The laws that govern limited liability companies (LLCs) in Florida are about to get a makeover. Florida’s original LLC laws were enacted over 30 years ago, but lots of amendments and other “fixes” have, over time, created conflicts and confusion, which make using Section 608 a rather difficult endeavor. However, in January 2015, the Florida Revised Limited Liability Company Act takes effect for ALL Florida LLCs, which is intended to clarify the law, add more weight to the terms and conditions of the LLC’s internal Operating Agreement, and (hopefully) make it easier and more attractive to establish and operate an LLC in Florida.
History of LLC Law
Based on the Revised Uniform Limited Liability Act, and other state’s LLC laws, the new Florida law (in the brand-new Section 605) will make it easier for business owners to tailor their company’s structure and their operating “rules of the road,” while still keeping certain boundaries in place. The Act does this by loosening contractual provisions that (formerly) placed limitations on LLC Operating Agreements. Apart from 17 “nonwaivable” provisions, business owners and operators will have significantly more freedom in a number of areas, as outlined below.
New Status of “Members”
In an effort to simplify roles within an LLC, the term “Managing Member” is eliminated under the new law. (Side note: It never really made a lot of sense, anyway.) Now, business owners will choose between two well-defined organizational structures: Member-Managed or Manager-Managed. It also greatly clarifies the scope of member’s authority and provides new provisions for the withdrawal and addition of new members to an LLC.
What This Means for Your Business
Your LLC should have an Operating Agreement that sets out exactly how your company will be governed, managed, funded, and operated. Without a proper Operating Agreement these new “default” rules apply which could lead to some unintended (and largely negative) consequences. The new law applies to ALL limited liability companies, regardless of when they were formed, and there is no “grandfathering” clause. Furthermore, the new law creates a set of “default” rules that apply to your LLCs regarding management decisions, member votes, fiduciary duties, and other matters.
The point is that
Take my advice: If you don’t have an Operating Agreement, take the time to have one professionally prepared. If your LLC already has an Operating Agreement, consult with your favorite business attorney to make sure it complies with the new Florida LLC law.