Revision: May 19, 2016, midnight
\t \t\tSB 405 - VERSION ADOPTED BY BOTH BODIES
01/21/2016 0056s
11May2016... 1839h
2016 SESSION
\t16-2864
\t03/01
SENATE BILL\t405
AN ACT\tmaking changes to the limited liability companies statutes.
SPONSORS:\tSen. Bradley, Dist 3
COMMITTEE:\tCommerce
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ANALYSIS
\tThis bill clarifies various provisions relating to limited liability company operating agreements and the rights of limited liability company members.
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Explanation:\tMatter added to current law appears in bold italics.
\t\tMatter removed from current law appears [in brackets and struckthrough.]
\t\tMatter which is either (a) all new or (b) repealed and reenacted appears in regular type.
01/21/2016 0056s
11May2016... 1839h\t16-2864
\t03/01
STATE OF NEW HAMPSHIRE
In the Year of Our Lord Two Thousand Sixteen
AN ACT\tmaking changes to the limited liability companies statutes.
Be it Enacted by the Senate and House of Representatives in General Court convened:
\t1 Member. Amend RSA 304-C:14 to read as follows:
\t304-C:14 Member. Unless the operating agreement provides otherwise, "member'' means a person who has been admitted to a limited liability company as a member as provided in RSA 304-C:53 or, in the case of a foreign limited liability company, in accordance with the laws of the state or foreign country or other foreign jurisdiction under which the foreign limited liability company is organized. A member does not include:
\t\tI. A dissociated member.
\t\tII. A member that has transferred or otherwise disposed of all of the member's membership rights.
\t\tIII. A member that has transferred or otherwise disposed of all of the member's membership rights except the member's limited liability company interest.
\t2 Form of Operating Agreement. Amend RSA 304-C:40 to read as follows:
\t304-C:40 Form of Operating Agreement. Unless a written operating agreement provides otherwise, an operating agreement, including amendments to the operating agreement, may be written, oral, or implied by course of dealing or otherwise.
\t3 Voting Requirements. Amend RSA 304-C:67, I to read as follows:
\t\tI. Unless paragraph II, RSA 304-C:68, RSA 304-C:69, RSA 304-C:87, V, or RSA 304-C:120, or the operating agreement provide otherwise, all matters that this act reserves for decision by the members shall be decided by majority vote of [a majority of] the members.
\t4 Allocation of Profits and Losses. Amend RSA 304-C:90, II to read as follows:
\t\tII. Unless the operating agreement provides otherwise, profits and losses shall be allocated on the basis of the agreed value, as of the date of contribution, of the contributions made by each member to the extent that the limited liability company has received these contributions and has not returned them in a return specifically identified in writing as a return of a capital contribution.
\t5 Limitations on Distributions. Amend RSA 304-C:93 to read as follows:
\t304-C:93 Limitations on Distributions.
\t\tI. A limited liability company shall not make a distribution to a member to the extent that at the time of the distribution, after giving effect to the distribution, [all liabilities of the limited liability company, other than liabilities to members on account of their limited liability company interests and liabilities for which the recourse of creditors is limited to specified property of the limited liability company, exceed the fair market value of the assets of the limited liability company.
\t\tII. The fair market value of property that is subject to a liability for which the recourse of creditors is limited shall be included in the assets of the limited liability company only to the extent that the fair market value of that property exceeds that liability] the company would not be able to pay its debts as they become due.
\t\t[III.] II.(a) A member who receives a distribution in violation of paragraph I, and who knew at the time of the distribution that it violated paragraph I, shall be liable to a limited liability company for the amount of the distribution, but only to the extent that the distribution exceeded the amount that could have been properly paid under paragraph I.
\t\t\t(b) A member who receives a distribution in violation of paragraph I, and who did not know at the time of the distribution that the distribution violated paragraph I shall not be liable for any amount of the distribution.
\t6 Allocation of Distributions. Amend RSA 304-C:95, II to read as follows:
\t\tII. Unless the operating agreement provides otherwise, distributions shall be made on the basis of the agreed value, as of the date of contribution, of the contributions made by each member to the extent the limited liability company has received these contributions and has not returned them in a return specifically identified in writing as a return of a capital contribution.
\t7 Member Dissociations. Amend RSA 304-C:99 to read as follows:
\t304-C:99 Certain Effects of Dissociation; Fiduciary Rights of Former Members.
\t\tI. If, after dissociation, a former member retains all or any part of the former member's limited liability company interest, the former member shall be entitled to the following rights:
\t\t\t(a) Subject to reasonable restrictions as determined from time to time by the limited liability company, the former member shall be entitled to inspect and copy at the former member's own expense all information reasonably relevant to allocations and distributions to the former member in respect of the former member's limited liability company interest.
