13 e. An encumbrance, including a mortgage or security 14 interest. 15 f. A gift. 16 g. A transfer by operation of law. 17 24. 30. a. Transferable interest means the right, as 18 originally associated with initially owned by a person in the 19 persons capacity as a member, to receive distributions from 20 a limited liability company , in accordance with the operating 21 agreement, whether or not the person remains a member or 22 continues to own any part of the right. 23 b. Transferable interest applies to any fraction of the 24 interest, by whomever owned. 25 25. 31. a. Transferee means a person to which all or 26 part of a transferable interest has been transferred, whether 27 or not the transferor is a member. 28 b. Transferee includes a person that owns a transferable 29 interest under section 489.603, subsection 1, paragraph c . 30 Sec. 3. Section 489.103, Code 2023, is amended to read as 31 follows: 32 489.103 Knowledge notice. 33 1. A person knows a fact when if the person has or is any 34 of the following: 35 -6- LSB 1051YC (2) 90 da/jh 6/ 161
H.F. _____ a. Has actual knowledge of it. 1 b. Is deemed to know it under subsection 4 , paragraph a , 2 or law other than this chapter . 3 2. A person has notice of a fact when if the person has or 4 is any of the following: 5 a. Has reason to know the fact from all of the facts known 6 to the person at the time in question. 7 b. Is deemed to have notice of the fact under subsection 4 , 8 paragraph b . 9 3. A Subject to section 489.210, subsection 6, a person 10 notifies another person of a fact by taking steps reasonably 11 required to inform the other person in ordinary course, whether 12 or not those steps cause the other person knows to know the 13 fact. 14 4. A person that is not a member is deemed both all of the 15 following: 16 a. To know of a limitation on authority to transfer real 17 property as provided in section 489.302, subsection 7 . 18 b. To have notice of all of the following regarding a 19 limited liability companys : 20 (1) Dissolution, The limited liability companys 21 dissolution, ninety days after a statement of dissolution under 22 section 489.702, subsection 2 , paragraph b , subparagraph (1), 23 becomes effective. 24 (2) Termination, The limited liability companys 25 termination, ninety days after a statement of termination under 26 section 489.702, subsection 2 , paragraph b , subparagraph (6), 27 becomes effective. 28 (3) Merger, The limited liability companys participation 29 in a merger, interest exchange, conversion, or domestication, 30 ninety days after articles of merger, interest exchange, 31 conversion, or domestication under article 10 subchapter X 32 become effective. 33 Sec. 4. Section 489.104, Code 2023, is amended to read as 34 follows: 35 -7- LSB 1051YC (2) 90 da/jh 7/ 161
H.F. _____ 489.104 Nature, purpose, and duration of limited liability 1 company. 2 1. A limited liability company is an entity distinct from 3 its member or members. 4 2. A limited liability company may have any lawful purpose, 5 regardless of whether for profit. 6 3. A limited liability company has perpetual duration. 7 Sec. 5. Section 489.105, Code 2023, is amended to read as 8 follows: 9 489.105 Powers. 10 1. Except as otherwise provided in subsection 2 , a limited 11 liability company has the capacity to sue and be sued in its 12 own name and the power to do all things necessary or convenient 13 to carry on its activities and affairs . 14 2. Until a limited liability company has or has had at 15 least one member, the limited liability company lacks the 16 capacity to do any act or carry on any activity except all of 17 the following: 18 a. Delivering to the secretary of state for filing a 19 statement of change under section 489.114 , an amendment to the 20 certificate under section 489.202 , a statement of correction 21 under section 489.206 , a biennial report under section 489.209 , 22 a statement of withdrawal or a statement of rescission under 23 section 489.701A , or a statement of termination under section 24 489.702, subsection 2 , paragraph b , subparagraph (6). 25 b. Admitting a member under section 489.401 . 26 c. Dissolving under section 489.701 . 27 3. A limited liability company that has or has had at least 28 one member may ratify an act or activity that occurred when the 29 company lacked capacity under subsection 2 . 30 Sec. 6. Section 489.106, Code 2023, is amended to read as 31 follows: 32 489.106 Governing law. 33 The law of this state governs all of the following: 34 1. The internal affairs of a limited liability company. 35 -8- LSB 1051YC (2) 90 da/jh 8/ 161
H.F. _____ 2. The liability of a member as member and a manager as 1 manager for the debts, obligations, a debt, obligation, or 2 other liabilities liability of a limited liability company. 3 Sec. 7. Section 489.108, Code 2023, is amended to read as 4 follows: 5 489.108 Name Permitted names . 6 1. The name of a limited liability company must contain 7 the words phrase limited liability company or limited 8 company or the abbreviation L. L. C., LLC, L. C., or LC. 9 Limited may be abbreviated as Ltd., and company may be 10 abbreviated as Co.. 11 2. Unless authorized by Except as otherwise provided in 12 subsection 3 , the name of a limited liability company , and 13 the name under which a foreign limited liability company may 14 register to do business in this state, must be distinguishable 15 in on the records of the secretary of state from all any of the 16 following: 17 a. The name of each person that is not an individual and 18 that is incorporated, organized, or authorized to transact 19 business in this state. 20 b. Each name reserved under section 489.109 . 21 a. The name of an existing person whose formation required 22 the filing of a record by the secretary of state and which is 23 not at the time administratively dissolved, or if such person 24 has been administratively dissolved, within five years of the 25 effective date of dissolution. 26 b. The name of a limited liability partnership whose 27 statement of qualification is in effect. 28 c. The name under which a person is registered to do 29 business in this state by the filing of a record by the 30 secretary of state. 31 d. The name reserved under section 489.109 or other law 32 of this state providing for the reservation of a name by the 33 filing of a record by the secretary of state. 34 e. The name registered under section 489.114 or other law 35 -9- LSB 1051YC (2) 90 da/jh 9/ 161
H.F. _____ of this state providing for the registration of a name by the 1 filing of a record by the secretary of state. 2 f. The name registered with the secretary of state as a 3 fictitious name. 4 3. A limited liability company may apply to the secretary of 5 state for authorization to use a name that does not comply with 6 subsection 2 . The secretary of state shall authorize use of 7 the name applied for if either of the following applies: If a 8 person consents in a record to the use of its name and submits 9 an undertaking in a form satisfactory to the secretary of state 10 to change its name to a name that is distinguishable on the 11 records of the secretary of state from any name in any category 12 of names in subsection 2, the name of the consenting person may 13 be used by the person to which the consent was given. 14 a. The present user, registrant, or owner of the 15 noncomplying name consents in a signed record to the use 16 and submits an undertaking in a form satisfactory to the 17 secretary of state to change the noncomplying name to a name 18 that complies with subsection 2 and is distinguishable in the 19 records of the secretary of state from the name applied for. 20 b. The applicant delivers to the secretary of state a 21 certified copy of the final judgment of a court establishing 22 the applicants right to use in this state the name applied 23 for. 24 4. A limited liability company may use the name, including 25 the fictitious name, of another entity that is used in this 26 state if the other entity is formed under the law of this 27 state or is authorized to transact business in this state 28 and the proposed user limited liability company meets any 29 of the following conditions: In determining whether a name 30 is the same as or not distinguishable on the records of the 31 secretary of state from the name of another person, words, 32 phrases, or abbreviations indicating a type of person, such as 33 corporation, corp., incorporated, Inc., professional 34 corporation, P.C., PC, professional association, P.A., 35 -10- LSB 1051YC (2) 90 da/jh 10/ 161
H.F. _____ PA, Limited, Ltd., limited partnership, L.P., LP, 1 limited liability partnership, L.L.P., LLP, registered 2 limited liability partnership, R.L.L.P., RLLP, limited 3 liability limited partnership, L.L.L.P., LLLP, registered 4 limited liability limited partnership, R.L.L.L.P., RLLLP, 5 limited liability company, L.L.C., LLC, cooperative, 6 coop, or CP shall not be taken into account. 7 a. Has merged with the other entity. 8 b. Has been formed by reorganization of the other entity. 9 c. Has acquired all or substantially all of the assets, 10 including the name, of the other entity. 11 5. This article does not control the use of fictitious 12 names. However, if a limited liability company uses a 13 fictitious name in this state, it shall deliver to the 14 secretary of state for filing a certified copy of the 15 resolution of its members if it is member-managed or its 16 managers if it is manager-managed, adopting the fictitious 17 name. The name of a limited liability company or foreign 18 limited liability company shall not contain words that may be 19 used only with approval by another state department or state 20 agency unless the company obtains the approval of such other 21 state department or agency and delivers to the secretary of 22 state for filing a record certifying such approval. 23 6. Subject to section 489.805 , this section applies to 24 a foreign limited liability company transacting business in 25 this state which has a certificate of authority to transact 26 business in this state or which has applied for a certificate 27 of authority. A limited liability company or foreign limited 28 liability company may use a name that is not distinguishable 29 from a name described in subsection 2, paragraphs a through 30 f , if the company delivers to the secretary of state a 31 certified copy of a final judgment of a court of competent 32 jurisdiction establishing the right of the company to use the 33 name in this state. 34 7. A limited liability company may use the name, including 35 -11- LSB 1051YC (2) 90 da/jh 11/ 161
H.F. _____ the fictitious name, of another entity that is used in this 1 state if the other entity is formed under the law of this 2 state or is authorized to transact business in this state and 3 the proposed user limited liability company meets any of the 4 following conditions: 5 a. Has merged with the other entity. 6 b. Has been formed by reorganization of the other entity. 7 c. Has acquired all or substantially all of the assets, 8 including the name, of the other entity. 9 8. This subchapter does not control the use of fictitious 10 names. However, if a limited liability company uses a 11 fictitious name in this state, it shall deliver to the 12 secretary of state for filing a certified copy of the 13 resolution of its members if it is member-managed or its 14 managers if it is manager-managed, adopting the fictitious 15 name. 16 Sec. 8. Section 489.109, Code 2023, is amended to read as 17 follows: 18 489.109 Reservation of name. 19 1. A person may reserve the exclusive use of the a name 20 of a limited liability company, including a fictitious or 21 assumed name for a foreign limited liability company whose 22 name is not available, by delivering an application to the 23 secretary of state for filing that complies with section 24 489.112 by delivering an application to the secretary of state 25 for filing . The application must state the name and address 26 of the applicant and the name proposed to be reserved. If 27 the secretary of state finds that the name applied for is 28 available, it must be reserved the secretary of state shall 29 reserve the name for the applicants exclusive use for a 30 one-hundred-twenty-day period one hundred and twenty days . 31 2. The owner of a reserved name reserved for a limited 32 liability company may transfer the reservation to another 33 person by delivering to the secretary of state for filing a 34 signed notice in a record of the transfer which states the name 35 -12- LSB 1051YC (2) 90 da/jh 12/ 161
H.F. _____ and address of the transferee person to which the reservation 1 is being transferred . 2 Sec. 9. Section 489.110, Code 2023, is amended to read as 3 follows: 4 489.110 Operating agreement scope, function, and 5 limitations. 6 1. Except as otherwise provided in subsections 2 3 and 3 4 , 7 the operating agreement governs all of the following: 8 a. Relations among the members as members and between the 9 members and the limited liability company. 10 b. The rights and duties under this chapter of a person in 11 the capacity of manager. 12 c. The activities and affairs of the company and the conduct 13 of those activities and affairs . 14 d. The means and conditions for amending the operating 15 agreement. 16 2. To the extent the operating agreement does not otherwise 17 provide for a matter described in subsection 1 , this chapter 18 governs the matter. 19 3. An operating agreement shall not do any of the following: 20 a. Vary a limited liability companys capacity under section 21 489.105 to sue and be sued in its own name the law applicable 22 under section 489.104 . 23 b. Vary the law applicable under section 489.106 a limited 24 liability companys capacity under section 489.109 to sue and 25 be sued in its own name . 26 c. Vary the power of the court under section 489.204 . any 27 requirement, procedure, or other provision of this chapter 28 pertaining to any of the following: 29 (1) Registered agents. 30 (2) The secretary of state, including provisions pertaining 31 to records authorized or required to be delivered to the 32 secretary of state for filing under this chapter. 33 d. Subject to subsections 4 through 7 , eliminate the duty of 34 loyalty, the duty of care, or any other fiduciary duty Vary the 35 -13- LSB 1051YC (2) 90 da/jh 13/ 161
H.F. _____ provisions of section 489.204 . 1 e. Subject to subsections 4 through 7 , eliminate the 2 contractual obligation of good faith and fair dealing under 3 section 489.409, subsection 4 Alter or eliminate the duty of 4 loyalty or the duty of care, except as otherwise provided in 5 subsection 4 . 6 f. Unreasonably restrict the duties and rights stated in 7 section 489.410 Eliminate the contractual obligation of good 8 faith and fair dealing under section 489.409, subsection 4, 9 but the operating agreement may prescribe the standards, if 10 not manifestly unreasonable, by which the performance of the 11 obligation is to be measured . 12 g. Vary the power of a court to decree dissolution in 13 the circumstances specified in section 489.701, subsection 14 1 , paragraphs d and e Relieve or exonerate a person from 15 liability for conduct except as provided in subsection 6 . 16 h. Vary the requirement to wind up a limited liability 17 companys business as specified in section 489.702, 18 subsection 1 , and section 489.702, subsection 2 , paragraph 19 a Unreasonably restrict the duties and rights under section 20 489.410, but the operating agreement may impose reasonable 21 restrictions on the availability and use of information 22 obtained under that section and may define appropriate 23 remedies, including liquidated damages, for a breach of any 24 reasonable restriction on use . 25 i. Unreasonably restrict the right of a member to maintain 26 an action under article 9 Vary the causes of dissolution 27 specified in section 489.701, subsection 1, paragraph d . 28 j. Restrict the right to approve a merger, conversion, or 29 domestication under section 489.1014 to a member that will have 30 personal liability with respect to a surviving, converted, or 31 domesticated organization Vary the requirement to wind up the 32 limited liability companys activities and affairs as specified 33 in section 489.702, subsection 1; subsection 2, paragraph a ; 34 and subsection 5 . 35 -14- LSB 1051YC (2) 90 da/jh 14/ 161
H.F. _____ k. Except as otherwise provided in section 489.112, 1 subsection 2 , restrict the rights under this chapter of a 2 person other than a member or manager Unreasonably restrict the 3 right of a member to maintain an action under subchapter VIII . 4 l. Vary the provisions of section 489.805A, but the 5 operating agreement may provide that the limited liability 6 company shall not have a special litigation committee. 7 m. Vary the right of a member to approve a merger, interest 8 exchange, conversion, or domestication under section 489.1023, 9 subsection 1, paragraph b ; section 489.1033, subsection 1, 10 paragraph b ; section 489.1043, subsection 1, paragraph b ; or 11 section 489.1053, subsection 1, paragraph b . 12 n. Vary the required contents of a plan of merger under 13 section 489.1022, subsection 1; plan of interest exchange 14 under section 489.1032, subsection 1; plan of conversion under 15 section 489.1042, subsection 1; or plan of domestication under 16 section 489.1052, subsection 1. 17 o. Except as otherwise provided in sections 489.111 and 18 489.112, subsection 2, restrict the rights under this chapter 19 of a person other than a member or manager. 20 4. If not manifestly unreasonable, the operating agreement 21 may do any of the following: Subject to subsection 3, 22 paragraph g , without limiting other terms that may be included 23 in an operating agreement, all the following rules apply: 24 a. Restrict or eliminate the duty to do any The operating 25 agreement may do all of the following: 26 (1) As required in section 489.409, subsection 2 , paragraph 27 a , and section 489.409, subsection 8 , to account to the 28 limited liability company and to hold as trustee for it any 29 property, profit, or benefit derived by the member in the 30 conduct or winding up of the companys business, from a use by 31 the member of the companys property, or from the appropriation 32 of a limited liability company opportunity Specify the method 33 by which a specific act or transaction that would otherwise 34 violate the duty of loyalty may be authorized or ratified by 35 -15- LSB 1051YC (2) 90 da/jh 15/ 161
H.F. _____ one or more disinterested and independent persons after full 1 disclosure of all material facts . 2 (2) As required in section 489.409, subsection 2 , paragraph 3 b , and section 489.409, subsection 8 , to refrain from dealing 4 with the company in the conduct or winding up of the companys 5 business as or on behalf of a party having an interest adverse 6 to the company Alter the prohibition in section 489.405, 7 subsection 1, paragraph b , so that the prohibition requires 8 only that the limited liability companys total assets not be 9 less than the sum of its total liabilities . 10 (3) As required by section 489.409, subsection 2 , paragraph 11 c , and section 489.409, subsection 8 , to refrain from 12 competing with the company in the conduct of the companys 13 business before the dissolution of the company. 14 b. Identify specific types or categories of activities 15 that do not violate the duty of loyalty To the extent the 16 operating agreement of a member-managed limited liability 17 company expressly relieves a member of a responsibility that 18 the member otherwise would have under this chapter and imposes 19 the responsibility on one or more other members, the agreement 20 also may eliminate or limit any fiduciary duty of the member 21 relieved of the responsibility which would have pertained to 22 the responsibility . 23 c. Alter the duty of care, except to authorize intentional 24 misconduct or knowing violation of law. If not manifestly 25 unreasonable, the operating agreement may do all of the 26 following: 27 (1) Alter or eliminate the aspects of the duty of loyalty 28 stated in section 489.409, subsections 2 and 9. 29 (2) Identify specific types or categories of activities 30 that do not violate the duty of loyalty. 31 (3) Alter the duty of care, but may not authorize conduct 32 involving bad faith, willful or intentional misconduct, or 33 knowing violation of law. 34 (4) Alter or eliminate any other fiduciary duty. 35 -16- LSB 1051YC (2) 90 da/jh 16/ 161
H.F. _____ d. Alter any other fiduciary duty, including eliminating 1 particular aspects of that duty. 2 e. Prescribe the standards by which to measure the 3 performance of the contractual obligation of good faith and 4 fair dealing under section 489.409, subsection 4 . 5 5. The operating agreement may specify the method by which 6 a specific act or transaction that would otherwise violate the 7 duty of loyalty may be authorized or ratified by one or more 8 disinterested and independent persons after full disclosure 9 of all material facts The court shall decide as a matter of 10 law whether a term of an operating agreement is manifestly 11 unreasonable under subsection 3, paragraph f , or subsection 12 4, paragraph c . All of the following shall apply: 13 a. The court shall make its determination as of the time the 14 challenged term became part of the operating agreement and by 15 considering only circumstances existing at that time. 16 b. The court may invalidate the term only if, in light of 17 the purposes, activities, and affairs of the limited liability 18 company, it is readily apparent that any of the following 19 apply: 20 (1) The objective of the term is unreasonable. 21 (2) The term is an unreasonable means to achieve the terms 22 objective. 23 6. To the extent the operating agreement of a member-managed 24 limited liability company expressly relieves a member of a 25 responsibility that the member would otherwise have under 26 this chapter and imposes the responsibility on one or more 27 other members, the operating agreement may, to the benefit 28 of the member that the operating agreement relieves of the 29 responsibility, also eliminate or limit any fiduciary duty that 30 would have pertained to the responsibility. 31 7. 6. The An operating agreement may alter or eliminate 32 the indemnification for a member or manager provided by section 33 489.408, subsection 1 , and may eliminate or limit a members 34 or managers liability to the limited liability company and 35 -17- LSB 1051YC (2) 90 da/jh 17/ 161
H.F. _____ members for money damages, except for any of the following: 1 a. A breach of the duty of loyalty. 2 b. A financial benefit received by the member or manager to 3 which the member or manager is not entitled. 4 c. A breach of a duty under section 489.406 . 5 d. Intentional infliction of harm on the company or a 6 member. 7 e. An intentional violation of criminal law. 8 8. The court shall decide any claim under subsection 4 that 9 a term of an operating agreement is manifestly unreasonable. 10 All of the following apply: 11 a. The court shall make its determination as of the time the 12 challenged term became part of the operating agreement and by 13 considering only circumstances existing at that time. 14 b. The court may invalidate the term only if, in light of 15 the purposes and activities of the limited liability company, 16 it is readily apparent that any of the following applies: 17 (1) The objective of the term is unreasonable. 18 (2) The term is an unreasonable means to achieve the 19 provisions objective. 20 Sec. 10. Section 489.111, Code 2023, is amended to read as 21 follows: 22 489.111 Operating agreement effect on limited liability 23 company and persons becoming members preformation agreement. 24 1. A limited liability company is bound by and may enforce 25 the operating agreement, whether or not the company has itself 26 manifested assent to the operating agreement. 27 2. A person that becomes a member of a limited liability 28 company is deemed to assent to the operating agreement. 29 3. Two or more persons intending to become the initial 30 members of a limited liability company may make an agreement 31 providing that upon the formation of the company the agreement 32 will become the operating agreement. One person intending 33 to become the initial member of a limited liability company 34 may assent to terms providing that upon the formation of the 35 -18- LSB 1051YC (2) 90 da/jh 18/ 161
H.F. _____ company the terms will become the operating agreement. 1 4. An operating agreement in a signed record that excludes 2 modification or rescission except by a signed record cannot be 3 otherwise modified or rescinded. 4 Sec. 11. Section 489.112, Code 2023, is amended to read as 5 follows: 6 489.112 Operating agreement effect on third parties and 7 relationship to records effective on behalf of limited liability 8 company. 9 1. An operating agreement may specify that its amendment 10 requires the approval of a person that is not a party to the 11 operating agreement or the satisfaction of a condition. An 12 amendment is ineffective if its adoption does not include the 13 required approval or satisfy the specified condition. 14 2. The obligations of a limited liability company and its 15 members to a person in the persons capacity as a transferee or 16 a person dissociated as a member are governed by the operating 17 agreement. Subject only to any a court order issued under 18 section 489.503, subsection 2 , paragraph b , to effectuate a 19 charging order, an amendment to the operating agreement made 20 after a person becomes a transferee or is dissociated as a 21 member is or is not effective as follows: 22 a. Is effective with regard to any debt, obligation, or 23 other liability of the limited liability company or its members 24 to the person in the persons capacity as a transferee or 25 person dissociated as a member. 26 b. Is not effective to the extent the amendment imposes a 27 new debt, obligation, or other liability on the transferee or 28 person dissociated as a member. 29 3. If a record that has been delivered by a limited 30 liability company to the secretary of state for filing and 31 has become becomes effective under this chapter and contains 32 a provision that would be ineffective under section 489.110, 33 subsection 3 or subsection 4, paragraph c , if contained in 34 the operating agreement, the provision is likewise ineffective 35 -19- LSB 1051YC (2) 90 da/jh 19/ 161
H.F. _____ in the record. 1 4. Subject to subsection 3 , if a record that has been 2 delivered by a limited liability company to the secretary 3 of state for filing and has become becomes effective under 4 this chapter and conflicts with a provision of the operating 5 agreement, all of the following rules apply: 6 a. The operating agreement prevails as to members, persons 7 dissociated as members, transferees, and managers. 8 b. The record prevails as to other persons to the extent 9 they reasonably rely on the record. 10 Sec. 12. Section 489.114, Code 2023, is amended to read as 11 follows: 12 489.114 Change of registered office or registered agent for 13 service of process or address for registered agency by limited 14 liability company . 15 1. A limited liability company or registered foreign 16 limited liability company may change its registered office 17 or its registered agent for service of process agent or the 18 address of its registered agent by delivering to the secretary 19 of state for filing a statement of change that sets forth 20 states all of the following: 21 a. The name of the limited liability company or foreign 22 limited liability company . 23 b. If the current registered office is to be changed, the 24 street and mailing addresses of the new registered office The 25 information that is to be in effect as a result of the filing of 26 the statement of change . 27 c. If the current registered agent is to be changed, the 28 name of the new registered agent and the new agents consent to 29 the appointment. The agents consent may be on the statement 30 or attached to it. 31 d. That after the change or changes are made, the street 32 address of its registered office and the business office of its 33 registered agent will be identical. 34 2. If a registered agent changes the street address of 35 -20- LSB 1051YC (2) 90 da/jh 20/ 161
H.F. _____ the registered agents business office, the registered agent 1 may change the street address of the registered office of any 2 limited liability company or foreign limited liability company 3 for which the person is the registered agent by notifying the 4 limited liability company or foreign limited liability company 5 in writing of the change and signing, either manually or in 6 facsimile, and delivering to the secretary of state for filing 7 a statement that complies with the requirements of subsection 8 1 and recites that the limited liability company or foreign 9 limited liability company has been notified of the change. The 10 members or managers of a limited liability company need not 11 approve the delivery to the secretary of state filing of any 12 of the following: 13 a. A statement of change under this section. 14 b. A similar filing changing the registered agent or 15 registered office, if any, of the limited liability company in 16 any other jurisdiction. 17 3. If a registered agent changes the registered agents 18 business address to another place, the registered agent may 19 change the business address and the address of the registered 20 agent by filing a statement as required by subsection 2 for 21 each limited liability company or foreign limited liability 22 company, or a single statement of all limited liability 23 companies or all foreign limited liability companies named 24 in the notice, except that it need be signed only by the 25 registered agent and need not be responsive to subsection 1 , 26 paragraph c , and must recite that a copy of the statement 27 has been mailed to each limited liability company or foreign 28 limited liability company named in the notice A statement of 29 change under this section designating a new registered agent 30 is an affirmation of fact by the limited liability company or 31 registered foreign limited liability company that the agent has 32 consented to serve . 33 4. A limited liability company or foreign limited liability 34 company may also change its registered office or registered 35 -21- LSB 1051YC (2) 90 da/jh 21/ 161
H.F. _____ agent in its biennial report as provided in section 489.209 1 As an alternative to using the procedure in this section, 2 a limited liability company may amend its certificate of 3 organization . 4 5. Subject to section 489.205, subsection 3 , a statement of 5 change is effective when filed by the secretary of state. 6 Sec. 13. NEW SECTION . 489.114A Registration of name. 7 1. A foreign limited liability company not registered to 8 do business in this state under subchapter IX may register 9 its name, or an alternate name adopted pursuant to section 10 489.906A, if the name is distinguishable on the records of the 11 secretary of state from the names that are not available under 12 section 489.108. 13 2. To register its name or an alternate name adopted 14 pursuant to section 489.906A, a foreign limited liability 15 company must deliver to the secretary of state for filing an 16 application stating the companys name, the jurisdiction and 17 date of its formation, and any alternate name adopted pursuant 18 to section 489.906A. If the secretary of state finds that the 19 name applied for is available, the secretary of state shall 20 register the name for the applicants exclusive use. 21 3. The registration of a name under this section is 22 effective for one year after the date of registration. 23 4. A foreign limited liability company whose name 24 registration is effective may renew the registration for 25 successive one-year periods by delivering, not earlier than 26 three months before the expiration of the registration, 27 to the secretary of state for filing a renewal application 28 that complies with this section. When filed, the renewal 29 application renews the registration for a succeeding one-year 30 period. 31 5. A foreign limited liability company whose name 32 registration is effective may register as a foreign limited 33 liability company under the registered name or consent in a 34 signed record to the use of that name by another person that is 35 -22- LSB 1051YC (2) 90 da/jh 22/ 161
H.F. _____ not an individual. 1 Sec. 14. Section 489.115, Code 2023, is amended to read as 2 follows: 3 489.115 Resignation of registered agent for service of 4 process . 5 1. A registered agent may resign the agents agency 6 appointment by signing and as an agent for a limited liability 7 company or registered foreign limited liability company by 8 delivering to the secretary of state for filing the signed 9 original a statement of resignation . The statement of 10 resignation may include a statement that the registered office 11 is also discontinued. The registered agent shall send a copy 12 of the statement of resignation by certified mail, return 13 receipt requested, to the limited liability company or foreign 14 limited liability company at its principal office and to the 15 registered office, if not discontinued. The registered agent 16 shall certify to the secretary of state that the copies have 17 been sent to the limited liability company or foreign limited 18 liability company, including the date the copies were sent. 19 that states all of the following: 20 a. The name of the limited liability company or foreign 21 limited liability company. 22 b. The name of the agent. 23 c. That the agent resigns from serving as registered agent 24 for the limited liability company or foreign limited liability 25 company. 26 d. The address of the limited liability company or foreign 27 limited liability company to which the agent will send the 28 notice required by subsection 3. 29 2. A statement of resignation takes effect on the earlier 30 of the following: 31 a. 12:01 a.m. on the The thirty-first day after the day on 32 which it is filed with the secretary of state. 33 b. The designation of a new registered agent for the limited 34 liability company or registered foreign limited liability 35 -23- LSB 1051YC (2) 90 da/jh 23/ 161
H.F. _____ company . 1 3. A registered agent promptly shall furnish to the limited 2 liability company or registered foreign limited liability 3 company notice in a record of the date on which a statement of 4 resignation was filed. 5 4. When a statement of resignation takes effect, the 6 registered agent ceases to have responsibility under this 7 chapter for any matter thereafter tendered to it as agent for 8 the limited liability company or registered foreign limited 9 liability company. The resignation does not affect any 10 contractual rights the company or foreign company has against 11 the agent or that the agent has against the company or foreign 12 company. 13 5. A registered agent may resign with respect to a limited 14 liability company or registered foreign limited liability 15 company whether or not the company or foreign company is in 16 good standing. 17 Sec. 15. NEW SECTION . 489.115A Registered agent. 18 1. Each limited liability company and each registered 19 foreign limited liability company shall designate and maintain 20 a registered agent in this state. The designation of a 21 registered agent is an affirmation of fact by the limited 22 liability company or registered foreign limited liability 23 company that the agent has consented to serve. 24 2. A registered agent for a limited liability company or 25 registered foreign limited liability company must have a place 26 of business in this state. 27 3. The only duties under this chapter of a registered agent 28 that has complied with this chapter are as follows: 29 a. To forward to the limited liability company or registered 30 foreign limited liability company at the address most recently 31 supplied to the agent by the limited liability company or 32 registered foreign limited liability company any process, 33 notice, or demand pertaining to the company or foreign company 34 which is served on or received by the agent. 35 -24- LSB 1051YC (2) 90 da/jh 24/ 161
H.F. _____ b. If the registered agent resigns, to provide the notice 1 required by section 489.115, subsection 3, to the limited 2 liability company or registered foreign limited liability 3 company at the address most recently supplied to the agent by 4 the limited liability company or registered foreign limited 5 liability company. 6 c. To keep current the information with respect to the agent 7 in the certificate of organization or foreign registration 8 statement. 9 Sec. 16. Section 489.116, Code 2023, is amended to read as 10 follows: 11 489.116 Service of process , notice, or demand . 12 1. A limited liability companys company or registered 13 foreign limited liability companys registered agent is the 14 companys agent for service of process, notice, or demand 15 required or permitted by law to company may be served on 16 the company with any process, notice, or demand required or 17 permitted by law by serving its registered agent . 18 2. If a limited liability company or registered foreign 19 limited liability company has no ceases to have a registered 20 agent, or the if its registered agent cannot with reasonable 21 diligence be served, the limited liability company or 22 registered foreign limited liability company may be served by 23 registered or certified mail, return receipt requested, or by 24 similar commercial delivery service, addressed to the limited 25 liability company or registered foreign limited liability 26 company at its principal office. The address of the principal 27 office must be as shown on the limited liability companys or 28 registered foreign limited liability companys most recent 29 biennial report filed with the secretary of state pursuant to 30 section 489.209. Service is perfected effected under this 31 subsection at on the earliest of any of the following: 32 a. The date the limited liability company or registered 33 foreign limited liability company receives the mail or delivery 34 by the commercial delivery service . 35 -25- LSB 1051YC (2) 90 da/jh 25/ 161
