General Assembly: 82 (2008 Regular GA) - Chapter 1162 - Limited liability companies


Published: 2008-05-10

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616LAWS OF THE EIGHTY-SECOND G.A., 2008 SESSIONCH. 1162

CH. 1162CH. 1162

CHAPTER 1162 LIMITED LIABILITY COMPANIES

H.F. 2633

ANACT relating tobusiness associations, byproviding for limited liability companies andcon- version involving corporations, providing fees and penalties, and providing an effective date.

Be It Enacted by the General Assembly of the State of Iowa:

DIVISION I UNIFORM ACT PROVISIONS

ARTICLE 1 GENERAL PROVISIONS

Section 1. NEW SECTION. 489.101 SHORT TITLE. This chapter may be cited as the “Revised Uniform Limited Liability Company Act”.

Sec. 2. NEW SECTION. 489.102 DEFINITIONS. As used in this chapter: 1. “Certificate of organization”means the certificate required by section 489.201. The term

includes the certificate as amended or restated. 2. “Contribution”means any benefit provided by a person to a limited liability company that

is any of the following: a. In order to become amember upon formation of the company and in accordance with an

agreement between or among the persons that have agreed to become the initial members of the company. b. In order to become amember after formation of the company and in accordance with an

agreement between the person and the company. c. In the person’s capacity as a member and in accordance with the operating agreement

or an agreement between the member and the company. 3. “Debtor in bankruptcy” means a person that is the subject of any of the following: a. Anorder for relief underTitle 11 of theUnitedStatesCodeor a successor statute of gener-

al application. b. A comparable order under federal, state, or foreign law governing insolvency. 4. “Deliver” or “delivery” means any method of delivery used in conventional commercial

practice, including delivery in person, by mail, commercial delivery, and electronic transmis- sion. 5. “Distribution”, except as otherwise provided in section 489.405, subsection 6, means a

transfer of money or other property from a limited liability company to another person on ac- count of a transferable interest. 6. “Domestic cooperative” means an entity organized on a cooperative basis under chapter

497, 498, or 499 or a cooperative organized under chapter 501 or 501A. 7. “Effective”, with respect to a record required or permitted to be delivered to the secretary

of state for filing under this chapter, means effective under section 489.205, subsection 3. 8. “Electronic transmission” means any process of communication not directly involving

the physical transfer of paper that is suitable for the retention, retrieval, and reproduction of information by the recipient. 9. “Foreign limited liability company” means an unincorporated entity formed under the

lawof a jurisdictionother than this state anddenominatedby that lawas a limited liability com- pany. 10. “Limited liability company”, except in the phrase “foreign limited liability company”,

means an entity formed under this chapter.

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11. “Manager” means a person that under the operating agreement of a manager-managed limited liability company is responsible, alone or in concert with others, for performing the management functions stated in section 489.407, subsection 3. 12. “Manager-managed limited liability company” means a limited liability company that

qualifies under section 489.407, subsection 1. 13. “Member”means a person that has become amember of a limited liability company un-

der section 489.401 and has not dissociated under section 489.602. 14. “Member-managed limited liability company” means a limited liability company that is

not a manager-managed limited liability company. 15. “Operatingagreement”means theagreement,whether or not referred toas anoperating

agreement and whether oral, in a record, implied, or in any combination thereof, of all the members of a limited liability company, including a sole member, concerning the matters de- scribed in section 489.110, subsection 1. The term includes the agreement as amended or re- stated. 16. “Organizer” means a person that acts under section 489.201 to form a limited liability

company. 17. “Person” means an individual, corporation, business trust, estate, trust, partnership,

limited liability company, association, joint venture, public corporation, government or gov- ernmental subdivision, agency, or instrumentality, or any other legal or commercial entity. 18. “Principal office” means the principal executive office of a limited liability company or

foreign limited liability company, whether or not the office is located in this state. 19. “Record” means information that is inscribed on a tangible medium or that is stored in

an electronic or other medium and is retrievable in perceivable form. 20. “Registered office” means any of the following: a. The office that a limited liability company is required to designate and maintain under

section 489.113. b. The principal office of a foreign limited liability company. 21. “Sign” means, with the present intent to authenticate or adopt a record to do any of the

following: a. Execute or adopt a tangible symbol. b. Attach to or logically associate with the record an electronic symbol, sound, or process. 22. “State” means a state of the United States, the District of Columbia, Puerto Rico, the

United States Virgin Islands, or any territory or insular possession subject to the jurisdiction of the United States. 23. “Transfer” includes anassignment, conveyance, deed, bill of sale, lease,mortgage, secu-

rity interest, encumbrance, gift, or transfer by operation of law. 24. “Transferable interest”means the right, as originally associatedwithaperson’s capacity

as a member, to receive distributions from a limited liability company in accordance with the operating agreement, whether or not the person remains a member or continues to own any part of the right. 25. “Transferee” means a person to which all or part of a transferable interest has been

transferred, whether or not the transferor is a member.

Sec. 3. NEW SECTION. 489.103 KNOWLEDGE — NOTICE. 1. A person knows a fact when the person has or is any of the following: a. Has actual knowledge of it. b. Is deemed to know it under subsection 4, paragraph “a”, or law other than this chapter. 2. A person has notice of a fact when the person has or is any of the following: a. Has reason to know the fact from all of the facts known to the person at the time in ques-

tion. b. Is deemed to have notice of the fact under subsection 4, paragraph “b”. 3. A personnotifies another of a fact by taking steps reasonably required to inform the other

person in ordinary course, whether or not the other person knows the fact. 4. A person that is not a member is deemed both of the following:

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a. To know of a limitation on authority to transfer real property as provided in section 489.302, subsection 7. b. To have notice of all of the following regarding a limited liability company’s: (1) Dissolution, ninety days after a statement of dissolution under section 489.702, subsec-

tion 2, paragraph “b”, subparagraph (1), becomes effective. (2) Termination, ninety days after a statement of termination under section 489.702, sub-

section 2, paragraph “b”, subparagraph (6), becomes effective. (3) Merger, conversion, or domestication, ninety days after articles of merger, conversion,

or domestication under article 10 become effective.

Sec. 4. NEW SECTION. 489.104 NATURE, PURPOSE, AND DURATION OF LIMITED LIABILITY COMPANY. 1. A limited liability company is an entity distinct from its members. 2. A limited liability companymay have any lawful purpose, regardless of whether for prof-

it. 3. A limited liability company has perpetual duration.

Sec. 5. NEW SECTION. 489.105 POWERS. 1. Except as otherwise provided in subsection 2, a limited liability companyhas the capacity

to sue and be sued in its own name and the power to do all things necessary or convenient to carry on its activities. 2. Until a limited liability company has or has had at least one member, the company lacks

the capacity to do any act or carry on any activity except all of the following: a. Delivering to the secretary of state for filing a statement of change under section 489.114,

anamendment to the certificate under section489.202, a statement of correctionunder section 489.206, a biennial report under section 489.209, or a statement of termination under section 489.702, subsection 2, paragraph “b”, subparagraph (6). b. Admitting a member under section 489.401. c. Dissolving under section 489.701. 3. A limited liability company that has or has had at least one member may ratify an act or

activity that occurred when the company lacked capacity under subsection 2.

Sec. 6. NEW SECTION. 489.106 GOVERNING LAW. The law of this state governs all of the following: 1. The internal affairs of a limited liability company. 2. The liability of amember asmember andamanager asmanager for thedebts, obligations,

or other liabilities of a limited liability company.

Sec. 7. NEW SECTION. 489.107 SUPPLEMENTAL PRINCIPLES OF LAW. Unless displaced by particular provisions of this chapter, the principles of law and equity

supplement this chapter.

Sec. 8. NEW SECTION. 489.108 NAME. 1. The name of a limited liability companymust contain the words “limited liability compa-

ny” or “limited company” or the abbreviation “L.L.C.”, “LLC”, “L.C.”, or “LC”. “Limited” may be abbreviated as “Ltd.”, and “company” may be abbreviated as “Co.”. 2. Unless authorized by subsection 3, the nameof a limited liability companymust be distin-

guishable in the records of the secretary of state from all of the following: a. The name of each person that is not an individual and that is incorporated, organized, or

authorized to transact business in this state. b. Each name reserved under section 489.109. 3. A limited liability company may apply to the secretary of state for authorization to use a

name that does not comply with subsection 2. The secretary of state shall authorize use of the name applied for if, as to each of the following noncomplying names:

619 LAWS OF THE EIGHTY-SECOND G.A., 2008 SESSION CH. 1162

a. The present user, registrant, or owner of the noncomplying name consents in a signed record to the use and submits an undertaking in a form satisfactory to the secretary of state to change the noncomplying name to a name that complies with subsection 2 and is distin- guishable in the records of the secretary of state from the name applied for. b. The applicant delivers to the secretary of state a certified copy of the final judgment of

a court establishing the applicant’s right to use in this state the name applied for. 4. A limited liability company may use the name, including the fictitious name, of another

entity that is used in this state if the other entity is formedunder the lawof this state or is autho- rized to transact business in this state and the proposed user limited liability company meets any of the following conditions: a. Has merged with the other entity. b. Has been formed by reorganization of the other entity. c. Has acquired all or substantially all of the assets, including the name, of the other entity. 5. This article does not control the use of fictitious names. However, if a limited liability

company uses a fictitious name in this state, it shall deliver to the secretary of state for filing a certified copy of the resolution of its members if it is member-managed or its managers if it is manager-managed, adopting the fictitious name. 6. Subject to section 489.805, this section applies to a foreign limited liability company

transactingbusiness in this statewhichhas a certificate of authority to transact business in this state or which has applied for a certificate of authority.

Sec. 9. NEW SECTION. 489.109 RESERVATION OF NAME. 1. A personmay reserve the exclusive use of the name of a limited liability company, includ-

ing a fictitious or assumed name for a foreign limited liability company whose name is not available, by delivering an application to the secretary of state for filing. The applicationmust state thenameandaddress of the applicant and thenameproposed tobe reserved. If the secre- tary of state finds that the name applied for is available, it must be reserved for the applicant’s exclusive use for a one-hundred-twenty-day period. 2. The owner of a name reserved for a limited liability companymay transfer the reservation

to another person by delivering to the secretary of state for filing a signed notice of the transfer which states the name and address of the transferee.

Sec. 10. NEW SECTION. 489.110 OPERATING AGREEMENT — SCOPE, FUNCTION, AND LIMITATIONS. 1. Except as otherwise provided in subsections 2 and 3, the operating agreement governs

all of the following: a. Relations among themembers asmembers and between themembers and the limited lia-

bility company. b. The rights and duties under this chapter of a person in the capacity of manager. c. The activities of the company and the conduct of those activities. d. The means and conditions for amending the operating agreement. 2. To the extent the operating agreement does not otherwise provide for amatter described

in subsection 1, this chapter governs the matter. 3. An operating agreement shall not do any of the following: a. Vary a limited liability company’s capacity under section 489.105 to sue and be sued in

its own name. b. Vary the law applicable under section 489.106. c. Vary the power of the court under section 489.204. d. Subject to subsections 4 through 7, eliminate the duty of loyalty, the duty of care, or any

other fiduciary duty. e. Subject to subsections 4 through 7, eliminate the contractual obligation of good faith and

fair dealing under section 489.409, subsection 4. f. Unreasonably restrict the duties and rights stated in section 489.410.

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g. Vary the power of a court to decree dissolution in the circumstances specified in section 489.701, subsection 1, paragraphs “d” and “e”. h. Vary the requirement towindupa limited liability company’s business as specified in sec-

tion 489.702, subsection 1, and subsection 2, paragraph “a”. i. Unreasonably restrict the right of a member to maintain an action under article 9. j. Restrict the right to approve a merger, conversion, or domestication under section

489.1014 to a member that will have personal liability with respect to a surviving, converted, or domesticated organization. k. Except as otherwise provided in section 489.112, subsection 2, restrict the rights under

this chapter of a person other than a member or manager. 4. If not manifestly unreasonable, the operating agreement may do any of the following: a. Restrict or eliminate the duty to do any of the following: (1) As required in section 489.409, subsection 2, paragraph “a”, and subsection 8, to account

to the limited liability company and to hold as trustee for it any property, profit, or benefit de- rived by the member in the conduct or winding up of the company’s business, from a use by themember of the company’s property, or from the appropriation of a limited liability compa- ny opportunity. (2) As required in section 489.409, subsection 2, paragraph “b”, and subsection 8, to refrain

from dealing with the company in the conduct or winding up of the company’s business as or on behalf of a party having an interest adverse to the company. (3) As required by section 489.409, subsection 2, paragraph “c”, and subsection 8, to refrain

from competing with the company in the conduct of the company’s business before the disso- lution of the company. b. Identify specific types or categories of activities that do not violate the duty of loyalty. c. Alter the duty of care, except to authorize intentional misconduct or knowing violation

of law. d. Alter any other fiduciary duty, including eliminating particular aspects of that duty. e. Prescribe the standards by which to measure the performance of the contractual obliga-

tion of good faith and fair dealing under section 489.409, subsection 4. 5. The operating agreement may specify the method by which a specific act or transaction

that would otherwise violate the duty of loyalty may be authorized or ratified by one or more disinterested and independent persons after full disclosure of all material facts. 6. To the extent the operating agreement of a member-managed limited liability company

expressly relieves a member of a responsibility that the member would otherwise have under this chapter and imposes the responsibility on one or more other members, the operating agreement may, to the benefit of the member that the operating agreement relieves of the re- sponsibility, also eliminate or limit any fiduciary duty thatwould have pertained to the respon- sibility. 7. The operating agreement may alter or eliminate the indemnification for a member or

manager provided by section 489.408, subsection 1, andmay eliminate or limit a member’s or manager’s liability to the limited liability company and members for money damages, except for any of the following: a. A breach of the duty of loyalty. b. A financial benefit received by themember ormanager towhich themember ormanager

is not entitled. c. A breach of a duty under section 489.406. d. Intentional infliction of harm on the company or a member. e. An intentional violation of criminal law. 8. The court shall decide any claim under subsection 4 that a term of an operating agree-

ment is manifestly unreasonable. All of the following apply: a. The court shall make its determination as of the time the challenged term became part

of the operating agreement and by considering only circumstances existing at that time. b. The courtmay invalidate the termonly if, in light of the purposes and activities of the lim-

ited liability company, it is readily apparent that any of the following applies:

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(1) The objective of the term is unreasonable. (2) The term is an unreasonable means to achieve the provision’s objective.

Sec. 11. NEW SECTION. 489.111 OPERATING AGREEMENT — EFFECT ON LIMITED LIABILITY COMPANY AND PERSONS BECOMING MEMBERS — PREFORMATION AGREEMENT. 1. A limited liability company is boundbyandmayenforce theoperating agreement,wheth-

er or not the company has itself manifested assent to the operating agreement. 2. A person that becomes amember of a limited liability company is deemed to assent to the

operating agreement. 3. Two or more persons intending to become the initial members of a limited liability com-

pany may make an agreement providing that upon the formation of the company the agree- ment will become the operating agreement. One person intending to become the initial mem- ber of a limited liability companymay assent to terms providing that upon the formation of the company the terms will become the operating agreement. 4. An operating agreement in a signed record that excludes modification or recision except

by a signed record cannot be otherwise modified or rescinded.

Sec. 12. NEW SECTION. 489.112 OPERATING AGREEMENT — EFFECT ON THIRD PARTIES AND RELATIONSHIP TO RECORDS EFFECTIVE ON BEHALF OF LIMITED LIA- BILITY COMPANY. 1. An operating agreement may specify that its amendment requires the approval of a per-

son that is not a party to the operating agreement or the satisfaction of a condition. An amend- ment is ineffective if its adoptiondoes not include the required approval or satisfy the specified condition. 2. The obligations of a limited liability company and itsmembers to a person in the person’s

capacity as a transferee or dissociated member are governed by the operating agreement. Subject only to any court order issued under section 489.503, subsection 2, paragraph “b”, to effectuate a charging order, an amendment to the operating agreement made after a person becomes a transferee or dissociated member is effective with regard to any debt, obligation, or other liability of the limited liability company or its members to the person in the person’s capacity as a transferee or dissociated member. 3. If a record that has been delivered by a limited liability company to the secretary of state

for filing and has become effective under this chapter contains a provision that would be inef- fective under section 489.110, subsection 3, if contained in the operating agreement, the provi- sion is likewise ineffective in the record. 4. Subject to subsection 3, if a record that has been delivered by a limited liability company

to the secretary of state for filing and has become effective under this chapter conflicts with a provision of the operating agreement, the following rules apply: a. The operating agreement prevails as tomembers, dissociatedmembers, transferees, and

managers. b. The record prevails as to other persons to the extent they reasonably rely on the record.

Sec. 13. NEW SECTION. 489.113 REGISTERED OFFICE AND REGISTERED AGENT FOR SERVICE OF PROCESS. 1. A limited liability company shall designate and continuously maintain in this state all of

the following: a. A registered office, which need not be a place of its activity in this state. b. A registered agent for service of process. 2. A foreign limited liability company that has a certificate of authority under section

489.802 shall designate and continuously maintain in this state a registered agent for service of process. 3. A registered agent for service of process of a limited liability company or foreign limited

liability companymust be an individual who is a resident of this state or other person with au- thority to transact business in this state.

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Sec. 14. NEW SECTION. 489.114 CHANGE OF REGISTERED OFFICE OR REGISTER- ED AGENT FOR SERVICE OF PROCESS. 1. A limited liability company or foreign limited liability companymay change its registered

office, its registered agent for service of process, or the address of its registered agent for ser- vice of process bydelivering to the secretary of state for filing a statement of change containing all of the following: a. The name of the company. b. The street and mailing addresses of its current registered office. c. If the current registered office is to be changed, the street and mailing addresses of the

new registered office. d. The name and street and mailing addresses of its current registered agent for service of

process. e. If the current registered agent for service of process or an address of the registered agent

is to be changed, the new information. 2. Subject to section 489.205, subsection 3, a statement of change is effective when filed by

the secretary of state.

Sec. 15. NEW SECTION. 489.115 RESIGNATION OF REGISTERED AGENT FOR SER- VICE OF PROCESS. 1. To resign as a registered agent for service of process of a limited liability company or for-

eign limited liability company, the registered agent must deliver to the secretary of state for filing a statement of resignation containing the company name and stating that the registered agent is resigning. 2. The secretary of state shall file a statement of resignation delivered under subsection 1

and mail or otherwise provide or deliver a copy to the registered office of the limited liability company or foreign limited liability company and another copy to the principal office of the company if the mailing address of the principal office appears in the records of the secretary of state and is different from the mailing address of the registered office. 3. An agency for service of process terminates on the earlier of the following: a. The thirty-first day after the secretary of state files the statement of resignation. b. When a record designating a new registered agent for service of process is delivered to

the secretary of state for filingonbehalf of the limited liability companyandbecomes effective.

Sec. 16. NEW SECTION. 489.116 SERVICE OF PROCESS. 1. A registered agent for service of process appointed by a limited liability company or for-

eign limited liability company is an agent of the company for service of any process, notice, or demand required or permitted by law to be served on the company. 2. If a limited liability companyhas no registered agent, or the agent cannotwith reasonable

diligence be served, the limited liability companymaybe served by registered or certifiedmail, return receipt requested, addressed to the limited liability company at its principal office. 3. Service is effected under subsection 2 at the earliest of any of the following: a. The date the limited liability company or foreign limited liability company receives the

process, notice, or demand. b. The date shown on the return receipt, if signed on behalf of the company. c. Five days after the process, notice, or demand is deposited with the United States postal

service, if correctly addressed and with sufficient postage. 4. This sectiondoesnot affect the right to serveprocess, notice, or demand inanyotherman-

ner provided by law.

Sec. 17. NEW SECTION. 489.117 FEES. 1. The secretary of state shall collect the following fees when documents described in this

subsection are delivered to the secretary’s office for filing: a. Certificate of organization $ 50. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . b. Application for use of indistinguishable name $ 10. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . c. Application for reserved name $ 10. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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d. Notice of transfer of reserved name $ 10. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . e. Application for registered name per month or part thereof No fee. . . . . . . . . . . . . . . . . . f. Application for renewal of registered name No fee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . g. Statement of change of registered agent or registered office or both No fee. . . . . . . . . h. Registered agent’s statement of change of registered office for each

affected limited liability company No fee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . i. Registered agent’s statement of resignation No fee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . j. Amendment to certificate of organization $ 50. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . k. Restatement of certificate of organization with amendment of

certificate $ 50. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . l. Articles of merger $ 50. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . m. Statement of dissolution $ 5. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . n. Declaration of administrative dissolution No fee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . o. Application for reinstatement following administrative dissolution $ 5. . . . . . . . . . . . p. Certificate of reinstatement No fee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . q. Application for certificate of authority $ 100. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . r. Application for amended certificate of authority $ 100. . . . . . . . . . . . . . . . . . . . . . . . . . . . . s. Statement of cancellation $ 10. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . t. Certificate of revocation of authority to transact business No fee. . . . . . . . . . . . . . . . . . . u. Statement of correction $ 5. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . v. Application for certificate of existence or authorization $ 5. . . . . . . . . . . . . . . . . . . . . . w. Any other document required or permitted to be filed by this chapter $ 5. . . . . . . . . 2. The secretary of state shall collect a fee of five dollars each time process is served on the

secretary under this chapter. The party to a proceeding causing service of process is entitled to recover this fee as costs if the party prevails in the proceeding. 3. The secretary of state shall collect the following fees for copying and certifying the copy

of any filed document relating to a domestic or foreign limited liability company: a. One dollar a page for copying. b. Five dollars for the certificate.

