Recently, the Florida legislature adopted a new limited liability company act. This new Florida LLC Act (the “Revised Act”) will be codified in Chapter 605 of the Florida Statutes and becomes effective on January 1, 2014. Initially, it will apply to all LLCs in Florida that are formed on or after January 1, 2014. In 2014, those Florida LLCs formed prior to January 1, 2014 will still be able to operate under the existing Florida LLC act. However, beginning on January 1, 2015, the existing act is repealed and all Florida LLCs will be governed by the Revised Act. This means that all Florida LLCs in existence prior to January 1, 2014 will have one year in which to ensure compliance with the Revised Act.
There are numerous additions and revisions to the Revised Act that are important to note. Under the Revised Act, there are an increased amount of non-waivable provisions, which means there are more default rules that cannot be modified by an LLC’s operating agreement or articles of organization. One of these provisions addresses the prohibition of indemnification for certain kinds of misconduct. In addition, the Revised Act protects a member’s right to maintain a derivative action.
Notably, the Revised Act modifies how management of an LLC is addressed. It eliminates the concept of a managing member. Furthermore, it recognizes the agency powers of members and managers and gives those individuals the ability to bind the LLC, unless there is a contrary provision in the articles of organization or if the LLC files a statement of authority limiting the power of those individuals to bind the LLC. The Revised Act also makes it easier for managers and members to seek judicial dissolution and to dissociate at any time by express will.
In addition, the Revised Act allows for the domestication of a non-American entity which desires to become a Florida LLC. One thing that did not change is the controversial Olmstead patch regarding charging orders.
The above is just a brief summary of some of the key changes in the Revised Act. During 2014, each LLC should examine its operating agreement and articles of organization closely and makes the changes necessary to comply with the Revised Act. Should you need assistance, please contact one of the business lawyers at Blalock Walters who can help you take the necessary steps for compliance. Please contact us at 941-748-0100.
Special credit is given to Alex John, our 2013 Law Clerk, for his excellent research and input to this article.