\t\t\t(b) Unless the operating agreement provides otherwise, the former member may invoke the dispute resolution provisions of RSA 304-C:186 with respect to the former member's limited liability company interest.
\t\tII. Subject to any contrary provision in paragraph IV or RSA 304-C:106 through RSA 304-C:117 and unless the operating agreement provides otherwise, a member who has been dissociated from a limited liability company shall have no fiduciary or other duties to the limited liability company.
\t\tIII. A person who has been dissociated from the limited liability company shall have no liabilities to the limited liability company except liabilities that accrued to the member before the member's dissociation and that were not discharged before or concurrent with the member's dissociation.
\t\tIV. Unless the operating agreement provides otherwise, former members and transferees of the limited liability company interests of former members may claim in the superior court under the implied contractual covenant of good faith and fair dealing that they are entitled to fiduciary rights against the limited liability company and its members.
\t8 Member Dissociation. Amend RSA 304-C:132,I(a) to read as follows:
\t\t\t(a) The death, [resignation] withdrawal, expulsion, bankruptcy, or dissolution of any member or the occurrence of any other event whose occurrence causes the dissociation of the member shall not cause the limited liability company to be dissolved or its internal affairs to be wound up; and
\t9 Right of Members to Dissent. Amend RSA 304-C:161, I to read as follows:
\t\tI. Unless the operating agreement provides otherwise, a member of a limited liability company is entitled to dissent from, and obtain payment of the fair value of the member's limited liability company interest, upon any of the following actions:
\t\t\t(a) Consummation of a plan of merger to which the limited liability company is a party;
\t\t\t(b) Consummation of a plan of statutory conversion of the limited liability company to some other business form;
\t\t\t(c) An amendment to the operating agreement:
\t\t\t\t(1) Altering or abolishing a right in respect of distribution, other than alteration by dilution through the admission of other members or acceptance of contributions;
\t\t\t\t(2) Altering or abolishing a right to voluntarily withdraw; or
\t\t\t\t(3) Altering or abolishing any right of a member to vote on any matter, other than alteration by dilution through the admission of other members or acceptance of contributions.
\t10 Document Filing; Signature. Amend RSA 304-C:28, V(c) to read as follows:
\t\t\t(c) If the limited liability company is in the hands of a receiver, executor, or other court appointed fiduciary, trustee, or other fiduciary, by that fiduciary; or
\t\t\t(d) Unless the operating agreement provides otherwise, by any authorized person, including an attorney-in-fact. An authorization, including a power of attorney, need not be in writing, need not be sworn to, verified, or acknowledged, and need not be filed in the office of the secretary of state, but if in writing, must be retained by the limited liability company or authorized person.
\t11 New Subdivision; Domestications. Amend RSA 304-C by inserting after section 204 the following new subdivision:
Domestications
\t304-C:205 Domestication.
\t\tI. A foreign limited liability company may become a domestic limited liability company only if the domestication is permitted by the organic law of the foreign limited liability company. The laws of New Hampshire shall govern the effect of domesticating in New Hampshire pursuant to RSA 304-C:205 through RSA 304-C:210.
\t\tII. A domestic limited liability company may become a foreign limited liability company if the domestication is permitted by the laws of the foreign jurisdiction. Regardless of whether the laws of the foreign jurisdiction require the adoption of a plan of domestication, the domestication shall be approved by the adoption by the domestic limited liability company of a plan of domestication in the manner provided in this subdivision. The laws of the foreign jurisdiction shall govern the effect of domesticating in that jurisdiction.
\t\tIII. The plan of domestication adopted by a domestic limited liability company shall include:
\t\t\t(a) A statement of the jurisdiction in which the limited liability company is to be domesticated;
\t\t\t(b) The terms and conditions of the domestication;
\t\t\t(c) The manner and basis of reclassifying the membership rights of the limited liability company following its domestication into membership rights or other securities, obligations, rights to acquire membership rights or other securities, cash, other property, or any combination of the foregoing; and
\t\t\t(d) Any desired amendments to the certificate of formation or equivalent foreign statutory document (for purposes of this subdivision, the “certificate of formation”) of the limited liability company following its domestication. The plan of domestication may include any other provision relating to the domestication that may be desired.