ARTICLE 2 FORMATION — CERTIFICATE OF ORGANIZATION

AND OTHER FILINGS

Sec. 18. NEW SECTION. 489.201 FORMATION OF LIMITED LIABILITY COMPANY — CERTIFICATE OF ORGANIZATION. 1. One ormore personsmay act as organizers to form a limited liability company by signing

and delivering to the secretary of state for filing a certificate of organization. 2. A certificate of organization must state all of the following: a. The name of the limited liability company, which must comply with section 489.108. b. The street and mailing addresses of the initial registered office and the name and street

and mailing addresses of the initial registered agent for service of process of the company. 3. Subject to section 489.112, subsection 3, a certificate of organization may also contain

statements as to matters other than those required by subsection 2. However, a statement in a certificate of organization is not effective as a statement of authority. 4. A limited liability company is formed when the secretary of state has filed the certificate

of organization, unless the certificate states a delayed effective date pursuant to section 489.205, subsection3. If the certificate states adelayed effectivedate, a limited liability compa- ny is not formed if, before the certificate takes effect, a statement of cancellation is signed and delivered to the secretary of state for filing and the secretary of state files the certificate. 5. Subject to any delayed effective date and except in a proceeding by this state to dissolve

a limited liability company, the filing of the certificate of organization by the secretary of state is conclusiveproof that theorganizer satisfied all conditions to the formation of a limited liabil- ity company.

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Sec. 19. NEW SECTION. 489.202 AMENDMENT OR RESTATEMENT OF CERTIFI- CATE OF ORGANIZATION. 1. A certificate of organization may be amended or restated at any time. 2. To amend its certificate of organization, a limited liability company must deliver to the

secretary of state for filing an amendment stating all of the following: a. The name of the company. b. The date of filing of its certificate of organization. c. The changes the amendmentmakes to the certificate asmost recently amended or restat-

ed. 3. To restate its certificate of organization, a limited liability company must deliver to the

secretary of state for filing a restatement, designated as such in its heading, stating all of the following: a. In the heading or an introductory paragraph, the company’s present name and the date

of the filing of the company’s initial certificate of organization. b. If the company’s name has been changed at any time since the company’s formation,

each of the company’s former names. c. The changes the restatementmakes to the certificate asmost recently amended or restat-

ed. 4. Subject to section 489.112, subsection 3, and section 489.205, subsection 3, an amend-

ment to or restatement of a certificate of organization is effective when filed by the secretary of state. 5. If amember of amember-managed limited liability company, or amanager of amanager-

managed limited liability company, knows that any information in a filed certificate of organi- zation was inaccurate when the certificate was filed or has become inaccurate owing to changed circumstances, the member or manager shall promptly do any of the following: a. Cause the certificate to be amended. b. If appropriate, deliver to the secretary of state for filing a statement of change under sec-

tion 489.114 or a statement of correction under section 489.206.

Sec. 20. NEWSECTION. 489.203 SIGNINGOFRECORDSTOBEDELIVEREDFORFIL- ING TO SECRETARY OF STATE. 1. A record delivered to the secretary of state for filing pursuant to this chapter must be

signed as follows: a. Except as otherwise provided in paragraphs “b” and “c”, a record signed on behalf of a

limited liability company must be signed by a person authorized by the company. b. A limited liability company’s initial certificate of organization must be signed by at least

one person acting as an organizer. c. A record filed on behalf of a limited liability company that does not have or has not had

at least one member must be signed by an organizer. d. A record filed on behalf of a dissolved limited liability company that has no members

must be signed by the person winding up the company’s activities under section 489.702, sub- section 3, or a person appointed under section 489.702, subsection 4, to wind up those activi- ties. e. A statement of cancellation under section 489.201, subsection 4, must be signed by each

organizer that signed the initial certificate of organization, but a personal representative of a deceased or incompetent organizer may sign in the place of the decedent or incompetent. f. A statement of denial by a person under section 489.303 must be signed by that person. g. Any other record must be signed by the person on whose behalf the record is delivered

to the secretary of state. 2. Any record filed under this chapter may be signed by an agent.

Sec. 21. NEW SECTION. 489.204 SIGNING AND FILING PURSUANT TO JUDICIAL ORDER. 1. If a person required by this chapter to sign a record or deliver a record to the secretary

625 LAWS OF THE EIGHTY-SECOND G.A., 2008 SESSION CH. 1162

of state for filing under this chapter does not do so, any other person that is aggrieved may petition the district court to order one or more of the following: a. The person to sign the record. b. The person to deliver the record to the secretary of state for filing. c. The secretary of state to file the record unsigned. 2. If a petitioner under subsection 1 is not the limited liability company or foreign limited

liability company to which the record pertains, the petitioner shall make the company a party to the action. 3. If a district court orders an unsigned record to be delivered to the secretary of state, the

secretary of state shall file the record and the court order upon receipt.

Sec. 22. NEW SECTION. 489.205 DELIVERY TO AND FILING OF RECORDS BY SEC- RETARY OF STATE — EFFECTIVE TIME AND DATE. 1. A record authorized or required to be delivered to the secretary of state for filing under

this chapter must be captioned to describe the record’s purpose, be in a medium permitted by the secretaryof state, andbedelivered to the secretary of state. If the filing feeshavebeenpaid, unless the secretary of state determines that a record does not comply with the filing require- ments of this chapter, the secretary of state shall file the record and any of the following ap- plies: a. For a statement of denial under section 489.303, send a copy of the filed statement and

a receipt for the fees to the person on whose behalf the statement was delivered for filing and to the limited liability company. b. For all other records, senda copyof the filed record and a receipt for the fees to theperson

on whose behalf the record was filed. 2. Upon request and payment of the requisite fee, the secretary of state shall send to the re-

quester a certified copy of a requested record. 3. Except as otherwise provided in sections 489.115 and 489.206, and except for a certificate

of organization that contains a statement as provided in section 489.201, subsection 4, a record delivered to the secretary of state for filing under this chapter may specify an effective time and a delayed effective date. Subject to section 489.115, section 489.201, subsection 4, and section 489.206, a record filed by the secretary of state is effective as follows: a. If the record does not specify either an effective time or a delayed effective date, on the

date and at the time the record is filed as evidenced by the secretary of state’s endorsement of the date and time on the record. b. If the record specifies an effective time but not a delayed effective date, on the date the

record is filed at the time specified in the record. c. If the record specifies a delayed effective date but not an effective time, at 12:01 a.m. on

the earlier of any of the following: (1) The specified date. (2) The ninetieth day after the record is filed. d. If the record specifies an effective time and a delayed effective date, at the specified time

on the earlier of any of the following: (1) The specified date. (2) The ninetieth day after the record is filed. e. A delayed effective date for a record shall not be later than the ninetieth day after the date

on which it is filed.

Sec. 23. NEW SECTION. 489.206 CORRECTING FILED RECORD. 1. A limited liability company or foreign limited liability company may deliver to the secre-

tary of state for filing a statement of correction to correct a record previously delivered by the company to the secretary of state and filed by the secretary of state, if at the time of filing the record contained inaccurate information or was defectively signed. 2. A statement of correction under subsection 1 shall not have a delayed effective date and

must do all of the following:

626LAWS OF THE EIGHTY-SECOND G.A., 2008 SESSIONCH. 1162

a. Describe the record to be corrected, including its filing date, or attach a copy of the record as filed. b. Specify the inaccurate information and the reason it is inaccurate or themanner inwhich

the signing was defective. c. Correct the defective signature or inaccurate information. 3. When filed by the secretary of state, a statement of correction under subsection 1 is effec-

tive retroactively as of the effective date of the record the statement corrects, but the statement is effective when filed as to all of the following: a. For the purposes of section 489.103, subsection 4. b. As to persons that previously relied on the uncorrected record and would be adversely

affected by the retroactive effect.

Sec. 24. NEW SECTION. 489.207 PENALTY FOR SIGNING FALSE RECORD. 1. A person commits an offense if that person signs a record the personknows is false in any

material respect with intent that the record be delivered to the secretary of state for filing. 2. An offense under this section is a seriousmisdemeanor punishable by a fine not to exceed

one thousand dollars.

Sec. 25. NEW SECTION. 489.208 CERTIFICATE OF EXISTENCE OR AUTHORIZA- TION. 1. The secretary of state, upon request and payment of the requisite fee, shall furnish to any

person a certificate of existence for a limited liability company if the records filed in the office of the secretary of state show that the company has been formed under section 489.201 and the secretary of state has not filed a statement of termination pertaining to the company. A certificate of existence must state all of the following: a. The company’s name. b. That the companywas duly formed under the laws of this state and the date of formation. c. Whether all fees, taxes, and penalties due under this chapter or other law to the secretary

of state have been paid. d. Whether the company’smost recent biennial report required by section 489.209 has been

filed by the secretary of state. e. Whether the secretary of state has administratively dissolved the company. f. Whether the companyhas delivered to the secretary of state for filing a statement of disso-

lution. g. That a statement of termination has not been filed by the secretary of state. h. Other facts of record in the office of the secretary of state which are specified by the per-

son requesting the certificate. 2. The secretary of state, upon request and payment of the requisite fee, shall furnish to any

person a certificate of authorization for a foreign limited liability company if the records filed in the office of the secretary of state show that the secretary of state has filed a certificate of authority, hasnot revoked the certificate of authority, andhas not filed anotice of cancellation. A certificate of authorization must state all of the following: a. The company’s name and any alternate name adopted under section 489.805, subsection

1, for use in this state. b. That the company is authorized to transact business in this state. c. Whether all fees, taxes, and penalties due under this chapter or other law to the secretary

of state have been paid. d. Whether the company’smost recent biennial report required by section 489.209 has been

filed by the secretary of state. e. That the secretary of state has not revoked the company’s certificate of authority and has

not filed a notice of cancellation. f. Other facts of record in theofficeof the secretaryof statewhichare specifiedby theperson

requesting the certificate. 3. Subject to anyqualification stated in the certificate, a certificate of existence or certificate

of authorization issued by the secretary of state is conclusive evidence that the limited liability

627 LAWS OF THE EIGHTY-SECOND G.A., 2008 SESSION CH. 1162

company is in existence or the foreign limited liability company is authorized to transact busi- ness in this state.

Sec. 26. NEW SECTION. 489.209 BIENNIAL REPORT FOR SECRETARY OF STATE. 1. A limited liability company or a foreign limited liability company authorized to transact

business in this state shall deliver to the secretary of state for filing a biennial report that states all of the following: a. The name of the company. b. The street and mailing addresses of the company’s registered office and the name and

street and mailing addresses of its registered agent for service of process in this state. c. The street and mailing addresses of its principal office. d. In the case of a foreign limited liability company, the state or other jurisdiction under

whose law the company is formed and any alternate nameadopted under section 489.805, sub- section 1. 2. Information in a biennial report under this section must be current as of the date the re-

port is delivered to the secretary of state for filing. 3. The first biennial report under this section must be delivered to the secretary of state be-

tween January 1 and April 1 of the first odd-numbered year following the calendar year in which a limited liability companywas formed or a foreign limited liability companywas autho- rized to transact business. A subsequent biennial report must be delivered to the secretary of state between January 1 and April 1 of each following odd-numbered calendar year. 4. If a biennial report under this sectiondoesnot contain the information required in subsec-

tion 1, the secretary of state shall promptly notify the reporting limited liability company or foreign limited liability company and return the report to it for correction. If the report is cor- rected to contain the information required in subsection 1 and delivered to the secretary of state within thirty days after the effective date of the notice, it is timely delivered. 5. If a biennial report under this section contains an address of a registered office or the

nameor address of a registered agent for service of processwhich differs from the information shown in the records of the secretary of state immediately before the biennial report becomes effective, the differing information in the biennial report is considered a statement of change under section 489.114.

ARTICLE 3 RELATIONS OF MEMBERS AND MANAGERS

TO PERSONS DEALING WITH LIMITED LIABILITY COMPANY

Sec. 27. NEW SECTION. 489.301 NO AGENCY POWER OF MEMBER AS MEMBER. 1. Amember is not an agent of a limited liability company solely by reason of being amem-

ber. 2. A person’s status as a member does not prevent or restrict law other than this chapter

from imposing liability on a limited liability company because of the person’s conduct.

Sec. 28. NEW SECTION. 489.302 STATEMENT OF AUTHORITY. 1. A limited liability company may deliver to the secretary of state for filing a statement of

authority. All of the following apply to the statement: a. Itmust include the name of the company and the street andmailing addresses of its regis-

tered office. b. With respect to any position that exists in or with respect to the company, it may state the

authority, or limitations on the authority, of all persons holding the position to do any of the following: (1) Execute an instrument transferring real property held in the name of the company. (2) Enter into other transactions on behalf of, or otherwise act for or bind, the company. c. It may state the authority, or limitations on the authority, of a specific person to do any

of the following: (1) Execute an instrument transferring real property held in the name of the company.

628LAWS OF THE EIGHTY-SECOND G.A., 2008 SESSIONCH. 1162

(2) Enter into other transactions on behalf of, or otherwise act for or bind, the company. 2. To amend or cancel a statement of authority filed by the secretary of state under section

489.205, subsection1, a limited liability companymust deliver to the secretary of state for filing an amendment or cancellation stating all of the following: a. The name of the company. b. The street and mailing addresses of the company’s registered office. c. The caption of the statement being amendedor canceled and the date the statement being

affected became effective. d. The contents of the amendment or a declaration that the statement being affected is can-

celed. 3. A statement of authority affects only the power of a person to bind a limited liability com-

pany to persons that are not members. 4. Subject to subsection3and section489.103, subsection4, and except as otherwiseprovid-

ed in subsections 6, 7, and 8, a limitation on the authority of a person or a position contained in an effective statement of authority is not by itself evidence of knowledge or notice of the limitation by any person. 5. Subject to subsection 3, a grant of authority not pertaining to a transfer of real property

and contained in an effective statement of authority is conclusive in favor of a person that gives value in reliance on the grant, except to the extent that when the person gives value and any of the following applies: a. The person has knowledge to the contrary. b. The statement has been canceled or restrictively amended under subsection 2. c. A limitation on the grant is contained in another statement of authority that becameeffec-

tive after the statement containing the grant became effective. 6. Subject to subsection 3, an effective statement of authority that grants authority to trans-

fer real property held in the name of the limited liability company and that is recorded by certi- fied copy in the office for recording transfers of the real property is conclusive in favor of a person that gives value in reliance on the grant without knowledge to the contrary, except to the extent that when the person gives value and any of the following applies: a. The statement has been canceled or restrictively amended under subsection 2 and a certi-

fied copy of the cancellation or restrictive amendment has been recorded in the office for re- cording transfers of the real property. b. A limitation on thegrant is contained in another statement of authority that becameeffec-

tive after the statement containing the grant became effective and a certified copy of the later- effective statement is recorded in the office for recording transfers of the real property. 7. Subject to subsection 3, if a certified copy of aneffective statement containing a limitation

on the authority to transfer real property held in the name of a limited liability company is re- corded in the office for recording transfers of that real property, all persons are deemed to know of the limitation. 8. Subject to subsection 9, an effective statement of dissolution or statement of termination

is a cancellation of any filed statement of authority for the purposes of subsection 6 and is a limitation on authority for the purposes of subsection 7. 9. After a statement of dissolution becomes effective, a limited liability companymay deliv-

er to the secretary of state for filing and, if appropriate, may record a statement of authority that is designated as a post-dissolution statement of authority. The statement operates as pro- vided in subsections 6 and 7. 10. Unless earlier canceled, an effective statement of authority is canceled by operation of

law five years after the date on which the statement, or its most recent amendment, becomes effective. This cancellation operates without need for any recording under subsection 6 or 7. 11. An effective statement of denial operates as a restrictive amendment under this section

and may be recorded by certified copy for the purposes of subsection 6, paragraph “a”.

Sec. 29. NEW SECTION. 489.303 STATEMENT OF DENIAL. A person named in a filed statement of authority granting that person authority may deliver

to the secretary of state for filing a statement of denial that does all of the following:

629 LAWS OF THE EIGHTY-SECOND G.A., 2008 SESSION CH. 1162

1. Provides the name of the limited liability company and the caption of the statement of au- thority to which the statement of denial pertains. 2. Denies the grant of authority.

Sec. 30. NEW SECTION. 489.304 LIABILITY OF MEMBERS AND MANAGERS. 1. For debts, obligations, or other liabilities of a limited liability company, whether arising

in contract, tort, or otherwise all of the following apply: a. They are solely the debts, obligations, or other liabilities of the company. b. They do not become the debts, obligations, or other liabilities of a member or manager

solely by reason of the member acting as a member or manager acting as a manager. 2. The failure of a limited liability company to observe any particular formalities relating to

the exercise of its powers or management of its activities is not a ground for imposing liability on the members or managers for the debts, obligations, or other liabilities of the company.

ARTICLE 4 RELATIONS OF MEMBERS TO EACH OTHER AND

TO LIMITED LIABILITY COMPANY

Sec. 31. NEW SECTION. 489.401 BECOMING MEMBER. 1. If a limited liability company is to have only one member upon formation, a person be-

comes the member as agreed by that person and the organizer of the company or a majority of organizers if more than one. That person and the organizermay be, but need not be, differ- ent persons. If different, the organizer acts on behalf of the initial member. 2. If a limited liability company is to havemore thanonemember upon formation, those per-

sons become members as agreed by the persons before the formation of the company. The organizer acts on behalf of the persons in forming the company and may be, but need not be, one of the persons. 3. If a limited liability company has nomembers upon formation, a person becomes amem-

ber of the limited liability companywith the consent of the organizer or amajority of the orga- nizers if more than one. The organizersmay consent tomore than one person simultaneously becoming the company’s initial members. 4. After formation of a limited liability company, a person becomes a member upon any of

the following: a. As provided in the operating agreement. b. As the result of a transaction effective under article 10. c. With the consent of all the members. d. If, within ninety consecutive days after the company ceases to have anymembers and all

of the following occur: (1) The last person to have been amember, or the legal representative of that person, desig-

nates a person to become a member. (2) The designated person consents to become a member. 5. A person may become a member without acquiring a transferable interest and without

making or being obligated to make a contribution to the limited liability company.

Sec. 32. NEW SECTION. 489.402 FORM OF CONTRIBUTION. A contribution may consist of tangible or intangible property or other benefit to a limited

liability company, including money, services performed, promissory notes, other agreements to contribute money or property, and contracts for services to be performed.

Sec. 33. NEW SECTION. 489.403 LIABILITY FOR CONTRIBUTIONS. 1. A person’s obligation tomake a contribution to a limited liability company is not excused

by the person’s death, disability, or other inability to perform personally. If a person does not make a required contribution, the person or the person’s estate is obligated to contributemon- ey equal to the value of the part of the contribution which has not been made, at the option of the company.

630LAWS OF THE EIGHTY-SECOND G.A., 2008 SESSIONCH. 1162

2. A creditor of a limited liability companywhich extends credit or otherwise acts in reliance on an obligation described in subsection 1 may enforce the obligation. 3. An operating agreement may provide that the interest of any member who fails to make

a contribution that the member is obligated to make is subject to specified penalties for, or specified consequences of, such failure. The penalty or consequencemay take the form of re- ducingor eliminating thedefaultingmember’s proportionate interest in a limited liability com- pany, subordinating the member’s interest to that of a nondefaulting member, a forced sale of the member’s interest, forfeiture of the member’s interest, the lending by other members of the amount necessary to meet the member’s commitment, a fixing of the value of the mem- ber’s interest by appraisal or by formula and redemption, or sale of the member’s interest at such value or other penalty or consequence.

Sec. 34. NEW SECTION. 489.404 SHARING OF AND RIGHT TO DISTRIBUTIONS BE- FORE DISSOLUTION. 1. Any distributions made by a limited liability company before its dissolution and winding

up must be in equal shares among members and dissociated members, except to the extent necessary to comply with any transfer effective under section 489.502 and any charging order in effect under section 489.503. 2. A person has a right to a distribution before the dissolution and winding up of a limited

liability company only if the company decides tomake an interim distribution. A person’s dis- sociation does not entitle the person to a distribution. 3. A person does not have a right to demand or receive a distribution from a limited liability

company in any formother thanmoney. Except as otherwise provided in section 489.708, sub- section 3, a limited liability company may distribute an asset in kind if each part of the asset is fungible with each other part and each person receives a percentage of the asset equal in value to the person’s share of distributions. 4. If amember or transferee becomes entitled to receive a distribution, themember or trans-

feree has the status of, and is entitled to all remedies available to, a creditor of the limited liabil- ity company with respect to the distribution.

