The New Florida LLC Act is Coming Soon
On May 3, 2013, as the last piece of legislation to be enacted this session, the Florida House of Representatives unanimously passed the new Florida Revised Limited Liability Company Act (the “New Florida LLC Act”), a companion bill of which also passed the Florida Senate unanimously a week earlier.
Governor Rick Scott is expected to sign the bill into law without any opposition. When signed, the New Florida LLC Act, which will become new Chapter 605 of the Florida Statutes, will be effective for every limited liability company (“LLC”) formed in Florida on or after July 1, 2014.
For Florida LLCs existing as of July 1, 2014, the New Florida LLC Act can become effective on an elective basis between July 1, 2014 and January 1, 2015, and the New Florida LLC Act will apply on a mandatory basis to all LLCs effective as of January 1, 2015.
The New Florida LLC Act may materially affect the provisions in your existing and future Florida LLC operating agreements. Thus, an understanding of the changes it will bring to LLC governance and operations is critical.
Changes to the Existing Limited Liability Company (LLC) Act
As discussed in a previous blog post, the New Florida LLC Act will look nothing like the existing Florida LLC Act, Chapter 608 of the Florida Statutes (the “Existing Florida LLC Act”). It is based primarily on the Uniform Law Commission’s 2006 Revised Uniform Limited Liability Company Act (as last amended in 2011) (“RULLCA”), a form of which has been adopted to date by seven states and the District of Columbia and currently is being studied or in the process of being adopted by numerous other states.
To improve the New Florida LLC Act, in addition to RULLCA, the drafting committee incorporated desirable provisions from the Existing Florida LLC Act, the ABA Revised Prototype LLC Act, the Revised Model Corporation Business Act, the Revised Uniform Partnership Act and the LLC statutes (“LLC Acts”) of Delaware and other influential states.
How the Revision May Affect You
If your company currently is a member or manager of a Florida LLC, or plans to form or enter into a new Florida LLC, it is crucial to understand the New Florida LLC Act, both the waivable and non-waivable provisions. The operating agreement of the LLC needs to be comprehensive and set forth the agreements of the parties as to all materials matters to avoid unintended statutory default rules from overriding your expectations. We strongly advise that your company have its current Florida operating agreements carefully reviewed in light of the New Florida LLC Act to determine whether revisions are needed to avoid unexpected consequences.
To read more about the New LLC Act, including the following topics, please click here:
The New Florida LLC Act vs. the Operating Agreement: Expansion of Non-Waivable Provisions
Florida Eliminates the Managing Member Form of Management
Other Changes in Florida’s New LLC Act
What Did Not Change in Florida