\t\tIV. The plan of domestication may include a provision that the plan may be amended prior to filing the document required by the laws of this state or the other jurisdiction to consummate the domestication, except that subsequent to approval of the plan by the members, the plan may not be amended to change:
\t\t\t(a) The amount or kind of membership rights or other securities, obligations, rights to acquire membership rights or other securities, cash, or other property to be received by the members under the plan;
\t\t\t(b) The certificate of formation or operating agreement, as they will be in effect immediately following the domestication, except for changes permitted by RSA 304-C:35, II or by comparable provisions of the laws of the other jurisdiction; or
\t\t\t(c) Any of the other terms or conditions of the plan if the change would adversely affect any of the membership rights in any material respect.
\t\tV. Terms of a plan of domestication may be made dependent upon facts objectively ascertainable outside the plan in accordance with the principles set forth in RSA 293-A:1.20(j).
\t\tVI. If any debt security, note, or similar evidence of indebtedness for money borrowed, whether secured or unsecured, or a contract of any kind, issued, incurred, or signed by a domestic limited liability company contains a provision applying to a merger of the limited liability company and the document does not refer to a domestication of the limited liability company, then the provision shall be deemed to apply to a domestication of the limited liability company until such time as the provision is amended subsequent to that date.
\t\tVII. An operating agreement of a domestic limited liability company may provide that decisions by the members relating to the limited liability company’s domestications are reserved to specified members or managers.
\t304-C:206 Action on a Plan of Domestication.
\t\tI. In the case of a domestication of a domestic limited liability company in a foreign jurisdiction:
\t\t\t(a) If the approval of the members is to be given at a meeting, the limited liability company must notify each member, whether or not entitled to vote, of the meeting of members at which the plan of domestication is to be submitted for approval. The notice must state that the purpose, or one of the purposes, of the meeting is to consider the plan and must contain or be accompanied by a copy or summary of the plan. The notice shall include or be accompanied by a copy of the limited liability company’s certificate of formation and operating agreement as they will be in effect immediately after the domestication.
\t\t\t(b) Unless the operating agreement of the limited liability company requires a greater vote or a greater number of votes to be present, approval of the plan of domestication requires the approval of each voting group entitled to vote separately on the plan by a majority of all the votes entitled to be cast on the plan by that voting group.
\t\t\t(c) Separate voting by voting groups is required by each class or series of membership rights that:
\t\t\t\t(1) Are to be reclassified under the plan of domestication into other securities, obligations, rights to acquire membership rights or other securities, cash, other property, or any combination of the foregoing;
\t\t\t\t(2) Would be entitled to vote as a separate group on a provision of the plan that, if contained in a proposed amendment to the certificate of formation or operating agreement, would require action by separate voting groups; or
\t\t\t\t(3) Is entitled under the certificate of formation or operating agreement to vote as a voting group to approve an amendment of the certificate of formation or operating agreement.
\t\tII. If any provision of the certificate of formation or operating agreement adopted or entered into applies to a merger of the limited liability company and that document does not refer to a domestication of the limited liability company, the provision shall be deemed to apply to a domestication of the limited liability company until such time as the provision is amended subsequent to that date.
\t304-C:207 Articles of Domestication.
\t\tI. After the domestication of a foreign limited liability company has been authorized as required by the laws of the foreign jurisdiction, articles of domestication shall be signed by any member or other duly authorized representative of the limited liability company. The articles shall set forth:
\t\t\t(a) The name of the limited liability company immediately before the filing of the articles of domestication and, if that name is unavailable for use in this state or if the limited liability company desires to change its name in connection with the domestication, a name that satisfies the requirements of RSA 304-C:32;
\t\t\t(b) The jurisdiction of formation of the limited liability company immediately before the filing of the articles of domestication and the date the limited liability company was formed in that jurisdiction; and
\t\t\t(c) A statement that the domestication of the limited liability company in this state was duly authorized as required by the laws of the jurisdiction in which the limited liability company was formed immediately before its domestication in this state.
\t\tII. The articles of domestication shall have an attached certificate of formation.
\t\tIII. The articles of domestication with the certificate of formation shall be delivered to the secretary of state for filing, and shall take effect at the effective time provided in RSA 304-C:29.
\t\tIV. If the foreign limited liability company was authorized to transact business in this state under RSA 304-C:174 and RSA 304-C:175,then its certificate of authority shall be canceled automatically on the effective date of its domestication in the foreign state.
\t304-C:208 Surrender of Charter Upon Domestication.