H.F. _____ b. The date shown on the return receipt, if signed on behalf 1 of by the limited liability company or registered foreign 2 limited liability company . 3 c. Five days after its deposit in with the United States 4 mail, as evidenced by the postmark, if mailed postpaid and 5 postal service or with the commercial delivery service, if 6 correctly addressed and with sufficient postage or payment . 7 3. A limited liability company or foreign limited liability 8 company may be served pursuant to this section , as provided 9 in another provision of this chapter , or as provided in 10 sections 617.3 through 617.6 , unless the manner of service is 11 otherwise specifically provided for by another provision of law 12 If process, notice, or demand cannot be served on a limited 13 liability company or registered foreign limited liability 14 company pursuant to subsection 1 or 2, service may be made by 15 handing a copy to the individual in charge of any regular place 16 of business or activity of the limited liability company or 17 registered foreign company if the individual served is not a 18 plaintiff in the action . 19 4. Service of process, notice, or demand on a registered 20 agent must be in a written record. 21 5. Service of process, notice, or demand may be made by 22 other means under law other than this chapter, including as 23 provided in sections 617.3 through 617.6 unless specifically 24 provided for by another provision of law. 25 Sec. 17. Section 489.117, Code 2023, is amended to read as 26 follows: 27 489.117 Fees. 28 1. The secretary of state shall collect the following fees 29 when documents described in this subsection are delivered to 30 the secretarys office for filing: 31 a. Statement of rescission . . . . . . . . . . . . . . . . . . . . . No fee 32 b. Statement of withdrawal . . . . . . . . . . . . . . . . . . . . . No fee 33 c. Certificate of organization . . . . . . . . . . . . . . . . . . . $ 50 34 d. Application for use of 35 -26- LSB 1051YC (2) 90 da/jh 26/ 161
H.F. _____ indistinguishable name . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 10 1 e. Application for reserved name . . . . . . . . . . . . . . . . . $ 10 2 f. Notice of transfer of reserved name . . . . . . . . . . . $ 10 3 g. Statement of change of registered 4 agent or registered office or both . . . . . . . . . . . . . . . . . No fee 5 h. Registered agents statement of 6 change of registered office for each 7 affected limited liability company . . . . . . . . . . . . . . . . . No fee 8 i. Registered agents statement 9 of resignation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . No fee 10 j. Amendment to certificate of 11 organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 50 12 k. Restatement of certificate of 13 organization with amendment 14 of certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 50 15 l. Articles of merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 50 16 m. Statement of dissolution . . . . . . . . . . . . . . . . . . . . . . $ 5 17 n. Declaration of administrative 18 dissolution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . No fee 19 o. Application for reinstatement 20 following administrative dissolution . . . . . . . . . . . . . . . . . $ 5 21 p. Certificate of reinstatement . . . . . . . . . . . . . . . . No fee 22 q. Application for certificate 23 of authority registration . . . . . . . . . . . . . . . . . . . . . . . . . . . . $100 24 r. Application for amended 25 certificate of authority registration . . . . . . . . . . . . . . . . $100 26 s. Statement of cancellation . . . . . . . . . . . . . . . . . . . . . $ 10 27 t. Certificate of revocation 28 of authority to transact business . . . . . . . . . . . . . . . . . . No fee 29 u. Statement of correction . . . . . . . . . . . . . . . . . . . . . . . $ 5 30 v. Application for certificate of 31 existence or authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 5 32 w. Any other document required or 33 permitted to be filed by this chapter . . . . . . . . . . . . . . . . . $ 5 34 2. The secretary of state shall collect a fee of five 35 -27- LSB 1051YC (2) 90 da/jh 27/ 161
H.F. _____ dollars each time process is served on the secretary under this 1 chapter . The party to a proceeding causing service of process 2 is entitled to recover this fee as costs if the party prevails 3 in the proceeding. 4 3. The secretary of state shall collect the following fees 5 for copying and certifying the copy of any filed document 6 relating to a domestic limited liability company or foreign 7 limited liability company as follows : 8 a. One dollar a page for copying. 9 b. Five dollars for the certificate. 10 4. The secretary of state may impose, assess, and collect 11 a filing fee as a condition to accepting a biennial report as 12 provided in section 489.209 . 13 Sec. 18. NEW SECTION . 489.118 Change of name or address by 14 registered agent. 15 1. If a registered agent changes its name or address, 16 the agent may deliver to the secretary of state for filing a 17 statement of change that states all of the following: 18 a. The name of the limited liability company or registered 19 foreign limited liability company represented by the registered 20 agent. 21 b. The name of the agent as currently shown in the records 22 of the secretary of state for the limited liability company or 23 registered foreign limited liability company. 24 c. If the name of the agent has changed, its new name. 25 d. If the address of the agent has changed, its new address. 26 2. A registered agent promptly shall furnish notice to the 27 represented limited liability company or registered foreign 28 limited liability company of the filing by the secretary of 29 state of the statement of change and the changes made by the 30 statement. 31 Sec. 19. NEW SECTION . 489.120 Delivery of record. 32 1. Except as otherwise provided in this chapter, 33 permissible means of delivery of a record include delivery by 34 hand, mail, conventional commercial practice, and electronic 35 -28- LSB 1051YC (2) 90 da/jh 28/ 161
H.F. _____ transmission. 1 2. Delivery to the secretary of state is effective only when 2 a record is received by the secretary of state. 3 Sec. 20. NEW SECTION . 489.121 Reservation of power to amend 4 or repeal. 5 The general assembly has power to amend or repeal all or 6 part of this chapter at any time, and all limited liability 7 companies and foreign limited liability companies subject to 8 this chapter are governed by the amendment or repeal. 9 Sec. 21. Section 489.201, Code 2023, is amended to read as 10 follows: 11 489.201 Formation of limited liability company certificate 12 of organization. 13 1. One or more persons may act as organizers to form a 14 limited liability company by signing and delivering to the 15 secretary of state for filing a certificate of organization. 16 2. A certificate of organization must state all of the 17 following: 18 a. The name of the limited liability company, which must 19 comply with section 489.108 . 20 b. The street address and mailing addresses of the initial 21 registered office and the name of the initial registered 22 agent for service of process on the company limited liability 23 companys principal office . 24 c. The name and street and mailing addresses in this state 25 of the limited liability companys registered agent. 26 3. Subject to section 489.112, subsection 3 , a A certificate 27 of organization may also contain statements as to matters other 28 than those required by subsection 2 , but shall not vary or 29 otherwise affect the provisions specified in section 489.110, 30 subsections 3 and 4, in a manner inconsistent with that 31 section . However, a statement in a certificate of organization 32 is not effective as a statement of authority. 33 4. A limited liability company is formed when the secretary 34 of state has filed the certificate of organization , unless the 35 -29- LSB 1051YC (2) 90 da/jh 29/ 161
H.F. _____ certificate states a delayed becomes effective date pursuant 1 to section 489.205, subsection 3 . If the certificate states 2 a delayed effective date, a limited liability company is not 3 formed if, before the certificate takes effect, a statement of 4 cancellation is signed and delivered to the secretary of state 5 for filing and the secretary of state files the certificate. 6 5. Subject to any delayed effective date and except in 7 a proceeding by this state to dissolve a limited liability 8 company, the filing of the certificate of organization by the 9 secretary of state is conclusive proof that the organizer 10 satisfied all conditions to the formation of a limited 11 liability company. 12 Sec. 22. Section 489.202, Code 2023, is amended to read as 13 follows: 14 489.202 Amendment or restatement of certificate of 15 organization. 16 1. A certificate of organization may be amended or restated 17 at any time. 18 2. To amend its certificate of organization, a limited 19 liability company must deliver to the secretary of state for 20 filing an amendment stating all of the following: 21 a. The name of the limited liability company. 22 b. The date of filing of its initial certificate of 23 organization . 24 c. The changes the amendment makes to the certificate as 25 most recently amended or restated text of the amendment . 26 3. To restate its certificate of organization, a limited 27 liability company must deliver to the secretary of state for 28 filing a restatement, designated as such in its heading, 29 stating and setting forth all of the following: 30 a. In the heading or an introductory paragraph, the 31 companys present name and the date of the filing of the 32 companys initial certificate of organization The name of the 33 limited liability company . 34 b. If the companys name has been changed at any time since 35 -30- LSB 1051YC (2) 90 da/jh 30/ 161
H.F. _____ the companys formation, each of the companys former names The 1 text of the restated certificate of organization . 2 c. The changes the restatement makes to the certificate as 3 most recently amended or restated A statement that the restated 4 certificate consolidates all amendments into a single document . 5 d. If a new amendment is included in the restated 6 certificate of organization, the statements required under 7 subsection 2 with respect to the new amendment if not otherwise 8 provided. 9 4. Subject to section 489.112, subsection 3 , and section 10 489.205, subsection 3 , an amendment to or restatement of a 11 certificate of organization is effective when filed by the 12 secretary of state. If a member of a member-managed limited 13 liability company, or a manager of a manager-managed limited 14 liability company, knows that any information in a filed 15 certificate of organization was inaccurate when the certificate 16 of organization was filed or has become inaccurate due to 17 changed circumstances, the member or manager shall promptly do 18 any of the following: 19 a. Cause the certificate of organization to be amended. 20 b. If appropriate, deliver to the secretary of state 21 for filing a statement of change under section 489.114 or a 22 statement of correction under section 489.206. 23 5. If a member of a member-managed limited liability 24 company, or a manager of a manager-managed limited liability 25 company, knows that any information in a filed certificate of 26 organization was inaccurate when the certificate was filed 27 or has become inaccurate owing to changed circumstances, the 28 member or manager shall promptly do any of the following: 29 a. Cause the certificate to be amended. 30 b. If appropriate, deliver to the secretary of state 31 for filing a statement of change under section 489.114 or a 32 statement of correction under section 489.206 . 33 Sec. 23. Section 489.203, Code 2023, is amended to read as 34 follows: 35 -31- LSB 1051YC (2) 90 da/jh 31/ 161
H.F. _____ 489.203 Signing of records to be delivered for filing to 1 secretary of state. 2 1. A record delivered to the secretary of state for filing 3 pursuant to this chapter must be signed as follows: 4 a. Except as otherwise provided in paragraphs b and c , a 5 record signed on behalf of by a limited liability company must 6 be signed by a person authorized by the company. 7 b. A limited liability companys initial certificate of 8 organization must be signed by at least one person acting as 9 an organizer. 10 c. A record filed delivered on behalf of a dissolved limited 11 liability company that does not have or has not had at least 12 one has no member must be signed by an organizer the person 13 winding up the companys activities and affairs under section 14 489.702, subsection 3, or a person appointed under section 15 489.702, subsection 4, to wind up the activities and affairs . 16 d. A record filed on behalf of a dissolved limited liability 17 company that has no members must be signed by the person 18 winding up the companys activities under section 489.702, 19 subsection 3 , or a person appointed under section 489.702, 20 subsection 4 , to wind up those activities A statement of denial 21 by a person under section 489.303 must be signed by that 22 person . 23 e. A statement of cancellation under section 489.201, 24 subsection 4 , must be signed by each organizer that signed 25 the initial certificate of organization, but a personal 26 representative of a deceased or incompetent organizer may sign 27 in the place of the decedent or incompetent Any other record 28 delivered on behalf of a person to the secretary of state for 29 filing must be signed by that person . 30 f. A statement of denial by a person under section 489.303 31 must be signed by that person. 32 g. Any other record must be signed by the person on whose 33 behalf the record is delivered to the secretary of state. 34 2. Any A record filed delivered for filing under this 35 -32- LSB 1051YC (2) 90 da/jh 32/ 161
H.F. _____ chapter may be signed by an agent. Whenever this chapter 1 requires a particular individual to sign a record and the 2 individual is deceased or incompetent, the record may be signed 3 by a legal representative of the individual. 4 3. A person that signs a record as an agent or legal 5 representative affirms as a fact that the person is authorized 6 to sign the record. 7 Sec. 24. Section 489.204, Code 2023, is amended to read as 8 follows: 9 489.204 Signing and filing pursuant to judicial order. 10 1. If a person required by this chapter to sign a record 11 or deliver a record to the secretary of state for filing under 12 this chapter does not do so, any other person that is aggrieved 13 may petition the district court to order one or more of the 14 following: 15 a. The person to sign the record. 16 b. The person to deliver the record to the secretary of 17 state for filing. 18 c. The secretary of state to file the record unsigned. 19 2. If a petitioner under subsection 1 is not the limited 20 liability company or foreign limited liability company to which 21 the record pertains, the petitioner shall make the limited 22 liability company or foreign limited liability company a party 23 to the action. 24 3. If a district court orders an unsigned record to be 25 delivered to the secretary of state, the secretary of state 26 shall file the record and the court order upon receipt A record 27 filed under subsection 1, paragraph c , is effective without 28 being signed . 29 Sec. 25. Section 489.205, Code 2023, is amended by striking 30 the section and inserting in lieu thereof the following: 31 489.205 Liability for inaccurate information in filed 32 records. 33 1. If a record delivered to the secretary of state for 34 filing under this chapter and filed by the secretary of state 35 -33- LSB 1051YC (2) 90 da/jh 33/ 161
H.F. _____ contains inaccurate information, a person that suffers loss by 1 reliance on the information may recover damages for the loss 2 from all of the following: 3 a. A person that signed the record, or caused another to 4 sign it on the persons behalf, and knew the information to be 5 inaccurate at the time the record was signed. 6 b. Subject to subsection 2, a member of a member-managed 7 limited liability company or a manager of a manager-managed 8 limited liability company if all of the following apply: 9 (1) The record was delivered for filing on behalf of the 10 limited liability company. 11 (2) The member or manager knew or had notice of the 12 inaccuracy for a reasonably sufficient time before the 13 information was relied upon so that, before the reliance, 14 the member or manager reasonably could have done any of the 15 following: 16 (a) Effected an amendment under section 489.202. 17 (b) Filed a petition under section 489.204. 18 (c) Delivered to the secretary of state for filing a 19 statement of change under section 489.114 or a statement of 20 correction under section 489.206. 21 2. To the extent the operating agreement of a member-managed 22 limited liability company expressly relieves a member of 23 responsibility for maintaining the accuracy of information 24 contained in records delivered on behalf of the limited 25 liability company to the secretary of state for filing under 26 this chapter and imposes that responsibility on one or more 27 other members, the liability stated in subsection 1, paragraph 28 b , applies to those other members and not to the member that 29 the operating agreement relieves of the responsibility. 30 3. A person commits a serious misdemeanor if that person 31 signs a record the person knows is false in any material 32 respect with intent that the record be delivered to the 33 secretary of state for filing. 34 Sec. 26. Section 489.206, Code 2023, is amended to read as 35 -34- LSB 1051YC (2) 90 da/jh 34/ 161
H.F. _____ follows: 1 489.206 Correcting filed record. 2 1. A limited liability company or foreign limited liability 3 company may deliver to the secretary of state for filing 4 a statement of correction to correct a record previously 5 delivered by the company to the secretary of state and filed 6 by the secretary of state, if at the time of filing the record 7 contained inaccurate information or was defectively signed. 8 A person on whose behalf a filed record was delivered to the 9 secretary of state for filing may correct the record if any of 10 the following apply: 11 a. The record at the time of filing was inaccurate. 12 b. The record was defectively signed. 13 c. The electronic transmission of the record to the 14 secretary of state was defective. 15 2. A statement of correction under subsection 1 shall not 16 have a delayed effective date and must do all of the following: 17 To correct a filed record, a person on whose behalf the record 18 was delivered to the secretary of state must deliver to the 19 secretary of state for filing a statement of correction. 20 a. Describe the record to be corrected, including its filing 21 date, or attach a copy of the record as filed. 22 b. Specify the inaccurate information and the reason it is 23 inaccurate or the manner in which the signing was defective. 24 c. Correct the defective signature or inaccurate 25 information. 26 3. When filed by the secretary of state, a statement of 27 correction under subsection 1 is effective retroactively as 28 of the effective date of the record the statement corrects, 29 but the statement is effective when filed as to A statement of 30 correction shall comply with all of the following: 31 a. For the purposes of section 489.103, subsection 4 It must 32 not state a delayed effective date . 33 b. As to persons that previously relied on the uncorrected 34 record and would be adversely affected by the retroactive 35 -35- LSB 1051YC (2) 90 da/jh 35/ 161
H.F. _____ effect It must be signed by the person correcting the filed 1 record . 2 c. It must describe the record to be corrected including its 3 filing date or attach a copy of the record as filed. 4 d. It must specify the inaccuracy or defect to be corrected. 5 e. It must correct the inaccuracy or defect. 6 4. A statement of correction is effective as of the 7 effective date of the filed record that it corrects except for 8 purposes of section 489.103, subsection 4, and as to persons 9 relying on the uncorrected filed record and adversely affected 10 by the correction. For those purposes and as to those persons, 11 the statement of correction is effective when filed. 12 Sec. 27. NEW SECTION . 489.206A Filing requirements. 13 1. To be filed by the secretary of state pursuant to 14 this chapter, a record must be captioned to describe the 15 records purpose, must be received by the secretary of state, 16 must comply with this chapter, and must satisfy all of the 17 following: 18 a. The filing of the record must be required or permitted by 19 this chapter. 20 b. The record must be physically delivered in written 21 form unless and to the extent the secretary of state permits 22 electronic delivery of records. 23 c. The words in the record must be in English, and numbers 24 must be in Arabic or Roman numerals, but the name of an entity 25 need not be in English if written in English letters or Arabic 26 or Roman numerals. 27 d. The record must be signed by a person authorized or 28 required under this chapter to sign the record. 29 e. The record must state the name and capacity, if 30 any, of each individual who signed it, either on behalf 31 of the individual or the person authorized or required to 32 sign the record, but need not contain a seal, attestation, 33 acknowledgment, or verification. 34 2. If law other than this chapter prohibits the disclosure 35 -36- LSB 1051YC (2) 90 da/jh 36/ 161
H.F. _____ by the secretary of state of information contained in a record 1 delivered to the secretary of state for filing, the secretary 2 of state shall file the record if the record otherwise complies 3 with this chapter but may redact the information. 4 3. When a record is delivered to the secretary of state for 5 filing, any fee required under this chapter and any fee, tax, 6 interest, or penalty required to be paid under this chapter or 7 law other than this chapter must be paid in a manner permitted 8 by the secretary of state or by that law. 9 4. The secretary of state may require that a record 10 delivered in written form be accompanied by an identical or 11 conformed copy. 12 5. The secretary of state may provide forms for filings 13 required or permitted to be made by this chapter, but, except 14 as otherwise provided in subsection 6, their use is not 15 required. 16 6. The secretary of state may prescribe, and furnish on 17 request and require any of the following forms: 18 a. A cover sheet for a filing. 19 b. An application for a certificate of existence or 20 certificate of registration. 21 c. A foreign corporations registration statement. 22 d. A foreign corporations statement of withdrawal. 23 e. A foreign corporations transfer of registration 24 statement. 25 f. The biennial report required by section 489.209. 26 7. Upon request and payment of the requisite fee, the 27 secretary of state shall send the requester a certified copy 28 of a requested record. 29 Sec. 28. Section 489.207, Code 2023, is amended by striking 30 the section and inserting in lieu thereof the following: 31 489.207 Effective date and time. 32 Except as otherwise provided in section 489.115 and section 33 489.208A and subject to section 489.206, subsection 4, a record 34 filed under this chapter is effective as follows: 35 -37- LSB 1051YC (2) 90 da/jh 37/ 161
H.F. _____ 1. On the date and at the time of its filing by the 1 secretary of state, as provided in section 489.210, subsection 2 2. 3 2. On the date of filing and at the time specified in the 4 record as its effective time, if later than the time under 5 subsection 1. 6 3. At a specified delayed effective date and time, which may 7 not be more than ninety days after the date of filing. 8 4. If a delayed effective date is specified, but no time is 9 specified, at 12:01 a.m. on the date specified, which shall not 10 be more than ninety days after the date of filing. 11 Sec. 29. Section 489.208, Code 2023, is amended to read as 12 follows: 13 489.208 Certificate of existence or authorization 14 registration . 15 1. Any person may apply to On request of any person, the 16 secretary of state to be furnished shall issue a certificate 17 of existence for a domestic limited liability company or a 18 certificate of authorization registration for a registered 19 foreign limited liability company. 20 2. A certificate of existence or certificate of 21 authorization registration under subsection 1 must set forth 22 state all of the following: 23 a. The domestic limited liability companys name or the 24 registered foreign limited liability companys name used in 25 this state. 26 b. One In the case of a limited liability company, all of 27 the following: 28 (1) If it is a domestic limited liability company, that 29 the company is duly formed under the laws of this state, the 30 date of its formation, and the period of its duration That 31 a certificate of organization has been filed and has taken 32 effect . 33 (2) If it is a foreign limited liability company, that the 34 company is authorized to transact business in this state The 35 -38- LSB 1051YC (2) 90 da/jh 38/ 161
H.F. _____ date the certificate became effective . 1 (3) The period of the limited liability companys duration 2 if the records of the secretary of state reflect that its 3 period of duration is less than perpetual. 4 (4) That all of the following apply: 5 (a) No statement of dissolution, statement of 6 administrative dissolution, or statement of termination has 7 been filed. 8 (b) The records of the secretary of state do not otherwise 9 reflect that the limited liability company has been dissolved 10 or terminated. 11 (c) A proceeding is not pending under section 489.705. 12 c. That all fees, taxes, and penalties due under this 13 chapter or other law to the secretary of state have been paid 14 In the case of a registered foreign limited liability company, 15 that it is registered to do business in this state . 16 d. That the companys most recent biennial report required 17 by this chapter has been filed by the secretary of state That 18 all fees, taxes, interest, and penalties owed to this state 19 by the limited liability company or foreign limited liability 20 company and collected through the secretary of state have been 21 paid, if all of the following apply: 22 (1) Payment is reflected in the records of the secretary of 23 state . 24 (2) Nonpayment affects the good standing or registration 25 of the limited liability company or foreign limited liability 26 company. 27 e. If it is a domestic limited liability company, that a 28 statement of dissolution or statement of termination has not 29 been filed That the most recent biennial report required by 30 section 489.209 has been delivered to the secretary of state 31 for filing . 32 f. Other facts of record in the office reflected in the 33 records of the secretary of state that may be requested by 34 the applicant pertaining to the limited liability company or 35 -39- LSB 1051YC (2) 90 da/jh 39/ 161
H.F. _____ foreign limited liability company which the person requesting 1 the certificate reasonably requests . 2 3. Subject to any qualification stated in the certificate, a 3 certificate of existence or certificate of authorization issued 4 by the secretary of state is under subsection 1 may be relied 5 on as conclusive evidence that the domestic limited liability 6 company is in existence or the foreign limited liability 7 company is authorized to transact business in this state of the 8 facts stated in the certificate . 9 Sec. 30. NEW SECTION . 489.208A Withdrawal of filed record 10 before effectiveness. 11 1. Except as otherwise provided in sections 489.1024, 12 489.1034, 489.1044, and 489.1054, a record delivered to the 13 secretary of state for filing may be withdrawn before it takes 14 effect by delivering to the secretary of state for filing a 15 statement of withdrawal. 16 2. A statement of withdrawal must comply with all of the 17 following: 18 a. Be signed by each person that signed the record being 19 withdrawn, except as otherwise agreed by those persons. 20 b. Identify the record to be withdrawn. 21 c. If signed by fewer than all the persons that signed the 22 record being withdrawn, state that the record is withdrawn in 23 accordance with the agreement of all the persons that signed 24 the record. 25 3. On filing by the secretary of state of a statement of 26 withdrawal, the action or transaction evidenced by the original 27 record does not take effect. 28 Sec. 31. Section 489.209, Code 2023, is amended to read as 29 follows: 30 489.209 Biennial report for secretary of state. 31 1. A limited liability company or a foreign limited 32 liability company authorized registered to transact do business 33 in this state shall deliver to the secretary of state for 34 filing a biennial report that states all of the following: 35 -40- LSB 1051YC (2) 90 da/jh 40/ 161
H.F. _____ a. The name of the company. 1 b. The street address of the companys registered office, 2 the name of its registered agent at that office, and the 3 consent of any new registered agent. 4 c. The street address of its principal office. 5 d. In the case of a foreign limited liability company, the 6 state or other jurisdiction under whose law the foreign company 7 is formed and any alternate name adopted under section 489.805, 8 subsection 1 . 9 2. Information in a biennial report under this section 10 must be current as of the date the report is delivered to the 11 secretary of state for filing. The report shall be executed 12 on behalf of the limited liability company or foreign limited 13 liability company and signed as provided in section 489.203 . 14 3. The first biennial report under this section in this 15 state must be delivered to the secretary of state between 16 January 1 and April 1 of the first odd-numbered year following 17 the calendar year in which a limited liability company was 18 formed or a foreign limited liability company was authorized 19 registered to transact do business. A subsequent biennial 20 report must be delivered to the secretary of state between 21 January 1 and April 1 of each following odd-numbered calendar 22 year. A filing fee for the biennial report shall be determined 23 by the secretary of state pursuant to section 489.117 . Each 24 biennial report shall contain information related to the 25 two-year period immediately preceding the calendar year in 26 which the report is filed. 27 4. If a biennial report does not contain the information 28 required in this section , the secretary of state shall promptly 29 notify the reporting limited liability company or foreign 30 limited liability company in writing and return the report to 31 it for correction. 32 5. The secretary of state may provide for the change of 33 registered office or registered agent on the form prescribed by 34 the secretary of state for the biennial report, provided that 35 -41- LSB 1051YC (2) 90 da/jh 41/ 161
H.F. _____ the form contains the information required in section 489.114 . 1 If the secretary of state determines that a biennial report 2 does not contain the information required in this section but 3 otherwise meets the requirements of section 489.114 for the 4 purpose of changing the registered office or registered agent, 5 the secretary of state shall file the statement of change 6 for the registered office or registered agent, effective as 7 provided in section 489.205 489.207 , subsection 3 , before 8 returning the biennial report to the limited liability 9 company as provided in this section . A statement of change of 10 registered office or registered agent accomplished pursuant to 11 this subsection shall be executed by a person authorized to 12 execute the biennial report. 13 Sec. 32. NEW SECTION . 489.210 Duty of secretary of state 14 to file review of refusal to file delivery of record by 15 secretary of state. 16 1. The secretary of state shall file a record delivered 17 to the secretary of state for filing which satisfies this 18 chapter. The duty of the secretary of state under this section 19 is ministerial. 20 2. When the secretary of state files a record, the secretary 21 of state shall record it as filed on the date and at the time of 22 its delivery. After filing a record, the secretary of state 23 shall deliver to the person that submitted the record a copy 24 of the record with an acknowledgment of the date and time of 25 filing and, in the case of a statement of denial, also to the 26 limited liability company to which the statement pertains. 27 3. If the secretary of state refuses to file a record, the 28 secretary of state shall, not later than fifteen business days 29 after the record is delivered, do all of the following: 30 a. Return the record or notify the person that submitted the 31 record of the refusal. 32 b. Provide a brief explanation in a record of the reason for 33 the refusal. 34 4. If the secretary of state refuses to file a record, the 35 -42- LSB 1051YC (2) 90 da/jh 42/ 161
H.F. _____ person that submitted the record may petition the district 1 court of Polk county to compel filing of the record. The 2 record and the explanation of the secretary of state of 3 the refusal to file must be attached to the petition. The 4 court may decide the matter in a summary proceeding. If the 5 court orders the record to be filed, the court may order it 6 filed with an effective date that is the date on which it was 7 submitted to the secretary of state for filing. 8 5. The filing of or refusal to file a record does not do any 9 of the following: 10 a. Affect the validity or invalidity of the record in whole 11 or in part. 12 b. Create a presumption that the information contained in 13 the record is correct or incorrect. 14 6. Except as otherwise provided by section 489.116 or by law 15 other than this chapter, the secretary of state may deliver any 16 record to a person by delivering it by any of the following: 17 a. In person to the person that submitted it. 18 b. To the address of the persons registered agent. 19 c. To the principal office of the person. 20 d. To another address the person provides to the secretary 21 of state for delivery. 22 Sec. 33. Section 489.302, Code 2023, is amended to read as 23 follows: 24 489.302 Statement of limited liability company authority. 25 1. A limited liability company may deliver to the secretary 26 of state for filing a statement of authority. All of the 27 following apply to the statement: 28 a. It must include the name of the limited liability company 29 and the name and street address and mailing addresses of its 30 principal office registered agent . 31 b. With respect to any position that exists in or with 32 respect to the limited liability company, it may state the 33 authority, or limitations on the authority, of all persons 34 holding the position to do any of the following: 35 -43- LSB 1051YC (2) 90 da/jh 43/ 161
H.F. _____ (1) Execute Sign an instrument transferring real property 1 held in the name of the limited liability company. 2 (2) Enter into other transactions on behalf of, or otherwise 3 act for or bind, the limited liability company. 4 c. It may state the authority, or limitations on the 5 authority, of a specific person to do any of the following: 6 (1) Execute Sign an instrument transferring real property 7 held in the name of the limited liability company. 8 (2) Enter into other transactions on behalf of, or otherwise 9 act for or bind, the limited liability company. 10 2. To amend or cancel a statement of authority filed by 11 the secretary of state under section 489.205, subsection 1 , 12 a limited liability company must deliver to the secretary of 13 state for filing an amendment or cancellation stating all of 14 the following: 15 a. The name of the limited liability company. 16 b. The name and street address and mailing addresses of the 17 limited liability companys principal office registered agent . 18 c. The caption of the statement being amended or canceled 19 and the date the statement being affected became effective. 20 d. The contents of the amendment or a declaration that the 21 statement being affected is canceled. 22 3. A statement of authority affects only the power of a 23 person to bind a limited liability company to persons that are 24 not members. 25 4. Subject to subsection 3 and section 489.103, subsection 26 4 , and except as otherwise provided in subsections 6, 7, and 27 8 , a limitation on the authority of a person or a position 28 contained in an effective statement of authority is not by 29 itself evidence of any persons knowledge or notice of the 30 limitation by any person . 31 5. Subject to subsection 3 , a grant of authority not 32 pertaining to a transfer of real property and contained in an 33 effective statement of authority is conclusive in favor of a 34 person that gives value in reliance on the grant, except to the 35 -44- LSB 1051YC (2) 90 da/jh 44/ 161
