The Rhode Island Limited-liability Company Act
If enacted, H6628 would significantly change the existing dynamics of how LLCs handle disputes among members, particularly those that lead to dissolution. The law would allow differing members to resolve their disagreements by offering a fair valuation for the purchasing of units, thereby preserving the continuity of the business. This change is particularly beneficial for businesses that may be otherwise harmed by sudden dissolution, allowing for continued operations and the fulfillment of ongoing contracts and relationships with clients or customers.
House Bill 6628 relates to the Rhode Island Limited-Liability Company Act and introduces provisions allowing members of an LLC to prevent dissolution by purchasing the ownership units held by members petitioning for dissolution. The bill is aimed at providing an option for LLC members to retain the company by facilitating a buyout among members rather than proceeding with a dissolution in court. This statutory amendment seeks to create a more stable business environment for limited liability companies operating within the state by reducing the likelihood of dissolution in situations where disagreement arises among members.
Notably, the bill may prompt discussions regarding valuation disputes among members and fair buyout practices. While it opens a path for resolving member disagreements proactively, there may be concerns about the fairness of valuations determined by courts. The potential for conflicts to escalate over the agreement on the fair value of units could still exist, as members may disagree on the pricing of units for buyout. Thus, while the bill promotes stability, it may also require additional guidelines to ensure fairness and transparency throughout the buyout process.