Sec. 35. NEW SECTION. 489.405 LIMITATIONS ON DISTRIBUTION. 1. A limited liability company shall not make a distribution if after the distribution any of

the following applies: a. The companywould not be able to pay its debts as they becomedue in the ordinary course

of the company’s activities. b. The company’s total assets would be less than the sum of its total liabilities plus the

amount that would be needed, if the companywere to be dissolved, wound up, and terminated at the time of the distribution, to satisfy the preferential rights upon dissolution, winding up, and termination ofmembers whose preferential rights are superior to those of persons receiv- ing the distribution. 2. A limited liability companymay base a determination that a distribution is not prohibited

under subsection 1 on financial statements prepared on the basis of accounting practices and principles that are reasonable in the circumstances or on a fair valuation or other method that is reasonable under the circumstances. 3. Except as otherwiseprovided in subsection5, the effect of a distributionunder subsection

1 is measured as follows: a. In the case of a distribution by purchase, redemption, or other acquisition of a transfer-

able interest in the company, as of the date money or other property is transferred or debt in- curred by the company. b. In all other cases, as follows: (1) The date that distribution is authorized, if the payment occurs within one hundred

twenty days after that date. (2) The date that payment is made, if the payment occurs more than one hundred twenty

days after the distribution is authorized.

631 LAWS OF THE EIGHTY-SECOND G.A., 2008 SESSION CH. 1162

4. A limited liability company’s indebtedness to a member incurred by reason of a distribu- tion made in accordance with this section is at parity with the company’s indebtedness to its general, unsecured creditors. 5. A limited liability company’s indebtedness, including indebtedness issued in connection

with or as part of a distribution, is not a liability for purposes of subsection 1 if the terms of the indebtedness provide that payment of principal and interest are made only to the extent that a distribution could bemade tomembers under this section. If indebtedness is issued as a dis- tribution, eachpayment of principal or interest on the indebtedness is treated as a distribution, the effect of which is measured on the date the payment is made. 6. In subsection 1, “distribution” does not include amounts constituting reasonable com-

pensation for present or past services or reasonable payments made in the ordinary course of business under a bona fide retirement plan or other benefits program.

Sec. 36. NEW SECTION. 489.406 LIABILITY FOR IMPROPER DISTRIBUTIONS. 1. Except as otherwise provided in subsection 2, if amember of amember-managed limited

liability company or manager of a manager-managed limited liability company consents to a distribution made in violation of section 489.405 and in consenting to the distribution fails to comply with section 489.409, the member or manager is personally liable to the company for the amount of the distribution that exceeds the amount that could have been distributed with- out the violation of section 489.405. 2. To the extent the operating agreement of a member-managed limited liability company

expressly relieves amember of the authority and responsibility to consent to distributions and imposes that authority and responsibility on one or more other members, the liability stated in subsection1applies to theothermembers andnot themember that theoperatingagreement relieves of authority and responsibility. 3. A person that receives a distribution knowing that the distribution to that person was

made in violation of section 489.405 is personally liable to the limited liability company but only to the extent that the distribution received by the person exceeded the amount that could have been properly paid under section 489.405. 4. A person against which an action is commenced because the person is liable under sub-

section 1 may do all of the following: a. Implead any other person that is subject to liability under subsection1 and seek to compel

contribution from the person. b. Implead any person that received a distribution in violation of subsection 3 and seek to

compel contribution from the person in the amount the person received in violation of subsec- tion 3. 5. An action under this section is barred if not commenced within two years after the distri-

bution.

Sec. 37. NEWSECTION. 489.407 MANAGEMENTOF LIMITED LIABILITY COMPANY. 1. A limited liability company is a member-managed limited liability company unless the

operating agreement does any of the following: a. Expressly provides that any of the following apply: (1) The company is or will be “manager-managed”. (2) The company is or will be “managed by managers”. (3) Management of the company is or will be “vested in managers”. b. Includes words of similar import. 2. In a member-managed limited liability company, all of the following rules apply: a. The management and conduct of the company are vested in the members. b. Each member has equal rights in the management and conduct of the company’s activi-

ties. c. A difference arising amongmembers as to amatter in the ordinary course of the activities

of the company may be decided by a majority of the members. d. Anact outside the ordinary courseof the activities of the company, including selling, leas-

632LAWS OF THE EIGHTY-SECOND G.A., 2008 SESSIONCH. 1162

ing, exchanging, or otherwise disposing of all, or substantially all, of the company’s property, with or without the goodwill, may be undertaken only with the consent of all members. e. The operating agreement may be amended only with the consent of all members. f. Approve a merger, conversion, or domestication under article 10. 3. In a manager-managed limited liability company, all of the following rules apply: a. Except as otherwise expressly provided in this chapter, any matter relating to the activi-

ties of the company is decided exclusively by the managers. b. Each manager has equal rights in the management and conduct of the activities of the

company. c. Adifference arising amongmanagers as to amatter in theordinary courseof the activities

of the company may be decided by a majority of the managers. d. The consent of all members is required to do any of the following: (1) Sell, lease, exchange, or otherwise dispose of all, or substantially all, of the company’s

property,with orwithout the goodwill, outside the ordinary course of the company’s activities. (2) Approve a merger, conversion, or domestication under article 10. (3) Undertake any other act outside the ordinary course of the company’s activities. (4) Amend the operating agreement. e. A manager may be chosen at any time by the consent of a majority of the members and

remains a manager until a successor has been chosen, unless the manager at an earlier time resigns, is removed, or dies, or, in the case of a manager that is not an individual, terminates. A manager may be removed at any time by the consent of a majority of the members without notice or cause. f. A person need not be a member to be a manager, but the dissociation of a member that

is also a manager removes the person as a manager. If a person that is both a manager and a member ceases to be a manager, that cessation does not by itself dissociate the person as a member. g. A person’s ceasing to be a manager does not discharge any debt, obligation, or other lia-

bility to the limited liability company ormemberswhich the person incurredwhile amanager. 4. An action requiring the consent of members under this chapter may be taken without a

meeting, and amembermay appoint a proxy or other agent to consent or otherwise act for the member by signing an appointing record, personally or by the member’s agent. 5. The dissolution of a limited liability company does not affect the applicability of this sec-

tion. However, a person that wrongfully causes dissolution of the company loses the right to participate in management as a member and a manager. 6. This chapter does not entitle a member to remuneration for services performed for a

member-managed limited liability company, except for reasonable compensation for services rendered in winding up the activities of the company.

Sec. 38. NEW SECTION. 489.408 INDEMNIFICATION AND INSURANCE. 1. A limited liability company shall reimburse for any paymentmade and indemnify for any

debt, obligation, or other liability incurred by a member of a member-managed company or themanager of amanager-managed company in the course of the member’s or manager’s ac- tivities on behalf of the company, if, in making the payment or incurring the debt, obligation, or other liability, the member or manager complied with the duties stated in sections 489.405 and 489.409. 2. A limited liability companymay purchase andmaintain insurance on behalf of amember

or manager of the company against liability asserted against or incurred by the member or manager in that capacity or arising from that status even if, under section 489.110, subsection 7, the operating agreement could not eliminate or limit the person’s liability to the company for the conduct giving rise to the liability.

Sec. 39. NEW SECTION. 489.409 STANDARDS OF CONDUCT FOR MEMBERS AND MANAGERS. 1. A member of a member-managed limited liability company owes to the company and,

633 LAWS OF THE EIGHTY-SECOND G.A., 2008 SESSION CH. 1162

subject to section 489.901, subsection 2, the other members the fiduciary duties of loyalty and care stated in subsections 2 and 3. 2. The duty of loyalty of amember in amember-managed limited liability company includes

all of the following duties: a. To account to the company and to hold as trustee for it any property, profit, or benefit de-

rived by the member regarding any of the following: (1) In the conduct or winding up of the company’s activities. (2) From a use by the member of the company’s property. (3) From the appropriation of a limited liability company opportunity. b. To refrain from dealingwith the company in the conduct or winding up of the company’s

activities as or on behalf of a person having an interest adverse to the company. c. To refrain from competing with the company in the conduct of the company’s activities

before the dissolution of the company. 3. Subject to the business judgment rule as stated in subsection 7, the duty of care of amem-

ber of amember-managed limited liability company in the conduct andwinding up of the com- pany’s activities is to act with the care that a person in a like position would reasonably exer- cise under similar circumstances and in amanner themember reasonably believes to be in the best interests of the company. In discharging this duty, amembermay rely in good faith upon opinions, reports, statements, or other information provided by another person that themem- ber reasonably believes is a competent and reliable source for the information. 4. Amember in amember-managed limited liability company or amanager-managed limit-

ed liability company shall discharge the duties under this chapter or under the operating agreement and exercise any rights consistently with the contractual obligation of good faith and fair dealing. 5. It is a defense to a claim under subsection 2, paragraph “b”, and any comparable claim

in equity or at common law that the transaction was fair to the limited liability company. 6. All of the members of a member-managed limited liability company or a manager-man-

aged limited liability companymay authorize or ratify, after full disclosure of allmaterial facts, a specific act or transaction that otherwise would violate the duty of loyalty. 7. a. A member satisfies the duty of care in subsection 3 if all of the following apply: (1) The member is not interested in the subject matter of the business judgment. (2) The member is informed with respect to the subject of the business judgment to the ex-

tent the member reasonably believes to be appropriate in the circumstances. (3) The member has a rational basis for believing that the business judgment is in the best

interests of the limited liability company. b. A person challenging the business judgment of a member has the burden of proving a

breach of the duty of care, and in a damage action, the burden of proving that the breach was the legal cause of damage suffered by the limited liability company. 8. In a manager-managed limited liability company, all of the following rules apply: a. Subsections 1, 2, 3, 5, and 7 apply to the manager or managers and not the members. b. Theduty stated under subsection 2, paragraph “c”, continues until windingup is complet-

ed. c. Subsection 4 applies to the members and managers. d. Subsection 6 applies only to the members. e. Amember does not have any fiduciary duty to the company or to any othermember solely

by reason of being a member.

Sec. 40. NEW SECTION. 489.410 RIGHT OF MEMBERS, MANAGERS, AND DISSOCI- ATED MEMBERS TO INFORMATION. 1. In a member-managed limited liability company, all of the following rules apply: a. On reasonable notice, a member may inspect and copy during regular business hours, at

a reasonable location specified by the company, any record maintained by the company regarding the company’s activities, financial condition, and other circumstances, to the extent

634LAWS OF THE EIGHTY-SECOND G.A., 2008 SESSIONCH. 1162

the information is material to the member’s rights and duties under the operating agreement or this chapter. b. The company shall furnish to each member all of the following: (1) Without demand, any information concerning the company’s activities, financial condi-

tion, and other circumstanceswhich the companyknowsand ismaterial to the proper exercise of themember’s rights and duties under the operating agreement or this chapter, except to the extent the company can establish that it reasonably believes the member already knows the information. (2) Ondemand, any other information concerning the company’s activities, financial condi-

tion, and other circumstances, except to the extent the demand or information demanded is unreasonable or otherwise improper under the circumstances. c. The duty to furnish information under paragraph “b” also applies to each member to the

extent the member knows any of the information described in paragraph “b”. 2. In a manager-managed limited liability company, all of the following rules apply: a. The informational rights stated in subsection 1 and the duty stated in subsection 1, para-

graph “c”, apply to the managers and not the members. b. During regular business hours and at a reasonable location specified by the company, a

member may obtain from the company and inspect and copy full information regarding the activities, financial condition, and other circumstances of the company as is just and reason- able if all of the following apply: (1) The member seeks the information for a purpose material to the member’s interest as

a member. (2) Themembermakes a demand in a record received by the company, describingwith rea-

sonable particularity the information sought and the purpose for seeking the information. (3) The information sought is directly connected to the member’s purpose. c. Within ten days after receiving a demand pursuant to paragraph “b”, subparagraph (2),

the company shall in a record inform the member that made the demand all of the following: (1) Of the information that the company will provide in response to the demand and when

and where the company will provide the information. (2) If the company declines to provide any demanded information, the company’s reasons

for declining. d. Whenever this chapter or an operating agreement provides for amember to give or with-

hold consent to a matter, before the consent is given or withheld, the company shall, without demand, provide thememberwith all information that is known to the company and ismateri- al to the member’s decision. 3. On ten days’ demand made in a record received by a limited liability company, a disso-

ciatedmembermay have access to information towhich the personwas entitled while amem- ber if the informationpertains to theperiodduringwhich thepersonwas amember, theperson seeks the information in good faith, and the person satisfies the requirements imposed on a member by subsection 2, paragraph “b”. The company shall respond to ademandmadepursu- ant to this subsection in the manner provided in subsection 2, paragraph “c”. 4. A limited liability companymay charge a person that makes a demand under this section

the reasonable costs of copying, limited to the costs of labor and material. 5. A member or dissociated member may exercise rights under this section through an

agent or, in the case of an individual under legal disability, a legal representative. Any restric- tion or condition imposed by the operating agreement or under subsection 7 applies both to the agent or legal representative and the member or dissociated member. 6. The rights under this section do not extend to a person as transferee. 7. In addition to any restriction or condition stated in its operating agreement, a limited lia-

bility company, as amatter within the ordinary course of its activities, may impose reasonable restrictions and conditions on access to and use of information to be furnished under this sec- tion, including designating information confidential and imposing nondisclosure and safe- guarding obligations on the recipient. In a dispute concerning the reasonableness of a restric- tion under this subsection, the company has the burden of proving reasonableness.

635 LAWS OF THE EIGHTY-SECOND G.A., 2008 SESSION CH. 1162

ARTICLE 5 TRANSFERABLE INTERESTS AND

RIGHTS OF TRANSFEREES AND CREDITORS

Sec. 41. NEW SECTION. 489.501 NATURE OF TRANSFERABLE INTEREST. A transferable interest is personal property.

Sec. 42. NEW SECTION. 489.502 TRANSFER OF TRANSFERABLE INTEREST. 1. For a transfer, in whole or in part, all of the following applies to a transferable interest: a. It is permissible. b. It does not by itself cause a member’s dissociation or a dissolution and winding up of the

limited liability company’s activities. c. Subject to section 489.504, it does not entitle the transferee to do any of the following: (1) Participate in the management or conduct of the company’s activities. (2) Except as otherwise provided in subsection 3, have access to records or other informa-

tion concerning the company’s activities. 2. A transferee has the right to receive, in accordance with the transfer, distributions to

which the transferor would otherwise be entitled. 3. In a dissolution and winding up of a limited liability company, a transferee is entitled to

an account of the company’s transactions only from the date of dissolution. 4. A transferable interestmaybeevidencedbya certificate of the interest issuedby the limit-

ed liability company in a record, and, subject to this section, the interest represented by the certificate may be transferred by a transfer of the certificate. 5. A limited liability company need not give effect to a transferee’s rights under this section

until the company has notice of the transfer. 6. A transfer of a transferable interest in violation of a restriction on transfer contained in

the operating agreement or another agreement to which the transferor is a party is ineffective as to a person having notice of the restriction at the time of transfer. 7. Except as otherwise provided in section 489.602, subsection 4, paragraph “b”, when a

member transfers a transferable interest, the transferor retains the rights of a member other than the interest in distributions transferred and retains all duties and obligations of a mem- ber. 8. Whenamember transfers a transferable interest to a person that becomes amemberwith

respect to the transferred interest, the transferee is liable for the member’s obligations under section 489.403 and section 489.406, subsection 3, known to the transferee when the transfer- ee becomes a member.

Sec. 43. NEW SECTION. 489.503 CHARGING ORDER. 1. On application by a judgment creditor of a member or transferee, a court may enter a

charging order against the transferable interest of the judgment debtor for the unsatisfied amount of the judgment. A charging order constitutes a lien on a judgment debtor’s transfer- able interest and requires the limited liability company to pay over to the person to which the charging orderwas issued any distribution thatwould otherwise be paid to the judgment debt- or. 2. To the extent necessary to effectuate the collectionof distributionspursuant to a charging

order in effect under subsection 1, the court may do all of the following: a. Appoint a receiver of the distributions subject to the charging order, with the power to

make all inquiries the judgment debtor might have made. b. Make all other orders necessary to give effect to the charging order. 3. Upon a showing that distributions under a charging order will not pay the judgment debt

within a reasonable time, the courtmay foreclose the lien and order the sale of the transferable interest. The purchaser at the foreclosure sale only obtains the transferable interest, does not thereby become a member, and is subject to section 489.502.

636LAWS OF THE EIGHTY-SECOND G.A., 2008 SESSIONCH. 1162

4. At any timebefore foreclosureunder subsection3, themember or transfereewhose trans- ferable interest is subject to a charging order under subsection 1may extinguish the charging order by satisfying the judgment and filing a certified copy of the satisfaction with the court that issued the charging order. 5. At any time before foreclosure under subsection 3, a limited liability company or one or

more members whose transferable interests are not subject to the charging order may pay to the judgment creditor the full amount due under the judgment and thereby succeed to the rights of the judgment creditor, including the charging order. 6. This chapter does not deprive any member or transferee of the benefit of any exemption

laws applicable to the member’s or transferee’s transferable interest. 7. This section provides the exclusive remedy by which a person seeking to enforce a judg-

ment against a member or transferee may, in the capacity of judgment creditor, satisfy the judgment from the judgment debtor’s transferable interest.

Sec. 44. NEW SECTION. 489.504 POWER OF PERSONAL REPRESENTATIVE OF DE- CEASED MEMBER. If amember dies, the deceasedmember’s personal representative or other legal representa-

tive may exercise the rights of a transferee provided in section 489.502, subsection 3, and, for the purposes of settling the estate, the rights of a current member under section 489.410.

ARTICLE 6 MEMBER’S DISSOCIATION

Sec. 45. NEWSECTION. 489.601 MEMBER’SPOWERTODISSOCIATE—WRONGFUL DISSOCIATION. 1. A person has the power to dissociate as a member at any time, rightfully or wrongfully,

by withdrawing as a member by express will under section 489.602, subsection 1. 2. A person’s dissociation from a limited liability company is wrongful only if any of the fol-

lowing applies to the dissociation: a. It is in breach of an express provision of the operating agreement. b. It occurs before the termination of the company and any of the following applies: (1) The person withdraws as a member by express will. (2) The person is expelled as a member by judicial order under section 489.602, subsec-

tion 5. (3) The person is dissociated under section 489.602, subsection 7, paragraph “a”, by becom-

ing a debtor in bankruptcy. (4) In the case of a person that is not a trust other than a business trust, an estate, or an indi-

vidual, the person is expelled or otherwise dissociated as a member because it willfully dis- solved or terminated. 3. Aperson thatwrongfully dissociates as amember is liable to the limited liability company

and, subject to section 489.901, to the other members for damages caused by the dissociation. The liability is in addition to any other debt, obligation, or other liability of the member to the company or the other members.

Sec. 46. NEW SECTION. 489.602 EVENTS CAUSING DISSOCIATION. Aperson is dissociated as amember froma limited liability companywhen anyof the follow-

ing applies: 1. The company has notice of the person’s express will to withdraw as amember, but, if the

person specified a withdrawal date later than the date the company had notice, on that later date. 2. An event stated in the operating agreement as causing the person’s dissociation occurs. 3. The person is expelled as a member pursuant to the operating agreement. 4. The person is expelled as a member by the unanimous consent of the other members if

any of the following applies: a. It is unlawful to carry on the company’s activities with the person as a member.

637 LAWS OF THE EIGHTY-SECOND G.A., 2008 SESSION CH. 1162

b. There has been a transfer of all of the person’s transferable interest in the company, other than any of the following: (1) A transfer for security purposes. (2) A charging order in effect under section 489.503 which has not been foreclosed. c. The person is a corporation and, within ninety days after the company notifies the person

that it will be expelled as a member because the person has filed a certificate of dissolution or the equivalent, its charter has been revoked, or its right to conduct business has been suspend- ed by the jurisdiction of its incorporation, the certificate of dissolution has not been revoked or its charter or right to conduct business has not been reinstated. d. The person is a limited liability company or partnership that has been dissolved and

whose business is being wound up. 5. On application by the company, the person is expelled as a member by judicial order be-

cause the person has done any of the following: a. Has engaged, or is engaging, in wrongful conduct that has adversely and materially af-

fected, or will adversely and materially affect, the company’s activities. b. Has willfully or persistently committed, or is willfully and persistently committing, ama-

terial breach of the operating agreement or the person’s duties or obligations under section 489.409. c. Has engaged in, or is engaging in, conduct relating to the company’s activities which

makes it not reasonably practicable to carry on the activities with the person as a member. 6. In the case of a person who is an individual, any of the following applies: a. The person dies. b. In a member-managed limited liability company any of the following applies: (1) A guardian or general conservator for the person is appointed. (2) There is a judicial order that the person has otherwise become incapable of performing

the person’s duties as a member under this chapter or the operating agreement. 7. In a member-managed limited liability company, the person does any of the following: a. Becomes a debtor in bankruptcy. b. Executes an assignment for the benefit of creditors. c. Seeks, consents to, or acquiesces in the appointment of a trustee, receiver, or liquidator

of the person or of all or substantially all of the person’s property. 8. In the case of a person that is a trust or is acting as a member by virtue of being a trustee

of a trust, the trust’s entire transferable interest in the company is distributed. 9. In the caseof aperson that is anestate or is actingas amember byvirtueof beingaperson-

al representative of an estate, the estate’s entire transferable interest in the company is distrib- uted. 10. In the case of amember that is not an individual, partnership, limited liability company,

corporation, trust, or estate, the termination of the member. 11. The company participates in a merger under article 10, if any of the following applies: a. The company is not the surviving entity. b. Otherwise as a result of the merger, the person ceases to be a member. 12. The company participates in a conversion under article 10. 13. The company participates in a domestication under article 10, if, as a result of the do-

mestication, the person ceases to be a member. 14. The company terminates.

