Office of the Revisor of Statutes
Minnesota Session Laws - 1992, Regular Session
Key: (1) language to be deleted (2) new language
Laws of Minnesota 1992
CHAPTER 517-H.F.No. 1910
An act relating to corporations; providing for the
formation, organization, operation, taxation,
management, and ownership of limited liability
companies; prescribing the procedures for filing
articles of organization; establishing the powers of a
limited liability company; providing for the naming of
a limited liability company; providing for the
appointment of a resident agent for a limited
liability company; establishing the relationship of
the members of a limited liability company to each
other and to third parties; permitting the merger of
one or more limited liability companies with other
domestic limited liability companies and domestic and
foreign corporations; providing for the dissolution,
winding up, and termination of a limited liability
company; providing for foreign limited liability
companies to do business in this state; defining
certain terms; amending Minnesota Statutes 1990,
sections 211B.15, subdivisions 1, 2, 3, 4, 6, 7, 9,
10, and 11; 290.01, by adding a subdivision; 302A.011,
subdivision 19; 302A.115, subdivision 1; 302A.121,
subdivision 2; 302A.601, by adding a subdivision;
308A.005, subdivision 6; 308A.121, subdivision 1;
317A.011, subdivision 16; 317A.115, subdivision 2;
319A.02, subdivision 5, and by adding a subdivision;
319A.03; 319A.05; 319A.06, subdivision 2; 319A.07;
319A.12, subdivisions 1a and 2; 319A.20; 322A.01;
322A.02; 333.001; 333.18, subdivision 2; 333.20,
subdivision 2; and 333.21, subdivision 1; Minnesota
Statutes 1991 Supplement, sections 290.06, subdivision
22; 302A.471, subdivision 1; and 500.24, subdivision
3; proposing coding for new law as Minnesota Statutes,
chapter 322B.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
ARTICLE 1
Section 1. Minnesota Statutes 1990, section 211B.15,
subdivision 1, is amended to read:
Subdivision 1. [DEFINITION DEFINITIONS.] (a) For purposes
of this section, the following terms have the meanings given
them.
(b) "Corporation" for purposes of this section means a
corporation organized for profit that does business in Minnesota.
(c) "Limited liability company" means a limited liability
company formed under chapter 322B, or under similar laws of
another state, that does business in Minnesota.
Sec. 2. Minnesota Statutes 1990, section 211B.15,
subdivision 2, is amended to read:
Subd. 2. [PROHIBITED CONTRIBUTIONS.] A corporation or
limited liability company may not make a contribution or offer
or agree to make a contribution, directly or indirectly, of any
money, property, free service of its officers or employees, or
thing of monetary value to a major political party,
organization, committee, or individual to promote or defeat the
candidacy of an individual for nomination, election, or
appointment to a political office. For the purpose of this
subdivision, "contribution" includes an expenditure to promote
or defeat the election or nomination of a candidate to a
political office that is made with the authorization or
expressed or implied consent of, or in cooperation or in concert
with, or at the request or suggestion of, a candidate or
committee established to support or oppose a candidate.
Sec. 3. Minnesota Statutes 1990, section 211B.15,
subdivision 3, is amended to read:
Subd. 3. [INDEPENDENT EXPENDITURES.] A corporation or
limited liability company may not make an independent
expenditure or offer or agree to make an independent expenditure
to promote or defeat the candidacy of an individual for
nomination, election, or appointment to a political office. For
the purpose of this subdivision, "independent expenditure" means
an expenditure that is not made with the authorization or
expressed or implied consent of, or in cooperation or concert
with, or at the request or suggestion of, a candidate or
committee established to support or oppose a candidate.
Sec. 4. Minnesota Statutes 1990, section 211B.15,
subdivision 4, is amended to read:
Subd. 4. [BALLOT QUESTION.] A corporation or limited
liability company may make contributions or expenditures to
promote or defeat a ballot question, to qualify a question for
placement on the ballot unless otherwise prohibited by law, or
to express its views on issues of public concern. A corporation
or limited liability company may not make a contribution to a
candidate for nomination, election, or appointment to a
political office or to a committee organized wholly or partly to
promote or defeat a candidate.
Sec. 5. Minnesota Statutes 1990, section 211B.15,
subdivision 6, is amended to read:
Subd. 6. [PENALTY FOR INDIVIDUALS.] An officer, manager,
stockholder, member, agent, employee, attorney, or other
representative of a corporation or limited liability company
acting in behalf of the corporation or limited liability company
who violates this section may be fined not more than $20,000 or
be imprisoned for not more than five years, or both.
Sec. 6. Minnesota Statutes 1990, section 211B.15,
subdivision 7, is amended to read:
Subd. 7. [PENALTY FOR CORPORATIONS OR LIMITED LIABILITY
COMPANIES.] A corporation or limited liability company convicted
of violating this section is subject to a fine not greater than
$40,000. A convicted domestic corporation or limited liability
company may be dissolved as well as fined. If a foreign or
nonresident corporation or limited liability company is
convicted, in addition to being fined, its right to do business
in this state may be declared forfeited.
Sec. 7. Minnesota Statutes 1990, section 211B.15,
subdivision 9, is amended to read:
Subd. 9. [MEDIA PROJECTS.] It is not a violation of this
section for a corporation or limited liability company to
contribute to or conduct public media projects to encourage
individuals to attend precinct caucuses, register, or vote if
the projects are not controlled by or operated for the advantage
of a candidate, political party, or committee.
Sec. 8. Minnesota Statutes 1990, section 211B.15,
subdivision 10, is amended to read:
Subd. 10. [MEETING FACILITIES.] It is not a violation of
this section for a corporation or limited liability company to
provide meeting facilities to a committee, political party, or
candidate on a nondiscriminatory and nonpreferential basis.
Sec. 9. Minnesota Statutes 1990, section 211B.15,
subdivision 11, is amended to read:
Subd. 11. [MESSAGES ON CORPORATE PREMISES.] It is not a
violation of this section for a corporation or limited liability
company selling products or services to the public to post on
its public premises messages that promote participation in
precinct caucuses, voter registration, or elections if the
messages are not controlled by or operated for the advantage of
a candidate, political party, or committee.
Sec. 10. Minnesota Statutes 1990, section 290.01, is
amended by adding a subdivision to read:
Subd. 3b. [LIMITED LIABILITY COMPANY.] For purposes of
this chapter and chapter 289A, a limited liability company that
is formed under either the laws of this state or under similar
laws of another state, and that is considered to be a
partnership for federal income tax purposes, is considered to be
a partnership and the members must be considered to be partners.
Sec. 11. Minnesota Statutes 1991 Supplement, section
290.06, subdivision 22, is amended to read:
Subd. 22. [CREDIT FOR TAXES PAID TO ANOTHER STATE.] (a) A
taxpayer who is liable for taxes on or measured by net income to
another state or province or territory of Canada, as provided in
paragraphs (b) through (f), upon income allocated or apportioned
to Minnesota, is entitled to a credit for the tax paid to
another state or province or territory of Canada if the tax is
actually paid in the taxable year or a subsequent taxable year.
A taxpayer who is a resident of this state pursuant to section
290.01, subdivision 7, clause (2), and who is subject to income
tax as a resident in the state of the individual's domicile is
not allowed this credit unless the state of domicile does not
allow a similar credit.
(b) For an individual, estate, or trust, the credit is
determined by multiplying the tax payable under this chapter by
the ratio derived by dividing the income subject to tax in the
other state or province or territory of Canada that is also
subject to tax in Minnesota while a resident of Minnesota by the
taxpayer's federal adjusted gross income, as defined in section
62 of the Internal Revenue Code of 1986, as amended through
December 31, 1989, modified by the addition required by section
290.01, subdivision 19a, clause (1), and the subtraction allowed
by section 290.01, subdivision 19b, clause (1), to the extent
the income is allocated or assigned to Minnesota under sections
290.081 and 290.17.