H.F. _____ extent that when the person gives value, any of the following 1 applies: 2 a. The person has knowledge to the contrary. 3 b. The statement has been canceled or restrictively amended 4 under subsection 2 . 5 c. A limitation on the grant is contained in another 6 statement of authority that became effective after the 7 statement containing the grant became effective. 8 6. Subject to subsection 3 , an effective statement of 9 authority that grants authority to transfer real property 10 held in the name of the limited liability company and that , a 11 certified copy of which statement is recorded by certified copy 12 in the office for recording transfers of the real property is 13 conclusive in favor of a person that gives value in reliance 14 on the grant without knowledge to the contrary, except to the 15 extent that when the person gives value, any of the following 16 applies: 17 a. The statement has been canceled or restrictively amended 18 under subsection 2 and a certified copy of the cancellation 19 or restrictive amendment has been recorded in the office for 20 recording transfers of the real property. 21 b. A limitation on the grant is contained in another 22 statement of authority that became effective after the 23 statement containing the grant became effective , and a 24 certified copy of the later-effective statement is recorded in 25 the office for recording transfers of the real property. 26 7. Subject to subsection 3 , if a certified copy of an 27 effective statement containing a limitation on the authority to 28 transfer real property held in the name of a limited liability 29 company is recorded in the office for recording transfers of 30 that real property, all persons are deemed to know of the 31 limitation. 32 8. Subject to subsection 9 , an effective statement of 33 dissolution or a statement of termination is a cancellation 34 of any filed statement of authority for the purposes of 35 -45- LSB 1051YC (2) 90 da/jh 45/ 161
H.F. _____ subsection 6 and is a limitation on authority for the purposes 1 of subsection 7 . 2 9. After a statement of dissolution becomes effective, 3 a limited liability company may deliver to the secretary of 4 state for filing and, if appropriate, the secretary of state 5 may record a statement of authority that is designated as 6 a post-dissolution statement of authority. The statement 7 operates as provided in subsections 6 and 7 . 8 10. A statement of authority filed by the secretary of 9 state under section 489.205 489.207 , subsection 1 , is effective 10 until amended or canceled as provided in subsection 2 , unless 11 an earlier cancellation date is specified in the statement. 12 11. An effective statement of denial operates as a 13 restrictive amendment under this section and may be recorded by 14 certified copy for the purposes of subsection 6 , paragraph a . 15 Sec. 34. Section 489.304, Code 2023, is amended to read as 16 follows: 17 489.304 Liability of members and managers. 18 1. For debts, obligations, or other liabilities A debt, 19 obligation, or other liability of a limited liability 20 company , whether arising in contract, tort, or otherwise 21 all of the following apply: is solely the debt, obligation, 22 or other liability of the company. A member or manager is 23 not personally liable, directly or indirectly, by way of 24 contribution or otherwise, for a debt, obligation, or other 25 liability of the company solely by reason of being or acting 26 as a member or manager. This subsection applies regardless of 27 the dissolution of the company. 28 a. They are solely the debts, obligations, or other 29 liabilities of the company. 30 b. They do not become the debts, obligations, or other 31 liabilities of a member or manager solely by reason of the 32 member acting as a member or manager acting as a manager. 33 2. The failure of a limited liability company to observe any 34 particular formalities relating to the exercise of its powers 35 -46- LSB 1051YC (2) 90 da/jh 46/ 161
H.F. _____ or management of its activities and affairs is not a ground 1 for imposing liability on the members a member or managers 2 manager for the debts, obligations, a debt, obligation, or 3 other liabilities liability of the company. 4 Sec. 35. Section 489.401, Code 2023, is amended to read as 5 follows: 6 489.401 Becoming member. 7 1. If a limited liability company is to have only one member 8 upon formation, a the person becomes the a member as agreed by 9 that person and the organizer of the company or a majority of 10 organizers if more than one . That person and the organizer 11 may be, but need not be, different persons. If different, the 12 organizer acts on behalf of the initial member. 13 2. If a limited liability company is to have more than 14 one member upon formation, those persons become members as 15 agreed by the persons before the formation of the company. The 16 organizer acts on behalf of the persons in forming the company 17 and may be, but need not be, one of the persons. 18 3. If a limited liability company has no members upon 19 formation, a person becomes a member of the limited liability 20 company with the consent of the organizer or a majority of 21 the organizers if more than one. The organizers may consent 22 to more than one person simultaneously becoming the companys 23 initial members After formation of a limited liability company, 24 a person becomes a member according to any of the following: 25 a. As provided in the operating agreement . 26 b. As the result of a transaction effective under subchapter 27 X. 28 c. With the affirmative vote or consent of all the members. 29 d. As provided in section 489.701, subsection 1, paragraph 30 c . 31 4. After formation of a limited liability company, a person 32 becomes a member upon A person may become a member without any 33 of the following: 34 a. As provided in the operating agreement Acquiring a 35 -47- LSB 1051YC (2) 90 da/jh 47/ 161
H.F. _____ transferable interest . 1 b. As the result of a transaction effective under article 10 2 Making or being obligated to make a contribution to the limited 3 liability company . 4 c. With the consent of all the members. 5 d. If, within ninety consecutive days after the company 6 ceases to have any members, all of the following occur: 7 (1) The last person to have been a member, or the legal 8 representative of that person, designates a person to become a 9 member. 10 (2) The designated person consents to become a member. 11 5. A person may become a member without acquiring a 12 transferable interest and without making or being obligated to 13 make a contribution to the limited liability company. 14 Sec. 36. Section 489.402, Code 2023, is amended to read as 15 follows: 16 489.402 Form of contribution. 17 A contribution may consist of tangible or intangible 18 property or other benefit to a limited liability company, 19 including money, services performed, promissory notes, other 20 agreements to contribute money or property, and contracts for 21 services to be performed property transferred to, services 22 performed for, or another benefit provided to the limited 23 liability company or an agreement to transfer property to, 24 perform services for, or provide another benefit to the 25 company . 26 Sec. 37. Section 489.403, Code 2023, is amended to read as 27 follows: 28 489.403 Liability for contributions. 29 1. A persons obligation to make a contribution to a 30 limited liability company is not excused by the persons 31 death, disability, termination, or other inability to perform 32 personally. If a person does not make a required contribution, 33 the person or the persons estate is obligated to contribute 34 money equal to the value of the part of the contribution which 35 -48- LSB 1051YC (2) 90 da/jh 48/ 161
H.F. _____ has not been made, at the option of the company. 1 2. A creditor of a limited liability company which extends 2 credit or otherwise acts in reliance on an obligation described 3 in subsection 1 may enforce the obligation If a person does not 4 fulfill an obligation to make a contribution other than money, 5 the person is obligated at the option of the limited liability 6 company to contribute money equal to the value of the part of 7 the contribution which has not been made . 8 3. An operating agreement may provide that the interest of 9 any member who fails to make a contribution that the member 10 is obligated to make is subject to specified penalties for, 11 or specified consequences of, such failure. The penalty or 12 consequence may take the form of reducing or eliminating 13 the defaulting members proportionate interest in a limited 14 liability company, subordinating the members interest to 15 that of a nondefaulting member, a forced sale of the members 16 interest, forfeiture of the members interest, the lending by 17 other members of the amount necessary to meet the members 18 commitment, a fixing of the value of the members interest 19 by appraisal or by formula and redemption, or sale of the 20 members interest at such value or other penalty or consequence 21 The obligation of a person to make a contribution may be 22 compromised only by the affirmative vote or consent of all the 23 members. If a creditor of a limited liability company extends 24 credit or otherwise acts in reliance on an obligation described 25 in subsection 1 without knowledge or notice of a compromise 26 under this subsection, the creditor may enforce the obligation . 27 4. An operating agreement may provide that the interest of 28 any member who fails to make a contribution that the member 29 is obligated to make is subject to specified penalties for, 30 or specified consequences of, such failure. The penalty or 31 consequence may take the form of reducing or eliminating 32 the defaulting members proportionate interest in a limited 33 liability company, subordinating the members interest to 34 that of a nondefaulting member, a forced sale of the members 35 -49- LSB 1051YC (2) 90 da/jh 49/ 161
H.F. _____ interest, forfeiture of the members interest, the lending by 1 other members of the amount necessary to meet the members 2 commitment, a fixing of the value of the members interest by 3 appraisal or by formula and redemption, or sale of the members 4 interest at such value or other penalty or consequence. 5 Sec. 38. Section 489.404, Code 2023, is amended to read as 6 follows: 7 489.404 Sharing of and right to distributions before 8 dissolution. 9 1. Any distributions distribution made by a limited 10 liability company before its dissolution and winding up must 11 be in equal shares among members and persons dissociated as 12 members, except to the extent necessary to comply with any a 13 transfer effective under section 489.502 and any charging order 14 in effect under section 489.503 . 15 2. A person has a right to a distribution before the 16 dissolution and winding up of a limited liability company only 17 if the limited liability company decides to make an interim 18 distribution. A persons dissociation does not entitle the 19 person to a distribution. 20 3. A person does not have a right to demand or receive a 21 distribution from a limited liability company in any form other 22 than money. Except as otherwise provided in section 489.708, 23 subsection 3 4 , a limited liability company may distribute an 24 asset in kind only if each part of the asset is fungible with 25 each other part and each person receives a percentage of the 26 asset equal in value to the persons share of distributions. 27 4. If a member or transferee becomes entitled to receive a 28 distribution, the member or transferee has the status of, and 29 is entitled to all remedies available to, a creditor of the 30 limited liability company with respect to the distribution. 31 However, the companys obligation to make a distribution is 32 subject to offset for any amount owed to the company by the 33 member or a person dissociated as a member on whose account the 34 distribution is made. 35 -50- LSB 1051YC (2) 90 da/jh 50/ 161
H.F. _____ Sec. 39. Section 489.405, Code 2023, is amended to read as 1 follows: 2 489.405 Limitations on distribution. 3 1. A limited liability company shall not make a 4 distribution , including a distribution under section 489.708, 5 if after the distribution any of the following applies: 6 a. The limited liability company would not be able to pay 7 its debts as they become due in the ordinary course of the 8 companys activities and affairs . 9 b. The limited liability companys total assets would be 10 less than the sum of its total liabilities plus the amount that 11 would be needed, if the company were to be dissolved , and wound 12 up , and terminated at the time of the distribution, to satisfy 13 the preferential rights upon dissolution , and winding up, and 14 termination of members up of members and transferees whose 15 preferential rights are superior to those the rights of persons 16 receiving the distribution. 17 2. A limited liability company may base a determination 18 that a distribution is not prohibited under subsection 1 on 19 financial statements prepared on the basis of accounting 20 practices and principles that are reasonable in the 21 circumstances or on a fair valuation or other method that is 22 reasonable under the circumstances any of the following: 23 a. Financial statements prepared on the basis of 24 accounting practices and principles that are reasonable in the 25 circumstances . 26 b. A fair valuation or other method that is reasonable under 27 the circumstances. 28 3. Except as otherwise provided in subsection 5 , the effect 29 of a distribution under subsection 1 is measured as follows: 30 a. In the case of a distribution by purchase, redemption, or 31 other acquisition of a transferable interest in the company, 32 as of the date money or other property is transferred or 33 debt incurred by the company as defined in section 489.102, 34 subsection 5, paragraph a , as of the earlier of any of the 35 -51- LSB 1051YC (2) 90 da/jh 51/ 161
H.F. _____ following: 1 (1) The date money or other property is transferred or debt 2 is incurred by the limited liability company . 3 (2) The date the person entitled to the distribution ceases 4 to own the interest or right being acquired by the limited 5 liability company in return for the distribution. 6 b. In the case of any other distribution of indebtedness, as 7 of the date the indebtedness is distributed. 8 b. c. In all other cases , as follows any of the following : 9 (1) The date that the distribution is authorized, if the 10 payment occurs within not later than one hundred twenty days 11 after that date. 12 (2) The date that the payment is made, if the payment occurs 13 more than one hundred twenty days after the distribution is 14 authorized. 15 4. A limited liability companys indebtedness to a member 16 or transferee incurred by reason of a distribution made in 17 accordance with this section is at parity with the companys 18 indebtedness to its general, unsecured creditors , except to the 19 extent subordinated by agreement . 20 5. A limited liability companys indebtedness, including 21 indebtedness issued in connection with or as part of as a 22 distribution, is not a liability for purposes of subsection 23 1 if the terms of the indebtedness provide that payment of 24 principal and interest are is made only if and to the extent 25 that payment of a distribution could then be made to members 26 under this section . If the indebtedness is issued as a 27 distribution, each payment of principal or interest on the 28 indebtedness is treated as a distribution, the effect of which 29 is measured on the date the payment is made. 30 6. In subsection 1 , distribution does not include amounts 31 constituting reasonable compensation for present or past 32 services or reasonable payments made in the ordinary course of 33 business under a bona fide retirement plan or other benefits 34 program In measuring the effect of a distribution under section 35 -52- LSB 1051YC (2) 90 da/jh 52/ 161
H.F. _____ 489.708, the liabilities of a dissolved limited liability 1 company do not include any claim that has been disposed of 2 under section 489.703, 489.704, or 489.706A . 3 Sec. 40. Section 489.406, Code 2023, is amended to read as 4 follows: 5 489.406 Liability for improper distributions. 6 1. Except as otherwise provided in subsection 2 , if a member 7 of a member-managed limited liability company or a manager 8 of a manager-managed limited liability company consents to 9 a distribution made in violation of section 489.405 and in 10 consenting to the distribution fails to comply with section 11 489.409 , the member or manager is personally liable to the 12 company for the amount of the distribution that which exceeds 13 the amount that could have been distributed without the 14 violation of section 489.405 . 15 2. To the extent the operating agreement of a member-managed 16 limited liability company expressly relieves a member of the 17 authority and responsibility to consent to distributions and 18 imposes that authority and responsibility on one or more other 19 members, the liability stated in subsection 1 applies to the 20 other members and not the member that the operating agreement 21 relieves of the authority and responsibility. 22 3. A person that receives a distribution knowing that the 23 distribution to that person was made in violation of violated 24 section 489.405 is personally liable to the limited liability 25 company but only to the extent that the distribution received 26 by the person exceeded the amount that could have been properly 27 paid under section 489.405 . 28 4. A person against which an action is commenced because 29 the person is liable under subsection 1 may do all of the 30 following: 31 a. Implead any other person that is subject to liability 32 liable under subsection 1 and seek to compel enforce a right of 33 contribution from the person. 34 b. Implead any person that received a distribution in 35 -53- LSB 1051YC (2) 90 da/jh 53/ 161
H.F. _____ violation of subsection 3 and seek to compel enforce a right of 1 contribution from the person in the amount the person received 2 in violation of subsection 3 . 3 5. An action under this section is barred if not 4 unless commenced within not later than two years after the 5 distribution. 6 Sec. 41. Section 489.407, Code 2023, is amended to read as 7 follows: 8 489.407 Management of limited liability company. 9 1. A limited liability company is a member-managed limited 10 liability company unless the operating agreement does any of 11 the following: 12 a. Expressly provides that any of the following apply: 13 (1) The limited liability company is or will be 14 manager-managed. 15 (2) The limited liability company is or will be managed by 16 managers. 17 (3) Management of the limited liability company is or will 18 be vested in managers. 19 b. Includes words of similar import. 20 2. In a member-managed limited liability company, all of the 21 following rules apply: 22 a. The Except as expressly provided in this chapter, the 23 management and conduct of the limited liability company are 24 vested in the members. 25 b. Each member has equal rights in the management and 26 conduct of the limited liability companys activities and 27 affairs . 28 c. A difference arising among members as to a matter in the 29 ordinary course of the activities and affairs of the limited 30 liability company may be decided by a majority of the members. 31 d. An act outside the ordinary course of the activities 32 of the company, including selling, leasing, exchanging, or 33 otherwise disposing of all, or substantially all, of the 34 companys property, with or without the goodwill, may be 35 -54- LSB 1051YC (2) 90 da/jh 54/ 161
H.F. _____ undertaken only with the consent of all members The affirmative 1 vote or consent of all the members is required to do any of the 2 following: 3 (1) Sell, lease, exchange, or otherwise dispose of all, or 4 substantially all, of the limited liability companys property, 5 with or without good will, outside the ordinary course of the 6 companys activities . 7 (2) Undertake an act outside the ordinary course of the 8 activities and affairs of the limited liability company. 9 (3) Approve a merger, interest exchange, conversion, or 10 domestication under subchapter X. 11 (4) Amend the operating agreement. 12 e. The operating agreement may be amended only with the 13 consent of all members. 14 3. In a manager-managed limited liability company, all of 15 the following rules apply: 16 a. Except as otherwise expressly provided in this chapter , 17 any matter relating to the activities and affairs of the 18 limited liability company is decided exclusively by the 19 managers manager, or, if there is more than one manager, by a 20 majority of the managers . 21 b. Each manager has equal rights in the management and 22 conduct of the activities and affairs of the limited liability 23 company. 24 c. A difference arising among managers as to a matter in the 25 ordinary course of the activities of the company may be decided 26 by a majority of the managers. 27 d. c. The affirmative vote or consent of all members is 28 required to do any of the following: 29 (1) Sell, lease, exchange, or otherwise dispose of all, or 30 substantially all, of the limited liability companys property, 31 with or without the goodwill, outside the ordinary course of 32 the companys activities. 33 (2) Approve a merger, conversion, or domestication under 34 article 10 Undertake any other act outside the ordinary course 35 -55- LSB 1051YC (2) 90 da/jh 55/ 161
H.F. _____ of the limited liability companys activities and affairs . 1 (3) Undertake any other act outside the ordinary course of 2 the companys activities Approve a merger, interest exchange, 3 conversion, or domestication under subchapter X . 4 (4) Amend the operating agreement. 5 e. d. A manager may be chosen at any time by the 6 affirmative vote or consent of a majority of the members and 7 remains a manager until a successor has been chosen, unless the 8 manager at an earlier time resigns, is removed, or dies, or, in 9 the case of a manager that is not an individual, terminates. A 10 manager may be removed at any time by the affirmative vote or 11 consent of a majority of the members without notice or cause. 12 f. e. A person need not be a member to be a manager, but 13 the dissociation of a member that is also a manager removes the 14 person as a manager. If a person that is both a manager and 15 a member ceases to be a manager, that cessation does not by 16 itself dissociate the person as a member. 17 g. f. A persons ceasing to be a manager does not discharge 18 any debt, obligation, or other liability to the limited 19 liability company or members which the person incurred while 20 a manager. 21 4. An action requiring the vote or consent of members under 22 this chapter may be taken without a meeting, and a member may 23 appoint a proxy or other agent to vote, consent , or otherwise 24 act for the member by signing an appointing record, personally 25 or by the members agent. 26 5. The dissolution of a limited liability company does not 27 affect the applicability of this section . However, a person 28 that wrongfully causes dissolution of the company loses the 29 right to participate in management as a member and a manager. 30 6. This chapter does not entitle a member to remuneration 31 for services performed for a member-managed limited liability 32 company, except for reasonable compensation for services 33 rendered in winding up the activities of the company A limited 34 liability company shall reimburse a member for an advance to 35 -56- LSB 1051YC (2) 90 da/jh 56/ 161
H.F. _____ the company beyond the amount of capital the member agreed to 1 contribute . 2 7. A payment or advance made by a member which gives rise 3 to a limited liability company obligation under subsection 6 4 or section 489.408, subsection 1, constitutes a loan to the 5 company which accrues interest from the date of the payment or 6 advance. 7 8. A member is not entitled to remuneration for services 8 performed for a member-managed limited liability company, 9 except for reasonable compensation for services rendered in 10 winding up the activities of the company. 11 Sec. 42. Section 489.407A, Code 2023, is amended to read as 12 follows: 13 489.407A Real estate interest transferred by limited 14 liability company or foreign limited liability company. 15 1. A transfer of an interest in real estate situated in 16 this state held by a limited liability company or a registered 17 foreign limited liability company authorized to transact do 18 business in this state is subject to the provisions of this 19 section . 20 2. a. In a member-managed limited liability company, a 21 transfer of an interest in real estate held by the company may 22 be undertaken by any of the following: 23 (1) As provided in the operating agreement, or if the 24 operating agreement does not so provide, only with the consent 25 of all members. 26 (2) As provided in a statement of authority filed by the 27 limited liability company with the secretary of state and 28 the recorder of the county where the real estate is situated 29 pursuant to section 489.302 . 30 b. A requirement of paragraph a is applicable to every 31 transfer of an interest in real estate situated in this state 32 held by a member-managed limited liability company, whether or 33 not the transfer is in the ordinary course of the companys 34 business. 35 -57- LSB 1051YC (2) 90 da/jh 57/ 161
H.F. _____ 3. a. In a manager-managed limited liability company, a 1 transfer of an interest in real estate held by the company may 2 be undertaken by any of the following: 3 (1) As provided in the operating agreement, or if the 4 operating agreement does not so provide, only with the consent 5 of a majority of all managers. 6 (2) As provided in a statement of authority filed by the 7 limited liability company with the secretary of state and 8 the recorder of the county where the real estate is situated 9 pursuant to section 489.302 . 10 b. A requirement in paragraph a is applicable to every 11 transfer of an interest in real estate situated in this state 12 held by a manager-managed limited liability company, whether 13 or not the transfer is in the ordinary course of the companys 14 business. 15 Sec. 43. Section 489.408, Code 2023, is amended to read as 16 follows: 17 489.408 Indemnification Reimbursement, indemnification, 18 advancement, and insurance. 19 1. A limited liability company shall reimburse a member of 20 a member-managed limited liability company or the manager of 21 a manager-managed limited liability company for any payment 22 made and indemnify for any debt, obligation, or other liability 23 incurred by a member of a member-managed company or the manager 24 of a manager-managed company in the course of the members 25 or managers activities on behalf of the company, if, in 26 making the payment or incurring the debt, obligation, or other 27 liability, the member or manager complied with the duties 28 stated in sections 489.405 and 489.409 by the member or manager 29 in the course of the members or managers activities on behalf 30 of the company, if the member or manager complied with sections 31 489.405, 489.407, and 489.409 in making the payment . 32 2. A limited liability company may purchase and maintain 33 insurance on behalf of a member or manager of the company 34 against liability asserted against or incurred by the member or 35 -58- LSB 1051YC (2) 90 da/jh 58/ 161
H.F. _____ manager in that capacity or arising from that status even if, 1 under section 489.110, subsection 7 , the operating agreement 2 could not eliminate or limit the persons liability to the 3 company for the conduct giving rise to the liability A limited 4 liability company shall indemnify and hold harmless a person 5 with respect to any claim or demand against the person and any 6 debt, obligation, or other liability incurred by the person by 7 reason of the persons former or present capacity as a member 8 or manager, if the claim, demand, debt, obligation, or other 9 liability does not arise from the persons breach of section 10 489.405, 489.407, or 489.409 . 11 3. In the ordinary course of its activities and affairs, 12 a limited liability company may advance reasonable expenses, 13 including attorneys fees and costs, incurred by a person 14 in connection with a claim or demand against the person by 15 reason of the persons former or present capacity as a member 16 or manager, if the person promises to repay the company if 17 the person ultimately is determined not to be entitled to be 18 indemnified under subsection 2. 19 4. A limited liability company may purchase and maintain 20 insurance on behalf of a member or manager against liability 21 asserted against or incurred by the member or manager in that 22 capacity or arising from that status even if, under section 23 489.110, subsection 3, paragraph g , the operating agreement 24 could not eliminate or limit the persons liability to the 25 company for the conduct giving rise to the liability. 26 Sec. 44. Section 489.409, Code 2023, is amended to read as 27 follows: 28 489.409 Standards of conduct for members and managers. 29 1. A member of a member-managed limited liability company 30 owes to the company and, subject to section 489.901, subsection 31 2 , the other members the fiduciary duties of loyalty and care 32 stated in subsections 2 and 3 . 33 2. The fiduciary duty of loyalty of a member in a 34 member-managed limited liability company includes all of the 35 -59- LSB 1051YC (2) 90 da/jh 59/ 161
H.F. _____ following duties: 1 a. To account to the limited liability company and to hold 2 as trustee for it any property, profit, or benefit derived by 3 the member regarding any of the following: 4 (1) In the conduct or winding up of the limited liability 5 companys activities and affairs . 6 (2) From a use by the member of the limited liability 7 companys property. 8 (3) From the appropriation of a limited liability company 9 opportunity. 10 b. To refrain from dealing with the limited liability 11 company in the conduct or winding up of the companys 12 activities and affairs as or on behalf of a person having an 13 interest adverse to the company. 14 c. To refrain from competing with the limited liability 15 company in the conduct of the companys activities and affairs 16 before the dissolution of the company. 17 3. Subject to the business judgment rule as stated in 18 subsection 7 , the duty of care of a member of a member-managed 19 limited liability company in the conduct and winding up of the 20 companys activities is to act with the care that a person 21 in a like position would reasonably exercise under similar 22 circumstances and in a manner the member reasonably believes to 23 be in the best interests of the company. In discharging this 24 duty, a member may rely in good faith upon opinions, reports, 25 statements, or other information provided by another person 26 that the member reasonably believes is a competent and reliable 27 source for the information The duty of care of a member of 28 a member-managed limited liability company in the conduct 29 or winding up of the companys activities and affairs is to 30 refrain from engaging in grossly negligent or reckless conduct, 31 willful or intentional misconduct, or knowing violation of law . 32 4. A member in a member-managed limited liability company 33 or a manager-managed limited liability company shall discharge 34 the duties under this chapter or under the operating agreement 35 -60- LSB 1051YC (2) 90 da/jh 60/ 161
H.F. _____ and exercise any rights consistently with the contractual 1 obligation of good faith and fair dealing A member shall 2 discharge the duties and obligations under this chapter 3 or under the operating agreement and exercise any rights 4 consistently with the contractual obligation of good faith and 5 fair dealing . 6 5. It is a defense to a claim under subsection 2 , paragraph 7 b , and any comparable claim in equity or at common law that 8 the transaction was fair to the limited liability company A 9 member does not violate a duty or obligation under this chapter 10 or under the operating agreement solely because the members 11 conduct furthers the members own interest . 12 6. All of the members of a member-managed limited liability 13 company or a manager-managed limited liability company may 14 authorize or ratify, after full disclosure of all material 15 facts, a specific act or transaction that otherwise would 16 violate the duty of loyalty. 17 7. a. A member satisfies the duty of care in subsection 3 18 if all of the following apply: It is a defense to a claim under 19 subsection 2, paragraph b , and any comparable claim in equity 20 or at common law that the transaction was fair to the limited 21 liability company. 22 (1) The member is not interested in the subject matter of 23 the business judgment. 24 (2) The member is informed with respect to the subject 25 of the business judgment to the extent the member reasonably 26 believes to be appropriate in the circumstances. 27 (3) The member has a rational basis for believing that 28 the business judgment is in the best interests of the limited 29 liability company. 30 b. A person challenging the business judgment of a member 31 has the burden of proving a breach of the duty of care, and 32 in a damage action, the burden of proving that the breach was 33 the legal cause of damage suffered by the limited liability 34 company. 35 -61- LSB 1051YC (2) 90 da/jh 61/ 161
H.F. _____ 8. In a manager-managed limited liability company, all of 1 the following rules apply: If, as permitted by subsection 6 2 or subsection 9, paragraph f , or the operating agreement, a 3 member enters into a transaction with the limited liability 4 company which otherwise would be prohibited by subsection 2, 5 paragraph b , the members rights and obligations arising from 6 the transaction are the same as those of a person that is not a 7 member. 8 a. Subsections 1, 2, 3, 5, and 7 apply to the manager or 9 managers and not the members. 10 b. The duty stated under subsection 2 , paragraph c , 11 continues until winding up is completed. 12 c. Subsection 4 applies to the members and managers. 13 d. Subsection 6 applies only to the members. 14 e. A member does not have any fiduciary duty to the company 15 or to any other member solely by reason of being a member. 16 9. In a manager-managed limited liability company, all of 17 the following rules apply: 18 a. Subsections 1, 2, 3, and 7 apply to the manager or 19 managers and not the members. 20 b. The duty stated under subsection 2, paragraph c , 21 continues until winding up is completed. 22 c. Subsection 4 applies to managers and members. 23 d. Subsection 5 applies only to members. 24 e. The power to ratify under subsection 6 may be exercised 25 only by the members. 26 f. Subject to subsection 4, a member does not have any duty 27 to the limited liability company or to any other member solely 28 by reason of being a member. 29 Sec. 45. Section 489.410, Code 2023, is amended to read as 30 follows: 31 489.410 Right of members, managers, and dissociated members 32 to information Rights to information of member, manager, and 33 person dissociated as member . 34 1. In a member-managed limited liability company, all of the 35 -62- LSB 1051YC (2) 90 da/jh 62/ 161
H.F. _____ following rules apply: 1 a. On reasonable notice, a member may inspect and copy 2 during regular business hours, at a reasonable location 3 specified by the limited liability company, any record 4 maintained by the company regarding the companys activities, 5 affairs, financial condition, and other circumstances, to the 6 extent the information is material to the members rights and 7 duties under the operating agreement or this chapter . 8 b. The limited liability company shall furnish to each 9 member all of the following: 10 (1) Without demand, any information concerning the limited 11 liability companys activities, affairs, financial condition, 12 and other circumstances which the company knows and is material 13 to the proper exercise of the members rights and duties under 14 the operating agreement or this chapter , except to the extent 15 the company can establish that it reasonably believes the 16 member already knows the information. 17 (2) On demand, any other information concerning the limited 18 liability companys activities, affairs, financial condition, 19 and other circumstances, except to the extent the demand or for 20 the information demanded is unreasonable or otherwise improper 21 under the circumstances. 22 c. The duty to furnish information under paragraph b also 23 applies to each member to the extent the member knows any of 24 the information described in paragraph b . 25 2. In a manager-managed limited liability company, all of 26 the following rules apply: 27 a. The informational rights stated in subsection 1 and 28 the duty stated in subsection 1 , paragraph c , apply to the 29 managers and not the members. 30 b. During regular business hours and at a reasonable 31 location specified by the limited liability company, a 32 member may obtain from the company and inspect and copy full 33 information regarding the activities, affairs, financial 34 condition, and other circumstances of the company as is just 35 -63- LSB 1051YC (2) 90 da/jh 63/ 161
