Iowa House Bill HSB659

Iowa 2023-2024 Regular Session

• Introduced: 2/6/24
• Refer: 2/6/24

Caption

A bill for an act providing for limited liability companies, providing for fees, and including effective date provisions.(See HF 2582, HF 2647.)

Impact

The newly amended provisions are expected to enhance the operational efficiency of LLCs by providing clearer guidelines for compliance. Among the notable changes is the establishment of a fee schedule for various filings with the Secretary of State, including a $50 charge for statements of domestication or conversion. This move aims to ensure that the regulatory framework remains robust and that LLCs contribute to the administrative costs associated with their oversight. Furthermore, the bill modifies the process by which members can initiate derivative actions, imposing stricter requirements on their ability to do so, which could impact member rights significantly.

Summary

House Study Bill 659 (HSB659) introduces amendments to provisions governing limited liability companies (LLCs) in Iowa. This bill is part of the ongoing effort to update the state's business regulations, specifically the Code chapter 489, which covers LLCs. The main objective of HSB659 is to streamline and clarify the existing laws related to LLCs, making them more consistent with model legislation proposed by the Uniform Law Commission. The updates include changes to the definitions, filing procedures, and the handling of mergers, conversions, and domestications of LLCs.

Contention

One of the contentious aspects of HSB659 is the elimination of an exception that allowed members to skip the demand requirement in derivative actions if it was deemed futile. Critics argue that this could make it more challenging for members to enforce their rights within an LLC, potentially favoring management at the expense of individual member interests. Supporters of the bill, however, contend that these changes are necessary to prevent frivolous lawsuits and ensure that only serious claims are pursued. This shift has sparked a debate on the balance between protecting business interests and maintaining member protections within LLCs.