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Business Law

Monday, May 20, 2019

What is the Connecticut Uniform Limited Liability Act? Part Two


The Connecticut Limited Liability Company Act, originally passed in 1993, was updated in 2017. This new law, called the Connecticut Uniform Limited Liability Company Act (the Act), is intended to create a more business-friendly environment for LLCs. In a previous article, we reviewed and discussed some of the Act's requirements. Below is an overview of some additional requirements under Connecticut's new LLC law. 

Fiduciary duties of managers and members 

  • Regarding the fiduciary duties of managers and members, the Act permits an operating agreement to do the following:
  • Eliminate or alter a manager or member's duty of loyalty
  • Identify categories of activities that don't violate the duty of loyalty
  • Alter the duty of care but not authorize conduct involving willful or intentional misconduct, bad faith, or a knowing violation of law
  • Eliminate or alter any other fiduciary duties

    In addition, under the Act:

  • A manager or member must discharge his or her duties in good faith 
  • Managers in a manager-managed LLC and members in a member-managed LLC have a duty of loyalty and are required to discharge their obligations and duties under the Act or the operating agreement in good faith
  • A majority in interest of disinterested members may approve any breach of the duty of loyalty after full disclosure of all material facts 

 Voting

Unless otherwise provided in the operating agreement, the unanimous approval of all members is required to amend an LLC’s certificate of organization or operating agreement.


Read more . . .


Monday, April 15, 2019

What is the Connecticut Uniform Limited Liability Act? Part One


The first major revision of the Connecticut Limited Liability Company Act since its passage in 1993 was signed into law in 2017. This new law, called the Connecticut Uniform Limited Liability Company Act (the Act), is intended to create a more business-friendly environment for LLCs. Below is an overview of some of the major updates enacted by this new version of Connecticut's LLC law. 

Terminology 

Some of the major changes to the Act's terminology include:

  • An LLC's organization document was changed from "articles of organization" to "certificate of organization"
  • An LLC's designated individual who receives legal process was changed from “statutory agent for service" to "registered agent"
  • The document the LLC must file after a merger is approved was changed from "articles of merger" to "certificate of merger"

Operating Agreement Prohibitions

The Act prohibits an operating agreement from: 

  • Applying out-of-state laws to govern Connecticut domestic LLCs
  • Eliminating the obligation of good faith and fair dealing 
  • Relieving an individual from liability for conduct involving bad faith, misconduct, or violation of the law

Certificate of Organization 

Regarding certificates of organization, the Act requires the following:

An LLC's operating agreement must state whether it will be run by a manager 
The certificate of organization must state the name, business address, and residence address of at least one manager or member

Professional Services LLCs

The Act also makes updates to the provisions for LLCs formed to render professional services, such as LLCs for accountants, doctors, and architects. However, the Act maintains certain requirements in this area, such as the requirement that each member of an LLC must be licensed or otherwise authorized by law to render such services.


Read more . . .


Friday, September 29, 2017

An Overview of Business Entity Formation in Connecticut


Determining how to legally structure your business is an important decision. All businesses are different, and one entity type may be more appropriate than another depending on the factors involved. Issues such as an organization’s financial health and the nature of activities the business engages in are helpful in determining the appropriate entity type.
Read more . . .


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