Bill Summary – FastDemocracy

Stricken language would be deleted from and underlined language would be added to present law.
                                    Act 12 of the Second Extraordinary Session
 State of Arkansas                                                                        Call Item 5
 93rd General Assembly                        A Bill
 Second Extraordinary Session, 2021                                                HOUSE BILL 1004
 4
 By: Representative Dalby
 By: Senator J. Dismang
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                                   For An Act To Be Entitled
                AN ACT TO MODIFY THE UNIFORM LIMITED LIABILITY
                COMPANY ACT; TO CLARIFY THE APPLICABILITY OF THE
                UNIFORM LIMITED LIABILITY COMPANY ACT AND RELATED
                BUSINESS STATUTES; TO CONFIRM AND RETAIN THE LIMITED
                LIABILITY STATUS AND LIMITED LIABILITY PROTECTION OF
                CERTAIN LIMITED LIABILITY COMPANIES; TO DECLARE AN
                EMERGENCY; AND FOR OTHER PURPOSES.
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                                               Subtitle
                       TO CLARIFY THE APPLICABILITY OF THE
                       UNIFORM LIMITED LIABILITY COMPANY ACT; TO
                       CONFIRM AND RETAIN THE LIMITED LIABILITY
                       STATUS AND LIMITED LIABILITY PROTECTION
                       OF CERTAIN LIMITED LIABILITY COMPANIES;
                       AND TO DECLARE AN EMERGENCY.
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 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF ARKANSAS:
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        SECTION 1.        DO NOT CODIFY.      Implementation of Uniform Limited Liability
 Company Act.
        (a)    The General Assembly declares that:
                (1)    Through inadvertence, Acts 2021, No. 1041,  1, provided for
 the repeal of the Small Business Entity Tax Pass Through Act,  4-32-101 et
 seq., effective ninety (90) days after April 28, 2021, rather than providing
 for the repeal to become effective on September 1, 2021, to correspond with
 the effective date of the Uniform Limited Liability Company Act,  4-38-101
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                                                                                 HB1004
 et seq., enacted by Acts 2021, No. 1041,  26, and the transition provisions
 provided therein;
            (2)   It is the intent of this act to:
                     (A)   Treat the repeal of the Small Business Entity Tax Pass
 Through Act,  4-32-101 et seq., and all references contained in Acts 2021,
 No. 1041, to the Small Business Entity Tax Pass Through Act,  4-32-101 et
 seq., by Acts 2021, No. 1041, as effective on September 1, 2021;
                     (B)   Provide for all purposes, including without limitation
 upon the books and records of the Secretary of State, the continued existence
 of all limited liability companies formed or registered to do business under
 the Small Business Entity Tax Pass Through Act,  4-32-101 et seq., and
 continuing to operate thereunder but for the repeal of the Small Business
 Entity Tax Pass Through Act,  4-32-101 et seq., by Acts 2021, No. 1041,  1,
 until September 1, 2021, at which time all such limited liability companies
 will begin operating under the Uniform Limited Liability Company Act,  4-38-
 101 et seq., except as otherwise provided by law;
                     (C)   Ratify all actions taken by a limited liability
 company that occurred after July 27, 2021, and before September 1, 2021, that
 would have been authorized or required under the Small Business Entity Tax
 Pass Through Act,  4-32-101 et seq., but for its repeal by Acts 2021, No.
 1041,  1; and
                     (D)   Require the Secretary of State to continue the
 registration and other filings of all limited liability companies formed or
 registered to do business and operating under the Small Business Entity Tax
 Pass Through Act,  4-32-101 et seq., that were not voluntarily or
 involuntarily dissolved before September 1, 2021, with no change in status
 except as provided by the Uniform Limited Liability Company Act,  4-38-101
 et seq., enacted by Acts 2021, No. 1041,  26, or other applicable law;
            (3)   A limited liability company formed or registered to do
 business before September 1, 2021, and not dissolved or terminated retains
 its status as a limited liability company without interruption until
 otherwise dissolved or terminated; and
            (4)   Section 4-38-110 applies to a limited liability company
 formed or registered to do business before September 1, 2021, notwithstanding
 the repeal of the Small Business Entity Tax Pass Through Act,  4-32-101 et
 seq., by Acts 2021, No. 1041,  1.
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      (b)   The General Assembly ratifies, validates, confirms, approves, and
 cures the following that occurred after July 27, 2021, and before September
 1, 2021:
            (1)   Any act by a limited liability company that would have been
 authorized or required under the Small Business Entity Tax Pass Through Act,
  4-32-101 et seq., but for its repeal by Acts 2021, No. 1041,  1; and
            (2)   In reference to a limited liability company, any action of a
 public or private individual or entity that would have been valid under the
 Small Business Entity Tax Pass Through Act,  4-32-101 et seq., but for its
 repeal by Acts 2021, No. 1041,  1.