(c) If the taxpayer is an athletic team that apportions all
of its income under section 290.17, subdivision 5, paragraph
(c), the credit is determined by multiplying the tax payable
under this chapter by the ratio derived from dividing the total
net income subject to tax in the other state or province or
territory of Canada by the taxpayer's Minnesota taxable income.
(d) The credit determined under paragraph (b) or (c) shall
not exceed the amount of tax so paid to the other state or
province or territory of Canada on the gross income earned
within the other state or province or territory of Canada
subject to tax under this chapter, nor shall the allowance of
the credit reduce the taxes paid under this chapter to an amount
less than what would be assessed if such income amount was
excluded from taxable net income.
(e) In the case of the tax assessed on a lump sum
distribution under section 290.032, the credit allowed under
paragraph (a) is the tax assessed by the other state or province
or territory of Canada on the lump sum distribution that is also
subject to tax under section 290.032, and shall not exceed the
tax assessed under section 290.032. To the extent the total
lump sum distribution defined in section 290.032, subdivision 1,
includes lump sum distributions received in prior years or is
all or in part an annuity contract, the reduction to the tax on
the lump sum distribution allowed under section 290.032,
subdivision 2, includes tax paid to another state that is
properly apportioned to that distribution.
(f) If a Minnesota resident reported an item of income to
Minnesota and is assessed tax in such other state or province or
territory of Canada on that same income after the Minnesota
statute of limitations has expired, the taxpayer shall receive a
credit for that year under paragraph (a), notwithstanding any
statute of limitations to the contrary. The claim for the
credit must be submitted within one year from the date the taxes
were paid to the other state or province or territory of
Canada. The taxpayer must submit sufficient proof to show
entitlement to a credit.
(g) For the purposes of this subdivision, a resident
shareholder of a corporation having a valid election in effect
under section 1362 of the Internal Revenue Code of 1986, as
amended through December 31, 1990, must be considered to have
paid a tax imposed on the shareholder in an amount equal to the
shareholder's pro rata share of any net income tax paid by the S
corporation to a state that does not measure the income of the
shareholder of the S corporation by reference to the income of
the S corporation. For the purposes of the preceding sentence,
the term "net income tax" means any tax imposed on or measured
by a corporation's net income.
(h) For the purposes of this subdivision, a resident member
of a limited liability company taxed as a partnership under the
Internal Revenue Code of 1986, as amended through December 31,
1991, must be considered to have paid a tax imposed on the
member in an amount equal to the member's pro rata share of any
net income tax paid by the limited liability company to a state
that does not measure the income of the member of the limited
liability company by reference to the income of the limited
liability company. For purposes of the preceding sentence, the
term "net income" tax means any tax imposed on or measured by a
limited liability company's net income.
Sec. 12. Minnesota Statutes 1990, section 302A.011,
subdivision 19, is amended to read:
Subd. 19. [ORGANIZATION.] "Organization" means a domestic
or foreign corporation, limited liability company, whether
domestic or foreign, partnership, limited partnership, joint
venture, association, business trust, estate, trust, enterprise,
and any other legal or commercial entity.
Sec. 13. Minnesota Statutes 1990, section 302A.115,
subdivision 1, is amended to read:
Subdivision 1. [REQUIREMENTS; PROHIBITIONS.] The corporate
name:
(a) Shall be in the English language or in any other
language expressed in English letters or characters;
(b) Shall contain the word "corporation," "incorporated,"
or "limited," or shall contain an abbreviation of one or more of
these words, or the word "company" or the abbreviation "Co." if
that word or abbreviation is not immediately preceded by the
word "and" or the character "&";
(c) Shall not contain a word or phrase that indicates or
implies that it is incorporated for a purpose other than a legal
business purpose;
(d) Shall be distinguishable upon the records in the office
of the secretary of state from the name of a domestic
corporation or limited partnership, whether profit or nonprofit,
or a limited liability company, whether domestic or foreign, or
a foreign corporation or limited partnership authorized or
registered to do business in this state, whether profit or
nonprofit, or a name the right to which is, at the time of
incorporation, reserved or provided for in sections 302A.117,
322A.03, 322B.125, or 333.001 to 333.54, unless there is filed
with the articles one of the following:
(1) The written consent of the domestic corporation or
limited partnership or foreign corporation or limited
partnership authorized or registered to do business in this
state or the holder of a reserved name or a name filed by or
registered with the secretary of state under sections 333.001 to
333.54 having a name that is not distinguishable;
(2) A certified copy of a final decree of a court in this
state establishing the prior right of the applicant to the use
of the name in this state; or
(3) The applicant's affidavit that the corporation or
limited partnership with the name that is not distinguishable
has been incorporated or on file in this state for at least
three years prior to the affidavit, if it is a domestic
corporation or limited partnership, or has been authorized or
registered to do business in this state for at least three years
prior to the affidavit, if it is a foreign corporation or
limited partnership, or that the holder of a name filed or
registered with the secretary of state under sections 333.001 to
333.54 filed or registered that name at least three years prior
to the affidavit, and has not during the three-year period filed
any document with the secretary of state; that the applicant has
mailed written notice to the corporation or limited partnership
or the holder of a name filed or registered with the secretary
of state under sections 333.001 to 333.54 by certified mail,
return receipt requested, properly addressed to the registered
office of the corporation or in care of the agent of the limited
partnership, or the address of the holder of a name filed or
registered with the secretary of state under sections 333.001 to
333.54, shown in the records of the secretary of state, that the
applicant intends to use a name that is not distinguishable and
the notice has been returned to the applicant as undeliverable
to the addressee corporation or limited partnership or holder of
a name filed or registered with the secretary of state under
sections 333.001 to 333.54; that the applicant, after diligent
inquiry, has been unable to find any telephone listing for the
corporation or limited partnership with the name that is not
distinguishable in the county in which is located the registered
office of the corporation shown in the records of the secretary
of state or has been unable to find any telephone listing for
the holder of a name filed or registered with the secretary of
state under sections 333.001 to 333.54 in the county in which is
located the address of the holder shown in the records of the
secretary of state; and that the applicant has no knowledge that
the corporation or limited partnership or holder of a name filed
or registered with the secretary of state under sections 333.001
to 333.54 is currently engaged in business in this state.
Sec. 14. Minnesota Statutes 1990, section 302A.121,
subdivision 2, is amended to read:
Subd. 2. [REGISTERED AGENT.] A corporation may designate
in its articles a registered agent. The registered agent may be
a natural person residing in this state, a domestic corporation,
or limited liability company, or a foreign corporation or
foreign limited liability company authorized to transact
business in this state. The registered agent must maintain a
business office that is identical with the registered office.