H.F. _____ and reasonable if all of the following apply: 1 (1) The member seeks the information for a purpose material 2 reasonably related to the members interest as a member. 3 (2) The member makes a demand in a record received by 4 the limited liability company, describing with reasonable 5 particularity the information sought and the purpose for 6 seeking the information. 7 (3) The information sought is directly connected to the 8 members purpose. 9 c. Within Not later than ten days after receiving a demand 10 pursuant to paragraph b , subparagraph (2), the limited 11 liability company shall in a record inform in a record the 12 member that made the demand that includes all of the following: 13 (1) Of the What information that the limited liability 14 company will provide in response to the demand and when and 15 where the company will provide the information. 16 (2) If the company declines to provide any demanded 17 information, the companys reasons for declining The limited 18 liability companys reasons for declining, if the company 19 declines to provide any demanded information . 20 d. Whenever this chapter or an operating agreement provides 21 for a member to vote on or give or withhold consent to a matter, 22 before the vote is cast or consent is given or withheld, the 23 limited liability company shall, without demand, provide the 24 member with all information that is known to the company and is 25 material to the members decision. 26 3. On ten days demand made in a record received by a 27 limited liability company, a dissociated member may have access 28 to information to which the person was entitled while a member 29 if the information pertains to the period during which the 30 person was a member, the person seeks the information in good 31 faith, and the person satisfies the requirements imposed on 32 a member by subsection 2 , paragraph b . The company shall 33 respond to a demand made pursuant to this subsection in the 34 manner provided in subsection 2 , paragraph c Subject to 35 -64- LSB 1051YC (2) 90 da/jh 64/ 161
H.F. _____ subsection 8, on ten days demand made in a record received by 1 a limited liability company, a person dissociated as a member 2 may have access to the information to which the person was 3 entitled while a member if all of the following apply: 4 a. The information pertains to the period during which the 5 person was a member . 6 b. The person seeks the information in good faith. 7 c. The person satisfies the requirements imposed on a member 8 by subsection 2, paragraph b . 9 4. A limited liability company may charge a person that 10 makes a demand under this section the reasonable costs of 11 copying, limited to the costs of labor and material shall 12 respond to a demand made pursuant to subsection 3 in the manner 13 provided in subsection 2, paragraph c . 14 5. A member or dissociated member may exercise rights 15 under this section through an agent or, in the case of an 16 individual under legal disability, a legal representative. Any 17 restriction or condition imposed by the operating agreement 18 or under subsection 7 applies both to the agent or legal 19 representative and the member or dissociated member A limited 20 liability company may charge a person that makes a demand under 21 this section the reasonable costs of copying, limited to the 22 costs of labor and material . 23 6. The rights under this section do not extend to a person 24 as transferee A member or person dissociated as a member may 25 exercise the rights under this section through an agent or, 26 in the case of an individual under legal disability, a legal 27 representative . Any restriction or condition imposed by the 28 operating agreement or under subsection 8 applies both to the 29 agent or legal representative and to the member or person 30 dissociated as a member. 31 7. In addition to any restriction or condition stated 32 in its operating agreement, a limited liability company, as 33 a matter within the ordinary course of its activities, may 34 impose reasonable restrictions and conditions on access to 35 -65- LSB 1051YC (2) 90 da/jh 65/ 161
H.F. _____ and use of information to be furnished under this section , 1 including designating information confidential and imposing 2 nondisclosure and safeguarding obligations on the recipient. 3 In a dispute concerning the reasonableness of a restriction 4 under this subsection , the company has the burden of proving 5 reasonableness Subject to section 489.504, the rights under 6 this section do not extend to a person as transferee . 7 8. In addition to any restriction or condition stated in its 8 operating agreement, a limited liability company, as a matter 9 within the ordinary course of its activities and affairs, may 10 impose reasonable restrictions and conditions on access to 11 and use of information to be furnished under this section, 12 including designating information confidential and imposing 13 nondisclosure and safeguarding obligations on the recipient. 14 In a dispute concerning the reasonableness of a restriction 15 under this subsection, the company has the burden of proving 16 reasonableness. 17 Sec. 46. Section 489.502, Code 2023, is amended to read as 18 follows: 19 489.502 Transfer of transferable interest. 20 1. For Subject to section 489.503, subsection 6, for a 21 transfer, in whole or in part, all of the following applies to 22 a transferable interest: 23 a. It is permissible. 24 b. It does not by itself cause a members persons 25 dissociation as a member or a dissolution and winding up of the 26 limited liability companys activities and affairs . 27 c. Subject to section 489.504 , it does not entitle the 28 transferee to do any of the following: 29 (1) Participate in the management or conduct of the limited 30 liability companys activities and affairs . 31 (2) Except as otherwise provided in subsection 3 , have 32 access to records or other information concerning the limited 33 liability companys activities and affairs . 34 2. A transferee has the right to receive, in accordance 35 -66- LSB 1051YC (2) 90 da/jh 66/ 161
H.F. _____ with the transfer, distributions to which the transferor would 1 otherwise be entitled. 2 3. In a dissolution and winding up of a limited liability 3 company, a transferee is entitled to an account of the 4 companys transactions only from the date of dissolution. 5 4. A transferable interest may be evidenced by a certificate 6 of the interest issued by the a limited liability company in a 7 record, and, subject to this section , the interest represented 8 by the certificate may be transferred by a transfer of the 9 certificate. 10 5. A limited liability company need not give effect to a 11 transferees rights under this section until the company knows 12 or has notice of the transfer. 13 6. A transfer of a transferable interest in violation of a 14 restriction on transfer contained in the operating agreement 15 or another agreement to which the transferor is a party is 16 ineffective as to a person having notice of the restriction at 17 the time of transfer if the intended transferee has knowledge 18 or notice of the restriction at the time of transfer . 19 7. Except as otherwise provided in section 489.602, 20 subsection 4 5 , paragraph b , when if a member transfers a 21 transferable interest, the transferor retains the rights of a 22 member other than the transferable interest in distributions 23 transferred and retains all duties and obligations of a member. 24 8. When If a member transfers a transferable interest to a 25 person that becomes a member with respect to the transferred 26 interest, the transferee is liable for the members obligations 27 under section sections 489.403 and section 489.406, subsection 28 3 , 489.406 known to the transferee when the transferee becomes 29 a member. 30 Sec. 47. Section 489.503, Code 2023, is amended to read as 31 follows: 32 489.503 Charging order. 33 1. On application by a judgment creditor of a member 34 or transferee, a court may enter a charging order against 35 -67- LSB 1051YC (2) 90 da/jh 67/ 161
H.F. _____ the transferable interest of the judgment debtor for the 1 unsatisfied amount of the judgment. A Except as otherwise 2 provided in subsection 6, a charging order constitutes a lien 3 on a judgment debtors transferable interest and requires the 4 limited liability company to pay over to the person to which 5 the charging order was issued any distribution that would 6 otherwise would be paid to the judgment debtor. 7 2. To the extent necessary to effectuate the collection 8 of distributions pursuant to a charging order in effect under 9 subsection 1 , the court may do all of the following: 10 a. Appoint a receiver of the distributions subject to 11 the charging order, with the power to make all inquiries the 12 judgment debtor might have made. 13 b. Make all other orders necessary to give effect to the 14 charging order. 15 3. Upon a showing that distributions under a charging 16 order will not pay the judgment debt within a reasonable 17 time, the court may foreclose the lien and order the sale of 18 the transferable interest. The Except as otherwise provided 19 in subsection 6, the purchaser at the foreclosure sale only 20 obtains only the transferable interest, does not thereby become 21 a member, and is subject to section 489.502 . 22 4. At any time before foreclosure under subsection 3 , the 23 member or transferee whose transferable interest is subject to 24 a charging order under subsection 1 may extinguish the charging 25 order by satisfying the judgment and filing a certified copy of 26 the satisfaction with the court that issued the charging order. 27 5. At any time before foreclosure under subsection 3 , 28 a limited liability company or one or more members whose 29 transferable interests are not subject to the charging order 30 may pay to the judgment creditor the full amount due under the 31 judgment and thereby succeed to the rights of the judgment 32 creditor, including the charging order. 33 6. This chapter does not deprive any member or transferee of 34 the benefit of any exemption laws applicable to the members 35 -68- LSB 1051YC (2) 90 da/jh 68/ 161
H.F. _____ or transferees transferable interest If a court orders 1 foreclosure of a charging order lien against the sole member of 2 a limited liability company all of the following apply: 3 a. The court shall confirm the sale . 4 b. The purchaser at the sale obtains the members entire 5 interest, not only the members transferable interest. 6 c. The purchaser thereby becomes a member. 7 d. The person whose interest was subject to the foreclosed 8 charging order is dissociated as a member. 9 7. This section provides the exclusive remedy by which 10 a person seeking to enforce a judgment against a member or 11 transferee may, in the capacity of judgment creditor, satisfy 12 the judgment from the judgment debtors transferable interest 13 This chapter does not deprive any member or transferee of the 14 benefit of any exemption law applicable to the transferable 15 interest of the member or transferee . 16 8. This section provides the exclusive remedy by which a 17 person seeking in the capacity of judgment creditor to enforce 18 a judgment against a member or transferee may satisfy the 19 judgment from the judgment debtors transferable interest. 20 Sec. 48. Section 489.504, Code 2023, is amended to read as 21 follows: 22 489.504 Power of personal representative of deceased member. 23 If a member dies, the deceased members personal legal 24 representative or other legal representative may exercise all 25 of the following: 26 1. The rights of a transferee provided in section 489.502, 27 subsection 3 , and, for . 28 2. For the purposes of settling the estate, the rights of a 29 current the deceased member had under section 489.410 . 30 Sec. 49. Section 489.601, Code 2023, is amended to read as 31 follows: 32 489.601 Members power Power to dissociate as a member 33 wrongful dissociation. 34 1. A person has the power to dissociate as a member at any 35 -69- LSB 1051YC (2) 90 da/jh 69/ 161
H.F. _____ time, rightfully or wrongfully, by withdrawing as a member by 1 express will under section 489.602, subsection 1 . 2 2. A persons dissociation from a limited liability company 3 as a member is wrongful only if any of the following applies to 4 the dissociation: 5 a. It is in breach of an express provision of the operating 6 agreement. 7 b. It occurs before the termination completion of the 8 winding up of the limited liability company and any of the 9 following applies: 10 (1) The person withdraws as a member by express will. 11 (2) The person is expelled as a member by judicial order 12 under section 489.602, subsection 5 6 . 13 (3) The person is dissociated under section 489.602, 14 subsection 7, paragraph a , by becoming a debtor in bankruptcy 15 8 . 16 (4) In the case of a person that is not a trust other than 17 a business trust, an estate, or an individual, the person 18 is expelled or otherwise dissociated as a member because it 19 willfully dissolved or terminated. 20 3. A person that wrongfully dissociates as a member is 21 liable to the limited liability company and, subject to 22 section 489.901 , to the other members for damages caused by the 23 dissociation. The liability is in addition to any other debt, 24 obligation, or other liability of the member to the company or 25 the other members. 26 Sec. 50. Section 489.602, Code 2023, is amended to read as 27 follows: 28 489.602 Events causing dissociation. 29 A person is dissociated as a member from a limited liability 30 company when any of the following applies: 31 1. The limited liability company knows or has notice of 32 the persons express will to withdraw as a member, but, if the 33 person specified a withdrawal date later than the date the 34 limited liability company knew or had notice, on that later 35 -70- LSB 1051YC (2) 90 da/jh 70/ 161
H.F. _____ date. 1 2. An event stated in the operating agreement as causing the 2 persons dissociation occurs. 3 3. The person is expelled as a member pursuant to the 4 operating agreement The persons entire interest is transferred 5 in a foreclosure sale under section 489.503, subsection 6 . 6 4. The person is expelled as a member by the unanimous 7 consent of the other members if any of the following applies: 8 pursuant to the operating agreement. 9 a. It is unlawful to carry on the companys activities with 10 the person as a member. 11 b. There has been a transfer of all of the persons 12 transferable interest in the company, other than any of the 13 following: 14 (1) A transfer for security purposes. 15 (2) A charging order in effect under section 489.503 which 16 has not been foreclosed. 17 c. The person is a corporation and, within ninety days 18 after the company notifies the person that it will be expelled 19 as a member because the person has filed a certificate of 20 dissolution or the equivalent, its charter has been revoked, 21 or its right to conduct business has been suspended by 22 the jurisdiction of its incorporation, the certificate of 23 dissolution has not been revoked or its charter or right to 24 conduct business has not been reinstated. 25 d. The person is a limited liability company or partnership 26 that has been dissolved and whose business is being wound up. 27 5. On application by the company, the person is expelled 28 as a member by judicial order because the person has done any 29 of the following The person is expelled as a member by the 30 affirmative vote or consent of all the other members if any of 31 the following apply : 32 a. Has engaged, or is engaging, in wrongful conduct that 33 has adversely and materially affected, or will adversely and 34 materially affect, the companys activities It is unlawful to 35 -71- LSB 1051YC (2) 90 da/jh 71/ 161
H.F. _____ carry on the limited liability companys activities and affairs 1 with the person as a member . 2 b. Has willfully or persistently committed, or is willfully 3 and persistently committing, a material breach of the 4 operating agreement or the persons duties or obligations under 5 section 489.409 There has been a transfer of all the persons 6 transferable interest in the limited liability company, other 7 than any of the following: 8 (1) A transfer for security purposes . 9 (2) A charging order in effect under section 489.503 which 10 has not been foreclosed. 11 c. Has engaged in, or is engaging in, conduct relating 12 to the companys activities which makes it not reasonably 13 practicable to carry on the activities with the person as a 14 member The person is an entity and all of the following apply: 15 (1) The limited liability company notifies the person that 16 it will be expelled as a member because the person has filed 17 a statement of dissolution or the equivalent, the person has 18 been administratively dissolved, the persons charter or the 19 equivalent has been revoked, or the persons right to conduct 20 business has been suspended by the persons jurisdiction of 21 formation . 22 (2) Not later than ninety days after the notification, 23 the statement of dissolution or the equivalent has not been 24 withdrawn, rescinded, or revoked, the person has not been 25 reinstated, or the persons charter or the equivalent or right 26 to conduct business has not been reinstated. 27 d. The person is an unincorporated entity that has been 28 dissolved and whose activities and affairs are being wound up. 29 6. In the case of a person who is an individual, any of 30 the following applies On application by the limited liability 31 company or a member in a direct action under section 489.901, 32 the person is expelled as a member by judicial order because 33 any of the following apply : 34 a. The person dies has engaged or is engaging in wrongful 35 -72- LSB 1051YC (2) 90 da/jh 72/ 161
H.F. _____ conduct that has affected adversely and materially, or will 1 affect adversely and materially, the companys activities and 2 affairs . 3 b. In a member-managed limited liability company, any of 4 the following applies: The person has committed willfully or 5 persistently, or is committing willfully or persistently, 6 a material breach of the operating agreement or a duty or 7 obligation under section 489.409. 8 (1) A guardian or general conservator for the person is 9 appointed. 10 (2) There is a judicial order that the person has otherwise 11 become incapable of performing the persons duties as a member 12 under this chapter or the operating agreement. 13 c. The person has engaged or is engaging in conduct relating 14 to the limited liability companys activities and affairs which 15 makes it not reasonably practicable to carry on the activities 16 and affairs with the person as a member. 17 7. In a member-managed limited liability company, the 18 person does any of the following In the case of an individual 19 any of the following apply : 20 a. Becomes a debtor in bankruptcy The individual dies . 21 b. Executes an assignment for the benefit of creditors In a 22 member-managed limited liability company any of the following 23 apply: 24 (1) A guardian or general conservator for the individual is 25 appointed . 26 (2) A court orders that the individual has otherwise become 27 incapable of performing the individuals duties as a member 28 under this chapter or the operating agreement. 29 c. Seeks, consents to, or acquiesces in the appointment of 30 a trustee, receiver, or liquidator of the person or of all or 31 substantially all of the persons property. 32 8. In the case of a person that is a trust or is acting as 33 a member by virtue of being a trustee of a trust, the trusts 34 entire transferable interest in the company is distributed In a 35 -73- LSB 1051YC (2) 90 da/jh 73/ 161
H.F. _____ member-managed limited liability company, any of the following 1 apply: 2 a. The person becomes a debtor in bankruptcy . 3 b. The person signs an assignment for the benefit of 4 creditors. 5 c. The person seeks, consents to, or acquiesces in the 6 appointment of a trustee, receiver, or liquidator of the person 7 or of all or substantially all the persons property. 8 9. In the case of a person that is an estate or is acting 9 as a member by virtue of being a personal representative of 10 an estate, the estates entire transferable interest in the 11 company is distributed In the case of a person that is a 12 testamentary or inter vivos trust or is acting as a member by 13 virtue of being a trustee of such a trust, the trusts entire 14 transferable interest in the limited liability company is 15 distributed . 16 10. In the case of a member that is not an individual, 17 partnership, limited liability company, corporation, trust, or 18 estate, the termination of the member In the case of a person 19 that is an estate or is acting as a member by virtue of being 20 a personal representative of an estate, the estates entire 21 transferable interest in the limited liability company is 22 distributed . 23 11. The company participates in a merger under article 10 , 24 if any of the following applies: In the case of a person that 25 is not an individual, the existence of the person terminates. 26 a. The company is not the surviving entity. 27 b. Otherwise as a result of the merger, the person ceases 28 to be a member. 29 12. The company participates in a conversion under article 30 10 The limited liability company participates in a merger under 31 subchapter X and any of the following apply: 32 a. The limited liability company is not the surviving 33 entity . 34 b. Otherwise as a result of the merger, the person ceases 35 -74- LSB 1051YC (2) 90 da/jh 74/ 161
H.F. _____ to be a member. 1 13. The company participates in a domestication under 2 article 10 , if, as a result of the domestication, the 3 person ceases to be a member The limited liability company 4 participates in an interest exchange under subchapter X and, 5 as a result of the interest exchange, the person ceases to be a 6 member . 7 14. The limited liability company terminates participates 8 in a conversion under subchapter X . 9 15. The limited liability company participates in a 10 domestication under subchapter X and, as a result of the 11 domestication, the person ceases to be a member. 12 16. The limited liability company dissolves and completes 13 winding up. 14 Sec. 51. Section 489.603, Code 2023, is amended to read as 15 follows: 16 489.603 Effect of persons dissociation as member . 17 1. When If a person is dissociated as a member , of a limited 18 liability company, all of the following apply: 19 a. The persons right to participate as a member in the 20 management and conduct of the limited liability companys 21 activities and affairs terminates. 22 b. If the company is member-managed, the persons fiduciary 23 duties as a member end with regard to matters arising and 24 events occurring after the persons dissociation The persons 25 duties and obligations under section 489.409 as a member end 26 with regard to matters arising and events occurring after the 27 persons dissociation . 28 c. Subject to section 489.504 and article 10 subchapter X , 29 any transferable interest owned by the person in the persons 30 capacity as a member immediately before dissociation in the 31 persons capacity as a member is owned by the person solely as 32 a transferee. 33 2. A persons dissociation as a member of a limited 34 liability company does not of itself discharge the person from 35 -75- LSB 1051YC (2) 90 da/jh 75/ 161
H.F. _____ any debt, obligation, or other liability to the company or the 1 other members which the person incurred while a member. 2 Sec. 52. Section 489.604, Code 2023, is amended to read as 3 follows: 4 489.604 Members power to dissociate under certain 5 circumstances. 6 1. If the certificate of organization or an operating 7 agreement does not specify the time or the events upon the 8 happening of which a member may dissociate from a limited 9 liability company , a member may dissociate from the limited 10 liability company in the event any amendment to the certificate 11 of organization or operating agreement that is adopted over 12 the members written dissent adversely affects the rights or 13 preferences of the dissenting members transferable interest 14 in any of the ways described in paragraphs a through f . 15 A dissociation in the event of such dissent and adverse 16 effect is deemed to have occurred as of the effective date 17 of the amendment, if the member gives notice to the limited 18 liability company not more than sixty days after the date of 19 the amendment. In valuing the members distribution pursuant 20 to this subsection , any depreciation in anticipation of the 21 amendment shall be excluded. An amendment that does any of the 22 following is subject to this section : 23 a. Alters or abolishes a members right to receive a 24 distribution. 25 b. Alters or abolishes a members right to voluntarily 26 dissociate. 27 c. Alters or abolishes a members right to vote on any 28 matter, except as the rights may be altered or abolished 29 through the acceptance of contributions or the making of 30 contribution agreements. 31 d. Alters or abolishes a members preemptive right to make 32 contributions. 33 e. Establishes or changes the conditions for or consequences 34 of expulsion. 35 -76- LSB 1051YC (2) 90 da/jh 76/ 161
H.F. _____ f. Waives the application of this section to the limited 1 liability company. 2 2. A member dissociating from a limited liability company 3 under this section is not liable for damages for the breach of 4 any agreement not to withdraw. 5 3. This section applies to a limited liability company 6 whose original articles of organization or certificate of 7 organization is filed with the secretary of state on or after 8 July 1, 1997. 9 4. This section applies to a limited liability company whose 10 original articles of organization are filed with the secretary 11 of state and effective on or prior to June 30, 1997, if such 12 companys operating agreement provides that it is subject to 13 this section . 14 5. The operating agreement of a limited liability company 15 may waive the applicability of this section to the company and 16 its members. 17 Sec. 53. Section 489.701, Code 2023, is amended to read as 18 follows: 19 489.701 Events causing dissolution. 20 1. A limited liability company is dissolved, and its 21 activities and affairs must be wound up, upon the occurrence 22 of any of the following: 23 a. An event or circumstance that the operating agreement 24 states causes dissolution. 25 b. The affirmative vote or consent of all the members. 26 c. Once the The limited liability company has at least one 27 member, and then the passage of ninety consecutive days during 28 which the company has no members . unless before the end of the 29 period all of the following apply: 30 (1) Consent to admit at least one specified person as a 31 member is given by transferees owning the rights to receive 32 a majority of distributions as transferees at the time the 33 consent is to be effective. 34 (2) At least one person becomes a member in accordance with 35 -77- LSB 1051YC (2) 90 da/jh 77/ 161
H.F. _____ the consent. 1 d. On application by a member, the entry by a the district 2 court of an order dissolving the limited liability company on 3 the grounds that any of the following applies: 4 (1) The conduct of all or substantially all of the limited 5 liability companys activities and affairs is unlawful. 6 (2) It is not reasonably practicable to carry on the limited 7 liability companys activities and affairs in conformity with 8 the certificate of organization and the operating agreement. 9 (3) The managers or those members in control of the limited 10 liability company conduct themselves according to any of the 11 following: 12 (a) Have acted, are acting, or will act in a manner that is 13 illegal or fraudulent. 14 (b) Have acted or are acting in a manner that is oppressive 15 and was, is, or will be directly harmful to the applicant. 16 e. On application by a member or transferee, the entry by 17 a district court of an order dissolving the company on the 18 grounds that the managers or those members in control of the 19 company have done any of the following: The signing and filing 20 of a statement of administrative dissolution by the secretary 21 of state under section 489.705. 22 (1) Have acted, are acting, or will act in a manner that is 23 illegal or fraudulent. 24 (2) Have acted or are acting in a manner that is oppressive 25 and was, is, or will be directly harmful to the applicant. 26 2. In a proceeding brought under subsection 1 , paragraph 27 e , d , subparagraph (3), the district court may order a 28 remedy other than dissolution. 29 Sec. 54. Section 489.701A, Code 2023, is amended to read as 30 follows: 31 489.701A Rescinding dissolution. 32 1. A limited liability company may rescind its dissolution, 33 unless a statement of termination applicable to the company has 34 become effective, a the district court has entered an order 35 -78- LSB 1051YC (2) 90 da/jh 78/ 161
H.F. _____ under section 489.701, subsection 1 , paragraph d , dissolving 1 the company, or the secretary of state has dissolved the 2 company under section 489.705 . 3 2. Rescinding dissolution under this section requires all 4 of the following: 5 a. The affirmative vote or consent of each member. 6 b. If the limited liability company has delivered to the 7 secretary of state for filing a statement of dissolution and 8 any of the following applies apply : 9 (1) If the statement has not become effective, delivery to 10 the secretary of state for filing of a statement of withdrawal 11 under section 489.205 489.208A applicable to the statement of 12 dissolution. 13 (2) If the statement of dissolution has become effective, 14 delivery to the secretary of state for filing of a statement of 15 rescission stating the name of the limited liability company 16 and that dissolution has been rescinded under this section . 17 3. If a limited liability company rescinds its dissolution 18 all of the following apply: 19 a. The limited liability company shall may resume carrying 20 on its activities and affairs as if the dissolution had never 21 occurred. 22 b. Subject to paragraph c , any liability incurred by the 23 limited liability company after the dissolution and before 24 the rescission has become effective shall be determined as if 25 dissolution had never occurred. 26 c. The rights of a third party arising out of conduct in 27 reliance on the dissolution before the third party knew or had 28 notice of the rescission must not be adversely affected. 29 Sec. 55. Section 489.702, Code 2023, is amended to read as 30 follows: 31 489.702 Winding up. 32 1. A dissolved limited liability company shall wind up its 33 activities and affairs , and except as otherwise provided in 34 section 489.701A, the company continues after dissolution only 35 -79- LSB 1051YC (2) 90 da/jh 79/ 161
H.F. _____ for the purpose of winding up. 1 2. In winding up its activities and affairs , all of the 2 following apply to a limited liability company: 3 a. It shall discharge the limited liability companys debts, 4 obligations, or and other liabilities, settle and close the 5 companys activities and affairs , and marshal and distribute 6 the assets of the company. 7 b. It may do all of the following: 8 (1) Deliver to the secretary of state for filing a statement 9 of dissolution stating the name of the limited liability 10 company and that the company is dissolved. 11 (2) Preserve the limited liability company activities , 12 affairs, and property as a going concern for a reasonable time. 13 (3) Prosecute and defend actions and proceedings, whether 14 civil, criminal, or administrative. 15 (4) Transfer the limited liability companys property. 16 (5) Settle disputes by mediation or arbitration. 17 (6) Deliver to the secretary of state for filing a statement 18 of termination stating the name of the limited liability 19 company and that the company is terminated. 20 (7) Perform other acts necessary or appropriate to the 21 winding up. 22 3. If a dissolved limited liability company has no members, 23 the legal representative of the last person to have been a 24 member may wind up the activities and affairs of the company. 25 If the person does so, the person has the powers of a sole 26 manager under section 489.407, subsection 3 , and is deemed to 27 be a manager for the purposes of section 489.304, subsection 28 1 , paragraph b . 29 4. If the legal representative under subsection 3 declines 30 or fails to wind up the limited liability companys activities 31 and affairs , a person may be appointed to do so by the consent 32 of transferees owning a majority of the rights to receive 33 distributions as transferees at the time the consent is to be 34 effective. All of the following apply to a person appointed 35 -80- LSB 1051YC (2) 90 da/jh 80/ 161
H.F. _____ under this subsection : 1 a. The person has the powers of a sole manager under section 2 489.407, subsection 3 , and is deemed to be a manager for the 3 purposes of section 489.304, subsection 1 , paragraph b . 4 b. The person shall deliver promptly deliver to the 5 secretary of state for filing an amendment to the limited 6 liability companys certificate of organization to do stating 7 all of the following: 8 (1) State that That the limited liability company has no 9 members. 10 (2) State that the person has been appointed pursuant to 11 this subsection to wind up the company The name and street and 12 mailing addresses of the person . 13 (3) Provide the street and mailing addresses of the person 14 That the person has been appointed pursuant to this subsection 15 to wind up the limited liability companys activities and 16 affairs . 17 5. The district court may order judicial supervision of the 18 winding up of a dissolved limited liability company, including 19 the appointment of a person to wind up the companys activities 20 and affairs pursuant to any of the following: 21 a. On application of a member, if the applicant establishes 22 good cause. 23 b. On the application of a transferee, if all of the 24 following apply: 25 (1) The limited liability company does not have any members. 26 (2) The legal representative of the last person to have been 27 a member declines or fails to wind up the limited liability 28 companys activities and affairs . 29 (3) Within a reasonable time following the dissolution a 30 person has not been appointed pursuant to subsection 4 3 . 31 c. In connection with a proceeding under section 489.701, 32 subsection 1 , paragraph d or e . 33 Sec. 56. Section 489.703, Code 2023, is amended to read as 34 follows: 35 -81- LSB 1051YC (2) 90 da/jh 81/ 161
H.F. _____ 489.703 Known claims against dissolved limited liability 1 company. 2 1. Except as otherwise provided in subsection 4 , a dissolved 3 limited liability company may give notice of a known claim 4 under subsection 2 , which has the effect as provided in 5 subsection 3 . 6 2. A dissolved limited liability company may in a record 7 notify its known claimants of the dissolution. The notice must 8 do all of the following: 9 a. Specify the information required to be included in a 10 claim. 11 b. Provide State that a claim must be in writing and provide 12 a mailing address to which the claim is to be sent. 13 c. State the deadline for receipt of the a claim, which may 14 not be less than one hundred twenty days after the date the 15 notice is received by the claimant. 16 d. State that the claim will be barred if not received by 17 the deadline. 18 3. A claim against a dissolved limited liability company is 19 barred if the requirements of subsection 2 are met and any of 20 the following applies: 21 a. The claim is not received by the specified deadline. 22 b. If the claim is timely received but rejected by the 23 limited liability company, all of the following must apply: 24 (1) The limited liability company causes the claimant to 25 receive a notice in a record stating that the claim is rejected 26 and will be barred unless the claimant commences an action 27 against the company to enforce the claim within not later than 28 ninety days after the claimant receives the notice. 29 (2) The claimant does not commence the required action 30 within not later than the ninety days after the claimant 31 receives the notice . 32 4. This section does not apply to a claim based on an 33 event occurring after the effective date of dissolution or a 34 liability that on that date is contingent. 35 -82- LSB 1051YC (2) 90 da/jh 82/ 161
H.F. _____ Sec. 57. Section 489.704, Code 2023, is amended to read as 1 follows: 2 489.704 Other claims against dissolved limited liability 3 company. 4 1. A dissolved limited liability company may publish notice 5 of its dissolution and request persons having claims against 6 the company to present them in accordance with the notice. 7 2. The notice authorized by under subsection 1 must do all 8 of the following meet all of the following requirements : 9 a. Be published at least once in a newspaper of general 10 circulation in the county in this state in which the dissolved 11 limited liability companys principal office is located or, if 12 it has none in this state, in the county in which the companys 13 registered office is or was last located Comply with any of the 14 following: 15 (1) Publication of the notice one time in a newspaper of 16 general circulation in the county in this state in which the 17 dissolved limited liability companys principal office is 18 located or, if the principal office is not located in this 19 state, in the county in which the office of the companys 20 registered agent is or was last located . 21 (2) Publication by posting the notice conspicuously for at 22 least thirty days on the dissolved limited liability companys 23 internet site. 24 b. Describe the information required to be contained in a 25 claim , state that the claim must be in writing, and provide a 26 mailing address to which the claim is to be sent. 27 c. State that a claim against the limited liability company 28 is barred unless an action to enforce the claim is commenced 29 within five not later than three years after publication of the 30 notice. 31 3. If a dissolved limited liability company publishes a 32 notice in accordance with subsection 2 , unless the claimant 33 commences an action to enforce the claim against the company 34 within five years after the publication date of the notice, the 35 -83- LSB 1051YC (2) 90 da/jh 83/ 161