      (c)   The General Assembly recognizes the validity, notwithstanding the
 repeal of the Small Business Entity Tax Pass Through Act,  4-32-101 et seq.,
 by Acts 2021, No. 1041,  1, of the following actions that may have occurred
 after July 27, 2021, and before September 1, 2021, by a limited liability
 company if the actions are otherwise valid:
            (1)   Issuance of any bonds, notes, warrants, certificates, or
 other evidences of indebtedness;
            (2)   Any action regarding a title to property;
            (3)   Any cause of action or other legal claim or right arising
 from an action taken or a failure to act;
            (4)   Creation and approval of any contracts, agreements,
 licenses, or other documents; and
            (5)   Any transaction or other act entered into or performed by a
 limited liability company that would have been authorized or permitted under
 the Small Business Entity Tax Pass Through Act,  4-32-101 et seq., but for
 its repeal by Acts 2021, No. 1041,  1.
      (d)   The act or acts of a member or manager of a limited liability
 company that would have been protected against personal liability under the
 Small Business Entity Tax Pass Through Act,  4-32-101 et seq., but for its
 repeal by Acts 2021, No. 1041,  1, shall be protected against personal
 liability to the same extent as provided by the Small Business Entity Tax
 Pass Through Act,  4-32-101 et seq., had it not been repealed by Acts 2021,
 No. 1041,  1.
      (e)   The General Assembly declares that a limited liability company
 formed or registered to do business before September 1, 2021, and otherwise
 in compliance with the Small Business Entity Tax Pass Through Act,  4-32-101
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 et seq., on September 1, 2021, but for its repeal by Acts 2021, No. 1041, 
 1, retains its status as a limited liability company without interruption
 until otherwise dissolved or terminated.
       (f)(1)     This act is not intended to destroy or otherwise disturb any
 vested rights.
                (2)   If a right is found by a court to be a vested right, the
 court shall uphold the vested right.
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       SECTION 2.      Arkansas Code  4-38-110 is amended to read as follows:
       4-38-110.      Application to existing relationships.
       (a)   Before September 1, 2021, this This chapter governs only:
                (1)   a limited liability company formed or registered to do
 business on or after September 1, 2021; and
                (2)   except as otherwise provided in subsection (c), a limited
 liability company formed or registered to do business before September 1,
 2021, which elects, in the manner provided in its operating agreement or by
 operation of law for amending the operating agreement, to be subject to this
 chapter.
       (b)   Except as otherwise provided in subsection (c), on and after
 September 1, 2021, this chapter governs all limited liability companies.
       (c)   For purposes of applying this chapter to a limited liability
 company formed or registered to do business before September 1, 2021:
                (1)   the company's articles of organization are deemed to be the
 company's certificate of organization; and
                (2)   for purposes of applying  4-38-102(10) and subject to  4-
 38-107(d), language in the company's articles of organization designating the
 company's management structure operates as if that language were in the
 operating agreement.
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       SECTION 3.      Arkansas Code Title 4, Chapter 38, Subchapter 12, is
 amended to read as follows:
   Subchapter 12  Medical or Dental Limited Liability Company Professional
                              Limited Liability Companies
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       4-38-1201.      Applicability  Definition.
       (a)   As used in this subchapter, "professional service" means a service
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 that may be legally performed under a license or other legally mandated
 personal authorization, including without limitation services rendered by
 certified public accountants, architects, engineers, dentists, physicians,
 and attorneys at law.
      (b)   This subchapter applies only to a limited liability company that
 provides a professional service.
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      4-38-1201. 4-38-1202.      Certification of registration.
      (a)   A limited liability company formed under this chapter and that
 will engage in the practice of medicine must obtain a certificate of
 registration from the Arkansas State Medical Board and must comply with the
 statutes of the Medical Corporation Act,  4-29-301 et seq.
      (b)   A limited liability company formed under this chapter and that
 will engage in the practice of dentistry must obtain a certificate of
 registration and comply with the statutes in the Dental Corporation Act,  4-
 29-401 et seq.
      (c)(1)      An applicant seeking to register a limited liability company
 under this chapter shall obtain the necessary authorization required by its
 licensing authority to:
                     (A)   register as a professional limited liability company
 under this chapter; and
                     (B)   use the name proposed by the applicant for
 registration with the Secretary of State.
               (2)   The Secretary of State may require satisfactory proof of
 compliance with this section before registration.
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      4-38-1202 4-38-1203.      Name  Medical or dental Professional limited
 liability company.
      (a)   The name of a limited liability company which performs a
 professional service shall contain the words Professional Limited Liability
 Company or Professional Limited Company or the abbreviations P.L.L.C.,
 P.L.C., PLLC, PLC, and the words Limited and Company may be
 abbreviated as Ltd. or Co. and may not contain the name of any person who
 is not a member, except that the name of a former member or member of a
 predecessor organization may continue to be included in the name.
      (b)   A limited liability company formed under this chapter, including
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 medical, dental, and professional companies, shall have only one corporate
 suffix, as allowed by subsection (a).