Sec. 15. Minnesota Statutes 1991 Supplement, section
302A.471, subdivision 1, is amended to read:
Subdivision 1. [ACTIONS CREATING RIGHTS.] A shareholder of
a corporation may dissent from, and obtain payment for the fair
value of the shareholder's shares in the event of, any of the
following corporate actions:
(a) An amendment of the articles that materially and
adversely affects the rights or preferences of the shares of the
dissenting shareholder in that it:
(1) alters or abolishes a preferential right of the shares;
(2) creates, alters, or abolishes a right in respect of the
redemption of the shares, including a provision respecting a
sinking fund for the redemption or repurchase of the shares;
(3) alters or abolishes a preemptive right of the holder of
the shares to acquire shares, securities other than shares, or
rights to purchase shares or securities other than shares;
(4) excludes or limits the right of a shareholder to vote
on a matter, or to cumulate votes, except as the right may be
excluded or limited through the authorization or issuance of
securities of an existing or new class or series with similar or
different voting rights; except that an amendment to the
articles of an issuing public corporation that provides that
section 302A.671 does not apply to a control share acquisition
does not give rise to the right to obtain payment under this
section;
(b) A sale, lease, transfer, or other disposition of all or
substantially all of the property and assets of the corporation
not made in the usual or regular course of its business, but not
including a disposition in dissolution described in section
302A.725, subdivision 2, or a disposition pursuant to an order
of a court, or a disposition for cash on terms requiring that
all or substantially all of the net proceeds of disposition be
distributed to the shareholders in accordance with their
respective interests within one year after the date of
disposition;
(c) A plan of merger, whether under this chapter or under
chapter 322B, to which the corporation is a party, except as
provided in subdivision 3;
(d) A plan of exchange, whether under this chapter or under
chapter 322B, to which the corporation is a party as the
corporation whose shares will be acquired by the acquiring
corporation, if the shares of the shareholder are entitled to
vote on the plan; or
(e) Any other corporate action taken pursuant to a
shareholder vote with respect to which the articles, the bylaws,
or a resolution approved by the board directs that dissenting
shareholders may obtain payment for their shares.
Sec. 16. Minnesota Statutes 1990, section 302A.601, is
amended by adding a subdivision to read:
Subd. 4. [MERGER OR EXCHANGE WITH A LIMITED LIABILITY
COMPANY.] A corporation may participate in a merger or exchange
with a domestic limited liability company pursuant to chapter
322B. The dissenters' rights for shareholders of a corporation
are governed by this chapter.
Sec. 17. Minnesota Statutes 1990, section 308A.005,
subdivision 6, is amended to read:
Subd. 6. [CORPORATION.] "Corporation" means a company,
limited liability company, whether domestic or foreign,
association, or body vested with a corporate power or function.
Sec. 18. Minnesota Statutes 1990, section 308A.121,
subdivision 1, is amended to read:
Subdivision 1. [NAME.] The name of a cooperative must
distinguish the cooperative upon the records in the office of
the secretary of state from the name of a domestic corporation,
whether profit or nonprofit, or a limited partnership, or a
foreign corporation or a limited partnership authorized or
registered to do business in this state, whether profit or
nonprofit, a limited liability company, whether domestic or
foreign, or a name the right to which is, at the time of
incorporation, reserved or provided for in sections 302A.117,
317A.117, 322A.03, 322B.125, or 333.001 to 333.54.
Sec. 19. Minnesota Statutes 1990, section 317A.011,
subdivision 16, is amended to read:
Subd. 16. [ORGANIZATION.] "Organization" means a domestic
or foreign business or nonprofit corporation, limited liability
company, whether domestic or foreign, partnership, limited
partnership, joint venture, association, trust, estate,
enterprise, or other legal or commercial entity.
Sec. 20. Minnesota Statutes 1990, section 317A.115,
subdivision 2, is amended to read:
Subd. 2. [NAME MUST BE DISTINGUISHABLE.] (a) A corporate
name must be distinguishable upon the records in the office of
the secretary of state from the name of a domestic corporation
or limited partnership, a foreign corporation or limited
partnership authorized or registered to do business in this
state, whether profit or nonprofit, a limited liability company,
whether domestic or foreign, or a name the right to which is, at
the time of incorporation, reserved, registered, or provided for
in section 317A.117, 302A.117, 322A.03, 322B.125, or sections
333.001 to 333.54, unless one of the following is filed with the
articles:
(1) the written consent of the organization having the name
that is not distinguishable;
(2) a certified copy of a final decree of a court in this
state establishing the prior right of the applicant to use its
corporate name in this state; or
(3) an affidavit of nonuse of the kind required by section
302A.115, subdivision 1, paragraph (d), clause (3).
(b) The secretary of state shall determine whether a name
is distinguishable from another name for purposes of this
section and section 317A.117.
(c) This subdivision does not affect the right of a
corporation existing on January 1, 1991, or a foreign
corporation authorized to do business in this state on that
date, to use its corporate name.
Sec. 21. Minnesota Statutes 1990, section 319A.02,
subdivision 5, is amended to read:
Subd. 5. "Foreign professional corporation" means a
corporation or limited liability company organized under laws
other than the laws of this state for a purpose for which a
professional corporation may be organized hereunder.
Sec. 22. Minnesota Statutes 1990, section 319A.02, is
amended by adding a subdivision to read:
Subd. 7. "Corporation" as used in this chapter includes a
limited liability company organized under chapter 322B and, with
respect to a limited liability company, references in this
chapter to articles of incorporation, bylaws, officers,
directors, shareholders and shares of stock shall refer to
articles of organization, operating agreement, governors,
managers, members and membership interests, respectively.
Sec. 23. Minnesota Statutes 1990, section 319A.03, is
amended to read:
319A.03 [FORMATION OF CORPORATION.]
One or more natural professional persons may form a
corporation pursuant to chapter 302A, or 317A and one or more
natural professional persons may organize a limited liability
company pursuant to chapter 322B for the purposes hereinafter
set forth.
Sec. 24. Minnesota Statutes 1990, section 319A.05, is
amended to read:
319A.05 [APPLICABILITY OF CORPORATION ACTS.]
A corporation incorporating or a limited liability company
organizing under sections 319A.01 to 319A.22 and chapter 302A,
322B, or 317A shall proceed in the manner specified in chapter
302A, 322B, or 317A. After incorporation or organization a
professional corporation or limited liability company shall
enjoy the powers and privileges and shall be subject to the
duties and liabilities of other corporations or limited
liability companies, respectively organized under chapter 302A,
322B, or 317A, except insofar as the same may be limited or
enlarged by sections 319A.01 to 319A.22. If any provision of
sections 319A.01 to 319A.22 conflicts with the provisions of
chapter 302A, 322B, or 317A, sections 319A.01 to 319A.22 take
precedence.
Sec. 25. Minnesota Statutes 1990, section 319A.06,
subdivision 2, is amended to read:
Subd. 2. A foreign professional corporation may provide
professional service in this state only upon compliance with
sections 303.01 to 303.24, or sections 322B.90 to 322B.955,
regulating foreign corporations and foreign limited liability
companies, respectively. The secretary of state shall
promulgate forms for such purpose. The provisions of sections
319A.01 to 319A.22 relating to the rendering of professional
service by a professional corporation apply to a foreign
professional corporation. Sections 319A.01 to 319A.22 shall not
be construed to prohibit the rendering of professional service
in this state by a person who is a shareholder, director,
officer, employee, or agent of a foreign professional
corporation, if the person could lawfully render professional
service in this state in the absence of any relationship to the
foreign professional corporation, irrespective of whether the
foreign professional corporation is authorized to provide
professional service in this state.
Sec. 26. Minnesota Statutes 1990, section 319A.07, is
amended to read:
319A.07 [CORPORATE NAME.]
The corporate name of any corporation organized under
sections 319A.01 to 319A.22 shall not be used to imply
superiority and, in the case of a corporation, other than a
limited liability company, shall end with the word "Chartered,"
or the word "Limited," or the abbreviation "Ltd.," or the words
"Professional Association," or the abbreviation "P.A." The name
of any limited liability company organized under sections
319A.01 to 319A.22 and chapter 322B shall end with the words
"Professional Limited Liability Company," or the abbreviation
"P.L.C."
Sec. 27. Minnesota Statutes 1990, section 319A.12,
subdivision 1a, is amended to read:
Subd. 1a. A professional corporation may at any time by
amendment to its articles of incorporation relinquish the powers
and privileges conferred upon it by this chapter and elect to be
governed thereafter solely by the provisions of chapter 302A,
322B, or 317A, as the case may be. Notwithstanding any
provision of this chapter, the representative of a deceased or
incompetent shareholder of a professional corporation shall have
authority to vote the deceased or incompetent shareholder's
shares on the question of adopting such an amendment.