H.F. _____ claim of each of the following claimants is barred of each of 1 the following claimants is barred unless the claimant commences 2 an action to enforce the claim against the company not later 3 than three years after the publication date of the notice : 4 a. A claimant that did not receive notice in a record under 5 section 489.703 . 6 b. A claimant whose claim was timely sent to the limited 7 liability company but not acted on. 8 c. A claimant whose claim is contingent at, or based on an 9 event occurring after, the effective date of dissolution. 10 4. A claim not barred under this section or section 489.703 11 may be enforced as follows: 12 a. Against a dissolved limited liability company, to the 13 extent of its undistributed assets. 14 b. If Except as otherwise provided in section 489.706A, if 15 assets of the limited liability company have been distributed 16 after dissolution, against a member or transferee to the extent 17 of that persons proportionate share of the claim or of the 18 companys assets distributed to the member or transferee after 19 dissolution, whichever is less, but a persons total liability 20 for all claims under this paragraph does not exceed the total 21 amount of assets distributed to the person after dissolution. 22 Sec. 58. Section 489.705, Code 2023, is amended to read as 23 follows: 24 489.705 Administrative Grounds for administrative 25 dissolution. 26 1. The secretary of state may commence a proceeding under 27 this section 489.709 to administratively dissolve a limited 28 liability company administratively, if any of the following 29 apply: 30 a. 1. The limited liability company has not delivered a 31 biennial report to the secretary of state in a form that meets 32 the requirements of section 489.209 within sixty days after 33 it is due, or has not paid within sixty days after the due 34 date, any fee, tax, or penalty due to the secretary of state 35 -84- LSB 1051YC (2) 90 da/jh 84/ 161
H.F. _____ under this chapter or law other than this chapter The limited 1 liability company does not pay within sixty days after they are 2 due any fees, taxes, interest, or penalties imposed by this 3 chapter or other laws of this state . 4 b. The limited liability company is without a registered 5 office or registered agent in this state for sixty days or 6 more. 7 c. The limited liability company does not notify the 8 secretary of state within sixty days that its registered agent 9 or registered office has been changed, that its registered 10 agent has resigned, or that its registered office has been 11 discontinued. 12 d. The limited liability companys period of duration stated 13 in its certificate of organization has expired. 14 2. If the secretary of state determines that a ground exists 15 for administratively dissolving a limited liability company, 16 the secretary of state shall file a record of the determination 17 and serve the company with a copy of the filed record The 18 limited liability company does not deliver its biennial report 19 required by section 489.209 to the secretary of state within 20 sixty days after it is due . 21 3. If within sixty days after service of the copy pursuant 22 to subsection 2 a limited liability company does not correct 23 each ground for dissolution or demonstrate to the reasonable 24 satisfaction of the secretary of state that each ground 25 determined by the secretary of state does not exist, the 26 secretary of state shall dissolve the company administratively 27 by preparing, signing, and filing a declaration of dissolution 28 that states the grounds for dissolution. The secretary 29 of state shall serve the company with a copy of the filed 30 declaration The limited liability company is without a 31 registered agent or the registered agent does not have a place 32 of business in this state for sixty days or more . 33 4. A limited liability company that has been 34 administratively dissolved continues in existence but, subject 35 -85- LSB 1051YC (2) 90 da/jh 85/ 161
H.F. _____ to section 489.706 , may carry on only activities necessary to 1 wind up its activities and liquidate its assets under sections 2 489.702 and 489.708 and to notify claimants under sections 3 489.703 and 489.704 The secretary of state has not been 4 notified within sixty days that the limited liability companys 5 registered agent or place of business of the registered agent 6 has been changed, or that its registered agent has resigned, or 7 that its registered office has been discontinued . 8 5. The administrative dissolution of a limited liability 9 company does not terminate the authority of its registered 10 agent for service of process The limited liability companys 11 period of duration stated in its certificate of organization 12 expires . 13 Sec. 59. Section 489.706, Code 2023, is amended to read as 14 follows: 15 489.706 Reinstatement following administrative dissolution. 16 1. A limited liability company administratively dissolved 17 under section 489.705 may apply to the secretary of state 18 for reinstatement at any time after the effective date 19 of dissolution. The application must be delivered to the 20 secretary of state and meet all of the following requirements: 21 a. Recite State the name of the limited liability company 22 at its date of dissolution and the effective date of its 23 administrative dissolution. 24 b. State that the ground or grounds for dissolution as 25 provided in section 489.705 either did not exist or have been 26 eliminated. 27 c. If the application is received more than five years after 28 the effective date of the administrative dissolution, state a 29 name that satisfies the requirements of section 489.108 . 30 d. State the federal tax identification number of the 31 limited liability company. 32 2. a. The secretary of state shall refer the federal 33 tax identification number contained in the application for 34 reinstatement to the department of workforce development. 35 -86- LSB 1051YC (2) 90 da/jh 86/ 161
H.F. _____ The department of workforce development shall report to the 1 secretary of state the tax status of the limited liability 2 company. If the department reports to the secretary of state 3 that a filing delinquency or liability exists against the 4 limited liability company, the secretary of state shall not 5 cancel the declaration certificate of dissolution until the 6 filing delinquency or liability is satisfied. 7 3. b. (1) If the secretary of state determines that the 8 application contains the information required by subsection 9 1 , and that a delinquency or liability reported pursuant to 10 subsection 2 paragraph a has been satisfied, and that the 11 information is correct, the secretary of state shall cancel 12 the declaration certificate of dissolution and prepare a 13 certificate of reinstatement that recites the secretary of 14 states determination and the effective date of reinstatement, 15 file the original of the certificate of reinstatement , and 16 serve deliver a copy on to the limited liability company under 17 section 489.116 . 18 (2) If the limited liability companys name in subsection 19 1 , paragraph c , is different than from the name in subsection 20 1 , paragraph a , the certificate of reinstatement shall 21 constitute an amendment to the limited liability companys 22 certificate of organization insofar as it pertains to its 23 name. A limited liability company shall not relinquish the 24 right to retain its name as provided in section 489.108 , if the 25 reinstatement is effective within five years of the effective 26 date of the limited liability companys dissolution. 27 4. 3. When the reinstatement is effective, it relates 28 back to and takes effect as of the effective date of the 29 administrative dissolution as if the administrative dissolution 30 had never occurred. 31 Sec. 60. NEW SECTION . 489.706A Court proceedings. 32 1. A dissolved limited liability company that has published 33 a notice under section 489.704 may file an application with 34 the district court in the county where the companys principal 35 -87- LSB 1051YC (2) 90 da/jh 87/ 161
H.F. _____ office is located or, if the principal office is not located 1 in this state, where the office of its registered agent is 2 or was last located, for a determination of the amount and 3 form of security to be provided for payment of claims that are 4 reasonably expected to arise after the date of dissolution 5 based on facts known to the company and any of the following 6 apply: 7 a. At the time of application any of the following apply: 8 (1) The facts are contingent. 9 (2) The facts have not been made known to the limited 10 liability company. 11 b. The facts are based on an event occurring after the date 12 of dissolution. 13 2. Security is not required for any claim that is or is 14 reasonably anticipated to be barred under section 489.704. 15 3. Not later than ten days after the filing of an 16 application under subsection 1, the dissolved limited liability 17 company shall give notice of the proceeding to each claimant 18 holding a contingent claim known to the company. 19 4. In a proceeding under this section, the court may appoint 20 a guardian ad litem to represent all claimants whose identities 21 are unknown. The reasonable fees and expenses of the guardian, 22 including all reasonable expert witness fees, must be paid by 23 the dissolved limited liability company. 24 5. A dissolved limited liability company that provides 25 security in the amount and form ordered by the court under 26 subsection 1 satisfies the companys obligations with respect 27 to claims that are contingent, have not been made known to 28 the company, or are based on an event occurring after the 29 date of dissolution, and such claims may not be enforced 30 against a member or transferee on account of assets received 31 in liquidation. 32 Sec. 61. Section 489.707, Code 2023, is amended to read as 33 follows: 34 489.707 Appeal from rejection denial of reinstatement. 35 -88- LSB 1051YC (2) 90 da/jh 88/ 161
H.F. _____ 1. If the secretary of state rejects denies a limited 1 liability companys application for reinstatement following 2 administrative dissolution, the secretary of state shall 3 prepare, sign, and file a notice that explains the reason for 4 rejection and serve the company under section 489.116 with a 5 copy of the written notice that explains the reason or reasons 6 for denial . 7 2. Within thirty days after service of a notice of rejection 8 of reinstatement under subsection 1 , a limited liability 9 company may appeal from the rejection by petitioning the 10 district court to set aside the dissolution. The petition 11 must be served on the secretary of state and contain a copy 12 of the secretary of states declaration of dissolution, the 13 companys application for reinstatement, and the secretary 14 of states notice of rejection The limited liability company 15 may appeal the denial of reinstatement to the district court 16 of the county where the companys principal office or, if none 17 in this state, where its registered office is located within 18 thirty days after service of the notice of denial is effected . 19 The company appeals by petitioning the court to set aside 20 the dissolution and attaching to the petition copies of the 21 secretary of states certificate of dissolution, the companys 22 application for reinstatement, and the secretary of states 23 notice of denial. 24 3. The court may summarily order the secretary of state to 25 reinstate a the dissolved limited liability company or may take 26 other action the court considers appropriate. 27 4. The courts final decision may be appealed as in other 28 civil proceedings. 29 Sec. 62. Section 489.708, Code 2023, is amended to read as 30 follows: 31 489.708 Distribution Disposition of assets in winding up 32 limited liability companys activities . 33 1. In winding up its activities and affairs , a limited 34 liability company must shall apply its assets to discharge its 35 -89- LSB 1051YC (2) 90 da/jh 89/ 161
H.F. _____ the companys obligations to creditors, including members that 1 are creditors. 2 2. After a limited liability company complies with 3 subsection 1 , any surplus must be distributed in the following 4 order, subject to any charging order in effect under section 5 489.503 : 6 a. To each person owning a transferable interest that 7 reflects contributions made by a member and not previously 8 returned, an amount equal to the value of the unreturned 9 contributions and not previously returned, an amount equal to 10 the value of the unreturned contributions . 11 b. In equal shares among members and dissociated members, 12 except to the extent necessary to comply with any transfer 13 effective under section 489.502 Among persons owning 14 transferable interests in proportion to their respective rights 15 to share in distributions immediately before the dissolution of 16 the limited liability company . 17 3. If a limited liability company does not have sufficient 18 surplus to comply with subsection 2 , paragraph a , any surplus 19 must be distributed among the owners of transferable interests 20 in proportion to the value of their the respective unreturned 21 contributions. 22 4. All distributions made under subsections 2 and 3 must be 23 paid in money. 24 Sec. 63. NEW SECTION . 489.709 Procedure for and effect of 25 administrative dissolution. 26 1. If the secretary of state determines that one or more 27 grounds exist under section 489.705 for dissolving a limited 28 liability company, the secretary of state shall serve the 29 company with written notice of such determination under section 30 489.116. 31 2. If the limited liability company does not correct 32 each ground for dissolution or demonstrate to the reasonable 33 satisfaction of the secretary of state that each ground 34 determined by the secretary of state does not exist within 35 -90- LSB 1051YC (2) 90 da/jh 90/ 161
H.F. _____ sixty days after service of the notice under section 489.116, 1 the secretary of state shall administratively dissolve the 2 company by signing a certificate of dissolution that recites 3 the ground or grounds for dissolution and its effective 4 date. The secretary of state shall file the original of the 5 certificate and serve a copy on the company under section 6 489.116. 7 3. A limited liability company administratively dissolved 8 continues its existence but shall not carry on any business 9 except that necessary to wind up and liquidate its business 10 and affairs under section 489.702 and notify claimants under 11 sections 489.703 and 489.704. 12 4. The administrative dissolution of a limited liability 13 company does not terminate the authority of its registered 14 agent. 15 Sec. 64. Section 489.801, Code 2023, is amended to read as 16 follows: 17 489.801 Governing law. 18 1. Subject to sections 489.14402 and 489.14404 , the law 19 of the state or other jurisdiction under which The law of 20 the jurisdiction of formation of a foreign limited liability 21 company is formed governs all of the following: 22 a. The internal affairs of the foreign limited liability 23 company. 24 b. The liability of a member as member and a manager as 25 manager for the debts, obligations, or other liabilities a 26 debt, obligation, or other liability of the foreign limited 27 liability company. 28 c. The liability of a series of the foreign limited 29 liability company. 30 2. A foreign limited liability company shall not be denied 31 a certificate of authority by reason of any difference between 32 the law of the jurisdiction under which the company is formed 33 is not precluded from registering to do business in this state 34 because of any difference between the law of the foreign 35 -91- LSB 1051YC (2) 90 da/jh 91/ 161
H.F. _____ limited liability companys jurisdiction of formation and the 1 law of this state. 2 3. A certificate of authority does not authorize a 3 foreign limited liability company to engage in any business 4 or exercise any power that a limited liability company shall 5 not Registration of a foreign limited liability company to do 6 business in this state does not permit the foreign limited 7 liability company to engage in any business or affairs or 8 exercise any power that a limited liability company cannot 9 lawfully engage in or exercise in this state. 10 Sec. 65. NEW SECTION . 489.805A Special litigation 11 committee. 12 1. If a limited liability company is named as or made a 13 party in a derivative proceeding, the company may appoint a 14 special litigation committee to investigate the claims asserted 15 in the proceeding and determine whether pursuing the action is 16 in the best interests of the company. If the company appoints 17 a special litigation committee, on motion by the committee made 18 in the name of the company, except for good cause shown, the 19 court shall stay discovery for the time reasonably necessary 20 to permit the committee to make its investigation. This 21 subsection does not prevent the court from doing any of the 22 following: 23 a. Enforcing a persons right to information under section 24 489.410. 25 b. Granting extraordinary relief in the form of a temporary 26 restraining order or preliminary injunction. 27 2. A special litigation committee must be composed of one 28 or more disinterested and independent individuals, who may be 29 members. 30 3. A special litigation committee may be appointed as 31 follows: 32 a. In a member-managed limited liability company, any of the 33 following: 34 (1) By the affirmative vote or consent of a majority of the 35 -92- LSB 1051YC (2) 90 da/jh 92/ 161
H.F. _____ members not named as parties in the proceeding. 1 (2) If all members are named as parties in the proceeding, 2 by a majority of the members named as defendants. 3 b. In a manager-managed limited liability company, any of 4 the following: 5 (1) By a majority of the managers not named as parties in 6 the proceeding. 7 (2) If all managers are named as parties in the proceeding, 8 by a majority of the managers named as defendants. 9 4. After appropriate investigation, a special litigation 10 committee may determine that it is in the best interests of the 11 limited liability company that the proceeding comply with any 12 of the following: 13 a. Continue under the control of the plaintiff. 14 b. Continue under the control of the committee. 15 c. Be settled on terms approved by the committee. 16 d. Be dismissed. 17 5. After making a determination under subsection 4, a 18 special litigation committee shall file with the court a 19 statement of its determination and its report supporting its 20 determination and shall serve each party with a copy of the 21 determination and report. The court shall determine whether 22 the members of the committee were disinterested and independent 23 and whether the committee conducted its investigation and made 24 its recommendation in good faith, independently, and with 25 reasonable care, with the committee having the burden of proof. 26 If the court finds that the members of the committee were 27 disinterested and independent and that the committee acted in 28 good faith, independently, and with reasonable care, the court 29 shall enforce the determination of the committee. Otherwise, 30 the court shall dissolve the stay of discovery entered under 31 subsection 1 and allow the action to continue under the control 32 of the plaintiff. 33 Sec. 66. Section 489.809, Code 2023, is amended to read as 34 follows: 35 -93- LSB 1051YC (2) 90 da/jh 93/ 161
H.F. _____ 489.809 Action by attorney general. 1 The attorney general may maintain an action to enjoin a 2 foreign limited liability company from transacting doing 3 business in this state in violation of this article chapter . 4 Sec. 67. Section 489.902, Code 2023, is amended to read as 5 follows: 6 489.902 Derivative action. 7 A member may maintain a derivative action to enforce a 8 right of a limited liability company as follows if any of the 9 following apply : 10 1. The member first makes a demand on the other members in a 11 member-managed limited liability company, or the managers of a 12 manager-managed limited liability company, requesting that they 13 cause the company to bring an action to enforce the right, and 14 the managers or other members do not bring the action within 15 ninety days from the date the demand was made unless the member 16 has earlier been notified that the demand has been rejected by 17 the company or unless irreparable injury to the company would 18 result by waiting for the expiration of the ninety-day period 19 a reasonable time . 20 2. A demand under subsection 1 would be futile. 21 Sec. 68. Section 489.904, Code 2023, is amended to read as 22 follows: 23 489.904 Pleading. 24 In a derivative action under section 489.902 , the complaint 25 must state with particularity any of the following: 26 1. The date and content of the plaintiffs demand and the 27 response to the demand by the managers or other members. 28 2. If a demand has not been made, the reasons a demand under 29 section 489.902, subsection 1 , would be Why demand should be 30 excused as futile. 31 Sec. 69. NEW SECTION . 489.905 Activities not constituting 32 doing business in this state. 33 1. Activities of a foreign limited liability company that 34 do not constitute doing business in this state for purposes of 35 -94- LSB 1051YC (2) 90 da/jh 94/ 161
H.F. _____ this subchapter include all of the following: 1 a. Maintaining, defending, mediating, arbitrating, or 2 settling a proceeding. 3 b. Carrying on any activity concerning the internal affairs 4 of the foreign limited liability company, including holding 5 meetings of its members or managers. 6 c. Maintaining accounts in financial institutions. 7 d. Maintaining offices or agencies for the transfer, 8 exchange, and registration of securities of the foreign limited 9 liability company or maintaining trustees or depositories with 10 respect to those securities. 11 e. Selling through independent contractors. 12 f. Soliciting or obtaining orders by any means if the 13 orders require acceptance outside this state before they become 14 contracts. 15 g. Creating or acquiring indebtedness, mortgages, or 16 security interests in property. 17 h. Securing or collecting debts or enforcing mortgages or 18 other security interests in property securing the debts and 19 holding, protecting, or maintaining property so acquired. 20 i. Conducting an isolated transaction that is not in the 21 course of similar transactions. 22 j. Owning, protecting, and maintaining property. 23 k. Doing business in interstate commerce. 24 2. This section does not apply in determining the contacts 25 or activities that may subject a foreign limited liability 26 company to service of process, taxation, or regulation under 27 the laws of this state other than this chapter. 28 Sec. 70. Section 489.906, Code 2023, is amended to read as 29 follows: 30 489.906 Proceeds and expenses. 31 1. Except as otherwise provided in subsection 2 , all of the 32 following apply: 33 a. Any proceeds or other benefits of a derivative action 34 under section 489.902 , whether by judgment, compromise, or 35 -95- LSB 1051YC (2) 90 da/jh 95/ 161
H.F. _____ settlement, belong to the limited liability company and not to 1 the plaintiff. 2 b. If the plaintiff receives any proceeds, the plaintiff 3 shall remit them immediately to the limited liability company. 4 2. If a derivative action under section 489.902 is 5 successful in whole or in part, the court may award the 6 plaintiff reasonable expenses, including reasonable attorney 7 fees and costs, from the recovery of the limited liability 8 company. 9 3. A derivative action on behalf of a limited liability 10 company shall not be voluntarily dismissed or settled without 11 the courts approval. 12 Sec. 71. NEW SECTION . 489.906A Noncomplying name of foreign 13 limited liability company. 14 1. A foreign limited liability company whose name does 15 not comply with section 489.108 shall not register to do 16 business in this state until it adopts, for the purpose of 17 doing business in this state, an alternate name that complies 18 with section 489.108 by filing a foreign registration statement 19 under section 489.911B, or if applicable, a transfer of 20 registration statement under section 489.910, setting forth 21 that alternate name. After registering to do business in this 22 state with an alternate name, a foreign limited liability 23 company shall do business in this state under any of the 24 following: 25 a. The alternate name. 26 b. The foreign limited liability companys name, with the 27 addition of its jurisdiction of formation. 28 2. If a registered foreign limited liability company 29 changes its name after registration to a name that does not 30 comply with section 489.108, it shall not do business in this 31 state until it complies with subsection 1 by amending its 32 registration statement to adopt an alternate name that complies 33 with section 489.108. 34 Sec. 72. NEW SECTION . 489.907 Withdrawal of registration of 35 -96- LSB 1051YC (2) 90 da/jh 96/ 161
H.F. _____ registered foreign limited liability company. 1 1. A registered foreign limited liability company may 2 withdraw its registration by delivering a statement of 3 withdrawal to the secretary of state for filing. The statement 4 of withdrawal must be signed by the foreign limited liability 5 company and state all of the following: 6 a. The name of the foreign limited liability company and its 7 jurisdiction of formation. 8 b. That the foreign limited liability company is not doing 9 business in this state and that it withdraws its registration 10 to do business in this state. 11 c. That the foreign limited liability company revokes the 12 authority of its registered agent in this state. 13 d. An address to which process on the foreign limited 14 liability company may be sent by the secretary of state under 15 section 489.116, subsection 3. 16 2. After the withdrawal of the registration of a foreign 17 limited liability company, service of process in any proceeding 18 based on a cause of action arising during the time the entity 19 was registered to do business in this state may be made as 20 provided in section 489.116. 21 Sec. 73. NEW SECTION . 489.908 Deemed withdrawal upon 22 domestication or conversion to certain domestic entities. 23 A registered foreign limited liability company that 24 domesticates to a domestic limited liability company or 25 converts to a domestic business corporation or domestic 26 nonprofit corporation or any type of domestic filing entity or 27 to a domestic limited liability partnership is deemed to have 28 withdrawn its registration on the effectiveness of such event. 29 Sec. 74. NEW SECTION . 489.909 Withdrawal upon dissolution 30 or conversion to certain nonfiling entities. 31 1. A registered foreign limited liability company that 32 has dissolved and completed winding up or has converted to 33 a domestic or foreign nonfiling entity other than a limited 34 liability partnership shall deliver to the secretary of state 35 -97- LSB 1051YC (2) 90 da/jh 97/ 161
H.F. _____ for filing a statement of withdrawal. The statement must be 1 signed by the dissolved foreign limited liability company or 2 the converted domestic or foreign nonfiling entity and state: 3 a. In the case of a foreign limited liability company that 4 has completed winding up all of the following: 5 (1) Its name and jurisdiction of formation. 6 (2) That the foreign limited liability company withdraws 7 its registration to do business in this state and revokes the 8 authority of its registered agent to accept service on its 9 behalf. 10 (3) An address to which process on the foreign limited 11 liability company may be sent by the secretary of state under 12 section 489.116, subsection 3. 13 b. In the case of a foreign limited liability company that 14 has converted to a domestic or foreign nonfiling entity other 15 than a limited liability partnership, all of the following: 16 (1) The name of the converting foreign limited liability 17 company and its jurisdiction of formation. 18 (2) The type of the nonfiling entity to which it has 19 converted and its name and jurisdiction of formation. 20 (3) That it withdraws its registration to do business in 21 this state and revokes the authority of its registered agent to 22 accept service on its behalf. 23 (4) An address to which process on the foreign limited 24 liability company may be sent by the secretary of state under 25 section 489.116, subsection 3. 26 2. After the withdrawal of the registration of a foreign 27 limited liability company, service of process in any proceeding 28 based on a cause of action arising during the time the entity 29 was registered to do business in this state may be made as 30 provided in section 489.116. 31 Sec. 75. NEW SECTION . 489.910 Transfer of registration. 32 1. If a registered foreign limited liability company merges 33 into a nonregistered foreign entity or converts to a foreign 34 entity required to register with the secretary of state to do 35 -98- LSB 1051YC (2) 90 da/jh 98/ 161
H.F. _____ business in this state, the foreign entity shall deliver to 1 the secretary of state for filing a transfer of registration 2 statement. The transfer of registration statement must be 3 signed by the surviving or converted foreign entity and state 4 all of the following: 5 a. The name of the registered foreign limited liability 6 company and its jurisdiction of formation before the merger or 7 conversion. 8 b. The name and type of the surviving or converted foreign 9 entity and its jurisdiction of formation after the merger 10 or conversion and, if the name does not comply with section 11 489.108, an alternate name adopted pursuant to section 12 489.906A. 13 c. All of the following information regarding the surviving 14 or converted foreign entity after the merger or conversion: 15 (1) The street and mailing addresses of the principal office 16 of the foreign entity and, if the law of the foreign entitys 17 jurisdiction of formation requires it to maintain an office in 18 that jurisdiction, the street and mailing addresses of that 19 office. 20 (2) The street and mailing addresses of the place of 21 business of the foreign entitys registered agent in this state 22 and the name of its registered agent. 23 2. On the effective date of a transfer of registration 24 statement as determined in accordance with section 489.207, 25 the registration of the registered foreign limited liability 26 company to do business in this state is transferred without 27 interruption to the foreign entity into which it has merged or 28 to which it has been converted. 29 Sec. 76. NEW SECTION . 489.911 Administrative termination of 30 registration. 31 1. The secretary of state may terminate the registration of 32 a registered foreign limited liability company in the manner 33 provided in subsections 2 and 3, if any of the following 34 applies: 35 -99- LSB 1051YC (2) 90 da/jh 99/ 161
H.F. _____ a. The foreign limited liability company does not pay within 1 sixty days after they are due any fees, taxes, interest, or 2 penalties imposed by this chapter or other laws of this state. 3 b. The foreign limited liability company does not deliver 4 its biennial report to the secretary of state within sixty days 5 after it is due. 6 c. The foreign limited liability company is without a 7 registered agent or its registered agent has no place of 8 business in this state for sixty days or more. 9 d. The secretary of state has not been notified within sixty 10 days that the foreign limited liability companys registered 11 agent or the registered agents place of business has been 12 changed, that its registered agent has resigned, or that its 13 registered office has been discontinued. 14 2. The secretary of state may terminate the registration of 15 a registered foreign limited liability company by doing all of 16 the following: 17 a. Filing a certificate of termination. 18 b. Delivering a copy of the certificate of termination 19 to the foreign companys registered agent or, if the foreign 20 company does not have a registered agent, to the foreign 21 companys principal office. 22 3. The certificate of termination must state all of the 23 following: 24 a. The effective date of the termination, which must be 25 not less than sixty days after the secretary of state delivers 26 the copy of the certificate of termination as prescribed in 27 subsection 2, paragraph b . 28 b. The grounds for termination under subsection 1. 29 4. The registration of a registered foreign limited 30 liability company to do business in this state ceases on 31 the effective date of the termination as set forth in the 32 certificate of termination, unless before that date the 33 foreign company cures each ground for termination stated in the 34 certificate of termination. If the foreign company cures each 35 -100- LSB 1051YC (2) 90 da/jh 100/ 161
H.F. _____ ground, the secretary of state shall file a statement that the 1 certificate of termination is withdrawn. 2 5. After the effective date of the termination as set forth 3 in the certificate of termination, service of process in any 4 proceeding based on a cause of action arising during the time 5 the entity was registered to do business in this state may be 6 made as provided in section 489.116. 7 Sec. 77. NEW SECTION . 489.911A Registration to do business 8 in this state. 9 1. A foreign limited liability company shall not do business 10 in this state until it registers with the secretary of state 11 under this chapter. 12 2. A foreign limited liability company doing business in 13 this state shall not maintain a proceeding in any court of this 14 state until it is registered to do business in this state. 15 3. The failure of a foreign limited liability company 16 to register to do business in this state does not impair 17 the validity of a contract or act of the foreign company or 18 preclude it from defending a proceeding in this state. 19 4. A limitation on the liability of a member or manager 20 of a foreign limited liability company is not waived solely 21 because the foreign company does business in this state without 22 registering. 23 5. Section 489.801, subsection 1, applies even if a 24 foreign limited liability company fails to register under this 25 subchapter. 26 Sec. 78. NEW SECTION . 489.911B Foreign registration 27 statement. 28 1. To register to do business in this state, a foreign 29 limited liability company shall deliver a foreign registration 30 statement to the secretary of state for filing. The 31 registration statement must be signed by the foreign company 32 and state all of the following: 33 a. The name of the foreign limited liability company and, 34 if the name does not comply with section 489.108, an alternate 35 -101- LSB 1051YC (2) 90 da/jh 101/ 161
H.F. _____ name as required by section 489.906A. 1 b. The foreign limited liability companys jurisdiction of 2 formation. 3 c. The street and mailing addresses of the foreign limited 4 liability companys principal office and, if the law of the 5 foreign companys jurisdiction of formation requires the 6 foreign company to maintain an office in that jurisdiction, the 7 street and mailing addresses of that required office. 8 d. The street and mailing addresses of the place of business 9 of the foreign limited liability companys registered agent in 10 this state and the name of its registered agent. 11 2. The foreign limited liability company shall deliver the 12 completed foreign registration statement to the secretary of 13 state, and also deliver to the secretary of state a certificate 14 of existence or a document of similar import duly authenticated 15 by the secretary of state or other official having custody of 16 corporate records in the state or country under whose law it is 17 incorporated which is dated no earlier than ninety days prior 18 to the date the application is filed by the secretary of state. 19 Sec. 79. NEW SECTION . 489.911C Amendment of foreign 20 registration statement. 21 A registered foreign limited liability company shall sign 22 and deliver to the secretary of state for filing an amendment 23 to its foreign registration statement if there is a change in 24 any of the following: 25 1. Its name or alternate name. 26 2. Its jurisdiction of formation, unless its registration 27 is deemed to have been withdrawn under section 489.908 or 28 transferred under section 489.910. 29 3. An address required by section 489.911B, subsection 1, 30 paragraph c . 31 4. The information required by section 489.911B, subsection 32 1, paragraph d . 33 Sec. 80. Section 489.1001, Code 2023, is amended by striking 34 the section and inserting in lieu thereof the following: 35 -102- LSB 1051YC (2) 90 da/jh 102/ 161