Sec. 47. NEW SECTION. 489.603 EFFECT OF PERSON’S DISSOCIATION AS MEM- BER. 1. When a person is dissociated as amember of a limited liability company, all of the follow-

ing apply: a. Theperson’s right to participate as amember in themanagement and conduct of the com-

pany’s activities terminates. b. If the company is member-managed, the person’s fiduciary duties as a member end with

regard to matters arising and events occurring after the person’s dissociation. c. Subject to section 489.504 and article 10, any transferable interest owned by the person

638LAWS OF THE EIGHTY-SECOND G.A., 2008 SESSIONCH. 1162

immediately before dissociation in the person’s capacity as a member is owned by the person solely as a transferee. 2. A person’s dissociation as a member of a limited liability company does not of itself dis-

charge the person from any debt, obligation, or other liability to the company or the other members which the person incurred while a member.

Sec. 48. NEW SECTION. 489.604 MEMBER’S POWER TO DISSOCIATE UNDER CER- TAIN CIRCUMSTANCES. 1. If the certificate of organization or an operating agreement does not specify the time or

the events upon the happening of which a member may dissociate, a member may dissociate from the limited liability company in the event any amendment to the certificate of organiza- tion or operating agreement that is adopted over the member’s written dissent adversely af- fects the rights or preferences of the dissenting member’s transferable interest in any of the ways described in paragraphs “a” through “f”. A dissociation in the event of such dissent and adverse effect is deemed to have occurred as of the effective date of the amendment, if the member gives notice to the limited liability company not more than sixty days after the date of the amendment. In valuing the member’s distribution pursuant to this subsection, any de- preciation in anticipation of the amendment shall be excluded. An amendment that does any of the following is subject to this section: a. Alters or abolishes a member’s right to receive a distribution. b. Alters or abolishes a member’s right to voluntarily dissociate. c. Alters or abolishes a member’s right to vote on any matter, except as the rights may be

altered or abolished through the acceptance of contributions or the making of contribution agreements. d. Alters or abolishes a member’s preemptive right to make contributions. e. Establishes or changes the conditions for or consequences of expulsion. f. Waives the application of this section to the limited liability company. 2. A member dissociating under this section is not liable for damages for the breach of any

agreement not to withdraw. 3. This section applies to a limited liability company whose original articles of organization

or certificate of organization is filed with the secretary of state on or after July 1, 1997. 4. This section applies to a limited liability company whose original articles of organization

are filedwith the secretary of state and effective on or prior to June 30, 1997, if such company’s operating agreement provides that it is subject to this section. 5. The operating agreement of a limited liability companymaywaive the applicability of this

section to the company and its members.

ARTICLE 7 DISSOLUTION AND WINDING UP

Sec. 49. NEW SECTION. 489.701 EVENTS CAUSING DISSOLUTION. 1. A limited liability company is dissolved, and its activitiesmust bewound up, upon the oc-

currence of any of the following: a. An event or circumstance that the operating agreement states causes dissolution. b. The consent of all the members. c. Once the company has at least one member, the passage of ninety consecutive days dur-

ing which the company has no members. d. On application by a member, the entry by a district court of an order dissolving the com-

pany on the grounds that any of the following applies: (1) The conduct of all or substantially all of the company’s activities is unlawful. (2) It is not reasonably practicable to carry on the company’s activities in conformity with

the certificate of organization and the operating agreement. e. On application by amember or transferee, the entry by a district court of an order dissolv-

ing the company on the grounds that themanagers or thosemembers in control of the compa- ny have done any of the following:

639 LAWS OF THE EIGHTY-SECOND G.A., 2008 SESSION CH. 1162

(1) Have acted, are acting, or will act in a manner that is illegal or fraudulent. (2) Have acted or are acting in a manner that is oppressive and was, is, or will be directly

harmful to the applicant. 2. In a proceeding brought under subsection 1, paragraph “e”, the courtmay order a remedy

other than dissolution.

Sec. 50. NEW SECTION. 489.702 WINDING UP. 1. A dissolved limited liability company shall wind up its activities, and the company contin-

ues after dissolution only for the purpose of winding up. 2. In winding up its activities, all of the following apply to a limited liability company: a. It shall discharge the company’s debts, obligations, or other liabilities, settle and close the

company’s activities, and marshal and distribute the assets of the company. b. It may do all of the following: (1) Deliver to the secretary of state for filing a statement of dissolution stating the name of

the company and that the company is dissolved. (2) Preserve the company activities and property as a going concern for a reasonable time. (3) Prosecute and defend actions and proceedings, whether civil, criminal, or administra-

tive. (4) Transfer the company’s property. (5) Settle disputes by mediation or arbitration. (6) Deliver to the secretary of state for filing a statement of termination stating the name of

the company and that the company is terminated. (7) Perform other acts necessary or appropriate to the winding up. 3. If a dissolved limited liability company has no members, the legal representative of the

last person to have been a member may wind up the activities of the company. If the person does so, the person has the powers of a solemanager under section 489.407, subsection 3, and is deemed to be a manager for the purposes of section 489.304, subsection 1, paragraph “b”. 4. If the legal representative under subsection 3 declines or fails to wind up the company’s

activities, a personmay be appointed to do so by the consent of transferees owning amajority of the rights to receive distributions as transferees at the time the consent is to be effective. All of the following apply to a person appointed under this subsection: a. The person has the powers of a sole manager under section 489.407, subsection 3, and

is deemed to be a manager for the purposes of section 489.304, subsection 1, paragraph “b”. b. The person shall promptly deliver to the secretary of state for filing an amendment to the

company’s certificate of organization to do all of the following: (1) State that the company has no members. (2) State that the personhas been appointed pursuant to this subsection towindup the com-

pany. (3) Provide the street and mailing addresses of the person. 5. The district court may order judicial supervision of the winding up of a dissolved limited

liability company, including the appointment of a person to wind up the company’s activities pursuant to any of the following: a. On application of a member, if the applicant establishes good cause. b. On the application of a transferee, if all of the following apply: (1) The company does not have any members. (2) The legal representative of the last person to have been a member declines or fails to

wind up the company’s activities. (3) Within a reasonable time following the dissolution a person has not been appointed pur-

suant to subsection 3.1 c. In connection with a proceeding under section 489.701, subsection 1, paragraph “d” or

“e”.

Sec. 51. NEW SECTION. 489.703 KNOWN CLAIMS AGAINST DISSOLVED LIMITED LIABILITY COMPANY. 1. Except as otherwise provided in subsection 4, a dissolved limited liability company may

___________________ 1 According to enrolled Act; the phrase “subsection 4” probably intended

640LAWS OF THE EIGHTY-SECOND G.A., 2008 SESSIONCH. 1162

give notice of a known claim under subsection 2, which has the effect as provided in subsec- tion 3. 2. A dissolved limited liability company may in a record notify its known claimants of the

dissolution. The notice must do all of the following: a. Specify the information required to be included in a claim. b. Provide a mailing address to which the claim is to be sent. c. State the deadline for receipt of the claim,whichmaynot be less thanonehundred twenty

days after the date the notice is received by the claimant. d. State that the claim will be barred if not received by the deadline. 3. A claim against a dissolved limited liability company is barred if the requirements of sub-

section 2 are met and any of the following applies: a. The claim is not received by the specified deadline. b. If the claim is timely received but rejected by the company, all of the following apply: (1) The company causes the claimant to receive a notice in a record stating that the claim

is rejected and will be barred unless the claimant commences an action against the company to enforce the claim within ninety days after the claimant receives the notice. (2) The claimant does not commence the required action within the ninety days. 4. This section does not apply to a claim based on an event occurring after the effective date

of dissolution or a liability that on that date is contingent.

Sec. 52. NEWSECTION. 489.704 OTHERCLAIMSAGAINSTDISSOLVED LIMITED LI- ABILITY COMPANY. 1. A dissolved limited liability company may publish notice of its dissolution and request

persons having claims against the company to present them in accordance with the notice. 2. The notice authorized by subsection 1 must do all of the following: a. Be published at least once in a newspaper of general circulation in the county in this state

in which the dissolved limited liability company’s principal office is located or, if it has none in this state, in the county in which the company’s registered office is or was last located. b. Describe the information required to be contained in a claim and provide a mailing ad-

dress to which the claim is to be sent. c. State that a claim against the company is barred unless an action to enforce the claim is

commenced within five years after publication of the notice. 3. If a dissolved limited liability company publishes a notice in accordance with subsection

2, unless the claimant commences an action to enforce the claim against the company within five years after the publication date of the notice, the claim of each of the following claimants is barred: a. A claimant that did not receive notice in a record under section 489.703. b. A claimant whose claim was timely sent to the company but not acted on. c. A claimant whose claim is contingent at, or based on an event occurring after, the effec-

tive date of dissolution. 4. A claim not barred under this section may be enforced as follows: a. Against a dissolved limited liability company, to the extent of its undistributed assets. b. If assets of the company have been distributed after dissolution, against a member or

transferee to theextent of that person’s proportionate shareof the claimorof theassetsdistrib- uted to themember or transferee after dissolution,whichever is less, but aperson’s total liabili- ty for all claims under this paragraph does not exceed the total amount of assets distributed to the person after dissolution.

Sec. 53. NEW SECTION. 489.705 ADMINISTRATIVE DISSOLUTION. 1. The secretary of state may dissolve a limited liability company administratively if the

company does not do any of the following: a. Pay, within sixty days after the due date, any fee, tax, or penalty due to the secretary of

state under this chapter or law other than this chapter. b. Deliver, within sixty days after the due date, its biennial report to the secretary of state.

641 LAWS OF THE EIGHTY-SECOND G.A., 2008 SESSION CH. 1162

2. If the secretary of state determines that a ground exists for administratively dissolving a limited liability company, the secretary of state shall file a record of the determination and serve the company with a copy of the filed record. 3. If within sixty days after service of the copy pursuant to subsection 2 a limited liability

company does not correct each ground for dissolution or demonstrate to the reasonable satis- faction of the secretary of state that each ground determined by the secretary of state does not exist, the secretary of state shall dissolve the company administratively by preparing, signing, and filing a declaration of dissolution that states the grounds for dissolution. The secretary of state shall serve the company with a copy of the filed declaration. 4. A limited liability company that has been administratively dissolved continues in exis-

tencebut, subject to section489.706,may carryononly activities necessary towindup its activ- ities and liquidate its assets under sections 489.702 and 489.708 and to notify claimants under sections 489.703 and 489.704. 5. The administrative dissolution of a limited liability company does not terminate the au-

thority of its registered agent for service of process.

Sec. 54. NEW SECTION. 489.706 REINSTATEMENT FOLLOWING ADMINISTRATIVE DISSOLUTION. 1. A limited liability company administratively dissolved under section 489.705 may apply

to the secretary of state for reinstatement at any time after the effective date of dissolution. Theapplicationmust bedelivered to the secretaryof state andmeet all of the following require- ments: a. Recite the name of the limited liability company at its date of dissolution and the effective

date of its administrative dissolution. b. State that the ground or grounds for dissolution as provided in section 489.705 have been

eliminated. c. If the application is received more than five years after the effective date of the adminis-

trative dissolution, state a name that satisfies the requirements of section 489.108. d. State the federal tax identification number of the limited liability company. 2. The secretary of state shall refer the federal tax identification number contained in the

application for reinstatement to the department of revenue. The department of revenue shall report to the secretary of state the tax status of the limited liability company. If the department reports to the secretary of state that a filing delinquency or liability exists against the limited liability company, the secretary of state shall not cancel the declaration of dissolution until the filing delinquency or liability is satisfied. 3. If the secretary of state determines that the application contains the information required

by subsection 1, and that a delinquency or liability reported pursuant to subsection 2 has been satisfied, and that the information is correct, the secretary of state shall cancel the declaration of dissolution and prepare a certificate of reinstatement that recites the secretary of state’s de- terminationand the effectivedate of reinstatement, file the original of the certificate, and serve a copyon the limited liability companyunder section489.116. If the limited liability company’s name in subsection 1, paragraph “c”, is different than the name in subsection 1, paragraph “a”, the certificate of reinstatement shall constitute an amendment to the limited liability compa- ny’s certificate of organization insofar as it pertains to its name. A limited liability company shall not relinquish the right to retain its name as provided in section 489.108, if the reinstate- ment is effective within five years of the effective date of the limited liability company’s disso- lution. 4. When the reinstatement is effective, it relates back to and takes effect as of the effective

date of the administrative dissolution as if the administrative dissolution had never occurred.

Sec. 55. NEW SECTION. 489.707 APPEAL FROM REJECTION OF REINSTATEMENT. 1. If the secretary of state rejects a limited liability company’s application for reinstatement

following administrative dissolution, the secretary of state shall prepare, sign, and file a notice that explains the reason for rejection and serve the company with a copy of the notice.

642LAWS OF THE EIGHTY-SECOND G.A., 2008 SESSIONCH. 1162

2. Within thirty days after service of a notice of rejection of reinstatement under subsection 1, a limited liability company may appeal from the rejection by petitioning the district court to set aside the dissolution. The petition must be served on the secretary of state and contain a copy of the secretary of state’s declaration of dissolution, the company’s application for re- instatement, and the secretary of state’s notice of rejection. 3. The courtmay order the secretary of state to reinstate a dissolved limited liability compa-

ny or take other action the court considers appropriate.

Sec. 56. NEW SECTION. 489.708 DISTRIBUTION OF ASSETS IN WINDING UP LIM- ITED LIABILITY COMPANY’S ACTIVITIES. 1. In winding up its activities, a limited liability company must apply its assets to discharge

its obligations to creditors, including members that are creditors. 2. After a limited liability company complies with subsection 1, any surplusmust be distrib-

uted in the following order, subject to any charging order in effect under section 489.503: a. To each person owning a transferable interest that reflects contributionsmade by amem-

ber and not previously returned, an amount equal to the value of the unreturned contributions. b. In equal shares among members and dissociated members, except to the extent neces-

sary to comply with any transfer effective under section 489.502. 3. If a limited liability company does not have sufficient surplus to comply with subsection

2, paragraph “a”, any surplus must be distributed among the owners of transferable interests in proportion to the value of their respective unreturned contributions. 4. All distributions made under subsections 2 and 3 must be paid in money.

ARTICLE 8 FOREIGN LIMITED LIABILITY COMPANIES

Sec. 57. NEW SECTION. 489.801 GOVERNING LAW. 1. The law of the state or other jurisdiction under which a foreign limited liability company

is formed governs all of the following: a. The internal affairs of the company. b. The liability of a member as member and a manager as manager for the debts, obliga-

tions, or other liabilities of the company. 2. A foreign limited liability company shall not be denied a certificate of authority by reason

of any difference between the law of the jurisdiction under which the company is formed and the law of this state. 3. A certificate of authority does not authorize a foreign limited liability company to engage

in any business or exercise any power that a limited liability company shall not engage in or exercise in this state.

Sec. 58. NEW SECTION. 489.802 APPLICATION FOR CERTIFICATE OF AUTHORITY. 1. A foreign limited liability company may apply for a certificate of authority to transact

business in this state by delivering an application to the secretary of state for filing. The appli- cation must state all of the following: a. The nameof the company and, if the namedoes not complywith section 489.108, an alter-

nate name adopted pursuant to section 489.805, subsection 1. b. The name of the state or other jurisdiction under whose law the company is formed. c. The street and mailing addresses of the company’s principal office and, if the law of the

jurisdiction under which the company is formed require2 the company to maintain an office in that jurisdiction, the street and mailing addresses of the required office. d. The name and street and mailing addresses of the company’s initial registered agent for

service of process in this state. 2. A foreign limited liability company shall deliver with a completed application under sub-

section 1 a certificate of existence or a record of similar import signed by the secretary of state or other official having custody of the company’s publicly filed records in the state or other jurisdiction under whose law the company is formed.

___________________ 2 According to enrolled Act; the word “requires” probably intended

643 LAWS OF THE EIGHTY-SECOND G.A., 2008 SESSION CH. 1162

Sec. 59. NEW SECTION. 489.803 ACTIVITIES NOT CONSTITUTING TRANSACTING BUSINESS. 1. Activities of a foreign limited liability company which do not constitute transacting busi-

ness in this state within the meaning of this article include all of the following: a. Maintaining, defending, or settling an action or proceeding. b. Carrying on any activity concerning its internal affairs, including holdingmeetings of its

members or managers. c. Maintaining accounts in financial institutions. d. Maintaining offices or agencies for the transfer, exchange, and registration of the compa-

ny’s own securities or maintaining trustees or depositories with respect to those securities. e. Selling through independent contractors. f. Soliciting or obtaining orders, whether bymail or electronicmeans or through employees

or agents or otherwise, if the orders require acceptance outside this state before they become contracts. g. Creating or acquiring indebtedness, mortgages, or security interests in real or personal

property. h. Securing or collecting debts or enforcingmortgages or other security interests in proper-

ty securing the debts and holding, protecting, or maintaining property so acquired. i. Conducting an isolated transaction that is completed within thirty days and is not in the

course of similar transactions. j. Transacting business in interstate commerce. 2. For purposes of this article, the ownership in this state of income-producing real property

or tangible personal property, other than property excluded under subsection 1, constitutes transacting business in this state. 3. This section does not apply in determining the contacts or activities that may subject a

foreign limited liability company to service of process, taxation, or regulation under lawof this state other than this chapter.

Sec. 60. NEW SECTION. 489.804 FILING OF CERTIFICATE OF AUTHORITY. Unless the secretary of state determines that an application for a certificate of authority does

not comply with the filing requirements of this chapter, the secretary of state, upon payment of all filing fees, shall file the application of a foreign limited liability company, prepare, sign, and file a certificate of authority to transact business in this state, and send a copy of the filed certificate, together with a receipt for the fees, to the company or its representative.

Sec. 61. NEW SECTION. 489.805 NONCOMPLYING NAME OF FOREIGN LIMITED LI- ABILITY COMPANY. 1. A foreign limited liability company whose name does not comply with section 489.108

shall not obtain a certificate of authority until it adopts, for the purpose of transacting business in this state, an alternatename that complieswith section 489.108. After obtaining a certificate of authoritywith an alternate name, a foreign limited liability company shall transact business in this state under the alternate name. 2. If a foreign limited liability company authorized to transact business in this state changes

its name to one that does not comply with section 489.108, it may not thereafter transact busi- ness in this state until it complies with subsection 1 and obtains an amended certificate of au- thority.

Sec. 62. NEW SECTION. 489.806 REVOCATION OF CERTIFICATE OF AUTHORITY. 1. A certificate of authority of a foreign limited liability company to transact business in this

state may be revoked by the secretary of state in the manner provided in subsections 2 and 3 if the company does not do any of the following: a. Pay, within sixty days after the due date, any fee, tax, or penalty due the secretary of state

under this chapter or law other than this chapter. b. Deliver, within sixty days after the due date, its biennial report required under section

489.209.

644LAWS OF THE EIGHTY-SECOND G.A., 2008 SESSIONCH. 1162

c. Appoint and maintain a registered agent for service of process as required by section 489.113, subsection 2. d. Deliver for filing a statement of a change under section 489.114 within thirty days after

a change has occurred in the name or address of the registered agent. 2. To revoke a certificate of authority of a foreign limited liability company, the secretary

of state must prepare, sign, and file a notice of revocation and send a copy to the company’s registered agent for service of process in this state, or if the company does not appoint and maintain a proper registered agent in this state, to the company’s registered office. The notice must state all of the following: a. The revocation’s effective date, whichmust be at least sixty days after the date the secre-

tary of state sends the copy. b. The grounds for revocation under subsection 1. 3. The authority of a foreign limited liability company to transact business in this state

ceases on the effective date in the notice of revocation unless before that date the company cures each ground for revocation stated in the notice filed under subsection 2. If the company cures each ground, the secretary of state shall file a record so stating.

Sec. 63. NEWSECTION. 489.807 CANCELLATIONOFCERTIFICATEOFAUTHORITY. 1. To cancel its certificate of authority to transact business in this state, a foreign limited lia-

bility company must deliver to the secretary of state for filing a notice of cancellation stating all of the following: a. The name of the foreign limited liability company and that the company desires to cancel

its certificate of authority. b. That the foreign limited liability company revokes the authority of its registered agent to

accept service on its behalf andappoints the secretary of state as its agent for service of process in any proceeding based on a cause of action arising during the time it was authorized to trans- act business in this state. c. A mailing address to which the secretary of state may mail a copy of any process served

on the secretary of state under paragraph “b”. d. A commitment to notify the secretary of state in the future of any change in the mailing

address of the foreign limited liability company. 2. The certificate is canceled when the notice becomes effective.