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      SECTION 4.    DO NOT CODIFY.   (a)   A limited liability company that
 registered, filed, or took any action, including without limitation payment
 for an action or service, with the office of the Secretary of State after
 July 27, 2021, and before September 1, 2021, is not required to reregister,
 refile, or make further payment for the same action or service.
      (b)    The Secretary of State shall continue the registration and other
 filings of all limited liability companies formed or registered to do
 business and existing under the Small Business Entity Tax Pass Through Act, 
 4-32-101 et seq., that were not voluntarily or involuntarily dissolved before
 September 1, 2021, with no change in status except as provided by the Uniform
 Limited Liability Company Act,  4-38-101 et seq., enacted by Acts 2021, No.
 1041,  26, or other applicable law.
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      SECTION 5.    DO NOT CODIFY.   Additional savings provisions.
      (a)    It is the intent of this section to:
             (1)   Provide for the transition and continuous operation and
 effect of additional provisions of Arkansas law related to limited liability
 companies and other business entities, whether or not specifically referenced
 in Acts 2021, No. 1041, including without limitation provisions affecting the
 operation and taxation aspects of limited liability companies and other
 business entities:
                   (A)   Under the Uniform Protected Series Act,  4-37-101 et
 seq.; and
                   (B)   Concerning the authorized and unauthorized use of
 business names; and
             (2)   Ratify, validate, confirm, approve, and cure any actions
 under a codified or uncodified provision described in this section.
      (b)    For the period of time after July 27, 2021, and before September
 1, 2021, with respect to Acts 2021, No. 1041,  2-25, 27-30, 32, 34, and 36,
 concerning various definitions and transition provisions from the Small
 Business Entity Tax Pass Through Act,  4-32-101 et seq., to the Uniform
 Limited Liability Company Act,  4-38-101 et seq., the stricken words "Small
 Business Entity Tax Pass Through Act,  4-38-101 et seq.", and all stricken
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 provisions of the Small Business Entity Tax Pass Through Act,  4-38-101 et
 seq., shall be treated as unstricken and operative and the underlined words
 "Uniform Limited Liability Company Act,  4-38-101 et seq." and all
 underlined provisions of the Uniform Limited Liability Company Act,  4-38-
 101 et seq. shall be treated as stricken and inoperative.
       (c)   Any action or obligation of any public or private individual or
 entity that occurred under the following sections after July 27, 2021, and
 before September 1, 2021, that would have been valid and effective but for
 the repeal of the Small Business Entity Tax Pass Through Act,  4-32-101 et
 seq., by Acts 2021, No. 1041,  1, is ratified, validated, confirmed,
 approved, and cured notwithstanding the repeal of the Small Business Entity
 Tax Pass Through Act,  4-32-101 et seq., by Acts 2021, No. 1041,  1:
             (1)    Section 4-37-102(8), amended by Acts 2021, No. 1041,  2;
             (2)    Section 4-37-102(12), amended by Acts 2021, No. 1041,  3;
             (3)    Section 4-37-102(13), amended by Acts 2021, No. 1041,  4;
             (4)    Section 4-37-102(14), amended by Acts 2021, No. 1041,  5;
             (5)    Section 4-37-102(20), amended by Acts 2021, No. 1041,  6;
             (6)    Section 4-37-106, amended by Acts 2021, No. 1041,  7;
             (7)    Section 4-37-107(a)(4), amended by Acts 2021, No. 1041,  8;
             (8)    Section 4-37-108, amended by Acts 2021, No. 1041,  9;
             (9)    Section 4-37-201(c), amended by Acts 2021, No. 1041,  10;
             (10)   Section 4-37-201(d), amended by Acts 2021, No. 1041,  11;
             (11)   Section 4-37-202, amended by Acts 2021, No. 1041,  12;
             (12)   Section 4-37-204(a)(3), amended by Acts 2021, No. 1041, 
 13;
             (13)   Section 4-37-304(f), amended by Acts 2021, No. 1041,  14;
             (14)   Section 4-37-304(g), amended by Acts 2021, No. 1041,  15;
             (15)   Section 4-37-305, amended by Acts 2021, No. 1041,  16;
             (16)   Section 4-37-403, amended by Acts 2021, No. 1041,  17;
             (17)   Section 4-37-502, amended by Acts 2021, No. 1041,  18;
             (18)   Section 4-37-503, amended by Acts 2021, No. 1041,  19;
             (19)   Section 4-37-604, amended by Acts 2021, No. 1041,  20;
             (20)   Section 4-37-605(1), amended by Acts 2021, No. 1041,  21;
             (21)   Section 4-37-606(1), amended by Acts 2021, No. 1041,  22;
             (22)   Section 4-37-607, amended by Acts 2021, No. 1041,  23;
             (23)   Section 4-37-703(c), amended by Acts 2021, No. 1041,  24;
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               (24)   Section 4-37-703(d), amended by Acts 2021, No. 1041,  25;