Major changes to Minnesota LLC laws expected
by attorney Aaron Hall, a Small Business Minnesota member
The Minnesota Legislature is expected to make major changes to Minnesota LLC law during the 2014 legislative session. The legislation has overwhelming bipartisan support. If enacted, the changes would affect nearly 200,000 limited liability companies formed in Minnesota since 1993.
The changes include shifting from a corporation-based model to the partnership-based model used by all other states, permitting a “series LLC,” and adopting best practices recommended by business law experts. The legislation has a grandfather clause allowing existing LLCs to continue under some of the old provisions.
Minnesota’s current LLC laws, found in Minnesota Statutes chapter 322B, are based on a legislation template named the “Uniform LLC Act.” The original Act was drafted in 1996 and updated in 2006 under the title, “Revised Uniform LLC Act.” Minnesota’s pending legislation would generally implement the 2006 updates.
Daniel Kleinberger, one of the drafters and a professor at William Mitchell College of Law, noted significant changes concerning
- the operating agreement
- the “un-cabining” of fiduciary duty
- the obligation of good faith and fair dealing
- an owner’s legitimate self-interest
- a reformation of the duty of care
- the “shelf LLC” issue
- the question of “statutory apparent authority”
- statements of authority by position
- default rules on management structure
- charging orders
- a remedy for oppressive conduct
- derivative claims and special litigation committees
- organic transactions — mergers, conversions, and domestications
The Minnesota legislation has virtually no significant opposition, and enactment is expected.
The 2006 updates have been enacted by California, District of Columbia, Florida, Idaho, Iowa, Nebraska, New Jersey, Utah, and Wyoming. The 2006 updates were endorsed by the Minnesota State Bar Association and American Bar Association.
Additional information can be found at http://ThompsonHall.com/Minnesota-Revised-LLC-Act/
About the Author: Aaron Hall is CEO and business attorney at Thompson Hall, a law firm in downtown Minneapolis exclusively designed to serve the needs of business owners. The attorneys help business owners strategize, get their companies healthy, and grow. Aaron’s bio is available at http://thompsonhall.com/attorneys/aaron-hall/ Phone (612) 466-0040