Sec. 64. NEW SECTION. 489.808 EFFECT OF FAILURE TO HAVE CERTIFICATE OF AUTHORITY. 1. A foreign limited liability company transacting business in this state shall not maintain

an action or proceeding in this state unless it has a certificate of authority to transact business in this state. 2. The failure of a foreign limited liability company to have a certificate of authority to trans-

act business in this state does not impair the validity of a contract or act of the company or pre- vent the company from defending an action or proceeding in this state. 3. The successor to a foreign limited liability company that transacted business in this state

without a certificate of authority and the assignee of a cause of action arising out of that busi- ness shall not maintain a proceeding based on that cause of action in any court in this state until the foreign limited liability company or its successor obtains a certificate of authority. 4. A district courtmay stay a proceeding commenced by a foreign limited liability company,

its successor, or assignee until it determines whether the foreign limited liability company or its successor or assignee requires a certificateof authority. If it sodetermines, thedistrict court may further stay the proceeding until the foreign limited liability company or its successor or assignee obtains the certificate. 5. A foreign limited liability company is liable for a civil penalty not to exceed a total of one

thousand dollars if it transacts business in this state without a certificate of authority. The at- torney general may collect penalties due under this subsection. 6. A member or manager of a foreign limited liability company is not liable for the debts,

645 LAWS OF THE EIGHTY-SECOND G.A., 2008 SESSION CH. 1162

obligations, or other liabilities of the company solely because the company transacted busi- ness in this state without a certificate of authority. 7. If a foreign limited liability company transacts business in this state without a certificate

of authority or cancels its certificate of authority, it appoints the secretary of state as its regis- tered agent for service of process for rights of action arising out of the transaction of business in this state.

Sec. 65. NEW SECTION. 489.809 ACTION BY ATTORNEY GENERAL. The attorney general may maintain an action to enjoin a foreign limited liability company

from transacting business in this state in violation of this article.

ARTICLE 9 ACTIONS BY MEMBERS

Sec. 66. NEW SECTION. 489.901 DIRECT ACTION BY MEMBER. 1. Subject to subsection 2, amembermaymaintain a direct action against anothermember,

amanager, or the limited liability company to enforce themember’s rights and otherwise pro- tect the member’s interests, including rights and interests under the operating agreement or this chapter or arising independently of the membership relationship. 2. A member maintaining a direct action under this section must plead and prove an actual

or threatened injury that is not solely the result of an injury suffered or threatened to be suf- fered by the limited liability company.

Sec. 67. NEW SECTION. 489.902 DERIVATIVE ACTION. Amember maymaintain a derivative action to enforce a right of a limited liability company

as follows: 1. The member first makes a demand on the other members in a member-managed limited

liability company, or themanagers of a manager-managed limited liability company, request- ing that they cause the company to bring an action to enforce the right, and the managers or othermembers do not bring the actionwithin ninety days from the date the demandwasmade unless thememberhas earlier beennotified that thedemandhasbeen rejectedby thecompany or unless irreparable injury to the company would result by waiting for the expiration of the ninety-day period. 2. A demand under subsection 1 would be futile.

Sec. 68. NEW SECTION. 489.903 PROPER PLAINTIFF. 1. Except as otherwise provided in subsection 2, a derivative action under section 489.902

may bemaintained only by a person that is amember at the time the action is commenced and remains a member while the action continues. 2. If the sole plaintiff in a derivative action dies while the action is pending, the court may

permit another member of the limited liability company to be substituted as plaintiff.

Sec. 69. NEW SECTION. 489.904 PLEADING. In a derivative action under section 489.902, the complaint must state with particularity any

of the following: 1. The date and content of the plaintiff’s demand and the response to the demand by the

managers or other members. 2. If a demand has not beenmade, the reasons a demand under section 489.902, subsection

1, would be futile.

Sec. 70. NEW SECTION. 489.906 PROCEEDS AND EXPENSES. 1. Except as otherwise provided in subsection 2, all of the following apply: a. Any proceeds or other benefits of a derivative action under section 489.902, whether by

judgment, compromise, or settlement, belong to the limited liability company and not to the plaintiff.

646LAWS OF THE EIGHTY-SECOND G.A., 2008 SESSIONCH. 1162

b. If the plaintiff receives any proceeds, the plaintiff shall remit them immediately to the company. 2. If a derivative action under section 489.902 is successful inwhole or in part, the courtmay

award the plaintiff reasonable expenses, including reasonable attorney fees and costs, from the recovery of the limited liability company.

ARTICLE 10 MERGER, CONVERSION, AND DOMESTICATION

Sec. 71. NEW SECTION. 489.1001 DEFINITIONS. As used in this article: 1. “Constituent limited liability company”means a constituent organization that is a limited

liability company. 2. “Constituent organization” means an organization that is party to a merger. 3. “Converted organization” means the organization into which a converting organization

converts pursuant to sections 489.1006 through 489.1009. 4. “Converting limited liability company” means a converting organization that is a limited

liability company. 5. “Converting organization” means an organization that converts into another organiza-

tion pursuant to section 489.1006. 6. “Domesticated company” means the company that exists after a domesticating foreign

limited liability company or limited liability company effects a domestication pursuant to sec- tions 489.1010 through 489.1013. 7. “Domesticating company” means the company that effects a domestication pursuant to

sections 489.1010 through 489.1013. 8. “Governing statute” means the statute that governs an organization’s internal affairs. 9. “Organization” means a general partnership, including a limited liability partnership,

limited partnership, including a limited liability limited partnership, limited liability company, business trust, corporation, or any other person having a governing statute. The term includes a domestic or foreign organization regardless of whether organized for profit. 10. “Organizational documents” means all of the following: a. For a domestic or foreign general partnership, its partnership agreement. b. For a limited partnership or foreign limited partnership, its certificate of limited partner-

ship and partnership agreement. c. For a domestic or foreign limited liability company, its certificate or articles of organiza-

tion and operating agreement, or comparable records as provided in its governing statute. d. For a business trust, its agreement of trust and declaration of trust. e. For a domestic or foreign corporation for profit, its articles of incorporation, bylaws, and

other agreements among its shareholders which are authorized by its governing statute, or comparable records as provided in its governing statute. f. For any other organization, the basic records that create the organization and determine

its internal governance and the relations among the persons that own it, have an interest in it, or are members of it. 11. “Personal liability”means liability for a debt, obligation, or other liability of an organiza-

tionwhich is imposedonaperson that co-owns, has an interest in, or is amember of theorgani- zation by any of the following: a. The governing statute solely by reason of the person co-owning, having an interest in, or

being a member of the organization. b. The organization’s organizational documents under a provision of the governing statute

authorizing those documents to make one or more specified persons liable for all or specified debts, obligations, or other liabilities of the organization solely by reason of the person or per- sons co-owning, having an interest in, or being a member of the organization. 12. “Surviving organization”means an organization intowhich one ormore other organiza-

tions aremergedwhether the organization preexisted themerger or was created by themerg- er.

647 LAWS OF THE EIGHTY-SECOND G.A., 2008 SESSION CH. 1162

Sec. 72. NEW SECTION. 489.1002 MERGER. 1. A limited liability companymaymerge with one or more other constituent organizations

pursuant to this section, sections 489.1003 through 489.1005, and a plan ofmerger, if all of the following apply: a. The governing statute of each of the other organizations authorizes the merger. b. Themerger is not prohibited by the lawof a jurisdiction that enacted any of the governing

statutes. c. Each of the other organizations complies with its governing statute in effecting themerg-

er. 2. A plan of merger must be in a record and must include all of the following: a. The name and form of each constituent organization. b. The name and form of the surviving organization and, if the surviving organization is to

be created by the merger, a statement to that effect. c. The terms and conditions of the merger, including the manner and basis for converting

the interests in each constituent organization into any combination of money, interests in the surviving organization, and other consideration. d. If the surviving organization is to be created by the merger, the surviving organization’s

organizational documents that are proposed to be in a record. e. If the surviving organization is not to be created by the merger, any amendments to be

made by the merger to the surviving organization’s organizational documents that are, or are proposed to be, in a record.

Sec. 73. NEWSECTION. 489.1003 ACTIONONPLANOFMERGER BYCONSTITUENT LIMITED LIABILITY COMPANY. 1. Subject to section 489.1014, a plan of merger must be consented to by all the members

of a constituent limited liability company. 2. Subject to section 489.1014 and any contractual rights, after a merger is approved, and

at any time before articles of merger are delivered to the secretary of state for filing under sec- tion 489.1004, a constituent limited liability company may amend the plan or abandon the merger as follows: a. As provided in the plan. b. Except as otherwise prohibited in the plan, with the same consent as was required to ap-

prove the plan.

Sec. 74. NEW SECTION. 489.1004 FILINGS REQUIRED FOR MERGER — EFFECTIVE DATE. 1. After each constituent organization has approved a merger, articles of merger must be

signed on behalf of all of the following: a. Each constituent limited liability company, as provided in section 489.203, subsection 1. b. Each other constituent organization, as provided in its governing statute. 2. Articles of merger under this section must include all of the following: a. The name and form of each constituent organization and the jurisdiction of its governing

statute. b. Thenameand formof the surviving organization, the jurisdiction of its governing statute,

and, if the surviving organization is created by the merger, a statement to that effect. c. Thedate themerger is effective under the governing statute of the survivingorganization. d. If the surviving organization is to be created by the merger as follows: (1) If it will be a limited liability company, the company’s certificate of organization. (2) If it will be an organization other than a limited liability company, the organizational

document that creates the organization that is in a public record. e. If the surviving organization preexists the merger, any amendments provided for in the

plan ofmerger for the organizational document that created the organization that are in a pub- lic record. f. A statement as to each constituent organization that themergerwas approved as required

by the organization’s governing statute.

648LAWS OF THE EIGHTY-SECOND G.A., 2008 SESSIONCH. 1162

g. If the surviving organization is a foreign organization not authorized to transact business in this state, the street and mailing addresses of an office that the secretary of state may use for the purposes of section 489.1005, subsection 2. h. Any additional information required by the governing statute of any constituent organi-

zation. 3. Each constituent limited liability company shall deliver the articles of merger for filing

in the office of the secretary of state. 4. A merger becomes effective under this article as follows: a. If the surviving organization is a limited liability company, upon the later of any of the

following: (1) Compliance with subsection 3. (2) Subject to section 489.205, subsection 3, as specified in the articles of merger. b. If the surviving organization is not a limited liability company, as provided by the govern-

ing statute of the surviving organization.

Sec. 75. NEW SECTION. 489.1005 EFFECT OF MERGER. 1. When a merger becomes effective all of the following apply: a. The surviving organization continues or comes into existence. b. Each constituent organization thatmerges into the surviving organization ceases to exist

as a separate entity. c. All property owned by each constituent organization that ceases to exist vests in the sur-

viving organization. d. All debts, obligations, or other liabilities of each constituent organization that ceases to

exist continue as debts, obligations, or other liabilities of the surviving organization. e. An action or proceeding pending by or against any constituent organization that ceases

to exist may be continued as if the merger had not occurred. f. Except as prohibited by other law, all of the rights, privileges, immunities, powers, and

purposes of each constituent organization that ceases to exist vest in the surviving organiza- tion. g. Except as otherwise provided in the plan of merger, the terms and conditions of the plan

of merger take effect. h. Except as otherwise agreed, if a constituent limited liability company ceases to exist, the

merger does not dissolve the limited liability company for the purposes of article 7. i. If the surviving organization is created by the merger, any of the following applies: (1) If it is a limited liability company, the certificate of organization becomes effective. (2) If it is an organization other than a limited liability company, the organizational docu-

ment that creates the organization becomes effective. j. If the surviving organization preexisted the merger, any amendments provided for in the

articles ofmerger for theorganizational document that created theorganizationbecomeeffec- tive. 2. A surviving organization that is a foreign organization consents to the jurisdiction of the

courts of this state to enforce any debt, obligation, or other liability owed by a constituent orga- nization, if before the merger the constituent organization was subject to suit in this state on the debt, obligation, or other liability. A surviving organization that is a foreign organization and not authorized to transact business in this state appoints the secretary of state as its regis- tered agent for service of process for the purposes of enforcing a debt, obligation, or other lia- bility under this subsection. Service on the secretary of state under this subsection must be made in the same manner and has the same consequences as in section 489.116, subsections 3 and 4.

Sec. 76. NEW SECTION. 489.1006 CONVERSION. 1. An organization other than a limited liability company or a foreign limited liability com-

pany may convert to a limited liability company, and a limited liability company may convert to an organization other than a foreign limited liability company pursuant to this section, sec- tions 489.1007 through 489.1009, and a plan of conversion, if all of the following apply:

649 LAWS OF THE EIGHTY-SECOND G.A., 2008 SESSION CH. 1162

a. The other organization’s governing statute authorizes the conversion. b. The conversion is not prohibited by the lawof the jurisdiction that enacted the other orga-

nization’s governing statute. c. The other organization complies with its governing statute in effecting the conversion. 2. A plan of conversion must be in a record and must include all of the following: a. The name and form of the organization before conversion. b. The name and form of the organization after conversion. c. The terms and conditions of the conversion, including the manner and basis for convert-

ing interests in the converting organization into any combination of money, interests in the converted organization, and other consideration. d. The organizational documents of the converted organization that are, or are proposed to

be, in a record.

Sec. 77. NEWSECTION. 489.1007 ACTIONONPLANOFCONVERSIONBYCONVERT- ING LIMITED LIABILITY COMPANY. 1. Subject to section 489.1014, a plan of conversionmust be consented to by all themembers

of a converting limited liability company. 2. Subject to section 489.1014 and any contractual rights, after a conversion is approved,

and at any time before articles of conversion are delivered to the secretary of state for filing under section 489.1008, a converting limited liability company may amend the plan or aban- don the conversion as follows: a. As provided in the plan. b. Except as otherwise prohibited in the plan, by the same consent as was required to ap-

prove the plan.

Sec. 78. NEW SECTION. 489.1008 FILINGS REQUIRED FOR CONVERSION—EFFEC- TIVE DATE. 1. After a plan of conversion is approved, all of the following apply: a. A converting limited liability company shall deliver to the secretary of state for filing ar-

ticles of conversion, which must be signed as provided in section 489.203, subsection 1, and must include all of the following: (1) A statement that the limited liability companyhasbeen converted into another organiza-

tion. (2) The name and form of the organization and the jurisdiction of its governing statute. (3) The date the conversion is effective under the governing statute of the converted organi-

zation. (4) A statement that the conversion was approved as required by this chapter. (5) A statement that the conversion was approved as required by the governing statute of

the converted organization. (6) All documents required to be filedwith the secretary of state in accordancewith the gov-

erning statute of the converted organization to effectuate the conversion. (7) If the converted organization is a foreign organization not authorized to transact busi-

ness in this state, the street andmailing addresses of an officewhich the secretary of statemay use for the purposes of section 489.1009, subsection 3. b. If the converting organization is not a converting limited liability company, the convert-

ing organization shall deliver to the secretary of state for filing a certificate of organization, which must include, in addition to the information required by section 489.201, subsection 2, all of the following: (1) A statement that the converted organization was converted from another organization. (2) The name and form of that converting organization and the jurisdiction of its governing

statute. (3) A statement that the conversion was approved in a manner that complied with the con-

verting organization’s governing statute. 2. A conversion becomes effective as follows:

650LAWS OF THE EIGHTY-SECOND G.A., 2008 SESSIONCH. 1162

a. If the converted organization is a limited liability company,when the certificate of organi- zation takes effect. b. If the converted organization is not a limited liability company, as providedby thegovern-

ing statute of the converted organization.

Sec. 79. NEW SECTION. 489.1009 EFFECT OF CONVERSION. 1. An organization that has been converted pursuant to this article is for all purposes the

same entity that existed before the conversion. 2. When a conversion takes effect all of the following apply: a. All property owned by the converting organization remains vested in the converted orga-

nization. b. All debts, obligations, or other liabilities of the converting organization continue asdebts,

obligations, or other liabilities of the converted organization. c. An action or proceeding pending by or against the converting organization may be con-

tinued as if the conversion had not occurred. d. Except as prohibited by law other than this chapter, all of the rights, privileges, immuni-

ties, powers, andpurposes of the convertingorganization remain vested in the converted orga- nization. e. Except as otherwise provided in the plan of conversion, the terms and conditions of the

plan of conversion take effect. f. Except as otherwise agreed, the conversion does not dissolve a converting limited liability

company for the purposes of article 7. 3. A converted organization that is a foreign organization consents to the jurisdiction of the

courts of this state to enforce any debt, obligation, or other liability for which the converting limited liability company is liable if, before the conversion, the converting limited liability companywas subject to suit in this state on the debt, obligation, or other liability. A converted organization that is a foreign organization and not authorized to transact business in this state appoints the secretary of state as its registered agent for service of process for purposes of en- forcing a debt, obligation, or other liability under this subsection. Service on the secretary of state under this subsectionmust bemade in the samemanner and has the same consequences as in section 489.116, subsections 3 and 4.

Sec. 80. NEW SECTION. 489.1010 DOMESTICATION. 1. A foreign limited liability company may become a limited liability company pursuant to

this section, sections 489.1011 through 489.1013, and a plan of domestication, if all of the fol- lowing apply: a. The foreign limited liability company’s governing statute authorizes the domestication. b. The domestication is not prohibited by the lawof the jurisdiction that enacted the govern-

ing statute. c. The foreign limited liability company complies with its governing statute in effecting the

domestication. 2. A limited liability company may become a foreign limited liability company pursuant to

this section, sections 489.1011 through 489.1013, and a plan of domestication, if all of the fol- lowing apply: a. The foreign limited liability company’s governing statute authorizes the domestication. b. The domestication is not prohibited by the lawof the jurisdiction that enacted the govern-

ing statute. c. The foreign limited liability company complies with its governing statute in effecting the

domestication. 3. A plan of domestication must be in a record and must include all of the following: a. The name of the domesticating company before domestication and the jurisdiction of its

governing statute. b. The name of the domesticated company after domestication and the jurisdiction of its

governing statute.

651 LAWS OF THE EIGHTY-SECOND G.A., 2008 SESSION CH. 1162

c. The terms and conditions of the domestication, including the manner and basis for con- verting interests in the domesticating company into any combination of money, interests in the domesticated company, and other consideration. d. The organizational documents of the domesticated company that are, or are proposed to

be, in a record.

Sec. 81. NEW SECTION. 489.1011 ACTION ON PLAN OF DOMESTICATION BY DO- MESTICATING LIMITED LIABILITY COMPANY. 1. A plan of domestication must be consented to as follows: a. By all themembers, subject to section 489.1014, if the domesticating company is a limited

liability company. b. As provided in the domesticating company’s governing statute, if the company is a for-

eign limited liability company. 2. Subject to any contractual rights, after a domestication is approved, and at any time be-

fore articles of domestication are delivered to the secretary of state for filing under section 489.1012, a domesticating limited liability company may amend the plan or abandon the do- mestication as follows: a. As provided in the plan. b. Except as otherwise prohibited in the plan, by the same consent as was required to ap-

prove the plan.

Sec. 82. NEW SECTION. 489.1012 FILINGS REQUIRED FOR DOMESTICATION— EF- FECTIVE DATE. 1. After a plan of domestication is approved, a domesticating company shall deliver to the

secretary of state for filing articles of domestication, which must include all of the following: a. A statement, as the case may be, that the company has been domesticated from or into

another jurisdiction. b. The name of the domesticating company and the jurisdiction of its governing statute. c. The name of the domesticated company and the jurisdiction of its governing statute. d. The date the domestication is effective under the governing statute of the domesticated

company. e. If the domesticating company was a limited liability company, a statement that the do-

mestication was approved as required by this chapter. f. If the domesticating company was a foreign limited liability company, a statement that

the domesticationwas approved as required by the governing statute of the other jurisdiction. g. If the domesticated company was a foreign limited liability company not authorized to

transact business in this state, the street and mailing addresses of an office that the secretary of state may use for the purposes of section 489.1013, subsection 2. 2. A domestication becomes effective as follows: a. When the certificate of organization takes effect, if the domesticated company is a limited

liability company. b. According to the governing statute of the domesticated company, if the domesticated or-

ganization is a foreign limited liability company.

Sec. 83. NEW SECTION. 489.1013 EFFECT OF DOMESTICATION. 1. When a domestication takes effect, all of the following apply: a. The domesticated company is for all purposes the company that existed before the do-

mestication. b. All property owned by the domesticating company remains vested in the domesticated

company. c. All debts, obligations, or other liabilities of the domesticating company continue as debts,

obligations, or other liabilities of the domesticated company. d. An action or proceeding pending by or against a domesticating company may be contin-

ued as if the domestication had not occurred.

652LAWS OF THE EIGHTY-SECOND G.A., 2008 SESSIONCH. 1162

e. Except as prohibited by other law, all of the rights, privileges, immunities, powers, and purposes of the domesticating company remain vested in the domesticated company. f. Except as otherwise provided in the plan of domestication, the terms and conditions of

the plan of domestication take effect. g. Except as otherwise agreed, the domestication does not dissolve a domesticating limited

liability company for the purposes of article 7. 2. A domesticated company that is a foreign limited liability company consents to the juris-

diction of the courts of this state to enforce any debt, obligation, or other liability owed by the domesticating company, if, before the domestication, the domesticating companywas subject to suit in this state on the debt, obligation, or other liability. A domesticated company that is a foreign limited liability company and not authorized to transact business in this state ap- points the secretary of state as its registered agent for service of process for purposes of enforc- ing a debt, obligation, or other liability under this subsection. Service on the secretary of state under this subsection must be made in the same manner and has the same consequences as in section 489.116, subsections 3 and 4. 3. If a limited liability company has adopted and approved a plan of domestication under

section 489.1010 providing for the company to be domesticated in a foreign jurisdiction, a statement surrendering the company’s certificate of organizationmust be delivered to the sec- retary of state for filing setting forth all of the following: a. The name of the company. b. A statement that the certificate of organization is being surrendered in connection with

the domestication of the company in a foreign jurisdiction. c. A statement the3 domestication was approved as required by this chapter. d. The jurisdiction of formation of the domesticated foreign limited liability company.

