Senate Study Bill 3147 - Introduced SENATE FILE _____ BY (PROPOSED COMMITTEE ON JUDICIARY BILL BY CHAIRPERSON ZAUN) A BILL FOR An Act providing for limited liability companies, providing for 1 fees, and including effective date provisions. 2 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 3 TLSB 5431XC (4) 90 da/jh
S.F. _____ Section 1. Section 489.102, subsection 13, Code 2024, is 1 amended to read as follows: 2 13. Limited liability company , except in the phrase 3 foreign limited liability company , and in subchapter X means 4 an entity formed under this chapter or which becomes subject to 5 this chapter under subchapter X or section 489.110 489.1207 . 6 Sec. 2. Section 489.103, subsection 4, paragraph b, 7 subparagraph (3), Code 2024, is amended to read as follows: 8 (3) The limited liability companys participation in a 9 merger, interest exchange, conversion, or domestication, 10 ninety days after articles the statement of merger, interest 11 exchange, conversion, or domestication under subchapter X 12 become effective. 13 Sec. 3. Section 489.109, subsection 2, paragraph a, Code 14 2024, is amended to read as follows: 15 a. Delivering to the secretary of state for filing a 16 statement of change under section 489.116 , an amendment to the 17 certificate under section 489.202 , a statement of correction 18 under section 489.209 , a biennial report under section 489.211A 19 489.212 , a statement of withdrawal or a statement of rescission 20 under section 489.703 , or a statement of termination under 21 section 489.702, subsection 2 , paragraph b , subparagraph (6). 22 Sec. 4. Section 489.116, subsection 2, paragraph b, Code 23 2024, is amended to read as follows: 24 b. A similar filing changing the registered agent or 25 registered office address of the registered agent , if any, of 26 the limited liability company in any other jurisdiction. 27 Sec. 5. Section 489.119, subsection 2, unnumbered paragraph 28 1, Code 2024, is amended to read as follows: 29 If a limited liability company or registered foreign limited 30 liability company ceases to have a registered agent, or if its 31 registered agent cannot with reasonable diligence be served, 32 the limited liability company or registered foreign limited 33 liability company may be served by registered or certified 34 mail, return receipt requested, or by similar commercial 35 -1- LSB 5431XC (4) 90 da/jh 1/ 9
S.F. _____ delivery service, addressed to the limited liability company or 1 registered foreign limited liability company at its principal 2 office. The address of the principal office must be as shown 3 on the limited liability companys or registered foreign 4 limited liability companys most recent biennial report filed 5 with the secretary of state pursuant to section 489.211A 6 489.212 . Service is effected under this subsection on the 7 earliest of any of the following: 8 Sec. 6. Section 489.122, subsection 1, paragraphs b, g, l, 9 and s, Code 2024, are amended to read as follows: 10 b. Statement of withdrawal under section 489.208, subsection 11 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . No fee 12 g. Statement of change of registered agent or address of the 13 registered office agent or both . . . . . . . . . . . . . . . . . . . . No fee 14 l. Articles Statement of merger or interest exchange . $ 50 15 s. Statement of cancellation withdrawal under section 16 489.907 or section 489.909, subsection 1 . . . . . . . . . . . . . $ 10 17 Sec. 7. Section 489.122, subsection 1, Code 2024, is amended 18 by adding the following new paragraphs: 19 NEW PARAGRAPH . 0m. Statement of domestication . . . $ 50 20 NEW PARAGRAPH . 00m. Statement of conversion . . . . . $ 50 21 Sec. 8. Section 489.122, subsection 4, Code 2024, is amended 22 to read as follows: 23 4. The secretary of state may impose, assess, and collect 24 a filing fee as a condition to accepting a biennial report as 25 provided in section 489.211A 489.212 . 26 Sec. 9. Section 489.206, subsection 6, paragraph f, Code 27 2024, is amended to read as follows: 28 f. The biennial report required by section 489.211A 489.212 . 29 Sec. 10. Section 489.211, subsection 2, paragraph e, Code 30 2024, is amended to read as follows: 31 e. That the most recent biennial report required by section 32 489.211A 489.212 has been delivered to the secretary of state 33 for filing. 34 Sec. 11. Section 489.211A, subsection 1, paragraphs b and d, 35 -2- LSB 5431XC (4) 90 da/jh 2/ 9