Sec. 28. Minnesota Statutes 1990, section 319A.12,
subdivision 2, is amended to read:
Subd. 2. If within 90 days following the date of death of
a shareholder or member of a professional corporation or the
loss of a license to render professional service all of the
shares or membership owned by the deceased or disqualified
shareholder or member have not been transferred to and acquired
by the corporation or persons qualified to own the shares or
membership, the corporation shall thereafter be governed solely
by the provisions of chapter 302A, 322B, or 317A, as the case
may be and shall not enjoy any of the powers and privileges
conferred by sections 319A.01 to 319A.22. When the corporation
ceases to be authorized to render professional service, its
corporate name must be changed to comply with the corporate name
provision of chapter 302A, 322B, or 317A, as the case may be,
and any words, phrases or abbreviations contained therein to
comply with the provisions of sections 319A.01 to 319A.22 shall
be eliminated.
Sec. 29. Minnesota Statutes 1990, section 319A.20, is
amended to read:
319A.20 [SUSPENSION OR REVOCATION.]
The corporate charter of a professional corporation or the
certificate of authority of a foreign professional corporation
may be suspended or revoked pursuant to section 302A.757,
322B.843, or 317A.751 for the reasons enumerated therein or for
failure to comply with the provisions of sections 319A.01 to
319A.22 or the rules of any board. A board through the attorney
general may institute such suspension or revocation proceedings.
Sec. 30. Minnesota Statutes 1990, section 322A.01, is
amended to read:
322A.01 [DEFINITIONS.]
As used in sections 322A.01 to 322A.87, unless the context
otherwise requires:
(1) "Certificate of limited partnership" means the
certificate referred to in section 322A.11, and the certificate
as amended or restated.
(2) "Contribution" means any cash, property, services
rendered, or a promissory note or other binding obligation to
contribute cash or property or to perform services, which a
partner contributes to a limited partnership as a partner.
(3) "Event of withdrawal of a general partner" means an
event that causes a person to cease to be a general partner as
provided in section 322A.32.
(4) "Foreign limited partnership" means a partnership
formed under the laws of any state other than this state and
having as partners one or more general partners and one or more
limited partners.
(5) "General partner" means a person who has been admitted
to a limited partnership as a general partner in accordance with
the partnership agreement and named in the certificate of
limited partnership as a general partner.
(6) "Limited partner" means a person who has been admitted
to a limited partnership as a limited partner in accordance with
the partnership agreement.
(7) "Limited partnership" and "domestic limited
partnership" mean a partnership formed by two or more persons
under the laws of this state and having one or more general
partners and one or more limited partners.
(8) "Partner" means a limited or general partner.
(9) "Partnership agreement" means any valid agreement,
written or oral, of the partners as to the affairs of a limited
partnership and the conduct of its business.
(10) "Partnership interest" means a partner's share of the
profits and losses of a limited partnership and the right to
receive distributions of partnership assets.
(11) "Person" means a natural person, partnership, limited
partnership (domestic or foreign), trust, estate,
association, limited liability company (whether domestic or
foreign), or corporation.
(12) "State" means a state, territory, or possession of the
United States, the District of Columbia, or the Commonwealth of
Puerto Rico.
Sec. 31. Minnesota Statutes 1990, section 322A.02, is
amended to read:
322A.02 [NAME.]
(a) The name of each limited partnership as set forth in
its certificate of limited partnership:
(1) shall contain without abbreviation the words "limited
partnership";
(2) may not contain the name of a limited partner unless
(i) it is also the name of a general partner or the corporate
name of a corporate general partner, or (ii) the business of the
limited partnership had been carried on under that name before
the admission of that limited partner;
(3) must be distinguishable from the name of a domestic
corporation or limited partnership, whether profit or nonprofit,
or a foreign corporation or limited partnership authorized or
registered to do business in this state, whether profit or
nonprofit, a limited liability company, whether domestic or
foreign, or a name the right to which is reserved or provided
for in the manner provided for in sections 302A.117, 322A.03,
322B.125, or 333.001 to 333.54, unless there is filed with the
certificate a written consent, court decree of prior right, or
affidavit of nonuse, of the kind required by section 302A.115,
subdivision 1, paragraph (d); and
(4) may not contain the following words: corporation,
incorporated.
The secretary of state shall determine whether a name is
"distinguishable" from another name for purposes of this section
and section 322A.03. This section does not abrogate or limit
the law of unfair competition or unfair practices, nor sections
333.001 to 333.54, nor the laws of the United States with
respect to the right to acquire and protect copyrights,
trademarks, service names, service marks, or any other rights to
the exclusive use of names or symbols, nor derogate the common
law or principles of equity.
(b) A person doing business in this state may contest the
subsequent registration of a name with the office of the
secretary of state as provided in section 5.22.
Sec. 32. Minnesota Statutes 1990, section 333.001, is
amended to read:
333.001 [DEFINITIONS.]
Subdivision 1. As used in sections 333.001 to 333.06, the
following terms shall have the meanings given, unless the
context clearly indicates that a different meaning is intended.
Subd. 2. [PERSON.] "Person" means one or more natural
persons; a limited liability company, whether domestic or
foreign; a partnership; a limited partnership; a corporation,
including a foreign, domestic, or nonprofit corporation; a
trust; or any other business organization.
Subd. 3. [TRUE NAME.] "True name" means the true full name
of the natural person, if a proprietorship; the true full name
of each partner, if a partnership; the full corporate name as
stated in its articles, if a corporation; the full name of the
limited liability company as stated in its articles of
organization or certificate of authority; the full name of the
limited partnership, if a limited partnership; the true full
name of at least one trustee, if a trust; or the true full name
of at least one beneficial owner, if any other form of business
organization.
Subd. 4. "Address" means the full residential address of
each natural person, trustee or beneficial owner, limited
liability company, whether domestic or foreign, or corporation,
included in subdivision 3, and the address of the principal
place in Minnesota where the business is conducted or transacted.
Subd. 5. "Executed" means executed by one natural person,
if a proprietorship; by a general partner if a general or
limited partnership; by a manager, if a limited liability
company; by an officer, if a corporation; by a trustee, if a
trust; or by a beneficial owner or managing agent, if some other
form of business organization.
Sec. 33. Minnesota Statutes 1990, section 333.18,
subdivision 2, is amended to read:
Subd. 2. The term "person" as used herein means any
individual, firm, partnership, corporation, limited liability
company, whether domestic or foreign, association, union or
other organization.
Sec. 34. Minnesota Statutes 1990, section 333.20,
subdivision 2, is amended to read:
Subd. 2. The application shall be signed by the applicant
or by a member of the firm or an officer of the corporation, or
association or by a manager of a domestic or foreign limited
liability company, or association applying.
Sec. 35. Minnesota Statutes 1990, section 333.21,
subdivision 1, is amended to read:
Subdivision 1. Upon a finding by the secretary of state
that the mark and application for registration comply with the
requirements of sections 333.18 to 333.31, and that the class
indicated, if any, in which the mark is to be registered is not
clearly incorrect, the secretary of state shall cause a
certificate of registration to be issued and delivered to the
applicant. The certificate of registration shall be issued
under the signature of the secretary of state and the seal of
the state, and shall show the registrant's name and business
address and, if a corporation or a limited liability company,
the state of incorporation or organization, the date claimed for
the first use of the mark in this state, the class of goods or
services and a description of the goods or services in
connection with which the mark is used, a reproduction of the
mark, the registration date and the term of the registration.