Sec. 84. NEW SECTION. 489.1014 RESTRICTIONS ON APPROVAL OF MERGERS, CONVERSIONS, AND DOMESTICATIONS. 1. If a member of a constituent, converting, or domesticating limited liability company will

have personal liability with respect to a surviving, converted, or domesticated organization, approval or amendment of a plan of merger, conversion, or domestication is ineffective with- out the consent of the member, unless all of the following apply: a. The company’s operating agreement provides for approval of a merger, conversion, or

domestication with the consent of fewer than all the members. b. The member has consented to the provision of the operating agreement. 2. A member does not give the consent required by subsection 1 merely by consenting to

a provision of the operating agreement that permits the operating agreement to be amended with the consent of fewer than all the members.

Sec. 85. NEW SECTION. 489.1015 MERGER OF DOMESTIC COOPERATIVE INTO A DOMESTIC LIMITED LIABILITY COMPANY. 1. A limited liability company may merge with a domestic cooperative only as provided by

this section. A limited liability company may merge with one or more domestic cooperatives if all of the following apply: a. Only one limited liability company and one or more domestic cooperatives are parties to

the merger. b. When themerger becomes effective, the separate existence of each domestic cooperative

ceases and the limited liability company is the surviving entity per organization. c. As to each domestic cooperative, the plan of merger is initiated and adopted, and the

merger is effectuated, as provided in section 501A.1101. d. As to the limited liability company, the plan of merger complies with section 489.1002,

the plan of merger is approved as provided in section 489.1003, and the articles of merger are prepared, signed, and filed as provided in section 489.1004. e. Notwithstanding section 489.1002 or 489.1005, the surviving organization must be the

limited liability company.

___________________ 3 According to enrolled Act; the phrase “statement that the” probably intended

653 LAWS OF THE EIGHTY-SECOND G.A., 2008 SESSION CH. 1162

2. Section 501A.1103 governs the abandonment by a domestic cooperative of a merger au- thorized by this section. Section 489.1003, subsection 2, governs the abandonment by a limit- ed liability company of a merger authorized by this section.

Sec. 86. NEW SECTION. 489.1016 ARTICLE NOT EXCLUSIVE. This article does not preclude an entity from being merged, converted, or domesticated un-

der law other than this chapter.

ARTICLE 11 PROFESSIONAL LIMITED LIABILITY COMPANIES

Sec. 87. NEW SECTION. 489.1101 DEFINITIONS. As used in this article, unless the context otherwise requires: 1. “Employee” or “agent” does not include a clerk, stenographer, secretary, bookkeeper,

technician, or other person who is not usually and ordinarily considered by custom and prac- tice to be practicing a profession nor any other person who performs all that person’s duties for the professional limited liability company under the direct supervision and control of one ormoremanagers, employees, or agents of the professional limited liability companywho are duly licensed in this state to practice a professionwhich the limited liability company is autho- rized to practice in this state. This article does not require any such persons to be licensed to practice a profession if they are not required to be licensed under any other law of this state. 2. “Foreign professional limited liability company” means a limited liability company orga-

nized under laws other than the laws of this state for a purpose forwhich a professional limited liability company may be organized under this article. 3. “Licensed” includes registered, certified, admitted to practice, or otherwise legally autho-

rized under the laws of this state. 4. “Profession” means the profession of certified public accountancy, architecture, chiro-

practic, dentistry, physical therapy, psychology, professional engineering, land surveying, landscape architecture, law, medicine and surgery, optometry, osteopathy, osteopathic medi- cine and surgery, accounting practitioner, podiatry, real estate brokerage, speech pathology, audiology, veterinary medicine, pharmacy, nursing, or marriage4 and family therapy, provid- ed that the marriage5 and family therapist is licensed under chapters 147 and 154D. 5. “Professional limited liability company”means a limited liability company subject to this

article, except a foreign professional limited liability company. 6. “Regulating board” means any board, commission, court, or governmental authority

which, under the laws of this state, is chargedwith the licensing, registration, certification, ad- mission to practice, or other legal authorization of the practitioners of any profession. 7. a. “Voluntary transfer” includes a sale, voluntary assignment, gift, pledge, or encum-

brance; a voluntary change of legal or equitable ownership or beneficial interest; or a volun- tary change of persons having voting rights with respect to any transferable interest, except as proxies. b. “Voluntary transfer” does not include a transfer of an individual’s interest in a limited lia-

bility company or other property to a guardian or conservator appointed for that individual or the individual’s property.

Sec. 88. NEW SECTION. 489.1102 PURPOSES AND POWERS. A professional limited liability company shall be organized only for the purpose of engaging

in the practice of one specific profession, or two ormore specific professionswhich could law- fully be practiced in combination by a licensed individual or a partnership of licensed individu- als, and for the additional purpose of doing all lawful thingswhichmay be incidental to or nec- essary or convenient in connection with the practice of the profession or professions. The certificate of organization of a professional limited liability company shall state in substance that the purposes for which the professional limited liability company is organized are to en- gage in the general practice of a specified profession or professions, or one or more specified

___________________ 4 According to enrolled Act; the word “marital” probably intended 5 According to enrolled Act; the word “marital” probably intended

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branches or divisions thereof, and to do all lawful things which may be incidental to or neces- sary or convenient in connection with the practice of the profession or professions.

Sec. 89. NEW SECTION. 489.1103 NAME. Thenameof a professional limited liability company, the nameof a foreign professional lim-

ited liability company or its name as modified for use in this state, and any fictitious name or trade name adopted by a professional limited liability company or foreign professional limited liability company shall contain the words “professional limited liability company” or the ab- breviation “P.L.L.C.” or “PLLC”, and except for the addition of such words or abbreviation, shall be a name which could lawfully be used by a licensed individual or by a partnership of licensed individuals in the practice in this state of a profession which the professional limited liability company is authorized to practice. Each regulating boardmay by rule adopt addition- al requirements as to the corporate names and fictitious or trade names of professional limited liability companies and foreign professional limited liability companies which are authorized to practice a profession which is within the jurisdiction of the regulating board.

Sec. 90. NEW SECTION. 489.1104 WHO MAY ORGANIZE. One or more individuals having capacity to contract and licensed to practice a profession

in this state in which the professional limited liability company is to be authorized to practice, may organize a professional limited liability company.

Sec. 91. NEW SECTION. 489.1105 PRACTICE BY PROFESSIONAL LIMITED LIABILI- TY COMPANY. Notwithstanding any other statute or rule of law, a professional limited liability company

may practice a profession, but may do so in this state only through a member, manager, em- ployee, or agent, who is licensed to practice the same profession in this state. In its practice of a profession, a professional limited liability company shall not do any act which could not lawfully be done by an individual licensed to practice the profession which the professional limited liability company is authorized to practice.

Sec. 92. NEW SECTION. 489.1106 PROFESSIONAL REGULATION. A professional limited liability company shall not be required to register with or to obtain

any license, registration, certificate, or other legal authorization froma regulating board in or- der to practice a profession. Except as provided in this section, this article does not restrict or limit in anymanner the authority or duties of any regulating board with respect to individu- als practicing a profession which is within the jurisdiction of the regulating board, even if the individual is amember, manager, employee, or agent of a professional limited liability compa- ny or foreign professional limited liability company and practices the individual’s profession through such professional limited liability company.

Sec. 93. NEW SECTION. 489.1107 RELATIONSHIP AND LIABILITY TO PERSONS SERVED. This article does not modify any law applicable to the relationship between an individual

practicing a profession and a person receiving professional services, including but not limited to any liability arising out of such practice or any law respecting privileged communications. This article does not modify or affect the ethical standards or standards of conduct of any pro- fession, including but not limited to any standards prohibiting or limiting the practice of the profession by a limited liability company or prohibiting or limiting the practice of two ormore professions in combination. All such standards shall apply to the members, managers, em- ployees, and agents throughwhom a professional limited liability company practices any pro- fession in this state, to the same extent that the standards apply to an individual practitioner.

Sec. 94. NEW SECTION. 489.1108 ISSUANCE OF INTERESTS. An interest of a professional limited liability company shall be issued only to an individual

who is licensed to practice in any state a profession which the professional limited liability

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company is authorized to practice. Interests of a professional limited liability company shall not at any time be issued in, transferred into, or held in joint tenancy, tenancy in common, or any other form of joint ownership or co-ownership. Chapter 502 shall not be applicable to nor govern any transaction relating to any interests of a professional limited liability company.

Sec. 95. NEW SECTION. 489.1109 ASSIGNMENT OF INTERESTS. Amember or other person shall not make a voluntary assignment of an interest in a profes-

sional limited liability company to any person, except to the professional limited liability com- pany or to an individual who is licensed to practice in this state a profession which the limited liability company is authorized to practice. The certificate of organization or operating agree- ment of the professional limited liability company may contain any additional provisions re- stricting the assignment of interests. Unless the certificate of organization or an operating agreement otherwise provides, a voluntary assignment requires the unanimous consent of the members.

Sec. 96. NEW SECTION. 489.1110 CONVERTIBLE INTERESTS — RIGHTS AND OP- TIONS. Aprofessional limited liability company shall not create or issue any interest convertible into

an interest of the professional limited liability company. The provisions of this article with re- spect to the issuance and transfer of interests apply to the creation, issuance, and transfer of any right or option entitling the holder to purchase froma professional limited liability compa- ny any interest of the professional limited liability company. A right or option shall not be transferable, whether voluntarily, involuntarily, by operation of law, or in any other manner. Upon the death of the holder, or when the holder ceases to be licensed to practice a profession in this statewhich the professional limited liability company is authorized to practice, the right or option shall expire.

Sec. 97. NEW SECTION. 489.1111 VOTING TRUST — PROXY. A member of a professional limited liability company shall not create or enter into a voting

trust or any other agreement conferring upon any other person the right to vote or otherwise represent any interests of a professional limited liability company, and no such voting trust or agreement is valid or effective. Any proxy of amember of a professional limited liability com- pany shall be an individual licensed to practice a profession in this statewhich theprofessional limited liability company is authorized to practice. Any provision in any proxy instrument de- nying the right of the member to revoke the proxy at any time or for any period of time is not valid or effective. This section does not otherwise limit the right of amember to vote by proxy, but the certificate of organization or operating agreement of the professional limited liability company may further limit or deny the right to vote by proxy.

Sec. 98. NEW SECTION. 489.1112 REQUIRED PURCHASE BY PROFESSIONAL LIM- ITED LIABILITY COMPANY OF ITS OWN INTERESTS. 1. Notwithstanding any other statute or rule of law, a professional limited liability company

shall purchase its own interests as provided in this section; and a member of a professional limited liability company and themember’s executor, administrator, legal representative, and successors in interest, shall sell and transfer the interests held by them as provided in this sec- tion. 2. Upon thedeathof amember, the professional limited liability company shall immediately

purchase all interests held by the deceased member. 3. In order to remain amember of a professional limited liability company, themember shall

at all times be licensed to practice in this state a profession which the professional limited lia- bility company is authorized to practice. When amember does not have or ceases to have this qualification, the professional limited liability company shall immediately purchase all in- terests held by that member. 4. When a person other than amember of record becomes entitled to have interests of a pro-

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fessional limited liability company transferred into that person’s name or to exercise voting rights, except as aproxy,with respect to interests of the professional limited liability company, the professional limited liability company shall immediately purchase the interests. Without limiting the generality of the foregoing, this section shall be applicable whether the event oc- curs as a result of appointment of a guardian or conservator for a member or the member’s property, transfer of interests by operation of law, involuntary transfer of interests, judicial proceeding, execution, levy, bankruptcy proceeding, receivership proceeding, foreclosure or enforcement of a pledge or encumbrance, or any other situation or occurrence. However, this section does not apply to any voluntary transfer of interests as defined in this article. 5. Interests purchased by a professional limited liability company under this section shall

be transferred to the professional limited liability company as of the close of business on the dateof thedeathor other eventwhich requires purchase. Themember and themember’s exec- utors, administrators, legal representatives, or successors in interest, shall promptly do all things which may be necessary or convenient to cause transfer to be made as of the transfer date. However, the interests shall promptly be transferred on thebooks and records of thepro- fessional limited liability company as of the transfer date, notwithstanding any delay in trans- ferring or surrendering the interests or certificates representing the interests, and the transfer shall be valid and effective for all purposes as of the close of business on the transfer date. The purchase price for such interests shall be paid as provided in this article, but the transfer of interests to the professional limited liability company as provided in this section shall not be delayed or affected by any delay or default in making payment. 6. Notwithstanding subsections 1 through 5, purchase by the professional limited liability

company is not required upon the occurrence of any event other than death of a member, if the professional limited liability company is dissolved within sixty days after the occurrence of the event. The certificate of organization or operating agreement of the professional limited liability company may provide that purchase is not required upon the death of a member, if the professional limited liability company is dissolved within sixty days after the date of the member’s death. 7. Unless otherwise provided in the certificate of organization or an operating agreement

of the professional limited liability company or in an agreement amongallmembers of the pro- fessional limited liability company, all of the following apply: a. The purchase price for interests shall be its book value as of the end of themonth immedi-

ately preceding the death or other event which requires purchase. Book value shall be deter- mined from the books and records of the professional limited liability company in accordance with the regularmethod of accounting used by the professional limited liability company, uni- formly and consistently applied. Adjustments to book value shall be made, if necessary, to take into account work in process and accounts receivable. A final determination of book val- uemade in good faith by an independent certified public accountant or firm of certified public accountants employed by the professional limited liability company for the purpose shall be conclusive on all persons. b. The purchase price shall be paid in cash as follows: (1) Upon the death of a member, thirty percent of the purchase price shall be paid within

ninety days after death, and the balance shall be paid in three equal annual installments on the first three anniversaries of the death. (2) Upon the happening of any other event referred to in this section, one-tenth of the pur-

chase price shall be paid within ninety days after the date of the event, and the balance shall be paid in three equal annual installments on the first three anniversaries of the date of the event. c. Interest from the date of death or other event shall be payable annually on principal pay-

ment dates, at the rate of six percent per annum on the unpaid balance of the purchase price. d. All persons who are members of the professional limited liability company on the date

of death or other event, and their executors, administrators, and legal representatives, shall, to the extent the professional limited liability company fails to meet its obligations under this section, be jointly liable for the payment of the purchase price and interest in proportion to

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their percentage of ownership of the professional limited liability company’s interests, disre- garding interests of the deceased or withdrawing member. e. The part of the purchase price remaining unpaid after the initial payment shall be evi-

denced by a negotiable promissory note, which shall be executed by the professional limited liability company and allmembers liable for payment. Anyperson liable on thenote shall have the right to prepay the note in full or in part at any time. f. If the person making any payment is not reasonably able to determine which of two or

more persons is entitled to receive a payment, or if the payment is payable to a person who is unknown, or who is under disability and there is no person legally competent to receive the payment, orwhocannot be foundafter the exercise of reasonable diligence by thepersonmak- ing the payment, it shall be depositedwith the treasurer of state and shall be subject to the pro- visions of section 490.1440with respect to funds depositedwith the treasurer of state upon the voluntary or involuntary dissolution of a business corporation. 8. Notwithstanding the other provisions of this section, no part of the purchase price shall

be required to be paid until the certificates, if any, representing the interests have been surren- dered to the professional limited liability company. 9. Notwithstanding the other provisions of this section, payment of any part of the purchase

price for interests of a deceasedmember shall not be required until the executor or administra- tor of the deceasedmember provides any indemnity, release, or other document from any tax- ing authority, which is reasonably necessary to protect the professional limited liability com- pany against liability for estate, inheritance, and death taxes. 10. The certificate of organization or an operating agreement of the professional limited lia-

bility companyor anagreement amongallmembers of a professional limited liability company may provide for a different purchase price, a different method of determining the purchase price, a different interest rate or no interest, and other terms, conditions, and schedules of pay- ment. 11. The certificate of organization or an operating agreement of the professional limited lia-

bility companyor anagreement amongallmembers of a professional limited liability company may provide for the optional or mandatory purchase of its own interests by the professional limited liability company in other situations, subject to any applicable law regarding such a purchase.

Sec. 99. NEW SECTION. 489.1113 CERTIFICATES REPRESENTING INTERESTS. Each certificate representing an interest of a professional limited liability company shall

state in substance that the certificate represents an interest in a professional limited liability company and is not transferable except as expressly provided in this article and in the certifi- cate of organization or an operating agreement of the professional limited liability company.

Sec. 100. NEW SECTION. 489.1114 MANAGEMENT. Allmanagers of a professional limited liability company shall at all times be individuals who

are licensed to practice a profession in this state which the limited liability company is autho- rized to practice. A personwho is not licensed shall have no authority or duties in themanage- ment or control of the professional limited liability company. If a manager ceases to have this qualification, the manager shall immediately and automatically cease to hold such manage- ment position.

Sec. 101. NEW SECTION. 489.1115 MERGER. A professional limited liability company shall notmergewith any entity except another pro-

fessional limited liability company subject to this article or a professional corporation subject to chapter 496C. Merger is not permitted unless the surviving or new professional limited lia- bility company is a professional limited liability company which complies with all require- ments of this article.

Sec. 102. NEW SECTION. 489.1116 DISSOLUTION OR LIQUIDATION. A violation of any provision of this article by a professional limited liability company or any

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of its members or managers shall be cause for its involuntary dissolution, or liquidation of its assets and business by the district court. Upon the death of the last remaining member of a professional limited liability company, or when the last remaining member is not licensed or ceases to be licensed to practice a profession in this statewhich the professional limited liabili- ty company is authorized to practice, or when any person other than the member of record becomes entitled to have all interests of the last remainingmember of the professional limited liability company transferred into that person’s name or to exercise voting rights, except as a proxy, with respect to such interests, the professional limited liability company shall not practice any profession and it shall be promptly dissolved. However, if prior to dissolution all outstanding interests of the professional limited liability company are acquired by twoormore persons licensed to practice a profession in this state which the professional limited liability company is authorized to practice, the professional limited liability company need not be dis- solved and may practice the profession as provided in this article.

Sec. 103. NEW SECTION. 489.1117 FOREIGN PROFESSIONAL LIMITED LIABILITY COMPANY. 1. A foreign professional limited liability company may practice a profession in this state

if it complies with the provisions of this article. The secretary of statemay prescribe forms for this purpose. A foreignprofessional limited liability companymaypractice aprofession in this state only through members, managers, employees, and agents who are licensed to practice the profession in this state. The provisions of this article with respect to the practice of a pro- fession by a professional limited liability company apply to a foreign professional limited lia- bility company. 2. This article does not prohibit the practice of a profession in this state by an individualwho

is amember, manager, employee, or agent of a foreign professional limited liability company, if the individual could lawfully practice the profession in this state in the absence of any rela- tionship to a foreignprofessional limited liability company. This subsectionapplies regardless of whether or not the foreign professional limited liability company is authorized to practice a profession in this state.

Sec. 104. NEW SECTION. 489.1118 LIMITED LIABILITY COMPANIES ORGANIZED UNDER THE OTHER LAWS. This article does not apply to or interfere with the practice of any profession by or through

any professional limited liability company organized after July 1, 1992, under any other law of this state or any other state or country, if the practice is lawful under any other statute or rule of law of this state. Any such professional limited liability companymay voluntarily elect to adopt this article and become subject to its provisions, by amending its certificate of organi- zation to be consistent with all provisions of this article and by stating in its amended certifi- cate of organization that the limited liability company has voluntarily elected to adopt this ar- ticle. Any limited liability company organized under any lawof any other state or countrymay become subject to the provisions of this article by complying with all provisions of this article with respect to foreign professional limited liability companies.

Sec. 105. NEW SECTION. 489.1119 CONFLICTS WITH OTHER PROVISIONS OF THIS CHAPTER. The provisions of this article shall prevail over any inconsistent provisions of this chapter.