S.F. _____ Code 2024, are amended to read as follows: 1 b. The name of the registered agent and street address of 2 the companys registered office, the name of its registered 3 agent at that office , and the consent of any new registered 4 agent. 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 8 489.906 , subsection 1. 9 Sec. 12. Section 489.211A, subsection 5, Code 2024, is 10 amended to read as follows: 11 5. The secretary of state may provide for the change 12 of registered office agent or address of the registered 13 agent on the form prescribed by the secretary of state for 14 the biennial report, provided that the form contains the 15 information required in section 489.116 . If the secretary of 16 state determines that a biennial report does not contain the 17 information required in this section but otherwise meets the 18 requirements of section 489.116 for the purpose of changing the 19 registered office or registered agent, the secretary of state 20 shall file the statement of change for the registered office 21 agent or address of the registered agent, effective as provided 22 in section 489.207, subsection 3 , before returning the biennial 23 report to the limited liability company as provided in this 24 section . A statement of change of registered office agent or 25 address of the registered agent accomplished pursuant to this 26 subsection shall be executed by a person authorized to execute 27 the biennial report. 28 Sec. 13. Section 489.302, subsection 10, Code 2024, is 29 amended to read as follows: 30 10. A statement of authority filed by the secretary of state 31 under section 489.207 489.206 , subsection 1, is effective until 32 amended or canceled as provided in subsection 2 , unless an 33 earlier cancellation date is specified in the statement. 34 Sec. 14. Section 489.708, subsections 2 and 4, Code 2024, 35 -3- LSB 5431XC (4) 90 da/jh 3/ 9
S.F. _____ are amended to read as follows: 1 2. The limited liability company does not deliver its 2 biennial report required by section 489.211A 489.212 to the 3 secretary of state within sixty days after it is due. 4 4. The secretary of state has not been notified within sixty 5 days that the limited liability companys registered agent or 6 place of business of the registered agent has been changed, or 7 that its registered agent has resigned, or that its the address 8 of the registered office agent has been discontinued. 9 Sec. 15. Section 489.710, subsection 1, unnumbered 10 paragraph 1, Code 2024, is amended to read as follows: 11 A limited liability company administratively dissolved under 12 section 489.708 489.709 may apply to the secretary of state 13 for reinstatement at any time after the effective date of 14 dissolution. The application must meet all of the following 15 requirements: 16 Sec. 16. Section 489.711, subsection 2, Code 2024, is 17 amended to read as follows: 18 2. The limited liability company may appeal the denial of 19 reinstatement to the district court of the county where the 20 companys principal office or, if none in this state, where its 21 registered office agent is located within thirty days after 22 service of the notice of denial is effected. The company 23 appeals by petitioning the court to set aside the dissolution 24 and attaching to the petition copies of the secretary of 25 states certificate of dissolution, the companys application 26 for reinstatement, and the secretary of states notice of 27 denial. 28 Sec. 17. Section 489.804, Code 2024, is amended to read as 29 follows: 30 489.804 Pleading. 31 In a derivative action under section 489.802 , the complaint 32 must state with particularity any of the following: 33 1. The the date and content of the plaintiffs demand and 34 the response to the demand by the managers or other members. 35 -4- LSB 5431XC (4) 90 da/jh 4/ 9