Sec. 36. Minnesota Statutes 1991 Supplement, section
500.24, subdivision 3, is amended to read:
Subd. 3. [FARMING AND OWNERSHIP OF AGRICULTURAL LAND BY
CORPORATIONS RESTRICTED.] No corporation, limited liability
company, pension or investment fund, or limited partnership
shall engage in farming; nor shall any corporation, limited
liability company, pension or investment fund, or limited
partnership, directly or indirectly, own, acquire, or otherwise
obtain an interest, whether legal, beneficial or otherwise, in
any title to real estate used for farming or capable of being
used for farming in this state. Provided, however, that the
restrictions in this subdivision do not apply to corporations or
partnerships in clause (b) and do not apply to corporations,
limited partnerships, and pension or investment funds that
record its name and the particular exception under clauses (a)
to (s) under which the agricultural land is owned or farmed,
have a conservation plan prepared for the agricultural land,
report as required under subdivision 4, and satisfy one of the
following conditions under clauses (a) to (s):
(a) A bona fide encumbrance taken for purposes of security;
(b) A family farm corporation, an authorized farm
corporation, a family farm partnership, or an authorized farm
partnership as defined in subdivision 2 or a general
partnership;
(c) Agricultural land and land capable of being used for
farming owned by a corporation as of May 20, 1973, or a pension
or investment fund as of May 12, 1981, including the normal
expansion of such ownership at a rate not to exceed 20 percent
of the amount of land owned as of May 20, 1973, or, in the case
of a pension or investment fund, as of May 12, 1981, measured in
acres, in any five-year period, and including additional
ownership reasonably necessary to meet the requirements of
pollution control rules;
(d) Agricultural land operated for research or experimental
purposes with the approval of the commissioner of agriculture,
provided that any commercial sales from the operation must be
incidental to the research or experimental objectives of the
corporation. A corporation, limited partnership, or pension or
investment fund seeking to operate agricultural land for
research or experimental purposes must submit to the
commissioner a prospectus or proposal of the intended method of
operation, containing information required by the commissioner
including a copy of any operational contract with individual
participants, prior to initial approval of an operation. A
corporation, limited partnership, or pension or investment fund
operating agricultural land for research or experimental
purposes prior to May 1, 1988, must comply with all requirements
of this clause except the requirement for initial approval of
the project;
(e) Agricultural land operated by a corporation or limited
partnership for the purpose of raising breeding stock, including
embryos, for resale to farmers or operated for the purpose of
growing seed, wild rice, nursery plants or sod;
(f) Agricultural land and land capable of being used for
farming leased by a corporation or limited partnership in an
amount, measured in acres, not to exceed the acreage under lease
to such corporation as of May 20, 1973, or to the limited
partnership as of May 1, 1988, and the additional acreage
required for normal expansion at a rate not to exceed 20 percent
of the amount of land leased as of May 20, 1973, for a
corporation or May 1, 1988, for a limited partnership in any
five-year period, and the additional acreage reasonably
necessary to meet the requirements of pollution control rules;
(g) Agricultural land when acquired as a gift (either by
grant or a devise) by an educational, religious, or charitable
nonprofit corporation or by a pension or investment fund or
limited partnership; provided that all lands so acquired by a
pension or investment fund, and all lands so acquired by a
corporation or limited partnership which are not operated for
research or experimental purposes, or are not operated for the
purpose of raising breeding stock for resale to farmers or
operated for the purpose of growing seed, wild rice, nursery
plants or sod must be disposed of within ten years after
acquiring title thereto;
(h) Agricultural land acquired by a pension or investment
fund or a corporation other than a family farm corporation or
authorized farm corporation, as defined in subdivision 2, or a
limited partnership other than a family farm partnership or
authorized farm partnership as defined in subdivision 2, for
which the corporation or limited partnership has documented
plans to use and subsequently uses the land within six years
from the date of purchase for a specific nonfarming purpose, or
if the land is zoned nonagricultural, or if the land is located
within an incorporated area. A pension or investment fund or a
corporation or limited partnership may hold such agricultural
land in such acreage as may be necessary to its nonfarm business
operation; provided, however, that pending the development of
agricultural land for nonfarm purposes, such land may not be
used for farming except under lease to a family farm unit, a
family farm corporation, an authorized farm corporation, a
family farm partnership, or an authorized farm partnership, or
except when controlled through ownership, options, leaseholds,
or other agreements by a corporation which has entered into an
agreement with the United States of America pursuant to the New
Community Act of 1968 (Title IV of the Housing and Urban
Development Act of 1968, United States Code, title 42, sections
3901 to 3914) as amended, or a subsidiary or assign of such a
corporation;
(i) Agricultural lands acquired by a pension or investment
fund or a corporation or limited partnership by process of law
in the collection of debts, or by any procedure for the
enforcement of a lien or claim thereon, whether created by
mortgage or otherwise; provided, however, that all lands so
acquired be disposed of within ten years after acquiring the
title if acquired before May 1, 1988, and five years after
acquiring the title if acquired on or after May 1, 1988,
acquiring the title thereto, and further provided that the land
so acquired shall not be used for farming during the ten-year or
five-year period except under a lease to a family farm unit, a
family farm corporation, an authorized farm corporation, a
family farm partnership, or an authorized farm partnership. The
aforementioned ten-year or five-year limitation period shall be
deemed a covenant running with the title to the land against any
grantee, assignee, or successor of the pension or investment
fund or corporate or limited partnership grantee or assignee or
the successor of such pension or investment fund or corporation
or limited partnership, corporation, or limited partnership.
Notwithstanding the five-year divestiture requirement under this
clause, a financial institution may continue to own the
agricultural land if the agricultural land is leased to the
immediately preceding former owner, but must divest of the
agricultural land within the ten-year period;
(j) Agricultural land acquired by a corporation regulated
under the provisions of Minnesota Statutes 1974, chapter 216B,
for purposes described in that chapter or by an electric
generation or transmission cooperative for use in its business,
provided, however, that such land may not be used for farming
except under lease to a family farm unit, a family farm
corporation, or a family farm partnership;
(k) Agricultural land, either leased or owned, totaling no
more than 2,700 acres, acquired after May 20, 1973, for the
purpose of replacing or expanding asparagus growing operations,
provided that such corporation had established 2,000 acres of
asparagus production;
(l) All agricultural land or land capable of being used for
farming which was owned or leased by an authorized farm
corporation as defined in Minnesota Statutes 1974, section
500.24, subdivision 1, clause (d), but which does not qualify as
an authorized farm corporation as defined in subdivision 2,
clause (d);
(m) A corporation formed primarily for religious purposes
whose sole income is derived from agriculture;
(n) Agricultural land owned or leased by a corporation
prior to August 1, 1975, which was exempted from the restriction
of this subdivision under the provisions of Laws 1973, chapter
427, including normal expansion of such ownership or leasehold
interest to be exercised at a rate not to exceed 20 percent of
the amount of land owned or leased on August 1, 1975, in any
five-year period and the additional ownership reasonably
necessary to meet requirements of pollution control rules;
(o) Agricultural land owned or leased by a corporation
prior to August 1, 1978, including normal expansion of such
ownership or leasehold interest, to be exercised at a rate not
to exceed 20 percent of the amount of land owned or leased on
August 1, 1978, and the additional ownership reasonably
necessary to meet requirements of pollution control rules,
provided that nothing herein shall reduce any exemption
contained under the provisions of Laws 1975, chapter 324,
section 1, subdivision 2;
(p) An interest in the title to agricultural land acquired
by a pension fund or family trust established by the owners of a
family farm, authorized farm corporation or family farm
corporation, but limited to the farm on which one or more of
those owners or shareholders have resided or have been actively
engaged in farming as required by subdivision 2, clause (b),
(c), or (d);
(q) Agricultural land owned by a nursing home located in a
city with a population, according to the state demographer's
1985 estimate, between 900 and 1,000, in a county with a
population, according to the state demographer's 1985 estimate,
between 18,000 and 19,000, if the land was given to the nursing
home as a gift with the expectation that it would not be sold
during the donor's lifetime. This exemption is available until
July 1, 1995;
(r) The acreage of agricultural land and land capable of
being used for farming owned and recorded by an authorized farm
corporation as defined in Minnesota Statutes 1986, section
500.24, subdivision 2, paragraph (d), or a limited partnership
as of May 1, 1988, including the normal expansion of the
ownership at a rate not to exceed 20 percent of the land owned
and recorded as of May 1, 1988, measured in acres, in any
five-year period, and including additional ownership reasonably
necessary to meet the requirements of pollution control rules;
(s) Agricultural land owned or leased as a necessary part
of an aquatic farm as defined in section 17.47, subdivision 3.
