Important Changes to Florida’s LLC Statute
On January 1, 2014, the Florida Revised Limited Liability Company Act went into effect for newly formed limited liability companies (“LLCs”), and it will apply to all LLCs beginning January 1, 2015, per The Florida Law Journal. How does the Act affect Florida LLCs? Read on to find out.
Effects of the Florida Revised Limited Liability Company Act
Here are some important changes in the Florida Revised Limited Liability Company Act (“the Act”).
Elimination of “Managing Member” Concept
As The Ledger explains, the Act eliminates the concept of a “managing member.” Thus, absent specific language in the LLC’s operating agreement that indicates the LLC will be managed by an appointed manager, the LLC will be deemed to be member-managed, and each member of the LLC—rather than only the managing member—will have actual authority to bind the LLC.
Expansion of Non-Waivable Provisions
The Act expands the list of statutory rights and provisions that cannot be waived or altered in the LLC’s governing documents or in agreements between the LLC’s members, The Florida Law Journal explains. The Act contains 17 non-waivable provisions, per Lexology, while Florida’s prior LLC act contained only five.
Statements of Authority
A “Statement of Authority”—a new concept under the Act—can be filed with the Department of State to limit the power of members or managers to bind the LLC. A Statement of Authority may be used to limit apparent authority, but, as Lexology clarifies, it would have no impact on actual authority.
Under the Act, all members now have the power to dissociate at any time by express will, explains The Florida Law Journal. Under the prior act, a member could not dissociate prior to dissolution or winding up unless the articles of organization or the operating agreement authorized it. The concept of “wrongful dissociation”—defined as dissociation in violation of the operating agreement prior to winding up—is also introduced in the Act, and an LLC may be entitled to damages if a member wrongfully dissociates.
Per The Ledger, members and managers may be liable for damage caused by inaccurate information regarding an LLC filed with the Department of State. According to The Florida Law Journal, members of member-managed LLCs and managers of manager-managed LLCs are obligated to maintain the accuracy of the articles of organization and to correct any information that is inaccurate.
Profits and Losses
The Act is silent on the issue of allocating the LLC’s profits and losses, Lexology explains, while the prior law allocated profits and losses among members under a default rule. Thus, the LLC’s operating agreement should address the allocation of profits and losses.
Under the Act, the default rule now requires unanimous approval of members to amend the articles of organization or the operating agreement, according to Lexology. The operating agreement can provide for a different requirement, however.
The major overhaul of Florida’s LLC statute has resulted in substantial changes to the state’s LLC law, some of which we mentioned above. New LLCs, as well as existing LLCs that will need to update their articles of organization and operating agreements, should consult with an experienced attorney. Contact the West Palm Beach or Boca Raton Law Offices of Larry E. Bray, P.A. if you have questions regarding Florida’s new LLC statute.