HOUSE BILL 281
56th legislature - STATE OF NEW MEXICO - first session, 2023
INTRODUCED BY
Greg Nibert
AN ACT
RELATING TO BUSINESS; ENACTING THE REVISED UNIFORM LIMITED LIABILITY COMPANY ACT; REPEALING AND REENACTING A PROVISION OF LAW PERTAINING TO RESTATED ARTICLES OF INCORPORATION; MAKING TECHNICAL AND CONFORMING CHANGES TO THE BUSINESS CORPORATION ACT AND CHAPTER 47, ARTICLE 1 NMSA 1978; PROVIDING PENALTIES.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:
ARTICLE 1
GENERAL PROVISIONS
SECTION 101. [NEW MATERIAL] SHORT TITLE.--Sections 101 through 1103 of this act may be cited as the "Revised Uniform Limited Liability Company Act".
SECTION 102. [NEW MATERIAL] DEFINITIONS.--As used in the Revised Uniform Limited Liability Company Act, unless the text otherwise specifies:
A. "address", when used to refer to the principal office or registered office of a limited liability company or foreign limited liability company or to the place of business of a registered agent, means:
(1) if within a municipality, the street address; or
(2) if outside a municipality, the highway number or rural route number and box number, if any, or, if none, the geographical location, using well-known landmarks;
B. "certificate of organization" means the certificate required by Section 201 of the Revised Uniform Limited Liability Company Act and includes the certificate as amended or restated;
C. "contribution", except when used in the phrase "right of contribution", means property or a benefit described in Section 402 of the Revised Uniform Limited Liability Company Act that is provided by a person to a limited liability company to become a member or in the person's capacity as a member;
D. "court" means the district court, except that if a party asserts a claim, action or proceeding against the secretary of state or an appeal pursuant to the provisions of Section 39-3-1.1 NMSA 1978 from a decision or act of any kind by the secretary of state, "court" means the district court for the first judicial district;
E. "debtor in bankruptcy" means a person that is the subject of:
(1) an order for relief under Title 11 of the United States Code or a comparable order under a successor statute of general application; or
(2) a comparable order under federal, state or foreign law governing insolvency;
F. "distribution":
(1) means a transfer of money or other property from a limited liability company to a person on account of a transferable interest or in the person's capacity as a member; and
(2) includes:
(a) a redemption or other purchase by a limited liability company of a transferable interest; and
(b) a transfer to a member in return for the member's relinquishment of a right to participate as a member in the management or conduct of the company's activities and affairs or to have access to records or other information concerning the company's activities and affairs; but
(3) excludes:
(a) reasonable compensation for present or past services; or
(b) payments made in the ordinary course of business under a bona fide retirement plan or other bona fide benefits program;
G. "electronic" means relating to technology having electronic, digital, magnetic, wireless, optical, electromagnetic or similar capabilities;
H. "foreign limited liability company" means an unincorporated entity that is formed under the law of a jurisdiction other than New Mexico and that would be a limited liability company if formed under the law of New Mexico;
I. "jurisdiction", when used to refer to a political entity, means the United States, a state, a foreign country or a political subdivision of a foreign country;
J. "jurisdiction of formation" means the jurisdiction whose law governs the internal affairs of an entity;
K. "limited liability company", except when used in the phrase "foreign limited liability company" or when used in Article 10 of the Revised Uniform Limited Liability Company Act, means an entity formed under that act or an entity that becomes subject to that act under Article 10 or Section 110 of that act;
L. "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 Subsection C of Section 407 of the Revised Uniform Limited Liability Company Act;
M. "manager-managed limited liability company" means a limited liability company that qualifies under Subsection A of Section 407 of the Revised Uniform Limited Liability Company Act;
N. "member" means a person that has become a member of a limited liability company under Section 401 of the Revised Uniform Limited Liability Company Act and that has not dissociated under Section 602 of that act;
O. "member-managed limited liability company" means a limited liability company that is not a manager-managed limited liability company;
P. "operating agreement" means the agreement, regardless of whether it is referred to as an operating agreement, and regardless of whether it is 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 described in Subsection A of Section 110 of the Revised Uniform Limited Liability Company Act; "operating agreement" includes the agreement as amended or restated;
Q. "organizer" means a person that acts under Section 201 of the Revised Uniform Limited Liability Company Act to form a limited liability company and that need not be nor become a member or manager of the company formed;