\t\tI. Whenever a domestic limited liability company has adopted and approved, in the manner required by this subdivision, a plan of domestication providing for the limited liability company to be domesticated in a foreign jurisdiction, articles of charter surrender shall be signed on behalf of the limited liability company by any member or other duly authorized representative. The articles of charter surrender shall set forth:
\t\t\t(a) The name of the limited liability company;
\t\t\t(b) A statement that the articles of charter surrender are being filed in connection with the domestication of the limited liability company in a foreign jurisdiction;
\t\t\t(c) A statement that the domestication was duly approved by the members and, if voting by any separate voting group was required, by each such separate voting group, in the manner required by this chapter and by the certificate of formation and operating agreement; and
\t\t\t(d) The limited liability company’s new jurisdiction of formation.
\t\tII. The articles of charter surrender shall be delivered by the limited liability company to the secretary of state for filing. The articles of charter surrender shall take effect on the effective time provided in RSA 304-C:29.
\t304-C:209 Effect of Domestication.
\t\tI. When a domestication of a foreign limited liability company in New Hampshire becomes effective:
\t\t\t(a) The title to all real and personal property, both tangible and intangible, of the limited liability company remains in the limited liability company without reversion or impairment and the domestication shall not be deemed to give rise to any transfer of real or personal property;
\t\t\t(b) The liabilities of the limited liability company remain the liabilities of the limited liability company;
\t\t\t(c) An action or proceeding pending against the limited liability company continues against the limited liability company as if the domestication had not occurred;
\t\t\t(d) The articles of domestication, or the certificate of formation and operating agreement attached to the articles of domestication, constitute the certificate of formation and operating agreement of a foreign limited liability company domesticating in this state;
\t\t\t(e) The membership rights of the limited liability company are reclassified into other membership rights, other securities, obligations, rights to acquire membership rights, or other securities of the limited liability company, or into cash or other property in accordance with the terms of the domestication as approved under the laws of the foreign jurisdiction, and the members are entitled only to the rights provided by those terms and under those laws; and
\t\t\t(f) The limited liability company is deemed to:
\t\t\t\t(1) Be formed under and subject to the organic law of this state for all purposes;
\t\t\t\t(2) Be the same limited liability company without interruption as the limited liability company that existed under the laws of the foreign jurisdiction; and
\t\t\t\t(3) Have been formed on the date it was originally formed in the foreign jurisdiction.
\t\tII. When a domestication of a domestic limited liability company in a foreign jurisdiction becomes effective, the foreign limited liability company is deemed to:
\t\t\t(a) Appoint the secretary of state as its agent for service of process in a proceeding to enforce the rights of members who exercise appraisal rights in connection with the domestication; and
\t\t\t(b) Agree that it will promptly pay the amount, if any, to which such members are entitled under RSA 304-C:160 through RSA 304-C:172.
\t\tIII. The domestication of a domestic limited liability company as a foreign limited liability company shall not be deemed to give rise to any transfer of real or personal property.
\t\tIV. The owner liability of a member in a foreign limited liability company that is domesticated in this state shall be as follows:
\t\t\t(a) The domestication does not discharge any owner liability under the laws of the foreign jurisdiction to the extent any such owner liability arose before the effective time of the articles of domestication.
\t\t\t(b) The member shall not have owner liability under the laws of the foreign jurisdiction for any debt, obligation, or liability of the limited liability company that arises after the effective time of the articles of domestication.
\t\t\t(c) The provisions of the laws of the foreign jurisdiction shall continue to apply to the collection or discharge of any owner liability preserved by subparagraph (a), as if the domestication had not occurred.
\t\t\t(d) The member shall have whatever rights of contribution from other members as are provided by the laws of the foreign jurisdiction with respect to any owner liability preserved by subparagraph (a), as if the domestication had not occurred.
\t304-C:210 Abandonment of a Domestication.
\t\tI. Unless otherwise provided in a plan of domestication of a domestic limited liability company, after the plan has been adopted and approved as required by this subdivision, and at any time before the domestication has become effective, it may be abandoned by the members.
\t\tII. If a domestication is abandoned under paragraph I after articles of charter surrender have been filed with the secretary of state but before the domestication has become effective, a statement that the domestication has been abandoned in accordance with this section, signed by a member or other duly authorized representative, shall be delivered to the secretary of state for filing prior to the effective date of the domestication with the fee, if any, required under RSA 304-C:191. The statement shall take effect upon filing and the domestication shall be deemed abandoned and shall not become effective.
\t\tIII. If the domestication of a foreign limited liability company in this state is abandoned in accordance with the laws of the foreign jurisdiction after articles of domestication have been filed with the secretary of state, a statement that the domestication has been abandoned, signed by a member or other duly authorized representative, shall be delivered to the secretary of state for filing. The statement shall take effect upon filing and the domestication shall be deemed abandoned and shall not become effective.
\t12 Effective Date. This act shall take effect 60 days after its passage.