ARTICLE 12 SERIES LIMITED LIABILITY COMPANIES

Sec. 106. NEW SECTION. 489.1201 SERIES OF TRANSFERABLE INTERESTS. 1. An operating agreement may establish or provide for the establishment of a designated

series of transferable interests having separate rights, powers, or duties with respect to speci- fied property or obligations of the limited liability company or profits and losses associated with specified property or obligations, and, to the extent provided in the operating agreement, any such series may have a separate business purpose or investment objective. The name of

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each seriesmust contain thenameof the limited liability company andbedistinguishable from the name of any other series set forth in the certificate of organization. 2. Notwithstanding contrary provisions of this chapter, the debts, liabilities, andobligations

incurred, contracted for, or otherwise existing with respect to a particular series shall be en- forceable against the assets of that series only, and not against the assets of the limited liability company generally, if all of the following apply: a. The operating agreement creates one or more series. b. Separate anddistinct records aremaintained for that series and separate anddistinct rec-

ords account for the assets associatedwith that series. Theassets associatedwitha seriesmust be accounted for separately from the other assets of the limited liability company, including another series. c. The operating agreement provides for such limitation on liabilities. d. Notice of the establishment of the series and of the limitation on liabilities of the series

is set forth in the certificate of organization of the limited liability company. The filing of the certificate of organization containing a notice of the limitation on liabilities of a series in the office of the secretary of state constitutes notice of the limitation on liabilities of such series. 3. A series meeting all of the conditions of subsection 2, shall be treated as a separate entity

to the extent set forth in the certificate of organization. 4. Notwithstanding section 489.304, or a contrary provision in an operating agreement, a

member or manager may agree to be obligated personally for any or all of the debts, obliga- tions, or liabilities of one or more series. 5. Anoperating agreementmayprovide for classesor groupsofmembersormanagers asso-

ciatedwith a series having such relative rights, powers, and duties as the operating agreement may provide. The operating agreementmay provide for the future creation of additional class- es or groups of members or managers associated with the series having such relative rights, powers, and duties as may from time to time be established, including rights, powers, and du- ties senior to existing classes and groups of members or managers associated with the series. An operating agreement may provide for the taking of an action, including the amendment of the operating agreement, without the vote or approval of any member or manager or class or group ofmembers ormanagers, including all action to create under the provisions of the oper- ating agreement a class or group of the series of membership interests that was not previously outstanding. An operating agreementmay provide that anymember or class or group ofmem- bers associated with a series does not have voting rights. 6. An operating agreement may grant to all or certain identified members or managers or

a specified class or groupof themembers ormanagers associatedwith a series the right to vote onanymatter separately orwithall or anyclass or groupof themembersormanagers associat- ed with the series. Voting by members or managers associated with a series may be on a per capita, number, financial interest, class, group, or other basis. 7. Except to the extentmodified by this article, the provisions of this chapter which are gen-

erally applicable to a limited liability company, and its managers, members and transferees, shall be applicable to each series with respect to the operations of such series.

Sec. 107. NEW SECTION. 489.1202 MANAGEMENT OF A SERIES. 1. A series is member-managed unless the operating agreement does any of the following: a. Expressly provides any of the following: (1) The series is or will be “manager-managed”. (2) The series is or will be “managed by managers”. (3) Management of the series is or will be “vested in managers”. b. Includes words of similar import. 2. In a member-managed series, unless modified pursuant to section 489.1201, subsections

5 and 6, all of the following rules apply: a. The management and conduct of the series are vested in the members of the series. b. Each seriesmember has equal rights in themanagement and conduct of the series’ activi-

ties.

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c. A difference arising among series members as to a matter in the ordinary course of the activities of the series may be decided by a majority of the series members. d. An act outside the ordinary course of the activities of the series may be undertaken only

with the consent of all members of the series. e. The operating agreement may be amended only with the consent of all members of the

series. 3. In a manager-managed series, all of the following rules apply: a. Except as otherwise expressly provided in this chapter, any matter relating to the activi-

ties of the series is decided exclusively by the managers of the series. b. Each series manager has equal rights in themanagement and conduct of the activities of

the series. c. A difference arising among managers of a series as to a matter in the ordinary course of

the activities of the series may be decided by a majority of the managers of the series. d. Unless modified pursuant to section 489.1201, subsections 5 and 6, the consent of all

members of the series is required to do any of the following: (1) Sell, lease, exchange, or otherwise dispose of all, or substantially all, of the series’ prop-

erty, with or without the goodwill, outside the ordinary course of the series’ activities. (2) Approve a merger, conversion, or domestication under article 10. (3) Undertake any other act outside the ordinary course of the series’ activities. (4) Amend the operating agreement as it pertains to the series. e. A manager of the series may be chosen at any time by the consent of a majority of the

members of the series and remains a manager of the series until a successor has been chosen, unless the series manager at an earlier time resigns, is removed, or dies, or, in the case of a seriesmanager that is not an individual, terminates. A seriesmanagermay be removed at any time by the consent of a majority of the members without notice or cause. f. A person need not be a series member to be a manager of a series, but the dissociation of

a series member that is also a series manager removes the person as a manager of the series. If a person that is both a series manager and a series member ceases to be a manager of the series, that cessation does not by itself dissociate the person as a member of the series. g. A person’s ceasing to be a seriesmanager does not discharge any debt, obligation, or oth-

er liability to the series or members of the series which the person incurred while a manager of the series. 4. An action requiring the consent of members of a series under this chapter may be taken

without a meeting, and a member of a series may appoint a proxy or other agent to consent or otherwise act for the series member by signing an appointing record, personally or by the series member’s agent. 5. Thedissolution of a series does not affect the applicability of this section. However, a per-

son that wrongfully causes dissolution of the series loses the right to participate in manage- ment as a series member and a series manager. 6. This chapter does not entitle a seriesmember of a series to remuneration for services per-

formed for a member-managed series, except for reasonable compensation for services ren- dered in winding up the activities of the series.

Sec. 108. NEW SECTION. 489.1203 SERIES DISTRIBUTIONS. 1. Any distribution made by a series before its dissolution and winding up must be in equal

shares among the seriesmembers and dissociated seriesmembers, except to the extent neces- sary to comply with any transfer effective under section 489.502 and any charging order in ef- fect under section 489.503. 2. Apersonhas a right to adistributionbefore thedissolutionandwindingupof a series only

if the series decides to make an interim distribution. A person’s dissociation does not entitle the person to a distribution. 3. A person does not have a right to demand or receive a distribution from a series in any

formother thanmoney. Except as otherwiseprovided in section489.708, subsection3, a series maydistribute anasset inkind if eachpart of the asset is fungiblewith each other part and each person receives a percentage of the asset equal in value to the person’s share of distributions.

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4. If a series member or transferee becomes entitled to receive a distribution, the series member or transferee has the status of, and is entitled to all remedies available to, a creditor of the series with respect to the distribution. 5. a. A series shall not make a distribution if after the distribution any of the following oc-

curs: (1) The series would not be able to pay its debts as they become due in the ordinary course

of the series’ activities. (2) The series’ total assets would be less than the sum of its total liabilities plus the amount

that would be needed, if the series were to be dissolved, wound up, and terminated at the time of the distribution, to satisfy the preferential rights upondissolution, winding up, and termina- tion ofmemberswhose preferential rights are superior to those of persons receiving the distri- bution. b. As used in paragraph “a”, “distribution” does not include amounts constituting reason-

able compensation for present or past services or reasonable payments made in the ordinary course of business under a bona fide retirement plan or other benefits program. 6. A series may base a determination that a distribution is not prohibited under subsection

1 on financial statements prepared on the basis of accounting practices and principles that are reasonable in the circumstances or ona fair valuationor othermethod that is reasonableunder the circumstances. 7. Except as otherwiseprovided in subsection9, the effect of a distributionunder subsection

1 is measured as follows: a. In the case of a distribution by purchase, redemption, or other acquisition of a transfer-

able interest in the series, as of thedatemoneyor other property is transferredor debt incurred by the series. b. In all other cases, as of the date when one of the following occurs: (1) The distribution is authorized, if the payment occurs within one hundred twenty days

after that date. (2) The payment is made, if the payment occurs more than one hundred twenty days after

the distribution is authorized. 8. A series’ indebtedness to a series member incurred by reason of a distribution made in

accordancewith this section is at parity with the series’ indebtedness to its general, unsecured creditors. 9. A series’ indebtedness, including indebtedness issued in connection with or as part of a

distribution, is not a liability for purposes of subsection 5 if the terms of the indebtedness pro- vide that payment of principal and interest aremade only to the extent that a distribution could bemade tomembers of the series under this section. If such indebtedness is issued as a distri- bution, each payment of principal or interest on the indebtedness is treated as a distribution, the effect of which is measured on the date the payment is made. 10. a. Except as otherwise provided in paragraph “b”, if a member of a member-managed

series or manager of a manager-managed series consents to a distribution made in violation of this section and in consenting to the distribution fails to comply with section 489.409, the member or manager is personally liable to the series for the amount of the distribution that exceeds the amount that could have been distributed without the violation of section 489.405. b. To the extent the operating agreement of a member-managed series expressly relieves

a series member of the authority and responsibility to consent to distributions and imposes that authority and responsibility on one ormore othermembers of the series, the liability stat- ed in paragraph “a” applies to the othermembers of the series and not themember of the series that the operating agreement relieves of authority and responsibility. 11. A person that receives a distribution knowing that the distribution to that person was

made in violation of section 489.405 is personally liable to the limited liability company but only to the extent that the distribution received by the person exceeded the amount that could have been properly paid under section 489.405. 12. A person against which an action is commenced because the person is liable under sub-

section 10 may do any of the following:

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a. Implead any other person that is subject to liability under subsection 10 and seek to com- pel contribution from the person. b. Implead any person that received a distribution in violation of subsection 11 and seek to

compel contribution from theperson in the amount theperson received in violationof that sub- section. 13. An action under this section is barred if not commencedwithin two years after the distri-

bution.

Sec. 109. NEW SECTION. 489.1204 DISSOCIATION FROM A SERIES. Unless otherwise provided in the operating agreement, amember shall cease to be associat-

ed with a series and to have the power to exercise any rights or powers of a member with re- spect to such series upon the assignment of all of the member’s transferable interest with re- spect to such series. Except as otherwise provided in an operating agreement, an event under this chapter or identified in an operating agreement that causes amember to cease to be asso- ciated with a series, by itself, shall not cause such member to cease to be associated with any other series or terminate the continued membership of a member in the limited liability com- pany.

Sec. 110. NEW SECTION. 489.1205 TERMINATION OF A SERIES. 1. Except to the extent otherwise provided in the operating agreement, a series may be ter-

minated and its affairswoundupwithout causing thedissolution of the limited liability compa- ny. The termination of a series established pursuant to section 489.1201, subsection 1, shall not affect the limitation on a liability of such series provided by section 489.1201, subsec- tion 2. A series is not terminated and its affairs shall continue despite the dissolution of the limited liability company under article 7 but the series shall be terminated and its affairs shall be wound up upon the first to occur of any of the events described in section 489.701, subsec- tion 1, paragraphs “a” through “e”, as applied to the series. 2. Notwithstanding section 489.702, unless otherwise provided in the operating agreement,

any of the following persons may wind up the affairs of a series: a. A manager associated with a series who has not wrongfully terminated the series. b. If there is nomanager of a series, the members associated with the series or a person ap-

proved by the members associated with the series. c. If there is more than one class or group of members associated with the series, then by

eachclass or groupofmembers associatedwith the series, in either case, bymemberswhoown more than fifty percent of the transferable interests of the series owned by all of the members associated with the series or by themembers of each class or group associatedwith the series. 3. The persons winding up the affairs of a series, in the name of the series and for and on

behalf of the series, may take all actions with respect to the series as are permitted under sec- tion 489.702 for a limited liability company. Thepersonswindingup the affairs of a series shall provide for the claims and obligations of the series as provided in section 489.708 for a limited liability company and distribute the assets of the series as provided in section 489.708 for a limited liability company. An action taken pursuant to this subsection shall not affect the lia- bility of a member and shall not impose liability on a liquidating trustee.

Sec. 111. NEW SECTION. 489.1206 FOREIGN SERIES. A foreign limited liability company that is authorized todobusiness in this state under article

8 which is governed by an operating agreement that establishes or provides for the establish- ment of designated series of transferable interests having separate rights, powers, or duties with respect to specified property or obligations of the foreign limited liability company, or profits and losses associated with the specified property or obligations, shall indicate that fact on the application for a certificate of authority as a foreign limited liability company. In addi- tion, the foreign limited liability company shall state on the application whether the debts, lia- bilities, and obligations incurred, contracted for, or otherwise existingwith respect to a partic- ular series, if any, are enforceable against the assets of such series only, and not against the assets of the foreign limited liability company generally.

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ARTICLE 13 MISCELLANEOUS PROVISIONS

Sec. 112. NEW SECTION. 489.1301 UNIFORMITY OF APPLICATION AND CON- STRUCTION. In applying and construing this chapter, considerationmust be given to the need to promote

uniformity of the law with respect to its subject matter among states that enact it.

Sec. 113. NEW SECTION. 489.1302 RELATION TO ELECTRONIC SIGNATURES IN GLOBAL AND NATIONAL COMMERCE ACT. This chapter modifies, limits, and supersedes the federal Electronic Signatures in Global

and National Commerce Act, 15 U.S.C. § 7001 et seq., but does not modify, limit, or supersede section 101(c) of that Act, 15 U.S.C. § 7001(c), or authorize electronic delivery of any of the notices described in section 103(b) of that Act, 15 U.S.C. § 7003(b).

Sec. 114. NEW SECTION. 489.1303 SAVINGS CLAUSE. This chapter does not affect an action commenced, proceeding brought, or right accrued be-

fore this chapter takes effect.

Sec. 115. NEW SECTION. 489.1304 APPLICATION TO EXISTING RELATIONSHIPS. 1. Before January 1, 2011, this chapter governs all of the following: a. A limited liability company formed on or after January 1, 2009. b. Except as otherwise provided in subsection 3, a limited liability company formed before

January 1, 2009, which elects, in themanner provided in its operating agreement or by law for amending the operating agreement, to be subject to this chapter. 2. Except as otherwise provided in subsection 3, on and after January 1, 2011, this chapter

governs all limited liability companies. 3. For the purposes of applying this chapter to a limited liability company formed before

January 1, 2009, all of the following apply: a. The limited liability company’s articles of organization are deemed to be the company’s

certificate of organization. b. For the purposes of applying section 489.102, subsection 12, and subject to section

489.112, subsection 4, language in the limited liability company’s articles of organization des- ignating the limited liability company’s management structure operates as if that language were in the operating agreement.

DIVISION II CONVERSION FOR CORPORATIONS AND OTHER ENTITIES

Sec. 116. Section 490.122, subsection 1, paragraph l, Code Supplement 2007, is amended to read as follows: l. Articles of merger, or share exchange, or conversion $ 50. . . . . . . . . . . . . . . . . . . . . . . . .

Sec. 117. Section 490.1101, Code 2007, is amended by adding the following new subsec- tions: NEW SUBSECTION. 0A. “Converted entity” means a corporation or other entity into

which a converting entity converts pursuant to sections 490.1111 through 490.1114. NEWSUBSECTION. 0B. “Converting entity”means a corporation or other entity that con-

verts into an other entity or corporation pursuant to section 490.1101.6 NEW SUBSECTION. 0C. “Governing statute” of a corporation or other entity means the

statute that governs the corporation or other entity’s internal affairs.

Sec. 118. NEW SECTION. 490.1111 CONVERSION. 1. An other entity may convert to a domestic corporation, and a domestic corporation may

convert to an other entity pursuant to this section and sections 490.1112 through 490.1114 and a plan of conversion, if all of the following apply:

___________________ 6 According to enrolled Act; the phrase “section 490.1111” probably intended

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a. The other entity’s governing statute authorizes the conversion. b. The conversion is not prohibited by the law of the jurisdiction that enacted the governing

statute. c. The other entity complies with its governing statute in effecting the conversion. 2. A plan of conversion must be in a record and must include all of the following: a. The name and form of the converting entity before conversion. b. The name and form of the converted entity after conversion. c. The terms and conditions of the conversion, including the manner and basis for convert-

ing interests in the converting entity into any combination ofmoney, interests in the converted entity, and other consideration. d. The organizational documents or articles of incorporation and bylaws of the converted

entity.

Sec. 119. NEW SECTION. 490.1112 ACTION ON PLAN OF CONVERSION BY CON- VERTING DOMESTIC CORPORATION. 1. In the case of a domestic corporation that is being converted into an other entity all of the

following apply: a. The plan of conversionmust be adopted by the domestic corporation’s board of directors. b. After adopting the plan of conversion, the domestic corporation’s board of directorsmust

submit the plan to the domestic corporation’s shareholders for their approval. The board of directors must also transmit to the shareholders a recommendation that the shareholders ap- prove the plan, unless the board of directors makes a determination that because of conflicts of interest or other special circumstances it should notmake such a recommendation, inwhich case the board of directorsmust transmit to the shareholders the basis for that determination. c. The domestic corporation must notify each shareholder of the domestic corporation,

whether or not entitled to vote, of the meeting of shareholders at which the plan is to be sub- mitted for approval. Thenoticemust state that thepurpose, or oneof thepurposes, of themeet- ing is to consider the plan of conversion andmust contain or be accompanied by a copy or sum- mary of the plan of conversion. The notice shall include or be accompanied by a copy of the organic documents as they will be in effect immediately after the conversion. d. The domestic corporation’s board of directors may condition its submission of the plan

of conversion to the domestic corporation’s shareholders on any basis. e. Unless the articles of incorporation, bylaws, or the board of directors of the domestic cor-

poration require a greater vote or a greater number of votes to be present, the approval of the plan of conversion shall require the approval of the domestic corporation’s shareholders at a meeting at which a quorum consisting of at least a majority of the votes entitled to be cast on the plan exists, and, if any classes or series of shares is entitled to vote as a separate group on the plan of conversion, the approval of each such separate voting group at a meeting at which a quorum of the voting group consisting of at least a majority of the votes entitled to be cast on the conversion by that voting group is present. f. If any provision of the articles of incorporation, bylaws or an agreement of the domestic

corporation towhich any of the directors or shareholders of the domestic corporation are par- ties, adopted or entered into before the effective date of this section, applies to amerger of the corporation and the document does not refer to a conversion of the corporation, the provision shall be deemed to apply to a conversion of the corporation until such provision is subsequent- ly amended. g. If as a result of the conversion as provided in this subsection, one or more shareholders

of the domestic corporationwould become subject to owner liability for the debts, obligations, or liabilities of any other person or entity, approval of the plan of conversion shall require the execution, by each such shareholder of thedomestic corporation, of a separatewritten consent to become so subject to such owner liability. 2. After a conversion is approved as provided in subsection 1, and at any time before a filing

is made under section 490.1113, a domestic corporation that is being converted may amend its plan of conversion or abandon the planned conversion as follows:

665 LAWS OF THE EIGHTY-SECOND G.A., 2008 SESSION CH. 1162

a. As provided in the plan of conversion. b. Except as prohibited by the plan of conversion, by the same consent as was required to

approve the plan of conversion.

Sec. 120. NEW SECTION. 490.1113 FILINGS REQUIRED FOR CONVERSION — EF- FECTIVE DATE. 1. After a plan of conversion is approved, all of the following apply: a. Adomestic corporation that is being converted into another entity shall deliver to the sec-

retary of state for filing articles of conversion, which must include all of the following: (1) A statement that the domestic corporation has been converted into an other entity. (2) The name and form of the other entity and the jurisdiction of its governing statute. (3) The date the conversion is effective under the governing statute of the converted entity. (4) A statement that the conversion was approved as required by this chapter. (5) A statement that the conversion was approved as required by the governing statute of

the converted entity. (6) If the converted entity is a foreign other entity not authorized to transact business in this

state, the street and mailing address of an office which the secretary of state may use for the purposes of section 490.1114, subsection 3. b. If the converting entity is not a converting domestic corporation, the converting entity

shall deliver to the secretary of state for filing articles of incorporation, which must include, in addition to the information required by section 490.202, all of the following: (1) A statement that the domestic corporation was converted from an other entity. (2) The name and form of the other entity and the jurisdiction of its governing statute. (3) A statement that the conversionwas approved in amanner that complied with the other

entity’s governing statute. 2. A conversion becomes effective according to the following: a. If the converted entity is a domestic corporation, when the articles of incorporation are

filed. b. If the converted entity is not a domestic corporation, as provided by the governing statute

of the converted other entity.

Sec. 121. NEW SECTION. 490.1114 EFFECT OF CONVERSION. 1. A domestic corporation or other entity that has been converted pursuant to this article is

for all purposes the same domestic corporation or other entity that existed before the conver- sion. 2. When a conversion takes effect, all of the following apply: a. All property owned by the converting entity remains vested in the converted entity. b. All debts, liabilities, and other obligations of the converting entity continue as obligations

of the converted entity. c. An action or proceeding pending by or against the converting entity may be continued as

if the conversion had not occurred. d. The shares or interests of the converting entity are reclassified into shares, interests, oth-

er securities, obligations, rights to acquire shares, interests or other securities, or into cash or other property in accordance with the plan of conversion; and the shareholders or interest holders of the converting entity are entitled only to the rights provided to themunder the terms of the conversion and to any appraisal rights they may have under the organic law of the con- verting entity. e. Except as prohibited by other law, all of the rights, privileges, immunities, powers, and

purposes of the converting entity remain vested in the converted entity. f. Except as otherwise provided in the plan of conversion, the terms and conditions of the

plan of conversion take effect. g. Except as otherwise agreed, the conversion does not dissolve a converting domestic cor-

poration for the purposes of division XIV. 3. A converted entity that is a foreign other entity consents to the jurisdiction of the courts

666LAWS OF THE EIGHTY-SECOND G.A., 2008 SESSIONCH. 1162

of this state to enforce any obligation owed by the converting corporation, if before the conver- sion the converting corporation was subject to suit in this state on the obligation. A converted other entity that is a foreign other entity and not authorized to transact business in this state appoints the secretary of state as its agent for service of process for purposes of enforcing an obligation under this subsection. Service on the secretary of state under this subsection is made in the same manner and with the same consequences as in section 490.504.

Sec. 122. Section 490.1302, subsection 1, Code 2007, is amended by adding the following new paragraph: NEWPARAGRAPH. f. Consummation of a conversion of the corporation to an other entity

pursuant to sections 490.1111 through 490.1114.

DIVISION III CONFORMING AMENDMENTS

Sec. 123. Section 9H.1, subsection 16, Code 2007, is amended to read as follows: 16. “Limited liability company” means a limited liability company as defined in section

489.102 or 490A.102.

Sec. 124. Section 9H.4, subsection 8, Code 2007, is amended to read as follows: 8. A corporation or its subsidiary organized under chapter 490or a limited liability company

organized under chapter 489 or 490A and to which section 312.8 is applicable.

Sec. 125. Section 10.1, subsection 9, Code 2007, is amended to read as follows: 9. “Farmers cooperative limited liability company” means a limited liability company orga-

nized under chapter 489 or 490A, if cooperative associations hold one hundred percent of all membership interests in the limited liability company. Farmers cooperative associationsmust hold at least seventy percent of all membership interests in the limited liability company. If more than one type of membership interest is established, including any series as provided in section 489.1201 or 490A.305 or any class or group as provided in section 489.1201 or 490A.307, farmers cooperative associations must hold at least seventy percent of all member- ship interests of that type.

Sec. 126. Section 10.1, subsection 17, Code 2007, is amended to read as follows: 17. “Networking farmers limited liability company”means a limited liability company, oth-

er than a family farm limited liability company as defined in section 9H.1, organized under chapter 489 or 490A if all of the following conditions are satisfied: a. Qualified farmers must hold at least fifty-one percent of all membership interests in the

limited liability company. Ifmore than one type ofmembership interest is established, includ- ing any series as provided in section 489.1201 or 490A.305 or any class or group as provided in section 489.1201 or 490A.307, qualified farmers must hold at least fifty-one percent of all membership interests of that type. b. Qualified persons must hold at least seventy percent of all membership interests in the

limited liability company. Ifmore than one type ofmembership interest is established, includ- ing any series as provided in section 489.1201 or 490A.305 or any class or group as provided in section 489.1201 or 490A.307, qualified persons must hold at least seventy percent of all membership interests of that type.

Sec. 127. Section 10.10, subsection 1, paragraph c, Code 2007, is amended to read as fol- lows: c. Less than fifty percent of the interest in the farmers cooperative limited liability company

is held bymemberswhich areparties to intra-company loanagreements. Ifmore thanone type of membership interest is established, including any series as provided in section 489.1201 or 490A.305 or any class or group as provided in section 489.1201 or 490A.307, less than fifty per- cent of the interest in each type of membership shall be held by members which are parties to intra-company loan agreements.

667 LAWS OF THE EIGHTY-SECOND G.A., 2008 SESSION CH. 1162

Sec. 128. Section 10B.1, subsection 7, Code 2007, is amended to read as follows: 7. “Limited liability company” means a foreign or domestic limited liability company, in-

cluding a limited liability company as defined in section 489.102 or 490A.102.

Sec. 129. Section 10B.4, subsection 1, Code 2007, is amended to read as follows: 1. Abiennial report shall be filed by a reporting entitywith the secretary of state onor before

March 31 of each odd-numbered year as required by rules adopted by the secretary of state pursuant to chapter 17A. However, a reporting entity required to file a biennial report pursu- ant to chapter 489or 490A, 490, 490A, 496C, 497, 498, 499, 501, 501A, or 504 shall file the report required by this section in the same year as required by that chapter. The reporting entitymay file the report required by this section together with the biennial report required to be filed by one of the other chapters referred to in this subsection. The reports shall be filed on forms pre- pared and supplied by the secretary of state. The secretary of statemay provide for combining its reporting forms with other biennial reporting forms required to be used by the reporting entities.

Sec. 130. Section 10B.7, unnumbered paragraph 1, Code Supplement 2007, is amended to read as follows: Lessees of agricultural land under section 9H.4, subsection 2, paragraph “c”, for research

or experimental purposes, shall file a biennial report with the secretary of state on or before March 31 of each odd-numbered year on forms adopted pursuant to chapter 17A and supplied by the secretary of state. However, a lessee required to file a biennial report pursuant to chap- ter 489 or 490A, 490, 490A, 496C, 497, 498, 499, 501, 501A, or 504 shall file the report required by this section in the same year as required by that chapter. The lessee may file the report re- quired by this section together with the biennial report required to be filed by one of the other chapters referred to in this paragraph. The report shall contain the following information for the reporting period:

Sec. 131. Section 10C.1, subsection 11, Code 2007, is amended to read as follows: 11. “Limited liability company” means a limited liability company as defined in section

489.102 or 490A.102.

Sec. 132. Section 10D.1, subsection 3, Code 2007, is amended to read as follows: 3. “Qualified enterprise” or “enterprise”means a limited liability company as defined in sec-

tion 489.102 or 490A.102, a domestic or foreign corporation subject to chapter 490, a nonprofit corporation organized under chapter 504, a limited liability company as defined in section 490A.102, a cooperative association as defined in section 10.1, or a foreign business as defined in section 9I.1.

Sec. 133. Section 203.1, subsection 10, paragraph j, unnumbered paragraph 1, Code Sup- plement 2007, is amended to read as follows: A limited liability company as defined in section 489.102 or 490A.102 that meets all of the

following requirements:

Sec. 134. Section 421.26, Code Supplement 2007, is amended to read as follows: 421.26 PERSONAL LIABILITY FOR TAX DUE. If a licensee or other person under section 452A.65, a retailer or purchaser under chapter

423A, 423B, or 423E, or section 423.31 or 423.33, or a retailer or purchaser under section 423.32, a user under section 423.34, or a permit holder or licensee under section 453A.13, 453A.16, or 453A.44 fails topaya taxunder those sectionswhendue, anofficer of a corporation or association, notwithstanding sections section 489.304 or sections 490A.601 and 490A.602, amember ormanager of a limited liability company, or a partner of a partnership, having con- trol or supervision of or the authority for remitting the tax payments and having a substantial legal or equitable interest in the ownership of the corporation, association, limited liability company, or partnership, who has intentionally failed to pay the tax is personally liable for the

668LAWS OF THE EIGHTY-SECOND G.A., 2008 SESSIONCH. 1162

payment of the tax, interest, andpenalty due andunpaid. However, this section shall not apply to taxes on accounts receivable. The dissolution of a corporation, association, limited liability company, or partnership shall not discharge a person’s liability for failure to remit the tax due.

Sec. 135. Section 422.16, subsection 4, Code Supplement 2007, is amended to read as fol- lows: 4. Every withholding agent who fails to withhold or pay to the department any sums re-

quiredby this chapter to bewithheld andpaid, shall be personally, individually, and corporate- ly liable therefor to the state of Iowa, and any sum or sums withheld in accordance with the provisions of subsections 1 and 12, shall be deemed to be held in trust for the state of Iowa. Notwithstanding sections section 489.304 or sections 490A.601 and 490A.602, this subsection applies to a member or manager of a limited liability company.

Sec. 136. Section 476C.1, subsection 6, paragraph b, subparagraph (6), Code 2007, is amended to read as follows: (6) A cooperative corporation organized pursuant to chapter 497 or a limited liability corpo-

ration company organized pursuant to chapter 489 or 490Awhose shares andmembership are held by an entity that is not prohibited from owning agricultural land under chapter 9H.

Sec. 137. Section 488.108, subsection 4, paragraph b, subparagraph (4), Code 2007, is amended to read as follows: (4) For a limited liability company, under chapter 489, section 489.108, 489.109, or 489.706

and for a limited liability company under chapter 490A, section 490A.401, 490A.402, or 490A.1322.

Sec. 138. Section 490.401, subsection 2, paragraph b, subparagraph (4), Code 2007, is amended to read as follows: (4) For a limited liability company, under chapter 489, section 489.108, 489.109, or 489.706

and for a limited liability company under chapter 490A, section 490A.401, 490A.402, or 490A.1322.

Sec. 139. Section 501A.102, subsections 9 and 13, Code 2007, are amended to read as fol- lows: 9. “Domestic business entity”means abusiness entity organizedunder the lawsof this state,

including but not limited to a limited liability company as defined in section 489.102 or 490A.102; a corporation organized pursuant to chapter 490; a nonprofit corporationorganized under chapter 504; a limited liability company as defined in section 490A.102; a partnership, limited partnership, limited liability partnership, or limited liability limited partnership as pro- vided in chapter 486A or 488; or a cooperative association or other cooperative organized un- der this chapter or chapter 497, 498, 499, or 501. 13. “Iowa limited liability company”means a limited liability company governed by chapter

489 or 490A.

Sec. 140. Section 501A.1101, subsection 1, Code Supplement 2007, is amended to read as follows: 1. AUTHORIZATION. Unless otherwiseprohibited, cooperatives organizedunder the laws

of this state, including cooperatives organized under this chapter or traditional cooperatives, may merge or consolidate with each other, an Iowa limited liability company under the provi- sions of section 489.1015 or 490A.1207, or other business entities organized under the laws of another state by complying with the provisions of this section and the law of the state where the surviving or new business entity will exist. A cooperative shall not merge or consolidate with a business entity organized under the laws of this state, other than a traditional coopera- tive, unless the law governing the business entity expressly authorizes merger or consolida- tionwith a cooperative. This subsection does not authorize a foreign business entity to do any act not authorized by the law governing the foreign business entity.

669 LAWS OF THE EIGHTY-SECOND G.A., 2008 SESSION CH. 1162

Sec. 141. Section 501A.1101, subsection 2, paragraphs a through c, Code Supplement 2007, are amended to read as follows: a. The names of the constituent domestic cooperative, the name of any Iowa limited liability

company that is a party to the merger, to the extent authorized under section 489.1015 or 490A.1207, and any foreign business entities. b. The name of the surviving or new domestic cooperative, Iowa limited liability company

as required by section 489.1015 or 490A.1207, or other foreign business entity. c. The manner and basis of converting membership or ownership interests of the constitu-

ent domestic cooperative, the Iowa limited liability company that is a party as provided in sec- tion 489.1015 or 490A.1207, or foreignbusiness entity intomembership or ownership interests in the surviving or new domestic cooperative, the surviving Iowa limited liability company as authorized in section 489.1015 or 490A.1207, or foreign business entity.

Sec. 142. Section 501A.1101, subsection 5, paragraph c, Code Supplement 2007, is amend- ed to read as follows: c. If a merger involves an Iowa limited liability company, this subsection is subject to the

provisions of section 489.1015 or 490A.1207.

Sec. 143. Section 501A.1102, subsection 2, unnumbered paragraph 1, Code 2007, is amended to read as follows: An Iowa limited liability companymay only participate in amerger under this section to the

extent authorized under section 489.1015 or 490A.1207. A parent domestic cooperative or a subsidiary that is a domestic cooperativemay complete themerger of a subsidiary as provided in this section. However, if either the parent cooperative or the subsidiary is a business entity organized under the laws of this state, themerger of the subsidiary is not authorized under this section unless the law governing the business entity expressly authorizes merger with a co- operative.

Sec. 144. Section 501A.1103, subsection 2, paragraph a, subparagraphs (3) and (6), Code 2007, are amended to read as follows: (3) The abandonment is approved in such manner as may be required by section 489.1015

or 490A.1207 for the involvement of an Iowa limited liability company, or for a foreignbusiness entity by the laws of the state under which the foreign business entity is organized. (6) The plan is abandoned before the effective date of the plan by a resolution of the board

of any constituent domestic cooperative abandoning the plan ofmerger approved by the affir- mative vote of a majority of the directors present, subject to the contract rights of any other person under the plan. If a plan of merger is with a domestic business entity or foreign busi- ness entity, the plan of merger may be abandoned before the effective date of the plan by a resolution of the foreignbusiness entity adopted according to the laws of the state underwhich the foreign business entity is organized, subject to the contract rights of any other person un- der the plan. If the plan ofmerger is with an Iowa limited liability company, the plan ofmerger may be abandoned by the Iowa limited liability company as provided in section 489.1015 or 490A.1207, subject to the contractual rights of any other person under the plan.

Sec. 145. Section 504.401, subsection 2, paragraph b, subparagraph (4), Code 2007, is amended to read as follows: (4) For a limited liability company, under chapter 489, section 489.108, 489.109, or 489.706

and for a limited liability company under chapter 490A, section 490A.401, 490A.402, or 490A.1322.

Sec. 146. Section 504.403, subsection 1, paragraph b, subparagraph (4), Code 2007, is amended to read as follows: (4) For a limited liability company, under chapter 489, section 489.108, 489.109, or 489.706

and for a limited liability company under chapter 490A, section 490A.401, 490A.402, or 490A.1322.

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Sec. 147. Section 524.303, subsection 2, Code 2007, is amended to read as follows: 2. Applicable fees, payable to the secretary of state as specified in section 489.117 or

490A.124 or section 490.122 or 490A.124, for the filing and recording of the articles of incorpo- ration.

Sec. 148. Section 524.315, subsection 1, Code 2007, is amended to read as follows: 1. A state bank organized as a limited liability company under this chapter shall also be sub-

ject to chapter 489, the revised uniform limited liability companyAct or chapter 490A, the Iowa limited liability companyAct. If a provision of chapter 489, the reviseduniform limited liability company Act, or chapter 490A, the Iowa limited liability company Act conflicts with a provi- sion of this chapter or any rule of the superintendent adopted pursuant to this chapter, the pro- visions of this chapter or rule of the superintendent shall control.

Sec. 149. Section 524.1309, unnumbered paragraph 1, Code 2007, is amended to read as follows: In lieu of the dissolution procedure prescribed in sections 524.1303 to 524.1306, a state bank

maycease to carry on thebusiness of bankingand, after compliancewith this section, continue as a corporation subject to chapter 490; or if the state bank is organized as a limited liability company under this chapter, continue as a limited liability company subject to chapter 489 or 490A.

Sec. 150. Section 524.1309, subsections 1, 3, 5, 6, 7, 8, and 9, Code 2007, are amended to read as follows: 1. A state bank that has commenced business may propose to voluntarily cease to carry on

the business of banking and become a corporation subject to chapter 490, or a limited liability company subject to chapter 489 or 490A, upon the affirmative vote of the holders of at least amajority of the shares entitled to vote on such proposal, adopting a plan involving both a pro- vision for acquisition of its assets and assumption of its liabilities by another state bank, na- tional bank, or other financial institution insured by the federal deposit insurance corporation, and a provision for continuance of its business if acquisition of its assets and assumption of its liabilities is not effected, or any other plan providing for the cessation of banking business and the payment of its liabilities. 3. Immediately upon adoption and approval of a plan to voluntarily cease to carry on the

business of banking and become a corporation subject to chapter 490, or a limited liability company subject to chapter 489 or 490A, the state bank shall deliver to the superintendent a plan to cease the business of banking and become a corporation subject to chapter 490, or a limited liability company subject to chapter 489 or 490A, which shall be signed by two of its duly authorized officers and shall contain the name of the state bank, the post office address of its principal placeof business, thenameandaddress of its officers anddirectors, thenumber of shares entitled to vote on the plan and the number of shares voted for or against the plan, respectively, the nature of the business to be conducted by the corporation under chapter 490, or by the limited liability company subject to chapter 489 or 490A, and the general nature of the assets to be held by the corporation or company. 5. The board of directors has full power to complete the settlement of the affairs of the state

bank. Within thirty days after approval by the superintendent of the plan to cease the business of bankingandbecomeacorporation subject to chapter 490, or a limited liability company sub- ject to chapter 489 or 490A, the state bank shall give notice of its intent to persons identified in section 524.1305, subsection 3, in themanner provided for in that subsection. In completing the settlement of its affairs as a state bank, the state bank shall also follow the procedure pre- scribed in section 524.1305, subsections 4, 5, and 6. 6. Upon completion of all the requirements of this section, the state bank shall deliver to the

superintendent articles of intent to be subject to chapter 490 or 489 or 490A, together with the applicable filing and recording fees,which shall set forth that the state bankhas compliedwith this section, that it has ceased to carry on the business of banking, and the information re-

671 LAWS OF THE EIGHTY-SECOND G.A., 2008 SESSION CH. 1162

quired by section 490.202 relative to the contents of articles of incorporation under chapter 490, or articles of organization under chapter 489 or 490A. If the superintendent finds that the state bank has compliedwith this section and that the articles of intent to be subject to chapter 490 or 489 or 490A satisfy the requirements of this section, the superintendent shall deliver them to the secretary of state for filing and recording in the secretary of state’s office, and the superintendent shall file and record them in the office of the county recorder. 7. Upon the filingof the articles of intent to be subject to chapter 490or 489or 490A, the state

bank shall cease to be a state bank subject to this chapter, and shall cease to have the powers of a state bank subject to this chapter and shall become a corporation subject to chapter 490 or a limited liability company subject to chapter 489 or 490A. The secretary of state shall issue a certificate as to the filing of the articles of intent to be subject to chapter 490 or 489 or 490A and send the certificate to the corporation or limited liability company or its representative. The articles of intent to be subject to chapter 490 or 489 or 490A shall be the articles of incorpo- ration of the corporation or a limited liability company. The provisions of chapter 490 or 489 or 490Abecomingapplicable to a corporationor limited liability company formerly doingbusi- ness as a state bank shall not affect any right accrued or established, or liability or penalty in- curred under this chapter prior to the filing with the secretary of state of the articles of intent to be subject to chapter 490 or 489 or 490A. 8. A shareholder of a state bankwho objects to adoption by the state bank of a plan to cease

to carry on the business of banking and to continue as a corporation subject to chapter 490, or a limited liability company subject to chapter 489 or 490A, is entitled to appraisal rights pro- vided for in chapter 490, division XIII, or in chapter 489, section 489.604 or 490A, subchapter VII. 9. A state bank, at any time prior to the approval of the articles of intent to become subject

to chapter 490or 489or 490A,may revoke theproceedings in themanner prescribed by section 524.1306.

Sec. 151. Section 524.2001, Code 2007, is amended to read as follows: 524.2001 APPLICABILITY OF OTHER CHAPTERS. Chapters 489, 490, 490A, 491, 492, and 493 do not apply to banks except as provided by this

chapter.

Sec. 152. Section 547.1, Code 2007, is amended to read as follows: 547.1 USE OF TRADE NAME — VERIFIED STATEMENT REQUIRED. A person shall not engage in or conduct a business under a trade name, or an assumed name

of a character other than the true surname of each person owning or having an interest in the business, unless the person first records with the county recorder of the county in which the business is to be conducted a verified statement showing the name, post office address, and residence address of eachpersonowningor having an interest in the business, and the address where the business is to be conducted. However, this provision does not apply to any person organized or incorporated in this state as a domestic entity or authorized to do business in this state as a foreign entity, if the person is a limited partnership under chapter 488; a corporation under chapter 490; a limited liability company under chapter 489 or 490A; a professional cor- porationunder chapter 496C; a cooperative or cooperative association under chapter 497, 498, 499, 501, or 501A; or a nonprofit corporation under chapter 504.

DIVISION IV REPEALS

SUBCHAPTER XVII REPEAL

Sec. 153. NEW SECTION. 490A.1701 REPEAL. This chapter is repealed on December 31, 2010.

672LAWS OF THE EIGHTY-SECOND G.A., 2008 SESSIONCH. 1162

Sec. 154. FUTURE ELIMINATION OF NONCONFORMING REFERENCES. The follow- ing sections, as amended by this Act, or as amended by a subsequent Act, are amended as fol- lows: 1. Sections 9H.1, 10B.1, 10C.1, 10D.1, 203.1, and 501A.102, by striking from the sections the

word and figure “or 490A.102”. 2. Sections 9H.4, 10.1, 10B.4, 10B.7, 476C.1, 501A.102, 524.1309, and 547.1, by striking from

the sections the word and figure “or 490A”. 3. Sections 10.1 and 10.10, by striking from the sections the word and figure “or 490A.305”. 4. Sections 10.1 and 10.10, by striking from the sections the word and figure “or 490A.307”. 5. Sections 421.26 and 422.16, by striking from the sections the words and figures “or sec-

tions 490A.601 and 490A.602”. 6. Sections 488.108, 490.401, 504.401, and 504.403, by striking from the sections the words

and figures “and for a limited liability company under chapter 490A, section 490A.401, 490A.402, or 490A.1322”. 7. Sections 501A.1101, 501A.1102, and 501A.1103, by striking from the sections the word

and figure “or 490A.1207”. 8. Section 524.303, by striking from the section the word and figure “or 490A.124”. 9. Section 524.315, by striking from the section the words and figure “or chapter 490A, the

Iowa limited liability company Act”. 10. Section 524.1309, by striking from the section the words and figures “or 490A, subchap-

ter VII”. 11. Section 524.2001, by striking from the section the figure “490A,”.

DIVISION V EFFECTIVE DATES

Sec. 155. EFFECTIVE DATES. 1. Except as provided in subsection 2, this Act takes effect on January 1, 2009. 2. The section of division IV of this Act that provides for the future elimination of noncon-

forming references takes effect on December 31, 2010.

Approved May 10, 2008

_________________________

CH. 1163CH. 1163

CHAPTER 1163 WATER USE — PERMIT FEES AND FUNDING

H.F. 2672

AN ACT relating to water use permit fees, creating a new water use permit fund, and making appropriations.

Be It Enacted by the General Assembly of the State of Iowa:

Section 1. Section 423.3, Code Supplement 2007, is amended by adding the following new subsection: NEW SUBSECTION. 93. Water use permit fees paid pursuant to section 455B.265.

Sec. 2. Section 455B.265, Code 2007, is amended by adding the following new subsection: NEWSUBSECTION. 6. The department may charge a fee to a person who has been grant-