S.F. _____ 2. Why demand should be excused as futile. 1 Sec. 18. Section 489.911, subsection 1, paragraph d, Code 2 2024, is amended to read as follows: 3 d. The secretary of state has not been notified within 4 sixty days that the foreign limited liability companys 5 registered agent or the registered agents place of business 6 has been changed, that its registered agent has resigned, or 7 that its the address of the registered office agent has been 8 discontinued. 9 Sec. 19. Section 489.1005, subsection 2, paragraph b, Code 10 2024, is amended to read as follows: 11 b. The address of the registered office agent of any entity. 12 Sec. 20. Section 489.1207, subsection 2, Code 2024, is 13 amended to read as follows: 14 2. A limited liability company that has published notice of 15 its dissolution and requested persons having claims against the 16 limited liability company to present them in accordance with 17 the notice pursuant to section 489.704 489.705 as that section 18 existed immediately prior to January 1, 2024, shall be subject 19 to the requirements set forth in that section as it existed 20 immediately prior to January 1, 2024, including the right of 21 a claim by a person that is commenced within five years after 22 publication of the notice. 23 Sec. 21. Section 489.1036, subsection 1, paragraph a, Code 24 2024, is amended to read as follows: 25 a. The interests in the acquired limited liability company 26 which are the subject of the interest exchange are converted, 27 and the members holding those interests are entitled only to 28 the rights provided to them under the plan of interest exchange 29 and to any appraisal rights they have under section 486.1006 30 489.1006 . 31 Sec. 22. Section 489.14201, subsections 3 and 4, Code 2024, 32 are amended to read as follows: 33 3. A protected series is established when the protected 34 series designation takes effect under section 489.205 489.207 . 35 -5- LSB 5431XC (4) 90 da/jh 5/ 9
S.F. _____ 4. To amend a protected series designation, a series limited 1 liability company shall deliver to the secretary of state 2 for filing a statement of designation change, signed by the 3 company, that changes the name of the company, the name of the 4 protected series to which the designation applies, or both. 5 The change takes effect when the statement of designation 6 change takes effect under section 489.205 489.207 . 7 Sec. 23. Section 489.14205, subsection 1, paragraph a, 8 subparagraph (2), unnumbered paragraph 1, Code 2024, is amended 9 to read as follows: 10 The company has delivered to the secretary of state for 11 filing the most recent biennial report required by section 12 489.211A 489.212 and the report includes the name of the 13 protected series, unless any of the following applies: 14 Sec. 24. Section 489.14206, subsection 1, unnumbered 15 paragraph 1, Code 2024, is amended to read as follows: 16 In the biennial report required by section 489.211A 489.212 , 17 a series limited liability company shall include the name of 18 each protected series of the company for which all of the 19 following apply: 20 Sec. 25. Section 489.14604, unnumbered paragraph 1, Code 21 2024, is amended to read as follows: 22 A series limited liability company may be party to a merger 23 in accordance with sections 489.1001 through 489.1005 24 subchapter X, parts 1 and 2 , this section , and sections 25 489.14605 through 489.14608 only if all of the following apply: 26 Sec. 26. Section 489.14605, subsection 1, Code 2024, is 27 amended to read as follows: 28 1. Comply with section 489.1002 subchapter X, parts 1 and 2 . 29 Sec. 27. Section 489.14606, unnumbered paragraph 1, Code 30 2024, is amended to read as follows: 31 In a merger under section 489.14604 , the articles statement 32 of merger must do all of the following: 33 Sec. 28. Section 489.14606, subsection 1, Code 2024, is 34 amended to read as follows: 35 -6- LSB 5431XC (4) 90 da/jh 6/ 9