Sec. 37. [EFFECTIVE DATE.]
Sections 10 and 11 are effective for taxable years
beginning after December 31, 1992. The rest of the article is
effective January 1, 1993.
ARTICLE 2
MINNESOTA LIMITED LIABILITY COMPANY ACT
Section 1. [322B.01] [CITATION.]
This chapter may be cited as the "Minnesota limited
liability company act."
Sec. 2. [322B.02] [LAWS NOT TO APPLY.]
Sections 222.19, 222.23, 300.01, 300.02, 300.06 to 300.09,
300.12 to 300.68, and chapters 301, 316, and 556 do not apply to
a limited liability company organized under this chapter.
Sec. 3. [322B.03] [DEFINITIONS.]
Subdivision 1. [SCOPE.] For the purposes of this chapter,
unless the language or context clearly indicates that a
different meaning is intended, the words, terms, and phrases
defined in this section have the meanings given them.
Subd. 2. [ACQUIRING ORGANIZATION.] "Acquiring organization"
means the limited liability company or foreign or domestic
corporation that acquires in an exchange the shares of a
domestic or foreign corporation or the membership interests of a
limited liability company.
Subd. 3. [ADDRESS.] "Address" means mailing address,
including a zip code. In the case of a registered office or
principal executive office, the term means the mailing address
and the actual office location which must not be a post office
box.
Subd. 4. [AGREEMENT TO GIVE DISSOLUTION AVOIDANCE
CONSENT.] "Agreement to give dissolution avoidance consent"
means a member control agreement under section 322B.37, or a
part of a member control agreement, under which the members
agree in advance that if in the future the continued membership
of any member is terminated through an event covered in the
agreement, then each remaining member shall give dissolution
avoidance consent.
Subd. 5. [AGREEMENT TO GIVE TRANSFER CONSENT.] "Agreement
to give transfer consent" means a member control agreement under
section 322B.37, or a part of a member control agreement, under
which the members agree in advance to give any consent referred
to in section 322B.313, subdivision 2.
Subd. 6. [ARTICLES OR ARTICLES OF ORGANIZATION.]
"Articles" or "Articles of organization" means, in the case of a
limited liability company organized under this chapter, articles
of organization, articles of amendment, a statement of change of
registered office, registered agent, or name of registered
agent, a statement establishing or fixing the rights and
preferences of a class or series of membership interests,
articles of merger, articles of abandonment, and articles of
termination. In the case of a foreign limited liability
company, the term includes all documents serving a similar
function required to be filed with the secretary of state or
other state office of the limited liability company's state of
organization.
Subd. 7. [BOARD OR BOARD OF GOVERNORS.] "Board" or "board
of governors" means the board of governors of a limited
liability company.
Subd. 8. [BOARD MEMBER.] "Board member" means a natural
person serving on the board of governors in the case of a
limited liability company and a natural person serving on the
board of directors in the case of a corporation.
Subd. 9. [BUSINESS CONTINUATION AGREEMENT.] "Business
continuation agreement" means a member control agreement under
section 322B.37, or a part of a member control agreement, made
before or after the limited liability company has incurred an
event of dissolution, under which the members:
(1) agree that, despite any dissolution, winding up and
termination of the limited liability company as a legal entity,
its business will be continued in a successor organization
through a merger, transfer of assets, transfer of membership
interests, or otherwise; and
(2) specify the terms and conditions under which the
business continuation will occur.
Subd. 10. [CLASS.] "Class," when used with reference to
membership interests, means a category of membership interests
that differs in one or more rights or preferences from another
category of membership interests of the limited liability
company.
Subd. 11. [CLOSELY HELD LIMITED LIABILITY
COMPANY.] "Closely held limited liability company" means a
limited liability company that does not have more than 35
members.
Subd. 12. [CONSTITUENT ORGANIZATION.] "Constituent
organization" means a limited liability company or a domestic or
foreign corporation that is a party to a merger or an exchange.
Subd. 13. [CONTRIBUTION AGREEMENT.] "Contribution
agreement" means an agreement between a person and a limited
liability company, under which:
(1) the person agrees to make a contribution in the future;
and
(2) the limited liability company agrees that, at the time
specified for the contribution in the future, the limited
liability company will accept the contribution, and reflect the
contribution in the required records.
Subd. 14. [CONTRIBUTION ALLOWANCE AGREEMENT.]
"Contribution allowance agreement" means an agreement between a
person and a limited liability company, under which:
(1) the person has the right, but not the obligation, to
make a contribution in the future; and
(2) the limited liability company agrees that, if the
person makes the specified contribution at the time specified in
the future, the limited liability company will accept the
contribution, and reflect the contribution in the required
records.
Subd. 15. [DISSOLUTION.] "Dissolution" means that the
limited liability company has incurred an event under section
322B.80, subdivision 1, subject only to sections 322B.823 and
322B.85, that obligates the limited liability company to wind up
its affairs and to terminate its existence as a legal entity.
Subd. 16. [DISSOLUTION AVOIDANCE CONSENT.] "Dissolution
avoidance consent" means the consent of all remaining members:
(1) given, as provided in section 322B.80, subdivision 1,
clause (5), after the occurrence of any event that terminates
the continued membership of a member in the limited liability
company; and
(2) that the limited liability company must be continued as
a legal entity without dissolution.
Subd. 17. [DISTRIBUTION.] "Distribution" means a direct or
indirect transfer of money or other property, other than its own
membership interests, with or without consideration, or an
incurrence or issuance of indebtedness, by a limited liability
company to any of its members in respect of membership
interests. A distribution may be in the form of an interim
distribution or a termination distribution, or as consideration
for the purchase, redemption, or other acquisition of its
membership interests, or otherwise.
Subd. 18. [FILED WITH THE SECRETARY OF STATE.] "Filed with
the secretary of state" means that an original of a document
meeting the applicable requirements of this chapter, signed and
accompanied by a filing fee of $35, has been delivered to the
secretary of state of this state. The secretary of state shall
endorse on the original the word "Filed" and the month, day, and
year of filing, record the document in the office of the
secretary of state, and return the document to the person who
delivered it for filing.
Subd. 19. [FINANCIAL RIGHTS.] "Financial rights" means a
member's rights:
(1) to share in profits and losses as provided in section
322B.326;
(2) to share in distributions as provided in section
322B.50;
(3) to receive interim distributions as provided in section
322B.51; and
(4) to receive termination distributions as provided in
section 322B.873, subdivision 1, clause (3).
Subd. 20. [FOREIGN LIMITED LIABILITY COMPANY.] "Foreign
limited liability company" means a limited liability company
organized for profit that is organized under laws other than the
laws of this state for a purpose or purposes for which a limited
liability company may be organized under this chapter.
Subd. 21. [GOOD FAITH.] "Good faith" means honesty in fact
in the conduct of the act or transaction concerned.
Subd. 22. [GOVERNANCE RIGHTS.] "Governance rights" means
all a member's rights as a member in the limited liability
company other than financial rights and the right to assign
financial rights.
Subd. 23. [GOVERNING BOARD.] "Governing board" means the
board of governors in the case of a limited liability company
and the board of directors in the case of a corporation.
