Senate File 544 - Introduced
SENATE FILE 544
BY COMMITTEE ON JUDICIARY
(SUCCESSOR TO SSB 1188)
(COMPANION TO LSB 1051HV BY
COMMITTEE ON JUDICIARY)
A BILL FOR
1 An Act providing for business organizations, including limited
2 liability companies, providing penalties, and including
3 effective date provisions.
4 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
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1 DIVISION I
2 LIMITED LIABILITY COMPANIES
3 Section 1. Section 489.101, Code 2023, is amended to read
4 as follows:
5 489.101 Short title.
6 1. This chapter may be cited as the “Revised Uniform
7 “Uniform Limited Liability Company Act”.
8 2. In addition, article 14 subchapter XIV of this chapter
9 may be cited as provided in section 489.14101.
10 Sec. 2. Section 489.102, Code 2023, is amended to read as
11 follows:
12 489.102 Definitions.
13 As used in this chapter, unless the context otherwise
14 requires:
15 1. “Certificate of organization” means the certificate
16 required by section 489.201. The term includes the certificate
17 as amended or restated.
18 2. “Contribution” means any benefit provided by a person to
19 a limited liability company that is any of the following:
20 a. In order to become a member upon formation of the company
21 and in accordance with an agreement between or among the
22 persons that have agreed to become the initial members of the
23 company.
24 b. In order to become a member after formation of the
25 company and in accordance with an agreement between the person
26 and the company.
27 c. In the person’s capacity as a member and in accordance
28 with the operating agreement or an agreement between the member
29 and the company.
30 2. “Contribution”, except in the phrase “right of
31 contribution”, means property or a benefit described in section
32 489.402 which is provided by a person to a limited liability
33 company to become a member or in the person’s capacity as a
34 member.
35 3. “Debtor in bankruptcy” means a person that is the subject
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1 of any of the following:
2 a. An order for relief under Tit. 11 of the United States
3 Code or a comparable order under a successor statute of general
4 application.
5 b. A comparable order under federal, state, or foreign law
6 governing insolvency.
7 4. “Deliver” or “delivery” means any method of delivery
8 used in conventional commercial practice, including delivery in
9 person, by hand, mail, commercial delivery, and if authorized
10 in accordance with section 489.120, by electronic transmission.
11 5. “Distribution”, except as otherwise provided in section
12 489.405, subsection 6, means a transfer of money or other
13 property from a limited liability company to another a person
14 on account of a transferable interest or in the person’s
15 capacity as a member.
16 a. “Distribution” includes all of the following:
17 (1) A redemption or other purchase by a limited liability
18 company of a transferable interest.
19 (2) A transfer to a member in return for the member’s
20 relinquishment of any right to participate as a member in
21 the management or conduct of the limited liability company’s
22 activities and affairs or to have access to records or other
23 information concerning the company’s activities and affairs.
24 b. “Distribution” does not include amounts constituting
25 reasonable compensation for present or past service or payments
26 made in the ordinary course of business under a bona fide
27 retirement plan or other bona fide benefits program.
28 6. “Domestic cooperative” means an entity organized on a
29 cooperative basis under chapter 497, 498, or 499, a cooperative
30 organized under chapter 499A, or a cooperative organized under
31 chapter 501 or 501A.
32 7. “Effective”, with respect to a record required or
33 permitted to be delivered to the secretary of state for filing
34 under this chapter, means effective under section 489.205,
35 subsection 3.
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1 7. “Electronic” means relating to technology having
2 electrical, digital, magnetic, wireless, optical,
3 electromagnetic, or similar capabilities.
4 8. “Electronic transmission” or “electronically transmitted”
5 means any form or process of communication not directly
6 involving the physical transfer of paper that is suitable for
7 the retention, retrieval, and reproduction of information by
8 the recipient. or another tangible medium that is all of the
9 following:
10 a. Suitable for the retention, retrieval, and reproduction
11 of information by the recipient.
12 b. Retrievable in paper form by the recipient through an
13 automated process used in conventional commercial practice,
14 unless otherwise authorized in accordance with subsection 15.
15 9. “Filing entity” means an unincorporated entity, other
16 than a limited liability partnership, that is of a type that
17 is created by filing a public organic record or is required to
18 file a public organic record that evidences its creation.
19 9. 10. “Foreign limited liability company” means an
20 unincorporated entity formed under the law of a jurisdiction
21 other than this state and denominated by that law as a limited
22 liability company which would be a limited liability company if
23 formed under the law of this state.
24 11. “Jurisdiction”, used to refer to a political entity,
25 means the United States, a state, a foreign county, or a
26 political subdivision of a foreign country.
27 12. “Jurisdiction of formation” means the jurisdiction whose
28 law governs the internal affairs of an entity.
29 10. 13. “Limited liability company”, except in the phrase
30 “foreign limited liability company”, and in subchapter X means
31 an entity formed under this chapter or which becomes subject to
32 this chapter under subchapter X or section 489.110.
33 11. 14. “Manager” means a person that under the operating
34 agreement of a manager-managed limited liability company is
35 responsible, alone or in concert with others, for performing
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1 the management functions stated in section 489.407, subsection
2 3.
3 12. 15. “Manager-managed limited liability company” means a
4 limited liability company that qualifies under section 489.407,
5 subsection 1.
6 13. 16. “Member” means a person that has become a member
7 of a limited liability company under section 489.401 and has
8 not dissociated under section 489.602. for whom all of the
9 following are true:
10 a. The person has become a member of a limited liability
11 company under section 489.401 or was a member in a limited
12 liability company when the company became subject to this
13 chapter under section 489.110.
14 b. The person is not dissociated under section 489.602.
15 14. 17. “Member-managed limited liability company” means a
16 limited liability company that is not a manager-managed limited
17 liability company.
18 18. “Nonfiling entity” means an unincorporated entity that
19 is of a type that is not created by filing a public organic
20 record.
21 15. 19. “Operating agreement” means the agreement, whether
22 or not referred to as an operating agreement and whether oral,
23 implied, in a record, implied, or in any combination thereof,
24 of all the members of a limited liability company, including
25 a sole member, concerning the matters described in section
26 489.110, subsection 1. The term includes the agreement as
27 amended or restated.
28 16. 20. “Organizer” means a person that acts under section
29 489.201 to form a limited liability company.
30 17. 21. a. “Person” means an individual, business
31 corporation, business trust, estate, trust, nonprofit
32 corporation, partnership, limited partnership, limited
33 liability company, domestic cooperative, unincorporated
34 nonprofit association, statutory trust, business trust,
35 common-law business trust, estate, trust, association, joint
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1 venture, public corporation, government or governmental
2 subdivision, agency, or instrumentality, or any other legal or
3 commercial entity.
4 b. “Person” includes a protected series, however
5 denominated, of an entity if the protected series is
6 established under law that limits, or limits if conditions
7 specified under law are satisfied, the ability of a creditor
8 of the entity or of any other protected series of the entity to
9 satisfy a claim from assets of the protected series.
10 18. 22. “Principal office” means the principal executive
11 office of a limited liability company or foreign limited
12 liability company, whether or not the office is located in this
13 state.
14 23. “Property” means all property, whether real, personal,
15 or mixed or tangible or intangible, or any right or interest
16 therein.
17 19. 24. “Record”, used as a noun, means information that
18 is inscribed on a tangible medium or that is stored in an
19 electronic or other medium and is retrievable in perceivable
20 form.
21 20. “Registered office” means the office that a limited
22 liability company or foreign limited liability company is
23 required to designate and maintain under section 489.113.
24 25. “Registered agent” means an agent of a limited
25 liability company or foreign limited liability company which is
26 authorized to receive service of any process, notice, or demand
27 required or permitted by law to be served on the company.
28 26. “Registered foreign limited liability company” means
29 a foreign limited liability company that is registered to do
30 business in this state pursuant to a statement of registration
31 filed by the secretary of state.
32 21. 27. “Sign” means, with the present intent to
33 authenticate or adopt a record, to do any of the following:
34 a. Execute or adopt a tangible symbol.
35 b. Attach to or logically associate with the record an
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1 electronic symbol, sound, or process.
2 22. 28. “State” means a state of the United States, the
3 District of Columbia, Puerto Rico, the United States Virgin
4 Islands, or any territory or insular possession subject to the
5 jurisdiction of the United States.
6 23. 29. “Transfer” includes an assignment, conveyance,
7 deed, bill of sale, lease, mortgage, security interest,
8 encumbrance, gift, or transfer by operation of law. any of the
9 following:
10 a. An assignment.
11 b. A conveyance.
12 c. A sale.
13 d. A lease.
14 e. An encumbrance, including a mortgage or security
15 interest.
16 f. A gift.
17 g. A transfer by operation of law.
18 24. 30. a. “Transferable interest” means the right, as
19 originally associated with initially owned by a person in the
20 person’s capacity as a member, to receive distributions from
21 a limited liability company, in accordance with the operating
22 agreement, whether or not the person remains a member or
23 continues to own any part of the right.
24 b. “Transferable interest” applies to any fraction of the
25 interest, by whomever owned.
26 25. 31. a. “Transferee” means a person to which all or
27 part of a transferable interest has been transferred, whether
28 or not the transferor is a member.
29 b. “Transferee” includes a person that owns a transferable
30 interest under section 489.603, subsection 1, paragraph “c”.
31 Sec. 3. Section 489.103, Code 2023, is amended to read as
32 follows:
33 489.103 Knowledge —— notice.
34 1. A person knows a fact when if the person has or is any
35 of the following:
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1 a. Has actual knowledge of it.
2 b. Is deemed to know it under subsection 4, paragraph “a”,
3 or law other than this chapter.
4 2. A person has notice of a fact when if the person has or
5 is any of the following:
6 a. Has reason to know the fact from all of the facts known
7 to the person at the time in question.
8 b. Is deemed to have notice of the fact under subsection 4,
9 paragraph “b”.
10 3. A Subject to section 489.210, subsection 6, a person
11 notifies another person of a fact by taking steps reasonably
12 required to inform the other person in ordinary course, whether
13 or not those steps cause the other person knows to know the
14 fact.
15 4. A person that is not a member is deemed both all of the
16 following:
17 a. To know of a limitation on authority to transfer real
18 property as provided in section 489.302, subsection 7.
19 b. To have notice of all of the following regarding a
20 limited liability company’s:
21 (1) Dissolution, The limited liability company’s
22 dissolution, ninety days after a statement of dissolution under
23 section 489.702, subsection 2, paragraph “b”, subparagraph (1),
24 becomes effective.
25 (2) Termination, The limited liability company’s
26 termination, ninety days after a statement of termination under
27 section 489.702, subsection 2, paragraph “b”, subparagraph (6),
28 becomes effective.
29 (3) Merger, The limited liability company’s participation
30 in a merger, interest exchange, conversion, or domestication,
31 ninety days after articles of merger, interest exchange,
32 conversion, or domestication under article 10 subchapter X
33 become effective.
34 Sec. 4. Section 489.104, Code 2023, is amended to read as
35 follows:
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1 489.104 Nature, purpose, and duration of limited liability
2 company.
3 1. A limited liability company is an entity distinct from
4 its member or members.
5 2. A limited liability company may have any lawful purpose,
6 regardless of whether for profit.
7 3. A limited liability company has perpetual duration.
8 Sec. 5. Section 489.105, Code 2023, is amended to read as
9 follows:
10 489.105 Powers.
11 1. Except as otherwise provided in subsection 2, a limited
12 liability company has the capacity to sue and be sued in its
13 own name and the power to do all things necessary or convenient
14 to carry on its activities and affairs.
15 2. Until a limited liability company has or has had at
16 least one member, the limited liability company lacks the
17 capacity to do any act or carry on any activity except all of
18 the following:
19 a. Delivering to the secretary of state for filing a
20 statement of change under section 489.114, an amendment to the
21 certificate under section 489.202, a statement of correction
22 under section 489.206, a biennial report under section 489.209,
23 a statement of withdrawal or a statement of rescission under
24 section 489.701A, or a statement of termination under section
25 489.702, subsection 2, paragraph “b”, subparagraph (6).
26 b. Admitting a member under section 489.401.
27 c. Dissolving under section 489.701.
28 3. A limited liability company that has or has had at least
29 one member may ratify an act or activity that occurred when the
30 company lacked capacity under subsection 2.
31 Sec. 6. Section 489.106, Code 2023, is amended to read as
32 follows:
33 489.106 Governing law.
34 The law of this state governs all of the following:
35 1. The internal affairs of a limited liability company.
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1 2. The liability of a member as member and a manager as
2 manager for the debts, obligations, a debt, obligation, or
3 other liabilities liability of a limited liability company.
4 Sec. 7. Section 489.108, Code 2023, is amended to read as
5 follows:
6 489.108 Name Permitted names.
7 1. The name of a limited liability company must contain
8 the words phrase “limited liability company” or “limited
9 company” or the abbreviation “L. L. C.”, “LLC”, “L. C.”, or “LC”.
10 “Limited” may be abbreviated as “Ltd.”, and “company” may be
11 abbreviated as “Co.”.
12 2. Unless authorized by Except a