New Florida LLC Act Does Not Apply To Existing LLCs until January 1, 2015, Unless Prior Application is Elected
Effective January 1, 2014, the Florida Revised Limited Liability Company Act (the “New Florida LLC Act”), new Chapter 605 of the Florida Statutes, became effective for LLCs formed in Florida on or after January 1, 2014. Existing Florida LLCs are not required to comply with the New Florida LLC Act, and remain subject to the old Florida Limited Liability Company Act, Chapter 608 of the Florida Statutes (the “Old Florida LLC Act”), until January 1, 2015, when Chapter 608 is repealed and the New Florida LLC Act becomes mandatory for all Florida LLCs. An existing LLC can voluntarily become subject to the New Florida LLC Act at any time from and after January 1, 2014 by amending its operating agreement to such effect. Effective January 1, 2014, pursuant to the New Florida LLC Act, the Florida Department of State began issuing and requiring the use solely of Florida LLC forms and filings that comply with the New Florida LLC Act, even with respect to existing LLCs that have not yet elected or are not required to be governed by the New Florida LLC Act.
Revised Act Incorporates National Models and Other Relevant Statutes
As discussed in previous blog posts, the New Florida LLC Act is a brand new statute that bears little to no resemblance to the Old Florida LLC Act. And, while the New Florida LLC Act is based primarily on a national model LLC Act, the 2006 Revised Uniform Limited Liability Company Act (the “Model LLC Act”, last amended in 2011), the drafters also incorporated provisions from the Old Florida LLC Act, other model LLC and other entity acts, other Florida entity statutes, including the Florida Business Corporation Act and the Florida Revised Uniform Limited Partnership Act, as well as other influential state LLC statutes such as Delaware’s.
Significant Changes in Florida LLC Act Affect Operating Agreements
Because the New Florida LLC Act is based on the Model Act, attorneys and other users should find the New Florida LLC Act far better organized and, accordingly, easier to use than the Old Florida LLC Act. Users need to be aware, however, that the New Florida LLC Act contains significant changes from the Old Florida LLC Act. Many of these changes are intended to provide a base level of protection for the smaller or less sophisticated LLC members who may be without competent LLC counsel and who may not have a comprehensive, or any, written operating agreement. Most of these new statutory provisions can be overridden through a well-drafted operating agreement, provided that counsel is aware of the new provisions that can be trumped. Existing forms of Florida LLC operating agreements, which may have been fine under the Old Florida LLC Act, probably do not specifically address all of these areas of change. Accordingly, drafters of operating agreements need to thoroughly understand the New Florida LLC Act and, in particular, how it differs from the Old Florida LLC Act, as well as whether the new provisions are waivable. Certain changes are non-waivable, meaning that they cannot be altered through the operating agreement or otherwise. The New Florida LLC Act contains 17 non-waivable provisions, compared to five under the Old Florida LLC Act.
Additional Resources on the New Florida LLC Act
Readers who desire to understand how the New Florida LLC Act changed the Old Florida LLC Act, and where the New Florida LLC Act deviates from the Model Act, should review the White Paper prepared by the Executive Committee of the Florida Bar Revised LLC Act Drafting Committee. In addition, the official commentary to the Model LLC Act is a valuable tool for understanding the New Florida LLC Act, provided that the user knows where the New Florida LLC Act differs from the Model Act, and therefore where the commentary is not applicable.
For a discussion of some of the material changes that the New Florida LLC Act makes to the Old Florida LLC Act, please see: Florida Legislature Passes New Revised Limited Liability Company (LLC) Act.