S.F. _____ 1. Comply with section 489.1004 subchapter X, parts 1 and 2 . 1 Sec. 29. Section 489.14607, unnumbered paragraph 1, Code 2 2024, is amended to read as follows: 3 When a merger under section 489.14604 becomes effective, in 4 addition to the effects stated in section 489.1005 489.1026 , 5 all of the following apply: 6 Sec. 30. CODE EDITOR DIRECTIVE. 7 1. The Code editor is directed to make the following 8 transfer: 9 Section 489.211A to section 489.212. 10 2. The Code editor shall correct internal references in the 11 Code and in any enacted legislation as necessary due to the 12 enactment of this section. 13 Sec. 31. EFFECTIVE DATE. This Act, being deemed of 14 immediate importance, takes effect upon enactment. 15 EXPLANATION 16 The inclusion of this explanation does not constitute agreement with 17 the explanations substance by the members of the general assembly. 18 GENERAL. This bill amends provisions in the uniform limited 19 liability company Act (Code chapter 489) originally enacted 20 in 2008 and rewritten during the 2023 legislative session 21 (2023 Iowa Acts, chapter 152). The 2023 Iowa Act was based on 22 a proposed Act (model legislation) approved and recommended 23 by the national conference on commissioners on uniform state 24 laws, also named the uniform law commissioners (ULC), which 25 includes commissioners appointed by the Governor (Code chapter 26 5). A limited liability company (LLC), or simply company, 27 is a type of unincorporated business entity formed for the 28 acquisition of capital (contributions) from, and the payout of 29 receipts (distributions) to, its investors (members). Although 30 an LLC is sometimes compared to other types of unincorporated 31 entities, and specifically a limited partnership (Code chapter 32 488) or general partnership (Code chapter 486A), it also 33 resembles a corporation (Code chapter 490). 34 BILL TERMINOLOGY CHANGES, SECTION TRANSFER, AND INTERNAL 35 -7- LSB 5431XC (4) 90 da/jh 7/ 9
S.F. _____ REFERENCE CORRECTIONS. The bill makes changes in terminology 1 to be consistent with the model legislation, including 2 references from articles of merger to statement of merger, 3 and from office of the registered agent to address of the 4 registered agent. The bill corrects a number of internal 5 references due to the transfer or rewriting of the Code 6 sections. The bill transfers a Code section providing for 7 biennial reports to correspond to the model legislation (from 8 Code section 489.211A to 489.212) and makes new corresponding 9 changes to internal references. Many of the internal 10 reference corrections are in Code chapter 489, subchapter XIV, 11 the uniform protected series Act, which is separate model 12 legislation approved and recommended by the ULC and enacted in 13 2019 and unamended by the model legislation or the 2023 Iowa 14 Act. 15 BILL CORRESPONDING CHANGE DERIVATIVE ACTIONS. The 16 bill includes a corresponding change in Code chapter 489, 17 subchapter VIII, providing for derivative actions by members. 18 The 2023 Iowa Act departed from the model legislation by 19 removing an option that allowed a member to maintain a 20 derivative action (Code section 489.802). A derivative action 21 is a type of cause of action brought by one or more members of 22 an LLC acting on behalf of the LLC to enforce a right held by 23 the LLC. Under the model legislation, a member may maintain a 24 derivative action only after the member first makes a demand on 25 the LLC to enforce the right. The model legislation allowed 26 the member to skip this demand requirement if it would be 27 futile. The 2023 Iowa Act eliminated this exception. However, 28 it retained a corresponding provision in the model legislation 29 (Code section 489.804) requiring the member in its pleading to 30 state how the member satisfied the notice requirements in Code 31 section 489.802. The bill eliminates the corresponding futile 32 exception in the pleading requirement. 33 BILL FEES. The model legislation does not include a fee 34 schedule for filing documents with the secretary of state, but 35 -8- LSB 5431XC (4) 90 da/jh 8/ 9
S.F. _____ such a schedule has been part of Code chapter 489 since it 1 was enacted and the schedule resembles those in Code chapters 2 providing for other types of business entities (see Code 3 section 490.122 for corporations). The bill adds a fee of 4 $50 for filing a statement of domestication or statement of 5 conversion. 6 EFFECTIVE DATE. The bill takes effect upon enactment. 7 -9- LSB 5431XC (4) 90 da/jh 9/ 9