Subd. 24. [GOVERNOR.] "Governor" means a natural person
serving on the board of governors.
Subd. 25. [INTENTIONALLY.] "Intentionally" means that the
person referred to either has a purpose to do or fail to do the
act or cause the result specified or believes that the act or
failure to act, if successful, will cause that result. A person
intentionally violates a statute if the person intentionally
does the act or causes the result prohibited by the statute, or
if the person intentionally fails to do the act or cause the
result required by the statute, even though the person may not
know of the existence or constitutionality of the statute or the
scope or meaning of the terms used in the statute.
Subd. 26. [KNOW AND KNOWLEDGE.] A person "knows" or has
"knowledge" of a fact when the person has actual knowledge of
it. A person does not know or have knowledge of a fact merely
because the person has reason to know of the fact.
Subd. 27. [LEGAL REPRESENTATIVE.] "Legal representative"
means a person empowered to act for another person, including,
but not limited to, an agent, manager, partner, or associate, of
an organization; a trustee of a trust; a personal
representative; an executor of a will; an administrator of an
estate; a trustee in bankruptcy; and a receiver, guardian,
custodian, or conservator of the person or estate of a person.
Subd. 28. [LIMITED LIABILITY COMPANY.] "Limited liability
company" means a limited liability company, other than a foreign
limited liability company, organized under this chapter.
Subd. 29. [MANAGER.] "Manager" means a person elected,
appointed, or otherwise designated as a manager by the board of
governors, and any other person considered elected as a manager
pursuant to section 322B.68.
Subd. 30. [MEMBER.] "Member" means a person reflected in
the required records of a limited liability company as the owner
of some governance rights of a membership interest of the
limited liability company.
Subd. 31. [MEMBERSHIP INTEREST.] "Membership interest"
means a member's interest in a limited liability company
consisting of a member's financial rights, a member's right to
assign financial rights as provided in section 322B.31, a
member's governance rights, and a member's right to assign
governance rights as provided in section 322B.313.
Subd. 32. [NOTICE.] "Notice" is given by a member of a
limited liability company to the limited liability company or a
manager of a limited liability company when in writing and
mailed or delivered to the limited liability company or the
manager at the registered office or principal executive office
of the limited liability company. In all other cases, notice is
given to a person when mailed to the person at an address
designated by the person or at the last known address of the
person, or when communicated to the person orally, or when
handed to the person, or when left at the office of the person
with a clerk or other person in charge of the office, or if
there is no one in charge, when left in a conspicuous place in
the office, or if the office is closed or the person to be
notified has no office, when left at the dwelling house or usual
place of abode of the person with some person of suitable age
and discretion who is residing there. Notice by mail is given
when deposited in the United States mail with sufficient postage
affixed. Notice is considered received when it is given.
Subd. 33. [OPERATING AGREEMENT.] "Operating agreement"
means rules, resolutions, or other provisions that:
(1) relate to the management of the business or the
regulation of the affairs of the limited liability company; and
(2) have been made expressly part of the operating
agreement by the action, taken from time to time under section
322B.603, by the board of governors or the members.
Subd. 34. [ORGANIZATION.] "Organization" means a domestic
or foreign limited liability company, corporation, partnership,
limited partnership, joint venture, association, business trust,
estate, trust, enterprise, and any other legal or commercial
entity.
Subd. 35. [OWNERS.] "Owners" means members in the case of
a limited liability company and shareholders in the case of a
corporation.
Subd. 36. [OWNERSHIP INTERESTS.] "Ownership interests"
means membership interests in the case of a limited liability
company and shares in the case of a corporation.
Subd. 37. [PERSON.] "Person" includes a natural person and
an organization.
Subd. 38. [PERTAINS.] A contribution pertains to a
particular series when the contribution is made in return for a
membership interest in that particular series. A contribution
pertains to a particular class when the class has no series and
the contribution is made in return for a membership interest in
the class. A contribution that pertains to a series does not
pertain to the class of which the series is a part.
Subd. 39. [PRINCIPAL EXECUTIVE OFFICE.] "Principal
executive office" means an office where the elected or appointed
chief manager of the limited liability company has an office.
If the limited liability company has no elected or appointed
chief manager, principal executive office means the registered
office of the limited liability company.
Subd. 40. [REGISTERED OFFICE.] "Registered office" means
the place in this state designated in the articles of
organization as the registered office of the limited liability
company.
Subd. 41. [RELATED LIMITED LIABILITY COMPANY.] "Related
limited liability company" of a specified limited liability
company means a parent or subsidiary of the specified limited
liability company or another subsidiary of a parent of the
specified limited liability company.
Subd. 42. [REQUIRED RECORDS.] "Required records" are those
records required to be maintained under section 322B.373.
Subd. 43. [SECURITY.] "Security" has the meaning given it
in section 80A.14, subdivision 18.
Subd. 44. [SERIES.] "Series" means a category of
membership interests, within a class of membership interests,
that have some of the same rights and preferences as other
membership interests within the same class, but that differ in
or one or more rights and preferences from another category of
membership interests within that class.
Subd. 45. [SIGNED.] (a) "Signed" means that the signature
of a person has been written on a document, as provided in
section 645.44, subdivision 14, and, with respect to a document
required by this chapter to be filed with the secretary of
state, means that the document has been signed by a person
authorized to do so by this chapter, the articles of
organization or operating agreement or a resolution approved by
the affirmative vote of the required proportion or number of
governors or the required proportion of the voting power of
membership interests present and entitled to vote.
(b) A signature on a document not required by this chapter
to be filed with the secretary of state may be a facsimile
affixed, engraved, printed, placed, stamped with indelible ink,
or in any other manner reproduced on the document.
Subd. 46. [SUCCESSOR ORGANIZATION.] "Successor
organization" means an organization that, pursuant to a business
continuation agreement or an order of the court under section
322B.833, subdivision 6, continues the business of the dissolved
and terminated limited liability company.
Subd. 47. [SURVIVING ORGANIZATION.] "Surviving
organization" means the limited liability company or domestic or
foreign corporation resulting from a merger.
Subd. 48. [TERMINATION.] "Termination" means the end of a
limited liability company's existence as a legal entity and
occurs when a notice of termination is filed with the secretary
of state under section 322B.826 or is considered filed with the
secretary of state under section 322B.75, subdivision 2, clause
(3).
Subd. 49. [VOTE.] "Vote" includes authorization by written
action.
Subd. 50. [WINDING UP.] "Winding up" means the period
triggered by dissolution during which the limited liability
company ceases to carry on its business, except to the extent
necessary for concluding its affairs, and disposes of its assets
under section 322B.873.
Subd. 51. [WRITTEN ACTION.] "Written action" means a
written document signed by all of the persons required to take
the action described. The term also means the counterparts of a
written document signed by any of the persons taking the action
described. Each counterpart constitutes the action of the
persons signing it, and all the counterparts, taken together,
constitute one written action by all of the persons signing them.
FORMATION AND ARTICLES OF ORGANIZATION
Sec. 4. [322B.10] [PURPOSES.]
A limited liability company may be organized under this
chapter for any business purpose or purposes, unless some other
statute of this state requires organization for any of those
purposes under a different law. Unless otherwise provided in
its articles of organization, a limited liability company has
general business purposes.
Sec. 5. [322B.105] [ORGANIZERS.]
One or more natural persons of full age may act as
organizers of a limited liability company by filing with the
secretary of state articles of organization for the limited
liability company.
Sec. 6. [322B.11] [TWO MEMBER REQUIREMENT.]
A limited liability company shall have two or more members
at the time of its formation. A limited liability company shall
be dissolved under section 322B.80, subdivision 1, clause (5),
whenever the limited liability company ceases to have at least
two members unless the remaining member admits a new member
within 90 days of the termination of the continued membership of
the former member.