R. "person" means an individual, a business corporation, a partnership including a limited liability partnership, a limited partnership including a limited liability limited partnership, a limited liability company, a general cooperative association, a statutory trust, a business trust, a common-law business trust, an estate, a trust, an association, a joint venture, a public corporation, a government, a governmental subdivision, agency or instrumentality or any other legal or commercial entity;
S. "principal office" means the principal executive office of a limited liability company or foreign limited liability company, regardless of whether the office is located in New Mexico, unless the principal office in New Mexico is specified;
T. "property" means all property, whether real, personal, a combination of real and personal, tangible or intangible, or any right or interest therein;
U. "record", when used as a noun, means information that is inscribed on a tangible medium or that is stored in an electronic or other medium and is retrievable in a perceivable form;
V. "registered agent" means an agent of a limited liability company or foreign limited liability company that is authorized to receive service of any process, notice or demand required or permitted by law to be delivered to the company;
W. "registered foreign limited liability company" means a foreign limited liability company that is registered to do business in New Mexico under a statement of registration filed by the secretary of state;
X. "sign" means, with the present intent to authenticate or adopt a record, to:
(1) execute or adopt a tangible symbol; or
(2) attach to or logically associate with the record an electronic symbol, sound or process;
Y. "state" means a state of the United States, the District of Columbia, Puerto Rico, the United States Virgin Islands or a territory or insular possession subject to the jurisdiction of the United States;
Z. "transfer" includes an assignment, a conveyance, a sale, a lease, an encumbrance, including a mortgage and a security interest, a gift and a transfer by operation of law;
AA. "transferable interest" means the right, as initially owned by a person in the person's capacity as a member, to receive distributions from a limited liability company, regardless of whether the person remains a member or continues to own any part of the right; "transferable interest" applies to any fraction of the interest, regardless of who owns it; and
BB. "transferee" means a person to which all or part of a transferable interest has been transferred, regardless of whether the transferor is a member, and includes a person that owns a transferable interest under Paragraph (3) of Subsection A of Section 603 of the Revised Uniform Limited Liability Company Act.
SECTION 103. [NEW MATERIAL] KNOWLEDGE--NOTICE.--
A. A person knows a fact when the person has actual knowledge of it.
B. A person has notice of a fact when the person:
(1) has reason to know the fact from all of the facts known to the person at the time in question; or
(2) is deemed to have notice of the fact under Subsection D of this section.
C. Subject to Subsection F of Section 210 of the Revised Uniform Limited Liability Company Act, a person notifies another person of a fact by taking steps reasonably required to inform the other person in ordinary course, regardless of whether those steps cause the other person to know the fact.
D. A person that is not a member is deemed to have notice of a limited liability company's:
(1) dissolution ninety days after a statement of dissolution under Subsection F of Section 702 of that act becomes effective;
(2) cancellation ninety days after a notice of cancellation under Section 213 of that act becomes effective;
(3) termination ninety days after a statement of termination under Subparagraph (f) of Paragraph (2) of Subsection B of Section 702 of that act becomes effective; and
(4) participation in a merger, an interest exchange, a conversion or a domestication, ninety days after statements of merger, interest, exchange, conversion or domestication under Article 10 of that act become effective.
SECTION 104. [NEW MATERIAL] GOVERNING LAW.--The law of New Mexico governs:
A. the internal affairs of a limited liability company; and
B. the liability of a member as member and a manager as manager for a debt, obligation or other liability of a limited liability company.
SECTION 105. [NEW MATERIAL] OPERATING AGREEMENT--SCOPE, FUNCTION AND LIMITATIONS.--
A. Except as otherwise provided in Subsections C and D of this section, the operating agreement governs:
(1) relations among the members as members and between the members and the limited liability company;
(2) the rights and duties under the Revised Uniform Limited Liability Company Act of a person in the capacity of manager;
(3) the activities and affairs of the company and the conduct of those activities and affairs; and
(4) the means and conditions for amending the operating agreement.
B. To the extent that the operating agreement does not provide for a matter described in Subsection A of this section, the Revised Uniform Limited Liability Company Act governs the matter.
C. An operating agreement shall not:
(1) vary the law applicable under Section 104 of the Revised Uniform Limited Liability Company Act;
(2) vary a limited liability company's capacity under Section 109 of that act to sue and be sued in its own name;
(3) vary any requirement, procedure or other provision of that act pertaining to: