House File 655 - Enrolled
House File 655
AN ACT
PROVIDING FOR BUSINESS ORGANIZATIONS, INCLUDING LIMITED
LIABILITY COMPANIES, PROVIDING PENALTIES, AND INCLUDING
EFFECTIVE DATE PROVISIONS.
4 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
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:
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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
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.
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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.
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 9. “Filing entity” means an unincorporated entity, other
15 than a limited liability partnership, that is of a type that
16 is created by filing a public organic record or is required to
17 file a public organic record that evidences its creation.
18 9. 10. “Foreign limited liability company” means an
19 unincorporated entity formed under the law of a jurisdiction
20 other than this state and denominated by that law as a limited
21 liability company which would be a limited liability company if
22 formed under the law of this state.
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23 11. “Jurisdiction”, used to refer to a political entity,
24 means the United States, a state, a foreign country, or a
25 political subdivision of a foreign country.
26 12. “Jurisdiction of formation” means the jurisdiction whose
27 law governs the internal affairs of an entity.
28 10. 13. “Limited liability company”, except in the phrase
29 “foreign limited liability company”, and in subchapter X means
30 an entity formed under this chapter or which becomes subject to
31 this chapter under subchapter X or section 489.110.
32 11. 14. “Manager” means a person that under the operating
33 agreement of a manager-managed limited liability company is
34 responsible, alone or in concert with others, for performing
35 the management functions stated in section 489.407, subsection
1 3.
2 12. 15. “Manager-managed limited liability company” means a
3 limited liability company that qualifies under section 489.407,
4 subsection 1.
5 13. 16. “Member” means a person that has become a member
6 of a limited liability company under section 489.401 and has
7 not dissociated under section 489.602. for whom all of the
8 following are true:
9 a. The person has become a member of a limited liability
10 company under section 489.401 or was a member in a limited
11 liability company when the company became subject to this
12 chapter under section 489.110.
13 b. The person is not dissociated under section 489.602.
14 14. 17. “Member-managed limited liability company” means a
15 limited liability company that is not a manager-managed limited
16 liability company.
17 18. “Nonfiling entity” means an unincorporated entity that
18 is of a type that is not created by filing a public organic
19 record.
20 15. 19. “Operating agreement” means the agreement, whether
21 or not referred to as an operating agreement and whether oral,
22 implied, in a record, implied, or in any combination thereof,
23 of all the members of a limited liability company, including
24 a sole member, concerning the matters described in section
25 489.110, subsection 1. The term includes the agreement as
26 amended or restated.
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27 16. 20. “Organizer” means a person that acts under section
28 489.201 to form a limited liability company.
29 17. 21. a. “Person” means an individual, business
30 corporation, business trust, estate, trust, nonprofit
31 corporation, partnership, limited partnership, limited
32 liability company, domestic cooperative, unincorporated
33 nonprofit association, statutory trust, business trust,
34 common-law business trust, estate, trust, association, joint
35 venture, public corporation, government or governmental
1 subdivision, agency, or instrumentality, or any other legal or
2 commercial entity.
3 b. “Person” includes a protected series, however
4 denominated, of an entity if the protected series is
5 established under law that limits, or limits if conditions
6 specified under law are satisfied, the ability of a creditor
7 of the entity or of any other protected series of the entity to
8 satisfy a claim from assets of the protected series.
9 18. 22. “Principal office” means the principal executive
10 office of a limited liability company or foreign limited
11 liability company, whether or not the office is located in this
12 state.
13 23. “Property” means all property, whether real, personal,
14 or mixed or tangible or intangible, or any right or interest
15 therein.
16 19. 24. “Record”, used as a noun, means information that
17 is inscribed on a tangible medium or that is stored in an
18 electronic or other medium and is retrievable in perceivable
19 form.
20 20. “Registered office” means the office that a limited
21 liability company or foreign limited liability company is
22 required to designate and maintain under section 489.113.
23 25. “Registered agent” means an agent of a limited
24 liability company or foreign limited liability company which is
25 authorized to receive service of any process, notice, or demand
26 required or permitted by law to be served on the company.
27 26. “Registered foreign limited liability company” means
28 a foreign limited liability company that is registered to do
29 business in this state pursuant to a statement of registration
30 filed by the secretary of state.
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31 21. 27. “Sign” means, with the present intent to
32 authenticate or adopt a record, to do any of the following:
33 a. Execute or adopt a tangible symbol.
34 b. Attach to or logically associate with the record an
35 electronic symbol, sound, or process.
1 22. 28. “State” means a state of the United States, the
2 District of Columbia, Puerto Rico, the United States Virgin
3 Islands, or any territory or insular possession subject to the
4 jurisdiction of the United States.
5 23. 29. “Transfer” includes an assignment, conveyance,
6 deed, bill of sale, lease, mortgage, security interest,
7 encumbrance, gift, or transfer by operation of law. any of the
8 following:
9 a. An assignment.
10 b. A conveyance.
11 c. A sale.
12 d. A lease.
13 e. An encumbrance, including a mortgage or security
14 interest.
15 f. A gift.
16 g. A transfer by operation of law.
17 24. 30. a. “Transferable interest” means the right, as
18 originally associated with initially owned by a person in the
19 person’s capacity as a member, to receive distributions from
20 a limited liability company, in accordance with the operating
21 agreement, whether or not the person remains a member or
22 continues to own any part of the right.
23 b. “Transferable interest” applies to any fraction of the
24 interest, by whomever owned.
25 25. 31. a. “Transferee” means a person to which all or
26 part of a transferable interest has been transferred, whether
27 or not the transferor is a member.
28 b. “Transferee” includes a person that owns a transferable
29 interest under section 489.603, subsection 1, paragraph “c”.
30 Sec. 3. Section 489.103, Code 2023, is amended to read as
31 follows:
32 489.103 Knowledge —— notice.
33 1. A person knows a fact when if the person has or is any
34 of the following:
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35 a. Has actual knowledge of it.
1 b. Is deemed to know it under subsection 4, paragraph “a”,
2 or law other than this chapter.
3 2. A person has notice of a fact when if the person has or
4 is any of the following:
5 a. Has reason to know the fact from all of the facts known
6 to the person at the time in question.
7 b. Is deemed to have notice of the fact under subsection 4,
8 paragraph “b”.
9 3. A Subject to section 489.210, subsection 6, a person
10 notifies another person of a fact by taking steps reasonably
11 required to inform the other person in ordinary course, whether
12 or not those steps cause the other person knows to know the
13 fact.
14 4. A person that is not a member is deemed both all of the
15 following:
16 a. To know of a limitation on authority to transfer real
17 property as provided in section 489.302, subsection 7.
18 b. To have notice of all of the following regarding a
19 limited liability company’s:
20 (1) Dissolution, The limited liability company’s
21 dissolution, ninety days after a statement of dissolution under
22 section 489.702, subsection 2, paragraph “b”, subparagraph (1),
23 becomes effective.
24 (2) Termination, The limited liability company’s
25 termination, ninety days after a statement of termination under
26 section 489.702, subsection 2, paragraph “b”, subparagraph (6),
27 becomes effective.
28 (3) Merger, The limited liability company’s participation
29 in a merger, interest exchange, conversion, or domestication,
30 ninety days after articles of merger, interest exchange,
31 conversion, or domestication under article 10 subchapter X
32 become effective.
33 Sec. 4. Section 489.104, Code 2023, is amended to read as
34 follows:
35 489.104 Nature, purpose, and duration of limited liability
1 company.
2 1. A limited liability company is an entity distinct from
3 its member or members.
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4 2. A limited liability company may have any lawful purpose,
5 regardless of whether for profit.
6 3. A limited liability company has perpetual duration.
7 Sec. 5. Section 489.105, Code 2023, is amended to read as
8 follows:
9 489.105 Powers.
10 1. Except as otherwise provided in subsection 2, a limited
11 liability company has the capacity to sue and be sued in its
12 own name and the power to do all things necessary or convenient
13 to carry on its activities and affairs.
14 2. Until a limited liability company has or has had at
15 least one member, the limited liability company lacks the
16 capacity to do any act or carry on any activity except all of
17 the following:
18 a. Delivering to the secretary of state for filing a
19 statement of change under section 489.114, an amendment to the
20 certificate under section 489.202, a statement of correction
21 under section 489.206, a biennial report under section 489.209,
22 a statement of withdrawal or a statement of rescission under
23 section 489.701A, or a statement of termination under section
24 489.702, subsection 2, paragraph “b”, subparagraph (6).
25 b. Admitting a member under section 489.401.
26 c. Dissolving under section 489.701.
27 3. A limited liability company that has or has had at least
28 one member may ratify an act or activity that occurred when the
29 company lacked capacity under subsection 2.
30 Sec. 6. Section 489.106, Code 2023, is amended to read as
31 follows:
32 489.106 Governing law.
33 The law of this state governs all of the following:
34 1. The internal affairs of a limited liability company.
35 2. The liability of a member as member and a manager as
1 manager for the debts, obligations, a debt, obligation, or
2 other liabilities liability of a limited liability company.
3 Sec. 7. Section 489.108, Code 2023, is amended to read as
4 follows:
5 489.108 Name Permitted names.
6 1. The name of a limited liability company must contain
7 the words phrase “limited liability company” or “limited
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8 company” or the abbreviation “L. L. C.”, “LLC”, “L. C.”, or “LC”.
9 “Limited” may be abbreviated as “Ltd.”, and “company” may be
10 abbreviated as “Co.”.
11 2. Unless authorized by Except as otherwise provided in
12 subsection 3, the name of a limited liability company, and
13 the name under which a foreign limited liability company may
14 register to do business in this state, must be distinguishable
15 in on the records of the secretary of state from all any of the
16 following:
17 a. The name of each person that is not an individual and
18 that is incorporated, organized, or authorized to transact
19 business in this state.
20 b. Each name reserved under section 489.109.
21 a. The name of an existing person whose formation required
22 the filing of a record by the secretary of state and which is
23 not at the time administratively dissolved, or if such person
24 has been administratively dissolved, within five years of the
25 effective date of dissolution.
26 b. The name of a limited liability partnership whose
27 statement of qualification is in effect.
28 c. The name under which a person is registered to do
29 business in this state by the filing of a record by the
30 secretary of state.
31 d. The name reserved under section 489.109 or other law
32 of this state providing for the reservation of a name by the
33 filing of a record by the secretary of state.
34 e.