H.F. _____ 489.1001 Definitions. 1 As used in this subchapter, unless the context otherwise 2 requires: 3 1. Acquired entity means the entity, all of one or more 4 classes or series of interests of which are acquired in an 5 interest exchange. 6 2. Acquiring entity means the entity that acquires all 7 of one or more classes or series of interests of the acquired 8 entity in an interest exchange. 9 3. Conversion means a transaction authorized by part 4. 10 4. Converted entity means the converting entity as it 11 continues in existence after a conversion. 12 5. Converting entity means the domestic entity that 13 approves a plan of conversion pursuant to section 489.1043 or 14 the foreign entity that approves a conversion pursuant to the 15 law of its jurisdiction of formation. 16 6. Distributional interest means the right under an 17 unincorporated entitys organic law and organic rules to 18 receive distributions from the entity. 19 7. Domestic , with respect to an entity, means governed as 20 to its internal affairs by the law of this state. 21 8. Domesticated limited liability company means the 22 domesticating limited liability company as it continues in 23 existence after a domestication. 24 9. Domesticating limited liability company means the 25 domestic limited liability company that approves a plan of 26 domestication pursuant to section 489.1053 or the foreign 27 limited liability company that approves a domestication 28 pursuant to the law of its jurisdiction of formation. 29 10. Domestication means a transaction authorized by part 30 5. 31 11. a. Entity means any of the following: 32 (1) A business corporation. 33 (2) A nonprofit corporation. 34 (3) A general partnership, including a limited liability 35 -103- LSB 1051YC (2) 90 da/jh 103/ 161
H.F. _____ partnership. 1 (4) A limited partnership, including a limited liability 2 limited partnership. 3 (5) A limited liability company. 4 (6) A domestic cooperative. 5 (7) An unincorporated nonprofit association. 6 (8) A statutory trust, business trust, or common-law 7 business trust. 8 (9) Any other person that has any of the following: 9 (a) A legal existence separate from any interest holder of 10 that person. 11 (b) The power to acquire an interest in real property in 12 its own name. 13 b. Entity does not include any of the following: 14 (1) An individual. 15 (2) A trust with a predominantly donative purpose or a 16 charitable trust. 17 (3) An association or relationship that is not an entity 18 listed in paragraph a and is not a partnership under the 19 rules stated in section 486A.202, subsection 3, or a similar 20 provision of the law of another jurisdiction. 21 (4) A decedents estate. 22 (5) A government or a governmental subdivision, agency, or 23 instrumentality. 24 12. Filing entity means an entity whose formation requires 25 the filing of a public organic record. The term does not 26 include a limited liability partnership. 27 13. Foreign , with respect to an entity, means an 28 entity governed as to its internal affairs by the law of a 29 jurisdiction other than this state. 30 14. Governance interest means a right under the organic 31 law or organic rules of an unincorporated entity, other than as 32 a governor, agent, assignee, or proxy, to any of the following: 33 a. Receive or demand access to information concerning, or 34 the books and records of, the entity. 35 -104- LSB 1051YC (2) 90 da/jh 104/ 161
H.F. _____ b. Vote for or consent to the election of the governors of 1 the entity. 2 c. Receive notice of or vote on or consent to an issue 3 involving the internal affairs of the entity. 4 15. Governor means any of the following: 5 a. A director of a business corporation. 6 b. A director or trustee of a nonprofit corporation. 7 c. A general partner of a general partnership. 8 d. A general partner of a limited partnership. 9 e. A manager of a manager-managed limited liability company. 10 f. A member of a member-managed limited liability company. 11 g. A director of a domestic cooperative. 12 h. A manager of an unincorporated nonprofit association. 13 i. A trustee of a statutory trust, business trust, or 14 common-law business trust. 15 j. Any other person under whose authority the powers of an 16 entity are exercised and under whose direction the activities 17 and affairs of the entity are managed pursuant to the organic 18 law and organic rules of the entity. 19 16. Interest means any of the following: 20 a. A share in a business corporation. 21 b. A membership in a nonprofit corporation. 22 c. A partnership interest in a general partnership. 23 d. A partnership interest in a limited partnership. 24 e. A membership interest in a limited liability company. 25 f. A share in a domestic cooperative. 26 g. A membership in an unincorporated nonprofit association. 27 h. A beneficial interest in a statutory trust, business 28 trust, or common-law business trust. 29 i. A governance interest or distributional interest in any 30 other type of unincorporated entity. 31 17. Interest exchange means a transaction authorized by 32 part 3. 33 18. Interest holder means any of the following: 34 a. A shareholder of a business corporation. 35 -105- LSB 1051YC (2) 90 da/jh 105/ 161
H.F. _____ b. A member of a nonprofit corporation. 1 c. A general partner of a general partnership. 2 d. A general partner of a limited partnership. 3 e. A limited partner of a limited partnership. 4 f. A member of a limited liability company. 5 g. a shareholder of a domestic cooperative. 6 h. A member of an unincorporated nonprofit association. 7 i. A beneficiary or beneficial owner of a statutory trust, 8 business trust, or common-law business trust. 9 j. Any other direct holder of an interest. 10 19. Interest holder liability means any of the following: 11 a. Personal liability for a liability of an entity which is 12 imposed on a person due to any of the following: 13 (1) Solely by reason of the status of the person as an 14 interest holder. 15 (2) By the organic rules of the entity which make one or 16 more specified interest holders or categories of interest 17 holders liable in their capacity as interest holders for all or 18 specified liabilities of the entity. 19 b. An obligation of an interest holder under the organic 20 rules of an entity to contribute to the entity. 21 20. Merger means a transaction authorized by part 2. 22 21. Merging entity means an entity that is a party to 23 a merger and exists immediately before the merger becomes 24 effective. 25 22. Organic law means the law of an entitys jurisdiction 26 of formation governing the internal affairs of the entity. 27 23. Organic rules means the public organic record and 28 private organic rules of an entity. 29 24. Plan means a plan of merger, plan of interest 30 exchange, plan of conversion, or plan of domestication. 31 25. Plan of conversion means a plan under section 32 489.1042. 33 26. Plan of domestication means a plan under section 34 489.1052. 35 -106- LSB 1051YC (2) 90 da/jh 106/ 161
H.F. _____ 27. Plan of interest exchange means a plan under section 1 489.1032. 2 28. Plan of merger means a plan under section 489.1022. 3 29. a. Private organic rules means the rules, whether or 4 not in a record, that govern the internal affairs of an entity, 5 are binding on all its interest holders, and are not part of 6 its public organic record, if any. 7 b. Private organic rules includes all of the following: 8 (1) The bylaws of a business corporation. 9 (2) The bylaws of a nonprofit corporation. 10 (3) The partnership agreement of a general partnership. 11 (4) The partnership agreement of a limited partnership. 12 (5) The operating agreement of a limited liability company. 13 (6) The bylaws of a domestic cooperative. 14 (7) The governing principles of an unincorporated nonprofit 15 association. 16 (8) The trust instrument of a statutory trust or similar 17 rules of a business trust or common-law business trust. 18 30. Protected agreement means any of the following: 19 a. A record evidencing indebtedness and any related 20 agreement in effect on January 1, 2009. 21 b. An agreement that is binding on an entity on January 1, 22 2009. 23 c. The organic rules of an entity in effect on January 1, 24 2009. 25 d. An agreement that is binding on any of the governors or 26 interest holders of an entity on January 1, 2009. 27 31. a. Public organic record means the record the filing 28 of which by the secretary of state is required to form an 29 entity and any amendment to or restatement of that record. 30 b. Public organic record includes any of the following: 31 (1) The articles of incorporation of a business 32 corporation. 33 (2) The articles of incorporation of a nonprofit 34 corporation. 35 -107- LSB 1051YC (2) 90 da/jh 107/ 161
H.F. _____ (3) The certificate of limited partnership of a limited 1 partnership. 2 (4) The certificate of organization of a limited liability 3 company. 4 (5) The articles of incorporation of a domestic 5 cooperative. 6 (6) The certificate of trust of a statutory trust or similar 7 record of a business trust. 8 32. Registered foreign entity means a foreign entity that 9 is registered to do business in this state pursuant to a record 10 filed by the secretary of state. 11 33. Statement of conversion means a statement under 12 section 489.1045. 13 34. Statement of domestication means a statement under 14 section 489.1055. 15 35. Statement of interest exchange means a statement under 16 section 489.1035. 17 36. Statement of merger means a statement under section 18 489.1025. 19 37. Surviving entity means the entity that continues in 20 existence after or is created by a merger. 21 38. Type of entity means a generic form of entity that is 22 any of the following: 23 a. Recognized at common law. 24 b. Formed under an organic law, whether or not some entities 25 formed under that organic law are subject to provisions of that 26 law that create different categories of the form of entity. 27 Sec. 81. Section 489.1002, Code 2023, is amended by striking 28 the section and inserting in lieu thereof the following: 29 489.1002 Relationship of subchapter to other laws. 30 1. This subchapter does not authorize an act prohibited by, 31 and does not affect the application or requirements of, law 32 other than this subchapter. 33 2. A transaction effected under this subchapter shall 34 not create or impair a right, duty, or obligation of a 35 -108- LSB 1051YC (2) 90 da/jh 108/ 161
H.F. _____ person under the statutory law of this state other than this 1 subchapter relating to a change in control, takeover, business 2 combination, control-share acquisition, or similar transaction 3 involving a domestic merging, acquired, converting, or 4 domesticating business corporation unless any of the following 5 applies: 6 a. If the corporation does not survive the transaction, the 7 transaction satisfies any requirements of the law. 8 b. If the corporation survives the transaction, the approval 9 of the plan is by a vote of the shareholders or directors which 10 would be sufficient to create or impair the right, duty, or 11 obligation directly under the law. 12 Sec. 82. Section 489.1003, Code 2023, is amended by striking 13 the section and inserting in lieu thereof the following: 14 489.1003 Required notice or approval. 15 1. A domestic or foreign entity that is required to give 16 notice to, or obtain the approval of, a governmental agency 17 or officer of this state to be a party to a merger must give 18 the notice or obtain the approval to be a party to an interest 19 exchange, conversion, or domestication. 20 2. Property held for a charitable purpose under the law of 21 this state by a domestic or foreign entity immediately before 22 a transaction under this subchapter becomes effective may be 23 diverted from the objects for which it was donated, granted, 24 devised, or otherwise transferred only to the extent a public 25 benefit corporation is able to divert from such objects under 26 chapter 504. 27 3. A bequest, devise, gift, grant, or promise contained 28 in a will or other instrument of donation, subscription, or 29 conveyance which is made to a merging entity that is not the 30 surviving entity and which takes effect or remains payable 31 after the merger inures to the surviving entity. 32 4. A trust obligation that would govern property if 33 transferred to a nonsurviving entity applies to property that 34 is transferred to the surviving entity under this section. 35 -109- LSB 1051YC (2) 90 da/jh 109/ 161
H.F. _____ Sec. 83. Section 489.1004, Code 2023, is amended by striking 1 the section and inserting in lieu thereof the following: 2 489.1004 Nonexclusivity. 3 The fact that a transaction under this subchapter produces 4 a certain result does not preclude the same result from being 5 accomplished in any other manner permitted by law other than 6 this subchapter. 7 Sec. 84. Section 489.1005, Code 2023, is amended by striking 8 the section and inserting in lieu thereof the following: 9 489.1005 Reference to external facts. 10 1. A plan may refer to facts ascertainable outside the plan 11 if the manner in which the facts will operate upon the plan is 12 specified in the plan. The facts may include the occurrence of 13 an event or a determination or action by a person, whether or 14 not the event, determination, or action is within the control 15 of a party to the transaction. 16 2. The following provisions of a record delivered to the 17 secretary of state for filing under this chapter or a plan 18 delivered for filing in lieu of a statement shall not be made 19 dependent on facts outside the record or plan: 20 a. The name and address of any person. 21 b. The registered office of any entity. 22 c. The registered agent of any entity. 23 d. The number of authorized interests and designation of 24 each class or series of interests. 25 e. The effective date of a record delivered to the secretary 26 of state for filing. 27 f. Any required statement in a record delivered to the 28 secretary of state for filing of the date on which the 29 underlying transaction was approved or the manner in which that 30 approval was given. 31 Sec. 85. Section 489.1006, Code 2023, is amended by striking 32 the section and inserting in lieu thereof the following: 33 489.1006 Appraisal rights. 34 An interest holder of a domestic merging, acquired, 35 -110- LSB 1051YC (2) 90 da/jh 110/ 161
H.F. _____ converting, or domesticating limited liability company is 1 entitled to contractual appraisal rights in connection with a 2 transaction under this subchapter to the extent provided in any 3 of the following: 4 1. The operating agreement. 5 2. The plan. 6 Sec. 86. Section 489.1007, Code 2023, is amended by striking 7 the section and inserting in lieu thereof the following: 8 489.1007 Excluded entities and transactions. 9 This subchapter shall not be used to effect a transaction 10 involving a bank, insurance company, or public utility where 11 any chapter governing the regulation of such entity does not 12 permit the transaction. 13 Sec. 87. NEW SECTION . 489.1021 Merger authorized. 14 1. By complying with this part, all of the following apply: 15 a. One or more domestic limited liability companies may 16 merge with one or more domestic or foreign entities into a 17 domestic or foreign surviving entity. 18 b. Two or more foreign entities may merge into a domestic 19 limited liability company. 20 2. By complying with the provisions of this part applicable 21 to foreign entities, a foreign entity may be a party to a 22 merger under this part or may be the surviving entity in such 23 a merger if the merger is authorized by the law of the foreign 24 entitys jurisdiction of formation. 25 Sec. 88. NEW SECTION . 489.1022 Plan of merger. 26 1. A domestic limited liability company may become a party 27 to a merger under this part by approving a plan of merger. The 28 plan must be in a record and contain all of the following: 29 a. As to each merging entity, its name, jurisdiction of 30 formation, and type of entity. 31 b. If the surviving entity is to be created in the merger, a 32 statement to that effect and the entitys name, jurisdiction of 33 formation, and type of entity. 34 c. The manner of converting the interests in each party 35 -111- LSB 1051YC (2) 90 da/jh 111/ 161
H.F. _____ to the merger into interests, securities, obligations, money, 1 other property, rights to acquire interests or securities, or 2 any combination of the foregoing. 3 d. If the surviving entity exists before the merger, any 4 proposed amendments to all of the following: 5 (1) Its public organic record, if any. 6 (2) Its private organic rules that are, or are proposed to 7 be, in a record. 8 e. If the surviving entity is to be created in the merger, 9 all of the following: 10 (1) Its proposed public organic record, if any. 11 (2) The full text of its private organic rules that are 12 proposed to be in a record. 13 f. The other terms and conditions of the merger. 14 g. Any other provision required by the law of a merging 15 entitys jurisdiction of formation or the organic rules of a 16 merging entity. 17 2. In addition to the requirements of subsection 1, a plan 18 of merger may contain any other provision not prohibited by 19 law. 20 Sec. 89. NEW SECTION . 489.1023 Approval of merger. 21 1. A plan of merger is not effective unless it has been 22 approved according to all of the following: 23 a. By a domestic merging limited liability company, by all 24 the members of the company entitled to vote on or consent to 25 any matter. 26 b. In a record, by each member of a domestic merging limited 27 liability company which will have interest holder liability for 28 debts, obligations, and other liabilities that are incurred 29 after the merger becomes effective, unless all of the following 30 apply: 31 (1) The operating agreement of the limited liability 32 company provides in a record for the approval of a merger in 33 which some or all of its members become subject to interest 34 holder liability by the affirmative vote or consent of fewer 35 -112- LSB 1051YC (2) 90 da/jh 112/ 161
H.F. _____ than all the members. 1 (2) The member consented in a record to or voted for that 2 provision of the operating agreement or became a member after 3 the adoption of that provision. 4 2. A merger involving a domestic merging entity that is not 5 a limited liability company is not effective unless the merger 6 is approved by that entity in accordance with its organic law. 7 3. A merger involving a foreign merging entity is not 8 effective unless the merger is approved by the foreign entity 9 in accordance with the law of the foreign entitys jurisdiction 10 of formation. 11 Sec. 90. NEW SECTION . 489.1024 Amendment or abandonment 12 of plan of merger. 13 1. A plan of merger may be amended only with the consent 14 of each party to the plan, except as otherwise provided in the 15 plan. 16 2. A domestic merging limited liability company may approve 17 an amendment of a plan of merger according to any of the 18 following: 19 a. In the same manner as the plan was approved, if the plan 20 does not provide for the manner in which it may be amended. 21 b. By its managers or members in the manner provided in the 22 plan, but a member that was entitled to vote on or consent to 23 approval of the merger is entitled to vote on or consent to any 24 amendment of the plan that will change any of the following: 25 (1) The amount or kind of interests, securities, 26 obligations, money, other property, rights to acquire interests 27 or securities, or any combination of the foregoing, to be 28 received by the interest holders of any party to the plan. 29 (2) The public organic record, if any, or private 30 organic rules of the surviving entity that will be in effect 31 immediately after the merger becomes effective, except for 32 changes that do not require approval of the interest holders of 33 the surviving entity under its organic law or organic rules. 34 (3) Any other terms or conditions of the plan, if the change 35 -113- LSB 1051YC (2) 90 da/jh 113/ 161
H.F. _____ would adversely affect the member in any material respect. 1 3. After a plan of merger has been approved and before 2 a statement of merger becomes effective, the plan may be 3 abandoned as provided in the plan. Unless prohibited by the 4 plan, a domestic merging limited liability company may abandon 5 the plan in the same manner as the plan was approved. 6 4. If a plan of merger is abandoned after a statement of 7 merger has been delivered to the secretary of state for filing 8 and before the statement becomes effective, a statement of 9 abandonment, signed by a party to the plan, must be delivered 10 to the secretary of state for filing before the statement of 11 merger becomes effective. The statement of abandonment takes 12 effect on filing, and the merger is abandoned and does not 13 become effective. The statement of abandonment must contain 14 all of the following: 15 a. The name of each party to the plan of merger. 16 b. The date on which the statement of merger was filed by 17 the secretary of state. 18 c. A statement that the merger has been abandoned in 19 accordance with this section. 20 Sec. 91. NEW SECTION . 489.1025 Statement of merger 21 effective date of merger. 22 1. A statement of merger must be signed by each merging 23 entity and delivered to the secretary of state for filing. 24 2. A statement of merger must contain all of the following: 25 a. The name, jurisdiction of formation, and type of entity 26 of each merging entity that is not the surviving entity. 27 b. The name, jurisdiction of formation, and type of entity 28 of the surviving entity, and if the surviving entity is a 29 foreign entity, the street and mailing addresses of an office 30 of the surviving entity that the secretary of state may use for 31 purposes of section 489.1026, subsection 5. 32 c. A statement that the merger was approved by each domestic 33 merging entity, if any, in accordance with this part and by 34 each foreign merging entity, if any, in accordance with the law 35 -114- LSB 1051YC (2) 90 da/jh 114/ 161
H.F. _____ of its jurisdiction of formation. 1 d. If the surviving entity exists before the merger and is 2 a domestic filing entity, any amendment to its public organic 3 record approved as part of the plan of merger. 4 e. If the surviving entity is created by the merger and 5 is a domestic filing entity, its public organic record, as an 6 attachment. 7 f. If the surviving entity is created by the merger and 8 is a domestic limited liability partnership, its statement of 9 qualification, as an attachment. 10 3. In addition to the requirements of subsection 2, a 11 statement of merger may contain any other provision not 12 prohibited by law. 13 4. If the surviving entity is a domestic entity, its public 14 organic record, if any, must satisfy the requirements of the 15 law of this state, except that the public organic record does 16 not need to be signed. 17 5. If the surviving entity is a domestic limited liability 18 company, the merger becomes effective when the statement of 19 merger is effective. In all other cases, the merger becomes 20 effective on the later of the following: 21 a. The date and time provided by the organic law of the 22 surviving entity. 23 b. When the statement is effective. 24 Sec. 92. NEW SECTION . 489.1026 Effect of merger. 25 1. When a merger becomes effective, all of the following 26 apply: 27 a. The surviving entity continues or comes into existence. 28 b. Each merging entity that is not the surviving entity 29 ceases to exist. 30 c. All property of each merging entity vests in the 31 surviving entity without transfer, reversion, or impairment. 32 d. All debts, obligations, and other liabilities of each 33 merging entity are debts, obligations, and other liabilities 34 of the surviving entity. 35 -115- LSB 1051YC (2) 90 da/jh 115/ 161
H.F. _____ e. Except as otherwise provided by law or the plan of 1 merger, all the rights, privileges, immunities, powers, and 2 purposes of each merging entity vest in the surviving entity. 3 f. If the surviving entity exists before the merger, all of 4 the following apply: 5 (1) All its property continues to be vested in it without 6 transfer, reversion, or impairment. 7 (2) It remains subject to all its debts, obligations, and 8 other liabilities. 9 (3) All its rights, privileges, immunities, powers, and 10 purposes continue to be vested in it. 11 g. The name of the surviving entity may be substituted for 12 the name of any merging entity that is a party to any pending 13 action or proceeding. 14 h. If the surviving entity exists before the merger, all of 15 the following apply: 16 (1) Its public organic record, if any, is amended to the 17 extent provided in the statement of merger. 18 (2) Its private organic rules that are to be in a record, if 19 any, are amended to the extent provided in the plan of merger. 20 i. If the surviving entity is created by the merger, its 21 private organic rules are effective and all of the following 22 apply: 23 (1) If it is a filing entity, its public organic record 24 becomes effective. 25 (2) If it is a limited liability partnership, its statement 26 of qualification becomes effective. 27 j. The interests in each merging entity which are to be 28 converted in the merger are converted, and the interest holders 29 of those interests are entitled only to the rights provided to 30 them under the plan of merger and to any appraisal rights they 31 have under section 489.1006 and the merging entitys organic 32 law. 33 2. Except as otherwise provided in the organic law or 34 organic rules of a merging entity, the merger does not give 35 -116- LSB 1051YC (2) 90 da/jh 116/ 161
H.F. _____ rise to any rights that an interest holder, governor, or third 1 party would have upon a dissolution, liquidation, or winding up 2 of the merging entity. 3 3. When a merger becomes effective, a person that did 4 not have interest holder liability with respect to any of 5 the merging entities and becomes subject to interest holder 6 liability with respect to a domestic entity as a result of 7 the merger has interest holder liability only to the extent 8 provided by the organic law of that entity and only for those 9 debts, obligations, and other liabilities that are incurred 10 after the merger becomes effective. 11 4. When a merger becomes effective, the interest holder 12 liability of a person that ceases to hold an interest in a 13 domestic merging limited liability company with respect to 14 which the person had interest holder liability is subject to 15 the following rules: 16 a. The merger does not discharge any interest holder 17 liability under this chapter to the extent the interest holder 18 liability was incurred before the merger became effective. 19 b. The person does not have interest holder liability under 20 this chapter for any debt, obligation, or other liability that 21 is incurred after the merger becomes effective. 22 c. This chapter continues to apply to the release, 23 collection, or discharge of any interest holder liability 24 preserved under paragraph a as if the merger had not occurred. 25 d. The person has whatever rights of contribution from 26 any other person as are provided by this chapter, law other 27 than this chapter, or the operating agreement of the domestic 28 merging limited liability company with respect to any interest 29 holder liability preserved under paragraph a as if the merger 30 had not occurred. 31 5. When a merger becomes effective, a foreign entity that is 32 the surviving entity may be served with process in this state 33 for the collection and enforcement of any debts, obligations, 34 or other liabilities of a domestic merging limited liability 35 -117- LSB 1051YC (2) 90 da/jh 117/ 161
H.F. _____ company as provided in section 489.116. 1 6. When a merger becomes effective, the registration to do 2 business in this state of any foreign merging entity that is 3 not the surviving entity is canceled. 4 Sec. 93. NEW SECTION . 489.1031 Interest exchange 5 authorized. 6 1. By complying with this part, any of the following apply: 7 a. A domestic limited liability company may acquire all 8 of one or more classes or series of interests of another 9 domestic entity or a foreign entity in exchange for interests, 10 securities, obligations, money, other property, rights to 11 acquire interests or securities, or any combination of the 12 foregoing. 13 b. All of one or more classes or series of interests of a 14 domestic limited liability company may be acquired by another 15 domestic entity or a foreign entity in exchange for interests, 16 securities, obligations, money, other property, rights to 17 acquire interests or securities, or any combination of the 18 foregoing. 19 2. By complying with the provisions of this part applicable 20 to foreign entities, a foreign entity may be the acquiring or 21 acquired entity in an interest exchange under this part if 22 the interest exchange is authorized by the law of the foreign 23 entitys jurisdiction of formation. 24 3. If a protected agreement contains a provision that 25 applies to a merger of a domestic limited liability company but 26 does not refer to an interest exchange, the provision applies 27 to an interest exchange in which the domestic limited liability 28 company is the acquired entity as if the interest exchange were 29 a merger until the provision is amended on or after January 1, 30 2009. 31 Sec. 94. NEW SECTION . 489.1032 Plan of interest exchange. 32 1. A domestic limited liability company may be the acquired 33 entity in an interest exchange under this part by approving a 34 plan of interest exchange. The plan must be in a record and 35 -118- LSB 1051YC (2) 90 da/jh 118/ 161
H.F. _____ contain all of the following: 1 a. The name of the acquired entity. 2 b. The name, jurisdiction of formation, and type of entity 3 of the acquiring entity. 4 c. The manner of converting the interests in the acquired 5 entity into interests, securities, obligations, money, other 6 property, rights to acquire interests or securities, or any 7 combination of the foregoing. 8 d. Any proposed amendments to all of the following: 9 (1) The certificate of organization of the acquired entity. 10 (2) The operating agreement of the acquired entity that are, 11 or are proposed to be, in a record. 12 e. The other terms and conditions of the interest exchange. 13 f. Any other provision required by the law of this state or 14 the operating agreement of the acquired entity. 15 2. In addition to the requirements of subsection 1, a 16 plan of interest exchange may contain any other provision not 17 prohibited by law. 18 Sec. 95. NEW SECTION . 489.1033 Approval of interest 19 exchange. 20 1. A plan of interest exchange is not effective unless it 21 has been approved according to all of the following: 22 a. By all the members of a domestic acquired limited 23 liability company entitled to vote on or consent to any matter. 24 b. In a record, by each member of the domestic acquired 25 limited liability company that will have interest holder 26 liability for debts, obligations, and other liabilities that 27 are incurred after the interest exchange becomes effective, 28 unless all of the following apply: 29 (1) The operating agreement of the limited liability 30 company provides in a record for the approval of an interest 31 exchange or a merger in which some or all of its members become 32 subject to interest holder liability by the affirmative vote or 33 consent of fewer than all the members. 34 (2) The member consented in a record to or voted for that 35 -119- LSB 1051YC (2) 90 da/jh 119/ 161
H.F. _____ provision of the operating agreement or became a member after 1 the adoption of that provision. 2 2. An interest exchange involving a domestic acquired 3 entity that is not a limited liability company is not effective 4 unless it is approved by the domestic entity in accordance with 5 its organic law. 6 3. An interest exchange involving a foreign acquired entity 7 is not effective unless it is approved by the foreign entity in 8 accordance with the law of the foreign entitys jurisdiction 9 of formation. 10 4. Except as otherwise provided in its organic law or 11 organic rules, the interest holders of the acquiring entity are 12 not required to approve the interest exchange. 13 Sec. 96. NEW SECTION . 489.1034 Amendment or abandonment 14 of plan of interest exchange. 15 1. A plan of interest exchange may be amended only with the 16 consent of each party to the plan, except as otherwise provided 17 in the plan. 18 2. A domestic acquired limited liability company may 19 approve an amendment of a plan of interest exchange according 20 to any of the following: 21 a. In the same manner as the plan was approved, if the plan 22 does not provide for the manner in which it may be amended. 23 b. By its managers or members in the manner provided in 24 the plan, but a member that was entitled to vote on or consent 25 to approval of the interest exchange is entitled to vote on or 26 consent to any amendment of the plan that will change any of 27 the following: 28 (1) The amount or kind of interests, securities, 29 obligations, money, other property, rights to acquire interests 30 or securities, or any combination of the foregoing, to be 31 received by any of the members of the acquired company under 32 the plan. 33 (2) The certificate of organization or operating agreement 34 of the acquired company that will be in effect immediately 35 -120- LSB 1051YC (2) 90 da/jh 120/ 161
H.F. _____ after the interest exchange becomes effective, except for 1 changes that do not require approval of the members of the 2 acquired company under this chapter or the operating agreement. 3 (3) Any other terms or conditions of the plan, if the change 4 would adversely affect the member in any material respect. 5 3. After a plan of interest exchange has been approved and 6 before a statement of interest exchange becomes effective, 7 the plan may be abandoned as provided in the plan. Unless 8 prohibited by the plan, a domestic acquired limited liability 9 company may abandon the plan in the same manner as the plan was 10 approved. 11 4. If a plan of interest exchange is abandoned after a 12 statement of interest exchange has been delivered to the 13 secretary of state for filing and before the statement becomes 14 effective, a statement of abandonment, signed by the acquired 15 limited liability company, must be delivered to the secretary 16 of state for filing before the statement of interest exchange 17 becomes effective. The statement of abandonment takes effect 18 on filing, and the interest exchange is abandoned and does not 19 become effective. The statement of abandonment must contain 20 all of the following: 21 a. The name of the acquired limited liability company. 22 b. The date on which the statement of interest exchange was 23 filed by the secretary of state. 24 c. A statement that the interest exchange has been abandoned 25 in accordance with this section. 26 Sec. 97. NEW SECTION . 489.1035 Statement of interest 27 exchange effective date of interest exchange. 28 1. A statement of interest exchange must be signed by a 29 domestic acquired limited liability company and delivered to 30 the secretary of state for filing. 31 2. A statement of interest exchange must contain all of the 32 following: 33 a. The name of the acquired limited liability company. 34 b. The name, jurisdiction of formation, and type of entity 35 -121- LSB 1051YC (2) 90 da/jh 121/ 161
H.F. _____ of the acquiring entity. 1 c. A statement that the plan of interest exchange was 2 approved by the acquired company in accordance with this part. 3 d. Any amendments to the acquired companys certificate of 4 organization approved as part of the plan of interest exchange. 5 3. In addition to the requirements of subsection 2, a 6 statement of interest exchange may contain any other provision 7 not prohibited by law. 8 4. An interest exchange becomes effective when the 9 statement of interest exchange is effective. 10 Sec. 98. NEW SECTION . 489.1036 Effect of interest exchange. 11 1. When an interest exchange in which the acquired entity 12 is a domestic limited liability company becomes effective, all 13 of the following apply: 14 a. The interests in the acquired limited liability company 15 which are the subject of the interest exchange are converted, 16 and the members holding those interests are entitled only to 17 the rights provided to them under the plan of interest exchange 18 and to any appraisal rights they have under section 486.1006. 19 b. The acquiring entity becomes the interest holder of the 20 interests in the acquired limited liability company stated in 21 the plan of interest exchange to be acquired by the acquiring 22 entity. 23 c. The certificate of organization of the acquired limited 24 liability company is amended to the extent provided in the 25 statement of interest exchange. 26 d. The provisions of the operating agreement of the acquired 27 limited liability company that are to be in a record, if any, 28 are amended to the extent provided in the plan of interest 29 exchange. 30 2. Except as otherwise provided in the operating agreement 31 of a domestic acquired limited liability company, the interest 32 exchange does not give rise to any rights that a member, 33 manager, or third party would have upon a dissolution, 34 liquidation, or winding up of the acquired limited liability 35 -122- LSB 1051YC (2) 90 da/jh 122/ 161
H.F. _____ company. 1 3. When an interest exchange becomes effective, a person 2 that did not have interest holder liability with respect to 3 a domestic acquired limited liability company and becomes 4 subject to interest holder liability with respect to a domestic 5 entity as a result of the interest exchange has interest holder 6 liability only to the extent provided by the organic law of 7 the entity and only for those debts, obligations, and other 8 liabilities that are incurred after the interest exchange 9 becomes effective. 10 4. When an interest exchange becomes effective, the 11 interest holder liability of a person that ceases to hold an 12 interest in a domestic acquired limited liability company with 13 respect to which the person had interest holder liability is 14 subject to all of the following rules: 15 a. The interest exchange does not discharge any interest 16 holder liability under this chapter to the extent the interest 17 holder liability was incurred before the interest exchange 18 became effective. 19 b. The person does not have interest holder liability under 20 this chapter for any debt, obligation, or other liability that 21 is incurred after the interest exchange becomes effective. 22 c. This chapter continues to apply to the release, 23 collection, or discharge of any interest holder liability 24 preserved under paragraph a as if the interest exchange had 25 not occurred. 26 d. The person has whatever rights of contribution from 27 any other person as are provided by this chapter, law other 28 than this chapter, or the operating agreement of the acquired 29 limited liability company with respect to any interest holder 30 liability preserved under paragraph a as if the interest 31 exchange had not occurred. 32 Sec. 99. NEW SECTION . 489.1041 Conversion authorized. 33 1. By complying with this part, a domestic limited liability 34 company may become any of the following: 35 -123- LSB 1051YC (2) 90 da/jh 123/ 161
H.F. _____ a. A domestic entity that is a different type of entity. 1 b. A foreign entity that is a different type of entity, if 2 the conversion is authorized by the law of the foreign entitys 3 jurisdiction of formation. 4 2. By complying with the provisions of this part applicable 5 to foreign entities, a foreign entity that is not a foreign 6 limited liability company may become a domestic limited 7 liability company if the conversion is authorized by the law of 8 the foreign entitys jurisdiction of formation. 9 3. If a protected agreement contains a provision that 10 applies to a merger of a domestic limited liability company 11 but does not refer to a conversion, the provision applies 12 to a conversion of the limited liability company as if the 13 conversion were a merger until the provision is amended on or 14 after January 1, 2009. 15 4. A domestic entity that is not a limited liability company 16 may become a domestic limited liability company if all of the 17 following apply: 18 a. The domestic converting entity complies with section 19 489.1043. 20 b. The domestic converting entity files a statement of 21 conversion in accordance with section 489.1045. 22 Sec. 100. NEW SECTION . 489.1042 Plan of conversion. 23 1. A domestic limited liability company may convert to a 24 different type of entity under this part by approving a plan 25 of conversion. The plan must be in a record and contain all of 26 the following: 27 a. The name of the converting limited liability company. 28 b. The name, jurisdiction of formation, and type of entity 29 of the converted entity. 30 c. The manner of converting the interests in the converting 31 limited liability company into interests, securities, 32 obligations, money, other property, rights to acquire interests 33 or securities, or any combination of the foregoing. 34 d. The proposed public organic record of the converted 35 -124- LSB 1051YC (2) 90 da/jh 124/ 161
H.F. _____ entity if it will be a filing entity. 1 e. The full text of the private organic rules of the 2 converted entity which are proposed to be in a record. 3 f. The other terms and conditions of the conversion. 4 g. Any other provision required by the law of this state 5 or the operating agreement of the converting limited liability 6 company. 7 2. In addition to the requirements of subsection 1, a plan 8 of conversion may contain any other provision not prohibited 9 by law. 10 Sec. 101. NEW SECTION . 489.1043 Approval of conversion. 11 1. A plan of conversion is not effective unless it has been 12 approved according to all of the following: 13 a. By a domestic converting limited liability company, by 14 all the members of the limited liability company entitled to 15 vote on or consent to any matter. 16 b. In a record, by each member of a domestic converting 17 limited liability company which will have interest holder 18 liability for debts, obligations, and other liabilities that 19 are incurred after the conversion becomes effective, unless all 20 of the following apply: 21 (1) The operating agreement of the limited liability 22 company provides in a record for the approval of a conversion 23 or a merger in which some or all of its members become subject 24 to interest holder liability by the affirmative vote or consent 25 of fewer than all the members. 26 (2) The member voted for or consented in a record to that 27 provision of the operating agreement or became a member after 28 the adoption of that provision. 29 2. A conversion involving a domestic converting entity that 30 is not a limited liability company is not effective unless it 31 is approved by the domestic converting entity in accordance 32 with its organic law. 33 3. A conversion of a foreign converting entity is not 34 effective unless it is approved by the foreign entity in 35 -125- LSB 1051YC (2) 90 da/jh 125/ 161
H.F. _____ accordance with the law of the foreign entitys jurisdiction 1 of formation. 2 Sec. 102. NEW SECTION . 489.1044 Amendment or abandonment of 3 plan of conversion. 4 1. A plan of conversion of a domestic converting limited 5 liability company may be amended according to any of the 6 following: 7 a. In the same manner as the plan was approved, if the plan 8 does not provide for the manner in which it may be amended. 9 b. By its managers or members in the manner provided in the 10 plan, but a member that was entitled to vote on or consent to 11 approval of the conversion is entitled to vote on or consent 12 to any amendment of the plan that will change any of the 13 following: 14 (1) The amount or kind of interests, securities, 15 obligations, money, other property, rights to acquire interests 16 or securities, or any combination of the foregoing, to be 17 received by any of the members of the converting limited 18 liability company under the plan. 19 (2) The public organic record, if any, or private organic 20 rules of the converted entity which will be in effect 21 immediately after the conversion becomes effective, except for 22 changes that do not require approval of the interest holders of 23 the converted entity under its organic law or organic rules. 24 (3) Any other terms or conditions of the plan, if the change 25 would adversely affect the member in any material respect. 26 2. After a plan of conversion has been approved by a 27 domestic converting limited liability company and before a 28 statement of conversion becomes effective, the plan may be 29 abandoned as provided in the plan. Unless prohibited by the 30 plan, a domestic converting limited liability company may 31 abandon the plan in the same manner as the plan was approved. 32 3. If a plan of conversion is abandoned after a statement 33 of conversion has been delivered to the secretary of state 34 for filing and before the statement becomes effective, a 35 -126- LSB 1051YC (2) 90 da/jh 126/ 161
H.F. _____ statement of abandonment, signed by the converting entity, 1 must be delivered to the secretary of state for filing before 2 the statement of conversion becomes effective. The statement 3 of abandonment takes effect on filing, and the conversion is 4 abandoned and does not become effective. The statement of 5 abandonment must contain all of the following: 6 a. The name of the converting limited liability company. 7 b. The date on which the statement of conversion was filed 8 by the secretary of state. 9 c. A statement that the conversion has been abandoned in 10 accordance with this section. 11 Sec. 103. NEW SECTION . 489.1045 Statement of conversion 12 effective date of conversion. 13 1. A statement of conversion must be signed by the 14 converting entity and delivered to the secretary of state for 15 filing. 16 2. A statement of conversion must contain all of the 17 following: 18 a. The name, jurisdiction of formation, and type of entity 19 of the converting entity. 20 b. The name, jurisdiction of formation, and type of entity 21 of the converted entity and if the converted entity is a 22 foreign entity, the street and mailing addresses of an office 23 of the converted entity that the secretary of state may use for 24 purposes of section 489.1046, subsection 5. 25 c. If the converting entity is a domestic limited liability 26 company, a statement that the plan of conversion was approved 27 in accordance with this part or, if the converting entity is a 28 foreign entity, a statement that the conversion was approved 29 by the foreign entity in accordance with the law of its 30 jurisdiction of formation. 31 d. If the converted entity is a domestic filing entity, its 32 public organic record, as an attachment. 33 e. If the converted entity is a domestic limited liability 34 partnership, its statement of qualification, as an attachment. 35 -127- LSB 1051YC (2) 90 da/jh 127/ 161
H.F. _____ 3. In addition to the requirements of subsection 2, a 1 statement of conversion may contain any other provision not 2 prohibited by law. 3 4. If the converted entity is a domestic entity, its public 4 organic record, if any, must satisfy the requirements of the 5 law of this state, except that the public organic record does 6 not need to be signed. 7 5. If the converted entity is a domestic limited liability 8 company, the conversion becomes effective when the statement of 9 conversion is effective. In all other cases, the conversion 10 becomes effective on the later of the following: 11 a. The date and time provided by the organic law of the 12 converted entity. 13 b. When the statement is effective. 14 Sec. 104. NEW SECTION . 489.1046 Effect of conversion. 15 1. When a conversion becomes effective all of the following 16 apply: 17 a. The converted entity is any of the following: 18 (1) Organized under and subject to the organic law of the 19 converted entity. 20 (2) The same entity without interruption as the converting 21 entity. 22 b. All property of the converting entity continues to be 23 vested in the converted entity without transfer, reversion, or 24 impairment. 25 c. All debts, obligations, and other liabilities of the 26 converting entity continue as debts, obligations, and other 27 liabilities of the converted entity. 28 d. Except as otherwise provided by law or the plan of 29 conversion, all the rights, privileges, immunities, powers, 30 and purposes of the converting entity remain in the converted 31 entity. 32 e. The name of the converted entity may be substituted for 33 the name of the converting entity in any pending action or 34 proceeding. 35 -128- LSB 1051YC (2) 90 da/jh 128/ 161
H.F. _____ f. The certificate of organization of the converted entity 1 becomes effective. 2 g. The provisions of the operating agreement of the 3 converted entity which are to be in a record, if any, approved 4 as part of the plan of conversion become effective. 5 h. The interests in the converting entity are converted, and 6 the interest holders of the converting entity are entitled only 7 to the rights provided to them under the plan of conversion and 8 to any appraisal rights they have under section 489.1006. 9 2. Except as otherwise provided in the operating agreement 10 of a domestic converting limited liability company, the 11 conversion does not give rise to any rights that a member, 12 manager, or third party would have upon a dissolution, 13 liquidation, or winding up of the converting entity. 14 3. When a conversion becomes effective, a person that 15 did not have interest holder liability with respect to the 16 converting entity and becomes subject to interest holder 17 liability with respect to a domestic entity as a result of the 18 conversion has interest holder liability only to the extent 19 provided by the organic law of the entity and only for those 20 debts, obligations, and other liabilities that are incurred 21 after the conversion becomes effective. 22 4. When a conversion becomes effective, the interest holder 23 liability of a person that ceases to hold an interest in a 24 domestic converting limited liability company with respect to 25 which the person had interest holder liability is subject to 26 all of the following rules: 27 a. The conversion does not discharge any interest holder 28 liability under this chapter to the extent the interest holder 29 liability was incurred before the conversion became effective. 30 b. The person does not have interest holder liability under 31 this chapter for any debt, obligation, or other liability that 32 arises after the conversion becomes effective. 33 c. This chapter continues to apply to the release, 34 collection, or discharge of any interest holder liability 35 -129- LSB 1051YC (2) 90 da/jh 129/ 161
H.F. _____ preserved under paragraph a as if the conversion had not 1 occurred. 2 d. The person has whatever rights of contribution from any 3 other person as are provided by this chapter, law other than 4 this chapter, or the organic rules of the converting entity 5 with respect to any interest holder liability preserved under 6 paragraph a as if the conversion had not occurred. 7 5. When a conversion becomes effective, a foreign entity 8 that is the converted entity may be served with process in this 9 state for the collection and enforcement of any of its debts, 10 obligations, and other liabilities as provided in section 11 489.116. 12 6. If the converting entity is a registered foreign entity, 13 its registration to do business in this state is canceled when 14 the conversion becomes effective. 15 7. A conversion does not require the entity to wind up its 16 affairs and does not constitute or cause the dissolution of the 17 entity. 18 Sec. 105. NEW SECTION . 489.1051 Domestication authorized. 19 1. By complying with this part, a domestic limited liability 20 company may become a foreign limited liability company if 21 the domestication is authorized by the law of the foreign 22 jurisdiction. 23 2. By complying with the provisions of this part applicable 24 to foreign limited liability companies, a foreign limited 25 liability company may become a domestic limited liability 26 company if the domestication is authorized by the law of the 27 foreign limited liability companys jurisdiction of formation. 28 3. If a protected agreement contains a provision that 29 applies to a merger of a domestic limited liability company 30 but does not refer to a domestication, the provision applies 31 to a domestication of the limited liability company as if the 32 domestication were a merger until the provision is amended on 33 or after January 1, 2009. 34 Sec. 106. NEW SECTION . 489.1052 Plan of domestication. 35 -130- LSB 1051YC (2) 90 da/jh 130/ 161
H.F. _____ 1. A domestic limited liability company may become a foreign 1 limited liability company in a domestication by approving 2 a plan of domestication. The plan must be in a record and 3 contain all of the following: 4 a. The name of the domesticating limited liability company. 5 b. The name and jurisdiction of formation of the 6 domesticated limited liability company. 7 c. The manner of converting the interests in the 8 domesticating limited liability company into interests, 9 securities, obligations, money, other property, rights to 10 acquire interests or securities, or any combination of the 11 foregoing. 12 d. The proposed certificate of organization of the 13 domesticated limited liability company. 14 e. The full text of the provisions of the operating 15 agreement of the domesticated limited liability company that 16 are proposed to be in a record. 17 f. The other terms and conditions of the domestication. 18 g. Any other provision required by the law of this state or 19 the operating agreement of the domesticating limited liability 20 company. 21 2. In addition to the requirements of subsection 1, a plan 22 of domestication may contain any other provision not prohibited 23 by law. 24 Sec. 107. NEW SECTION . 489.1053 Approval of domestication. 25 1. A plan of domestication of a domestic domesticating 26 limited liability company is not effective unless it has been 27 approved according to any of the following: 28 a. By all the members entitled to vote on or consent to any 29 matter. 30 b. In a record, by each member that will have interest 31 holder liability for debts, obligations, and other liabilities 32 that are incurred after the domestication becomes effective, 33 unless all of the following apply: 34 (1) The operating agreement of the domesticating limited 35 -131- LSB 1051YC (2) 90 da/jh 131/ 161
H.F. _____ liability company in a record provides for the approval of a 1 domestication or merger in which some or all of its members 2 become subject to interest holder liability by the affirmative 3 vote or consent of fewer than all the members. 4 (2) The member voted for or consented in a record to that 5 provision of the operating agreement or became a member after 6 the adoption of that provision. 7 2. A domestication of a foreign domesticating limited 8 liability company is not effective unless it is approved in 9 accordance with the law of the foreign limited liability 10 companys jurisdiction of formation. 11 Sec. 108. NEW SECTION . 489.1054 Amendment or abandonment 12 of plan of domestication. 13 1. A plan of domestication of a domestic domesticating 14 limited liability company may be amended according to any of 15 the following: 16 a. In the same manner as the plan was approved, if the plan 17 does not provide for the manner in which it may be amended. 18 b. By its managers or members in the manner provided in 19 the plan, but a member that was entitled to vote on or consent 20 to approval of the domestication is entitled to vote on or 21 consent to any amendment of the plan that will change any of 22 the following: 23 (1) The amount or kind of interests, securities, 24 obligations, money, other property, rights to acquire interests 25 or securities, or any combination of the foregoing, to be 26 received by any of the members of the domesticating limited 27 liability company under the plan. 28 (2) The certificate of organization or operating agreement 29 of the domesticated limited liability company that will be in 30 effect immediately after the domestication becomes effective, 31 except for changes that do not require approval of the members 32 of the domesticated limited liability company under its organic 33 law or operating agreement. 34 (3) Any other terms or conditions of the plan, if the change 35 -132- LSB 1051YC (2) 90 da/jh 132/ 161
H.F. _____ would adversely affect the member in any material respect. 1 2. After a plan of domestication has been approved by a 2 domestic domesticating limited liability company and before a 3 statement of domestication becomes effective, the plan may be 4 abandoned as provided in the plan. Unless prohibited by the 5 plan, a domestic domesticating limited liability company may 6 abandon the plan in the same manner as the plan was approved. 7 3. If a plan of domestication is abandoned after a statement 8 of domestication has been delivered to the secretary of state 9 for filing and before the statement becomes effective, a 10 statement of abandonment, signed by the domesticating limited 11 liability company, must be delivered to the secretary of state 12 for filing before the statement of domestication becomes 13 effective. The statement of abandonment takes effect on 14 filing, and the domestication is abandoned and does not become 15 effective. The statement of abandonment must contain all of 16 the following: 17 a. The name of the domesticating limited liability company. 18 b. The date on which the statement of domestication was 19 filed by the secretary of state. 20 c. A statement that the domestication has been abandoned in 21 accordance with this section. 22 Sec. 109. NEW SECTION . 489.1055 Statement of domestication 23 effective date of domestication. 24 1. A statement of domestication must be signed by the 25 domesticating limited liability company and delivered to the 26 secretary of state for filing. 27 2. A statement of domestication must contain all of the 28 following: 29 a. The name and jurisdiction of formation of the 30 domesticating limited liability company. 31 b. The name and jurisdiction of formation of the 32 domesticated limited liability company and the street and 33 mailing addresses of an office of the domesticated limited 34 liability company that the secretary of state may use for 35 -133- LSB 1051YC (2) 90 da/jh 133/ 161
H.F. _____ purposes of section 489.1056, subsection 5. 1 c. If the domesticating limited liability company is a 2 domestic limited liability company, a statement that the plan 3 of domestication was approved in accordance with this part or, 4 if the domesticating limited liability company is a foreign 5 limited liability company, a statement that the domestication 6 was approved in accordance with the law of its jurisdiction of 7 formation. 8 d. The certificate of organization of the domesticated 9 limited liability company, as an attachment. 10 3. In addition to the requirements of subsection 2, a 11 statement of domestication may contain any other provision not 12 prohibited by law. 13 4. The certificate of organization of a domestic 14 domesticated limited liability company must satisfy the 15 requirements of this chapter, but the certificate does not need 16 to be signed. 17 5. If the domesticated entity is a domestic limited 18 liability company, the domestication becomes effective 19 when the statement of domestication is effective. If the 20 domesticated entity is a foreign limited liability company, 21 the domestication becomes effective on the later of all of the 22 following: 23 a. The date and time provided by the organic law of the 24 domesticated entity. 25 b. When the statement is effective. 26 Sec. 110. NEW SECTION . 489.1056 Effect of domestication. 27 1. When a domestication becomes effective, all of the 28 following apply: 29 a. The domesticated entity is all of the following: 30 (1) Organized under and subject to the organic law of the 31 domesticated entity. 32 (2) The same entity without interruption as the 33 domesticating entity. 34 b. All property of the domesticating entity continues to be 35 -134- LSB 1051YC (2) 90 da/jh 134/ 161
H.F. _____ vested in the domesticated entity without transfer, reversion, 1 or impairment. 2 c. All debts, obligations, and other liabilities of the 3 domesticating entity continue as debts, obligations, and other 4 liabilities of the domesticated entity. 5 d. Except as otherwise provided by law or the plan of 6 domestication, all the rights, privileges, immunities, 7 powers, and purposes of the domesticating entity remain in the 8 domesticated entity. 9 e. The name of the domesticated entity may be substituted 10 for the name of the domesticating entity in any pending action 11 or proceeding. 12 f. The certificate of organization of the domesticated 13 entity becomes effective. 14 g. The provisions of the operating agreement of the 15 domesticated entity that are to be in a record, if any, 16 approved as part of the plan of domestication become effective. 17 h. The interests in the domesticating entity are converted 18 to the extent and as approved in connection with the 19 domestication, and the members of the domesticating entity are 20 entitled only to the rights provided to them under the plan 21 of domestication and to any appraisal rights they have under 22 section 489.1006. 23 2. Except as otherwise provided in the organic law or 24 operating agreement of the domesticating limited liability 25 company, the domestication does not give rise to any rights 26 that a member, manager, or third party would otherwise 27 have upon a dissolution, liquidation, or winding up of the 28 domesticating company. 29 3. When a domestication becomes effective, a person that 30 did not have interest holder liability with respect to the 31 domesticating limited liability company and becomes subject to 32 interest holder liability with respect to a domestic limited 33 liability company as a result of the domestication has interest 34 holder liability only to the extent provided by this chapter 35 -135- LSB 1051YC (2) 90 da/jh 135/ 161
H.F. _____ and only for those debts, obligations, and other liabilities 1 that are incurred after the domestication becomes effective. 2 4. When a domestication becomes effective, the interest 3 holder liability of a person that ceases to hold an interest in 4 a domestic domesticating limited liability company with respect 5 to which the person had interest holder liability is subject 6 to all of the following rules: 7 a. The domestication does not discharge any interest 8 holder liability under this chapter to the extent the interest 9 holder liability was incurred before the domestication became 10 effective. 11 b. A person does not have interest holder liability under 12 this chapter for any debt, obligation, or other liability that 13 is incurred after the domestication becomes effective. 14 c. This chapter continues to apply to the release, 15 collection, or discharge of any interest holder liability 16 preserved under paragraph a as if the domestication had not 17 occurred. 18 d. A person has whatever rights of contribution from any 19 other person as are provided by this chapter, law other than 20 this chapter, or the operating agreement of the domestic 21 domesticating limited liability company with respect to any 22 interest holder liability preserved under paragraph a as if 23 the domestication had not occurred. 24 5. When a domestication becomes effective, a foreign 25 limited liability company that is the domesticated company 26 may be served with process in this state for the collection 27 and enforcement of any of its debts, obligations, and other 28 liabilities as provided in section 489.116. 29 6. If the domesticating limited liability company is a 30 registered foreign entity, the registration of the limited 31 liability company is canceled when the domestication becomes 32 effective. 33 7. A domestication does not require a domestic 34 domesticating limited liability company to wind up its affairs 35 -136- LSB 1051YC (2) 90 da/jh 136/ 161
H.F. _____ and does not constitute or cause the dissolution of the limited 1 liability company. 2 Sec. 111. Section 489.1101, Code 2023, is amended to read 3 as follows: 4 489.1101 Definitions. 5 As used in this article subchapter , unless the context 6 otherwise requires: 7 1. Employee or agent does not include a clerk, 8 stenographer, secretary, bookkeeper, technician, or other 9 person who is not usually and ordinarily considered by custom 10 and practice to be practicing a profession nor any other person 11 who performs all that persons duties for the professional 12 limited liability company under the direct supervision and 13 control of one or more managers, employees, or agents of the 14 professional limited liability company who are duly licensed in 15 this state to practice a profession which the limited liability 16 company is authorized to practice in this state. This article 17 subchapter does not require any such persons to be licensed to 18 practice a profession if they are not required to be licensed 19 under any other law of this state. 20 2. Foreign professional limited liability company means 21 a limited liability company organized under laws other than 22 the laws of this state for a purpose for which a professional 23 limited liability company may be organized under this article 24 subchapter . 25 3. Licensed includes registered, certified, admitted to 26 practice, or otherwise legally authorized under the laws of 27 this state. 28 4. Profession means the following professions: 29 a. Certified public accountancy. 30 b. Architecture. 31 c. Chiropractic. 32 d. Dentistry. 33 e. Physical therapy. 34 f. Practice as a physician assistant. 35 -137- LSB 1051YC (2) 90 da/jh 137/ 161
H.F. _____ g. Psychology. 1 h. Professional engineering. 2 i. Land surveying. 3 j. Landscape architecture. 4 k. Law. 5 l. Medicine and surgery. 6 m. Optometry. 7 n. Osteopathic medicine and surgery. 8 o. Accounting practitioner. 9 p. Podiatry. 10 q. Real estate brokerage. 11 r. Speech pathology. 12 s. Audiology. 13 t. Veterinary medicine. 14 u. Pharmacy. 15 v. Nursing. 16 w. Marital and family therapy or mental health counseling, 17 provided that the marital and family therapist or mental health 18 counselor is licensed under chapters 147 and 154D . 19 x. Social work, provided that the social worker is licensed 20 pursuant to chapter 147 and section 154C.3, subsection 1 , 21 paragraph c . 22 5. Professional limited liability company means a limited 23 liability company subject to this article subchapter , except a 24 foreign professional limited liability company. 25 6. Regulating board means any board, commission, court, 26 or governmental authority which, under the laws of this state, 27 is charged with the licensing, registration, certification, 28 admission to practice, or other legal authorization of the 29 practitioners of any profession. 30 7. a. Voluntary transfer includes a sale, voluntary 31 assignment, gift, pledge, or encumbrance; a voluntary change 32 of legal or equitable ownership or beneficial interest; or a 33 voluntary change of persons having voting rights with respect 34 to any transferable interest, except as proxies. 35 -138- LSB 1051YC (2) 90 da/jh 138/ 161
H.F. _____ b. Voluntary transfer does not include a transfer of 1 an individuals interest in a limited liability company or 2 other property to a guardian or conservator appointed for that 3 individual or the individuals property. 4 Sec. 112. Section 489.1106, Code 2023, is amended to read 5 as follows: 6 489.1106 Professional regulation. 7 A professional limited liability company shall not 8 be required to register with or to obtain any license, 9 registration, certificate, or other legal authorization from 10 a regulating board in order to practice a profession. Except 11 as provided in this section , this article subchapter does not 12 restrict or limit in any manner the authority or duties of any 13 regulating board with respect to individuals an individual 14 practicing a profession which is within the jurisdiction of the 15 regulating board, even if the individual is a member, manager, 16 employee, or agent of a professional limited liability company 17 or foreign professional limited liability company and practices 18 the individuals profession through such professional limited 19 liability company. 20 Sec. 113. Section 489.1107, Code 2023, is amended to read 21 as follows: 22 489.1107 Relationship and liability to persons served. 23 This article subchapter does not modify any law applicable 24 to the relationship between an individual practicing a 25 profession and a person receiving professional services, 26 including but not limited to any liability arising out of such 27 practice or any law respecting privileged communications. 28 This article subchapter does not modify or affect the ethical 29 standards or standards of conduct of any profession, including 30 but not limited to any standards prohibiting or limiting the 31 practice of the profession by a limited liability company or 32 prohibiting or limiting the practice of two or more professions 33 in combination. All such standards shall apply to the members, 34 managers, employees, and agents through whom a professional 35 -139- LSB 1051YC (2) 90 da/jh 139/ 161
H.F. _____ limited liability company practices any profession in this 1 state, to the same extent that the standards apply to an 2 individual practitioner. 3 Sec. 114. Section 489.1110, Code 2023, is amended to read 4 as follows: 5 489.1110 Convertible interests rights and options. 6 A professional limited liability company shall not create 7 or issue any interest convertible into an interest of the 8 professional limited liability company. The provisions of this 9 article subchapter with respect to the issuance and transfer 10 of interests apply to the creation, issuance, and transfer 11 of any right or option entitling the holder to purchase from 12 a professional limited liability company any interest of the 13 professional limited liability company. A right or option 14 shall not be transferable, whether voluntarily, involuntarily, 15 by operation of law, or in any other manner. Upon the death 16 of the holder, or when the holder ceases to be licensed to 17 practice a profession in this state which the professional 18 limited liability company is authorized to practice, the right 19 or option shall expire. 20 Sec. 115. Section 489.1112, subsections 4, 5, and 6, Code 21 2023, are amended to read as follows: 22 4. When a person other than a member of record becomes 23 entitled to have interests of a professional limited liability 24 company transferred into that persons name or to exercise 25 voting rights, except as a proxy, with respect to interests of 26 the professional limited liability company, the professional 27 limited liability company shall immediately purchase the 28 interests. Without limiting the generality of the foregoing, 29 this section shall be applicable whether the event occurs 30 as a result of appointment of a guardian or conservator for 31 a member or the members property, transfer of interests 32 by operation of law, involuntary transfer of interests, 33 judicial proceeding, execution, levy, bankruptcy proceeding, 34 receivership proceeding, foreclosure or enforcement of a pledge 35 -140- LSB 1051YC (2) 90 da/jh 140/ 161
H.F. _____ or encumbrance, or any other situation or occurrence. However, 1 this section does not apply to any voluntary transfer of 2 interests as defined in this article subchapter . 3 5. Interests purchased by a professional limited liability 4 company under this section shall be transferred to the 5 professional limited liability company as of the close 6 of business on the date of the death or other event which 7 requires purchase. The member and the members executors, 8 administrators, legal representatives, or successors in 9 interest, shall promptly do all things which may be necessary 10 or convenient to cause transfer to be made as of the transfer 11 date. However, the interests shall promptly be transferred on 12 the books and records of the professional limited liability 13 company as of the transfer date, notwithstanding any delay in 14 transferring or surrendering the interests or certificates 15 representing the interests, and the transfer shall be valid and 16 effective for all purposes as of the close of business on the 17 transfer date. The purchase price for such interests shall be 18 paid as provided in this article subchapter , but the transfer 19 of interests to the professional limited liability company as 20 provided in this section shall not be delayed or affected by 21 any delay or default in making payment. 22 6. a. Notwithstanding subsections 1 through 5 , purchase by 23 the professional limited liability company is not required upon 24 the occurrence of any event other than death of a member, if 25 the professional limited liability company is dissolved within 26 sixty days after the occurrence of the event or voluntarily 27 elects to no longer be a professional limited liability company 28 but continue its existence as a limited liability company 29 pursuant to section 489.1119A within sixty days after the 30 occurrence of the event . The certificate of organization or 31 operating agreement of the professional limited liability 32 company may provide that purchase is not required upon the 33 death of a member, if the professional limited liability 34 company is dissolved within sixty days after the date of the 35 -141- LSB 1051YC (2) 90 da/jh 141/ 161
H.F. _____ members death. 1 b. Notwithstanding sections 1 through 5, purchase by the 2 professional limited liability company is not required upon the 3 death of a shareholder if the professional limited liability 4 company voluntarily elects to no longer be a professional 5 limited liability company but continue its existence as a 6 limited liability company pursuant to section 489.1119A within 7 sixty days after death. 8 Sec. 116. Section 489.1113, Code 2023, is amended to read 9 as follows: 10 489.1113 Certificates representing interests. 11 Each certificate representing an interest of a professional 12 limited liability company shall state in substance that the 13 certificate represents an interest in a professional limited 14 liability company and is not transferable except as expressly 15 provided in this article subchapter and in the certificate of 16 organization or an operating agreement of the professional 17 limited liability company. 18 Sec. 117. Section 489.1114, Code 2023, is amended to read 19 as follows: 20 489.1114 Management. 21 1. All managers of a professional limited liability 22 company shall at all times be individuals who are licensed to 23 practice a profession in this state or a lawful combination of 24 professions pursuant to section 489.1102 , which the limited 25 liability company is authorized to practice. A person who 26 is not licensed shall have no authority or duties in the 27 management or control of the professional limited liability 28 company. If a manager ceases to have this qualification, the 29 manager shall immediately and automatically cease to hold such 30 management position. 31 2. Notwithstanding subsection 1, upon the occurrence of 32 any event that requires the professional limited liability 33 company either to be dissolved or to elect to no longer be 34 a professional limited liability company but continue its 35 -142- LSB 1051YC (2) 90 da/jh 142/ 161
H.F. _____ existence as a limited liability company, as provided in 1 section 489.1119A, all of the following apply: 2 a. The professional limited liability company ceases to 3 practice the profession that the professional limited liability 4 company is authorized to practice, as provided in section 5 489.1119A. 6 b. The individuals who are not licensed to practice in this 7 state a profession that the professional limited liability 8 company is authorized to practice may be appointed as officers 9 and directors for the sole purpose of doing any of the 10 following: 11 (1) Carrying out the dissolution of the professional 12 limited liability company. 13 (2) If applicable, carrying out the voluntary election 14 of the professional limited liability company to no longer 15 be a professional limited liability company but continue its 16 existence as a limited liability company, as provided in 17 section 489.1119A. 18 Sec. 118. Section 489.1115, Code 2023, is amended to read 19 as follows: 20 489.1115 Merger. 21 A professional limited liability company shall not merge 22 with any entity except another professional limited liability 23 company subject to this article subchapter or a professional 24 corporation subject to chapter 496C . Merger is not permitted 25 unless the surviving or new professional limited liability 26 company is a professional limited liability company which that 27 complies with all requirements of this article subchapter . 28 Sec. 119. Section 489.1116, Code 2023, is amended to read 29 as follows: 30 489.1116 Dissolution or liquidation. 31 A violation of any provision of this article subchapter by a 32 professional limited liability company or any of its members 33 or managers shall be cause for its involuntary dissolution, or 34 liquidation of its assets and business by the district court. 35 -143- LSB 1051YC (2) 90 da/jh 143/ 161
H.F. _____ Upon the death of the last remaining member of a professional 1 limited liability company, or when the last remaining member is 2 not licensed or ceases to be licensed to practice a profession 3 in this state which the professional limited liability company 4 is authorized to practice, or when any person other than 5 the member of record becomes entitled to have all interests 6 of the last remaining member of the professional limited 7 liability company transferred into that persons name or to 8 exercise voting rights, except as a proxy, with respect to such 9 interests, the professional limited liability company shall not 10 practice any profession and it . In that case, the professional 11 limited liability company shall either be promptly dissolved 12 or shall promptly elect to no longer be a professional limited 13 liability company but continue its existence as a limited 14 liability company as provided in section 489.1119A . However, 15 if prior to dissolution all outstanding interests of the 16 professional limited liability company are acquired by two 17 or more persons licensed to practice a profession in this 18 state which the professional limited liability company is 19 authorized to practice, the professional limited liability 20 company need not be dissolved nor elect to no longer be a 21 professional limited liability company and may instead practice 22 the profession as provided in this article subchapter . 23 Sec. 120. Section 489.1117, Code 2023, is amended to read 24 as follows: 25 489.1117 Foreign professional limited liability company. 26 1. A foreign professional limited liability company may 27 practice a profession in this state if it complies with the 28 provisions of this article subchapter . The secretary of state 29 may prescribe forms for this purpose. A foreign professional 30 limited liability company may practice a profession in this 31 state only through members, managers, employees, and agents 32 who are licensed to practice the profession in this state. 33 The provisions of this article subchapter with respect to the 34 practice of a profession by a professional limited liability 35 -144- LSB 1051YC (2) 90 da/jh 144/ 161
H.F. _____ company apply to a foreign professional limited liability 1 company. 2 2. This article subchapter does not prohibit the practice 3 of a profession in this state by an individual who is a member, 4 manager, employee, or agent of a foreign professional limited 5 liability company, if the individual could lawfully practice 6 the profession in this state in the absence of any relationship 7 to a foreign professional limited liability company. This 8 subsection applies regardless of whether or not the foreign 9 professional limited liability company is authorized to 10 practice a profession in this state. 11 Sec. 121. Section 489.1118, Code 2023, is amended to read 12 as follows: 13 489.1118 Limited liability companies organized under the 14 other laws. 15 This article subchapter does not apply to or interfere with 16 the practice of any profession by or through any professional 17 limited liability company organized after July 1, 1992, under 18 any other law of this state or any other state or country, if 19 the practice is lawful under any other statute or rule of law 20 of this state. Any such professional limited liability company 21 may voluntarily elect to adopt this article subchapter and 22 become subject to its provisions, by amending its certificate 23 of organization to be consistent with all provisions of this 24 article subchapter and by stating in its amended certificate 25 of organization that the limited liability company has 26 voluntarily elected to adopt this article subchapter . Any 27 limited liability company organized under any law of any other 28 state or country may become subject to the provisions of this 29 article subchapter by complying with all provisions of this 30 article subchapter with respect to foreign professional limited 31 liability companies. 32 Sec. 122. Section 489.1119, Code 2023, is amended to read 33 as follows: 34 489.1119 Conflicts with other provisions of this chapter . 35 -145- LSB 1051YC (2) 90 da/jh 145/ 161
H.F. _____ The provisions of this article subchapter shall prevail over 1 any inconsistent provisions of this chapter . 2 Sec. 123. NEW SECTION . 489.1119A Election to no longer be 3 a professional limited liability company. 4 A professional limited liability company may elect to no 5 longer be a professional limited liability company but continue 6 its existence as a limited liability company by filing with 7 the secretary of state an amendment to or restatement of its 8 certificate of organization that states that the limited 9 liability company is no longer a professional limited liability 10 company and amending its name to no longer indicate it is a 11 professional limited liability company. 12 Sec. 124. NEW SECTION . 489.1204 Severability clause. 13 If any provision of this chapter or its application to any 14 person or circumstance is held invalid, the invalidity does 15 not affect other provisions or applications of this chapter 16 which can be given effect without the invalid provision or 17 application, and to this end the provisions of this chapter are 18 severable. 19 Sec. 125. NEW SECTION . 489.1207 Application to existing 20 relationships. 21 1. For purposes of applying this chapter to a limited 22 liability company formed before the effective date of this 23 Act, references in the limited liability companys operating 24 agreement to provisions in this chapter in effect before the 25 effective date of this Act are deemed to be references to the 26 comparable provision in this chapter after the effective date 27 of this Act. 28 2. A limited liability company that has published notice of 29 its dissolution and requested persons having claims against the 30 limited liability company to present them in accordance with 31 the notice pursuant to section 489.703 as that section existed 32 immediately prior to the effective date of this Act shall be 33 subject to the requirements set forth in that section as it 34 existed immediately prior to the effective date of this Act, 35 -146- LSB 1051YC (2) 90 da/jh 146/ 161
H.F. _____ including the right of a claim by a person that is commenced 1 within five years after publication of the notice. 2 3. For the purposes of applying this chapter to a limited 3 liability company formed before January 1, 2009, all of the 4 following apply: 5 a. The limited liability companys articles of organization 6 are deemed to be the companys certificate of organization. 7 b. For the purposes of applying section 489.102, subsection 8 15, and subject to section 489.112, subsection 4, language 9 in the limited liability companys articles of organization 10 designating the limited liability companys management 11 structure operates as if that language were in the operating 12 agreement. 13 c. If a professional limited liability companys name 14 complied with section 490A.1503 as that section existed on 15 December 30, 2010, that companys name shall also be deemed to 16 comply with the name requirements of section 489.1103 of the 17 2011 edition of the Iowa Code. 18 Sec. 126. Section 489.14101, Code 2023, is amended to read 19 as follows: 20 489.14101 Short title. 21 This article subchapter may be cited as the Uniform 22 Protected Series Act . 23 Sec. 127. Section 489.14102, unnumbered paragraph 1, Code 24 2023, is amended to read as follows: 25 As used in this article subchapter , unless the context 26 otherwise requires: 27 Sec. 128. Section 489.14102, subsections 4 and 9, Code 2023, 28 are amended to read as follows: 29 4. Foreign protected series means an arrangement, 30 configuration, or other structure established by a foreign 31 limited liability company which has attributes comparable to 32 a protected series established under this article subchapter . 33 The term applies whether or not the law under which the foreign 34 company is organized refers to protected series. 35 -147- LSB 1051YC (2) 90 da/jh 147/ 161
H.F. _____ 9. Protected-series manager means a person under whose 1 authority the powers of a protected series are exercised 2 and under whose direction the activities and affairs of the 3 protected series are managed under the operating agreement, 4 this article subchapter , and this chapter . 5 Sec. 129. Section 489.14104, subsection 4, paragraph c, 6 Code 2023, is amended to read as follows: 7 c. Except as permitted by law of this state other than 8 this article subchapter , have a purpose or power that the law 9 of this state other than this article subchapter prohibits a 10 limited liability company from doing or having. 11 Sec. 130. Section 489.14106, subsections 2, 3, and 4, Code 12 2023, are amended to read as follows: 13 2. If this chapter otherwise restricts the power of an 14 operating agreement to affect a matter, the restriction applies 15 to a matter under this article subchapter in accordance with 16 section 489.14108 . 17 3. If law of this state other than this article subchapter 18 imposes a prohibition, limitation, requirement, condition, 19 obligation, liability, or other restriction on a limited 20 liability company, a member, manager, or other agent of the 21 company, or a transferee of the company, except as otherwise 22 provided in law of this state other than this article 23 subchapter , the restriction applies in accordance with section 24 489.14108 . 25 4. Except as otherwise provided in section 489.14107 , if the 26 operating agreement of a series limited liability company does 27 not provide for a matter described in subsection 1 in a manner 28 permitted by this article subchapter , the matter is determined 29 in accordance with the following rules: 30 a. To the extent this article subchapter addresses the 31 matter, this article subchapter governs. 32 b. To the extent this article subchapter does not address 33 the matter, the other articles subchapters of this chapter 34 govern the matter in accordance with section 489.14108 . 35 -148- LSB 1051YC (2) 90 da/jh 148/ 161
H.F. _____ Sec. 131. Section 489.14107, subsection 1, paragraphs v, w, 1 x, and y, Code 2023, are amended to read as follows: 2 v. Article 6 Subchapter VI . 3 w. Article 7 Subchapter VII . 4 x. Article 8 Subchapter VIII . 5 y. A provision of this article subchapter pertaining to any 6 of the following: 7 (1) Registered agents. 8 (2) The secretary of state, including provisions pertaining 9 to records authorized or required to be delivered to the 10 secretary of state for filing under this article subchapter . 11 Sec. 132. Section 489.14108, subsection 2, paragraph b, 12 subparagraphs (1) and (2), Code 2023, are amended to read as 13 follows: 14 (1) Accept for filing a type of record that neither this 15 article subchapter nor any of the other articles subchapters of 16 this chapter authorizes or requires a person to deliver to the 17 secretary of state for filing. 18 (2) Make or deliver a record that neither this article 19 subchapter nor the other articles subchapters of this chapter 20 authorizes or requires the secretary of state to make or 21 deliver. 22 Sec. 133. Section 489.14204, subsection 1, paragraph c, 23 Code 2023, is amended to read as follows: 24 c. Other means authorized by law of this state other than 25 the other articles subchapters of this chapter . 26 Sec. 134. Section 489.14301, subsection 5, unnumbered 27 paragraph 1, Code 2023, is amended to read as follows: 28 To the extent permitted by this section and law of this 29 state other than this article subchapter , a series limited 30 liability company or protected series of the company may 31 hold an associated asset directly or indirectly, through a 32 representative, nominee, or similar arrangement, except that 33 all of the following applies: 34 Sec. 135. Section 489.14303, subsection 4, Code 2023, is 35 -149- LSB 1051YC (2) 90 da/jh 149/ 161
H.F. _____ amended to read as follows: 1 4. Except for section 489.14108, subsection 1 , paragraph 2 c , a provision of this article subchapter which applies 3 to a protected-series transferee of a protected series of a 4 series limited liability company applies to the company in 5 its capacity as an owner of a protected-series transferable 6 interest of the protected series. A provision of the operating 7 agreement of a series limited liability company which applies 8 to a protected-series transferee of a protected series of the 9 company applies to the company in its capacity as an owner of a 10 protected-series transferable interest of the protected series. 11 Sec. 136. Section 489.14304, subsection 6, Code 2023, is 12 amended to read as follows: 13 6. Article 9 Subchapter IX applies to a protected series in 14 accordance with section 489.14108 . 15 Sec. 137. Section 489.14402, subsection 3, paragraph b, 16 Code 2023, is amended to read as follows: 17 b. The claim is to establish or enforce a liability arising 18 under law of this state other than this article subchapter or 19 from an act or omission in this state. 20 Sec. 138. Section 489.14404, subsection 3, Code 2023, is 21 amended to read as follows: 22 3. In addition to any other remedy provided by law or 23 equity, if a claim against a series limited liability company 24 or a protected series has not been reduced to a judgment and 25 law other than this article subchapter permits a prejudgment 26 remedy by attachment, levy, or the like, the court may apply 27 subsection 2 as a prejudgment remedy. 28 Sec. 139. Section 489.14404, subsection 5, paragraph b, 29 Code 2023, is amended to read as follows: 30 b. The claimant is a resident of this state or doing 31 business or authorized to do business in this state, or the 32 claim under section 489.14404 is to enforce a judgment, or to 33 seek a prejudgment remedy, pertaining to a liability arising 34 from law of this state other than this article subchapter or an 35 -150- LSB 1051YC (2) 90 da/jh 150/ 161
H.F. _____ act or omission in this state. 1 Sec. 140. Section 489.14801, Code 2023, is amended to read 2 as follows: 3 489.14801 Uniformity of application and construction. 4 In applying and construing this article subchapter , 5 consideration shall be given to the need to promote uniformity 6 of the law with respect to its subject matter among states 7 that enact the uniform protected series Act as approved and 8 recommended by the national conference of commissioners on 9 uniform state laws. 10 Sec. 141. Section 489.14804, Code 2023, is amended to read 11 as follows: 12 489.14804 Savings clause. 13 This article subchapter does not affect an action commenced, 14 proceeding brought, or right accrued before July 1, 2020. 15 Sec. 142. REPEAL. Sections 489.113, 489.802, 489.803, 16 489.804, 489.805, 489.806, 489.807, 489.808, 489.1008, 17 489.1009, 489.1010, 489.1011, 489.1012, 489.1013, 489.1014, 18 489.1015, 489.1016, and 489.1304, Code 2023, are repealed. 19 Sec. 143. CODE EDITOR DIRECTIVE. 20 1. The Code editor is directed to make the following 21 transfers: 22 a. Section 489.104 to section 489.108. 23 b. Section 489.105 to section 489.109. 24 c. Section 489.106 to section 489.104. 25 d. Section 489.107 to section 489.111. 26 e. Section 489.108 to section 489.112. 27 f. Section 489.109 to section 489.113. 28 g. Section 489.110 to section 489.105. 29 h. Section 489.111 to section 489.106. 30 i. Section 489.112 to section 489.107. 31 j. Section 489.114 to section 489.116. 32 k. Section 489.114A, as enacted by this Act, to section 33 489.114. 34 l. Section 489.115 to section 489.117. 35 -151- LSB 1051YC (2) 90 da/jh 151/ 161
H.F. _____ m. Section 489.115A, as enacted by this Act, to section 1 489.115. 2 n. Section 489.116 to section 489.119. 3 o. Section 489.117 to section 489.122. 4 p. Section 489.205A to section 489.122A. 5 q. Section 489.206 to section 489.209. 6 r. Section 489.206A, as enacted by this Act, to section 7 489.206. 8 s. Section 489.208 to section 489.211. 9 t. Section 489.208A, as enacted by this Act, to section 10 489.208. 11 u. Section 489.209 to section 489.211A. 12 v. Section 489.701A to section 489.703. 13 w. Section 489.703 to section 489.704. 14 x. Section 489.704 to section 489.705. 15 y. Section 489.705 to section 489.708. 16 z. Section 489.706 to section 489.710. 17 aa. Section 489.706A, as enacted by this Act, to section 18 489.706. 19 ab. Section 489.707 to section 489.711. 20 ac. Section 489.708 to section 489.707. 21 ad. Section 489.801 to section 489.901. 22 ae. Section 489.805A, as enacted by this Act, to section 23 489.805. 24 af. Section 489.809 to section 489.912. 25 ag. Section 489.901 to section 489.801. 26 ah. Section 489.902 to section 489.802. 27 ai. Section 489.903 to section 489.803. 28 aj. Section 489.904 to section 489.804. 29 ak. Section 489.906 to section 489.806. 30 al. Section 489.906A, as enacted by this Act, to section 31 489.906. 32 am. Section 489.911A to section 489.902. 33 an. Section 489.911B to section 489.903. 34 ao. Section 489.911C to section 489.904. 35 -152- LSB 1051YC (2) 90 da/jh 152/ 161
H.F. _____ ap. Section 489.1119 to section 489.1120. 1 aq. Section 489.1119A to section 489.1119. 2 ar. Section 489.1301 to section 489.1201. 3 as. Section 489.1302 to section 489.1202. 4 at. Section 489.1303 to section 489.1203. 5 2. The Code editor shall correct internal references in the 6 Code and in any enacted legislation as necessary due to the 7 enactment of this section. 8 Sec. 144. DIRECTIONS TO THE CODE EDITOR DIVIDING 9 SUBCHAPTER X INTO PARTS. The Code editor is directed to divide 10 the provisions of chapter 489, subchapter X, as amended or 11 enacted in this division of this Act, into parts as follows: 12 1. Part 1, including sections 489.1001 through 489.1007. 13 2. Part 2, including sections 489.1021 through 489.1026. 14 3. Part 3, including sections 489.1031 through 489.1036. 15 4. Part 4, including sections 489.1041 through 489.1046. 16 5. Part 5, including sections 489.1051 through 489.1056. 17 DIVISION II 18 COORDINATING AMENDMENTS 19 Sec. 145. Section 9.11, subsection 1, paragraph c, Code 20 2023, is amended to read as follows: 21 c. Chapter 489 , including as provided in section 489.205, 22 489.205A and as stated in section 489.117 or as otherwise 23 described in sections 489.112, 489.302 , 489.702 , 489.1008 , 24 489.1012 , and 489.14502 section 489.210 . 25 Sec. 146. Section 10.1, subsection 9, paragraph b, Code 26 2023, is amended to read as follows: 27 b. As used in paragraph a , a type of membership interest 28 in a limited liability company includes a protected series as 29 provided in chapter 489, article 14 subchapter XIV . 30 Sec. 147. Section 10.1, subsection 17, paragraph b, Code 31 2023, is amended to read as follows: 32 b. As used in paragraph a , a type of membership interest 33 in a limited liability company includes a protected series of a 34 series limited liability company as provided in chapter 489, 35 -153- LSB 1051YC (2) 90 da/jh 153/ 161
H.F. _____ article 14 subchapter XIV . 1 Sec. 148. Section 10.10, subsection 1, paragraph c, 2 subparagraph (2), Code 2023, is amended to read as follows: 3 (2) As used in subparagraph (1), a type of membership 4 interest in a limited liability company includes a protected 5 series of a series limited liability company as provided in 6 chapter 489, article 14 subchapter XIV . 7 Sec. 149. Section 488.108, subsection 4, paragraph b, 8 subparagraph (4), Code 2023, is amended to read as follows: 9 (4) For a limited liability company under chapter 489 , 10 section 489.108 , 489.109 , 489.114A, or 489.706 . 11 Sec. 150. Section 490.401, subsection 2, paragraph h, 12 subparagraph (4), Code 2023, is amended to read as follows: 13 (4) For a limited liability company under chapter 489 , 14 section 489.108 , 489.109 , 489.114A, or 489.706 . 15 Sec. 151. Section 501A.102, subsection 13, Code 2023, is 16 amended by striking the subsection. 17 Sec. 152. Section 501A.1101, subsections 1, 2, and 5, Code 18 2023, are amended to read as follows: 19 1. Authorization. Unless otherwise prohibited, cooperatives 20 organized under the laws of this state, including cooperatives 21 organized under this chapter or traditional cooperatives, may 22 merge or consolidate with each other, an Iowa limited liability 23 company under the provisions of section 489.1015 , or other 24 another business entities entity organized under the laws 25 of another state , by complying with the provisions of this 26 section and the law of the state where the surviving or new 27 business entity will exist. A cooperative shall not merge or 28 consolidate with a business entity organized under the laws 29 of this state, other than a traditional cooperative, unless 30 the law governing the business entity expressly authorizes 31 merger or consolidation with a cooperative. This subsection 32 does not authorize a foreign business entity to do any act not 33 authorized by the law governing the foreign business entity. 34 2. Plan. To initiate a merger or consolidation of a 35 -154- LSB 1051YC (2) 90 da/jh 154/ 161
H.F. _____ cooperative, a written plan of merger or consolidation shall be 1 prepared by the board or by a committee selected by the board 2 to prepare a plan. The plan shall state all of the following: 3 a. The names of the each constituent domestic cooperative , 4 the name of any Iowa limited liability company that is a party 5 to the merger , to the extent authorized under section 489.1015 , 6 and any foreign business entities entity that is a party to the 7 merger . 8 b. The name of the surviving or new domestic cooperative , 9 Iowa limited liability company as required by section 489.1015 , 10 or other foreign business entity. 11 c. The manner and basis of converting membership or 12 ownership interests of the constituent domestic cooperative , 13 the Iowa limited liability company that is a party as provided 14 in section 489.1015 , or foreign business entity into membership 15 or ownership interests in the surviving or new domestic 16 cooperative, the surviving Iowa limited liability company as 17 authorized in section 489.1015 , or foreign business entity. 18 d. The terms of the merger or consolidation. 19 e. The proposed effect of the merger or consolidation on 20 the members and patron members of each constituent domestic 21 cooperative. 22 f. For a consolidation, the plan shall contain the articles 23 of the entity or organizational documents to be filed with the 24 state in which the entity is organized or, if the surviving 25 organization is an Iowa limited liability company, the articles 26 of organization . 27 5. Effect of merger or consolidation. For a merger that does 28 not involve an Iowa limited liability company, the following 29 shall apply to the The effect of a merger or consolidation 30 shall be as follows : 31 a. After the effective date, the each domestic cooperative, 32 Iowa limited liability company, if party to the plan, 33 cooperatives and any foreign business entity that is a party to 34 the plan become a single entity. For a merger, the surviving 35 -155- LSB 1051YC (2) 90 da/jh 155/ 161
H.F. _____ business entity is the business entity designated in the plan. 1 For a consolidation, the new domestic cooperative , the Iowa 2 limited liability company, if any, and any or new foreign 3 business entity is the business entity provided for in the 4 plan. Except for the surviving or new domestic cooperative, 5 Iowa limited liability company, or foreign business entity, the 6 separate existence of each merged or consolidated domestic or 7 foreign business entity that is a party to the plan ceases on 8 the effective date of the merger or consolidation. 9 b. The surviving or new domestic cooperative , Iowa limited 10 liability company, or foreign business entity possesses all of 11 the rights and property of each of the merged or consolidated 12 business entities and is responsible for all their obligations. 13 The title to property of the merged or consolidated domestic 14 cooperative, Iowa limited liability company, or foreign 15 business entity , is vested in the surviving or new domestic 16 cooperative, Iowa limited liability company, or foreign 17 business entity without reversion or impairment of the title 18 caused by the merger or consolidation. 19 c. If a merger involves an Iowa limited liability company, 20 this subsection is subject to the provisions of section 21 489.1015 . 22 Sec. 153. Section 501A.1102, subsection 1, Code 2023, is 23 amended to read as follows: 24 1. Definition. For purposes of this section , subsidiary 25 means a domestic cooperative , an Iowa limited liability 26 company, or a foreign cooperative. 27 Sec. 154. Section 501A.1102, subsection 2, unnumbered 28 paragraph 1, Code 2023, is amended to read as follows: 29 An Iowa limited liability company may only participate 30 in a merger under this section to the extent authorized 31 under section 489.1015 . A parent domestic cooperative or 32 a subsidiary that is a domestic cooperative may complete 33 the merger of a subsidiary as provided in this section . 34 However, if either the parent cooperative or the subsidiary 35 -156- LSB 1051YC (2) 90 da/jh 156/ 161
H.F. _____ is a business entity organized under the laws of this state, 1 the merger of the subsidiary is not authorized under this 2 section unless the law governing the business entity expressly 3 authorizes merger with a cooperative. 4 Sec. 155. Section 501A.1103, subsection 2, paragraph a, 5 Code 2023, is amended to read as follows: 6 a. A merger may be abandoned upon any of the following: 7 (1) The members of each of the constituent domestic 8 cooperatives entitled to vote on the approval of the plan 9 have approved the abandonment at a meeting by the affirmative 10 vote of the holders of a majority of the voting power of the 11 membership interests entitled to vote. 12 (2) The merger is with a domestic cooperative and an Iowa 13 limited liability company or foreign business entity. 14 (3) (2) The abandonment is approved in such manner as may 15 be required by section 489.1015 for the involvement of an Iowa 16 limited liability company, or for a foreign business entity by 17 under the laws of the state under which the foreign business 18 entity is organized. 19 (4) (3) The members of a constituent domestic cooperative 20 are not entitled to vote on the approval of the plan, and the 21 board of the constituent domestic cooperative has approved 22 the abandonment by the affirmative vote of a majority of the 23 directors present. 24 (5) (4) The plan provides for abandonment and all 25 conditions for abandonment set forth in the plan are met. 26 (6) (5) The plan is abandoned before the effective date 27 of the plan by a resolution of the board of any constituent 28 domestic cooperative abandoning the plan of merger approved by 29 the affirmative vote of a majority of the directors present, 30 subject to the contract rights of any other person under the 31 plan. If a plan of merger is with a domestic business entity or 32 foreign business entity, the plan of merger may be abandoned 33 before the effective date of the plan by a resolution of the 34 foreign business entity adopted according to the laws of the 35 -157- LSB 1051YC (2) 90 da/jh 157/ 161
H.F. _____ state under which the foreign business entity is organized, 1 subject to the contract rights of any other person under the 2 plan. If the plan of merger is with an Iowa limited liability 3 company, the plan of merger may be abandoned by the Iowa 4 limited liability company as provided in section 489.1015 , 5 subject to the contractual rights of any other person under the 6 plan. 7 Sec. 156. Section 504.401, subsection 2, paragraph b, 8 subparagraph (4), Code 2023, is amended to read as follows: 9 (4) For a limited liability company under chapter 489 , 10 section 489.108 , 489.109 , 489.114A, or 489.706 . 11 Sec. 157. Section 504.403, subsection 1, paragraph b, 12 subparagraph (4), Code 2023, is amended to read as follows: 13 (4) For a limited liability company under chapter 489 , 14 section 489.108 , 489.109 , 489.114A, or 489.706 . 15 Sec. 158. Section 524.310, subsection 5, paragraph b, Code 16 2023, is amended to read as follows: 17 b. A corporate or company name reserved, registered, or 18 protected as provided in section 489.109 , 489.114A, 489.706, 19 490.402 , 490.403 , 504.402 , or 504.403 . 20 Sec. 159. Section 524.303, subsection 2, Code 2023, is 21 amended to read as follows: 22 2. Applicable fees, payable to the secretary of state as 23 specified in section 489.117 or section 490.122 , for the filing 24 of the articles of incorporation or section 489.117 for filing 25 a certificate of organization . 26 Sec. 160. Section 542.7, subsection 3, paragraph c, 27 subparagraph (2), Code 2023, is amended to read as follows: 28 (2) Notwithstanding chapter 489, article 11 subchapter XI , 29 or any other provision of law to the contrary, a certified 30 public accounting firm organized as a professional limited 31 liability company under chapter 489, article 11 subchapter XI , 32 may have nonlicensee members provided that the professional 33 limited liability company complies with the requirements of 34 this section . 35 -158- LSB 1051YC (2) 90 da/jh 158/ 161
H.F. _____ DIVISION III 1 EFFECTIVE DATE 2 Sec. 161. EFFECTIVE DATE. This Act takes effect January 1, 3 2024. 4 EXPLANATION 5 The inclusion of this explanation does not constitute agreement with 6 the explanations substance by the members of the general assembly. 7 GENERAL. This bill enacts new or amends existing Code 8 sections in the Revised Uniform Limited Liability Company 9 Act (RULLCA), now referred to as simply the Uniform Limited 10 Liability Act, as approved and recommended by the national 11 conference on commissioners of uniform state laws, more 12 commonly referred to as the uniform law commissioners (ULC) 13 (see Code chapter 5). The RULLCA, which was enacted by the 14 general assembly by 2008 Iowa Acts, chapter 1162, replaced 15 the Iowa limited liability company Act effective January 1, 16 2011. Its provisions are published in Code chapter 489. The 17 bill is based on amendments approved and recommended by the 18 ULC in 2013. The bill amends every one of the 14 articles in 19 the RULLCA other than the last article, the uniform protected 20 series Act enacted by the general assembly in 2019 Iowa Acts, 21 chapter 26. The bill also amends provisions to the Iowa 22 professional corporation Act (IPCA) enacted as Article 11 by 23 the general assembly in 2008 Iowa Acts, chapter 1088. 24 BACKGROUND. A limited liability company (LLC), sometimes 25 referred to as simply a company, is a type of domestic business 26 entity usually perpetual in duration and formed for capital 27 acquisition and the distribution of any profits. An LLC 28 is formed by filing a certificate of organization with the 29 secretary of state (SOS). A foreign LLC is recognized to 30 do business in the state when acting under a certificate of 31 authorization. An LLC is often organized in a manner similar 32 to a limited partnership which may include a number of passive 33 investors and one or more managers who owe a fiduciary duty 34 of care to the entity and its members when making decisions 35 -159- LSB 1051YC (2) 90 da/jh 159/ 161
H.F. _____ affecting the company, although the law also recognizes 1 member-managed organizational structure. An LLC is governed 2 by an operating agreement executed by the members, which may 3 supersede certain statutory provisions, and is comparable to 4 a partnership agreement in a general or limited partnership. 5 Members and managers are shielded from personal liability 6 similar to shareholders and directors of a corporation. Unlike 7 a corporation, taxes attributable as income to an LLC are 8 passed through to investors without being taxed at the business 9 level. 10 BILLS PROVISIONS. The bill changes the names of articles 11 to subchapters to be consistent with Iowas system of Code 12 organization (see Code chapter 490, the Iowa business 13 corporation Act). The bill also changes the name of the Code 14 chapter, other than subchapter XI, to the uniform limited 15 liability company Act (ULLCA). Subchapter I includes basic 16 provisions that govern the interpretation of terms in the 17 ULLCA, the nature and powers of LLCs, the formation of LLCs 18 including through the use of an operating agreement, the use 19 and protection of its name, the use of a registered agent, 20 and service of process, including by the SOS. Subchapter 21 II governs the formation of an LLC, including the filing of 22 a certificate of organization. The bill provides that a 23 foreign LLC does business in the state under a certificate 24 of registration. The subchapter provides for the records 25 filed with the SOS or pursuant to judicial order, the filing 26 of biennial reports with the SOS, and payment of fees or 27 charges to the SOS. Subchapter III governs the relationship 28 between members and managers and between the LLC and persons 29 dealing with the business entity, including the liability 30 of members and managers. Subchapter IV governs membership, 31 contributions and distributions, the management, standards of 32 conduct, and the right to information. Subchapter V governs 33 the transfer of rights and the rights of persons transferred an 34 interest. Subchapter VI governs a members dissociation from 35 -160- LSB 1051YC (2) 90 da/jh 160/ 161
H.F. _____ an LLC. Subchapter VII governs the dissolution of the entity 1 voluntarily, by the SOS, and the winding up of its affairs, 2 including providing for the settlement of claims by creditors 3 and members. Subchapter VIII governs foreign LLCs and the 4 process to obtain a certificate of registration to do business 5 in the state. Subchapter IX governs action by members taken 6 against an LLC either directly or derivatively, and subchapter 7 X governs mergers, conversions, and domestications. Subchapter 8 XI amends provisions governing professional liability 9 companies. Subchapter XII governed series limited liability 10 companies before it was replaced by subchapter XIV. Subchapter 11 XIV enacts the uniform protected series Act. 12 PENALTY. A person who files a record containing information 13 that the person knows is false commits a serious misdemeanor. 14 A serious misdemeanor is punishable by confinement for no more 15 than one year and a fine of at least $430 but not more than 16 $2,560. 17 COORDINATING PROVISIONS. The bill makes a number of 18 corresponding changes, including eliminating special 19 requirements applicable to cooperatives involved in a merger or 20 consolidation with a cooperative under Code chapter 501A. 21 EFFECTIVE DATE. The bill takes effect January 1, 2024. 22 -161- LSB 1051YC (2) 90 da/jh 161/ 161