Sec. 7. [322B.115] [ARTICLES OF ORGANIZATION.]
Subdivision 1. [REQUIRED PROVISIONS.] The articles of
organization must contain:
(1) the name of the limited liability company;
(2) the address of the registered office of the limited
liability company and the name of its registered agent, if any,
at that address;
(3) the name and address of each organizer;
(4) the limited period of existence for the limited
liability company, which must be a period of 30 years or less
from the date the articles of organization are filed with the
secretary of state;
(5) a statement as to whether upon the occurrence of any
event under section 322B.80, subdivision 1, clause (5), that
terminates the continued membership of a member in the limited
liability company, the remaining members will have the power to
avoid dissolution by giving dissolution avoidance consent; and
(6) a statement as to whether the members have the power to
enter into a business continuation agreement.
Subd. 2. [STATUTORY PROVISIONS THAT MAY BE MODIFIED ONLY
IN ARTICLES OF ORGANIZATION.] The following provisions govern a
limited liability company unless modified in the articles of
organization:
(1) a limited liability company has general business
purposes (section 322B.10);
(2) a limited liability company has certain powers (section
322B.20);
(3) the power to adopt, amend, or repeal the operating
agreement is vested in the board of governors (section
322B.603);
(4) a limited liability company must allow cumulative
voting for governors (section 322B.63);
(5) the affirmative vote of a majority of governors present
is required for an action of the board of governors (section
322B.653);
(6) a written action by the board of governors taken
without a meeting must be signed by all governors (section
322B.656);
(7) the board may accept contributions, make contribution
agreements, and make contribution allowance agreements (sections
322B.40, subdivision 1; 322B.42; and 322B.43);
(8) all membership interests are ordinary membership
interests entitled to vote and are of one class with no series
(section 322B.40, subdivision 5, clauses (1) and (2));
(9) all membership interests have equal rights and
preferences in all matters not otherwise provided for by the
board of governors (section 322B.40, subdivision 5, clause (2));
(10) the restatement of value of previous contributions is
to be determined according to a specified process (section
322B.41, subdivisions 3 and 4);
(11) a member has certain preemptive rights, unless
otherwise provided by the board of governors (section 322B.33);
(12) the affirmative vote of the owners of a majority of
the voting power of the membership interests present and
entitled to vote at a duly held meeting is required for an
action of the members, except where this chapter requires the
affirmative vote of a majority of the voting power of all
membership interests entitled to vote (section 322B.35,
subdivision 1);
(13) the voting power of each membership interest is in
proportion to the value reflected in the required records of the
contributions of the members (section 322B.356);
(14) members share in distributions in proportion to the
value reflected in the required records of the contributions of
members (section 322B.50);
(15) members share profits and losses in proportion to the
value reflected in the required records of the contributions of
members (section 322B.326);
(16) a written action by the members taken without a
meeting must be signed by all members (section 322B.35);
(17) members have no right to receive distributions in kind
and the limited liability company has only limited rights to
make distributions in kind (section 322B.52); and
(18) a member is not subject to expulsion (section
322B.306, subdivision 2).
Subd. 3. [STATUTORY PROVISIONS THAT MAY BE MODIFIED EITHER
IN ARTICLES OF ORGANIZATION OR IN THE OPERATING AGREEMENT.] The
following provisions govern a limited liability company unless
modified either in the articles of organization or in the
operating agreement:
(1) governors serve for an indefinite term that expires at
the next regular meeting of members (section 322B.616);
(2) the compensation of governors is fixed by the board of
governors (section 322B.623);
(3) a certain method must be used for removal of governors
(section 322B.636);
(4) a certain method must be used for filling board of
governor vacancies (section 322B.64);
(5) if the board of governors fails to select a place for a
board meeting, it must be held at the principal executive office
(section 322B.643, subdivision 1);
(6) a governor may call a board of governors meeting, and
the notice of the meeting need not state the purpose of the
meeting (section 322B.643, subdivision 3);
(7) a majority of the board of governors is a quorum for a
board meeting (section 322B.65);
(8) a committee consists of one or more persons, who need
not be governors, appointed by affirmative vote of a majority of
the governors present (section 322B.66, subdivision 2);
(9) the board may establish a special litigation committee
(section 322B.66);
(10) the chief manager and treasurer have specified duties,
until the board of governors determines otherwise (section
322B.673);
(11) managers may delegate some or all of their duties and
powers, if not prohibited by the board of governors from doing
so (section 322B.689);
(12) regular meetings of members need not be held, unless
demanded by a member under certain conditions (section
322B.333);
(13) in all instances where a specific minimum notice
period has not otherwise been fixed by law, not less than ten
days' notice is required for a meeting of members (section
322B.34, subdivision 2);
(14) for a quorum at a members' meeting there is required a
majority of the voting power of the membership interests
entitled to vote at the meeting (section 322B.353);
(15) the board of governors may fix a date up to 60 days
before the date of a members' meeting as the date for the
determination of the members entitled to notice of and entitled
to vote at the meeting (section 322B.356, subdivision 1);
(16) indemnification of certain persons is required
(section 322B.699);
(17) the board of governors may authorize, and the limited
liability company may make, distributions not prohibited,
limited, or restricted by an agreement (section 322B.54,
subdivision 1); and
(18) members have no right to interim distributions except
as provided through the operating agreement or an act of the
board of governors (section 322B.51).
Subd. 4. [OPTIONAL PROVISIONS AND SPECIFIC SUBJECTS.] The
following provisions relating to the management of the business
or the regulation of the affairs of a limited liability company
may be included either in the articles of organization or,
except for naming persons to serve as the first board of
governors, fixing a greater than majority governor or member
vote, establishing the rights and priorities for distributions
and the rights to share in profits and losses, or giving or
prescribing the manner of giving voting rights to persons other
than members otherwise than pursuant to the articles of
organization, or eliminating or limiting a governor's personal
liability, in the operating agreement:
(1) the persons to serve as the first board of governors
may be named in the articles of organization (section 322B.606,
subdivision 1);
(2) a manner for increasing or decreasing the number of
governors may be provided (section 322B.61);
(3) additional qualifications for governors may be imposed
(section 322B.613);
(4) governors may be classified (section 322B.626);
(5) the day or date, time, and place of board of governors
meetings may be fixed (section 322B.643, subdivision 1);
(6) absent governors may be permitted to give written
consent or opposition to a proposal (section 322B.646);
(7) a larger than majority vote may be required for board
of governor action (section 322B.653);
(8) authority to sign and deliver certain documents may be
delegated to a manager or agent of the limited liability company
other than the chief manager (section 322B.673, subdivision 2);
(9) additional managers may be designated (section
322B.676);
(10) additional powers, rights, duties, and
responsibilities may be given to managers (section 322B.679);
(11) a method for filling vacant offices may be specified
(section 322B.686, subdivision 3);
(12) the day or date, time, and place of regular member
meetings may be fixed (section 322B.333, subdivision 3);
(13) certain persons may be authorized to call special
meetings of members (section 322B.336, subdivision 1);
(14) notices of member meetings may be required to contain
certain information (section 322B.34, subdivision 3);
(15) a larger than majority vote may be required for member
action (section 322B.346);
(16) voting rights may be granted in or pursuant to the
articles of organization to persons who are not members (section
322B.356, subdivision 3);
(17) limited liability company actions giving rise to
dissenter rights may be designated (section 322B.386,
subdivision 1, paragraph (e)); and
(18) a governor's personal liability to the limited
liability company or its members for monetary damages for breach
of fiduciary duty as a governor may be eliminated or limited in
the articles (section 322B.663, subdivision 4).
Subd. 5. [OPTIONAL PROVISIONS GENERALLY.] The articles of
organization may contain other provisions not inconsistent with
law relating to the management of the business or the regulation
of the affairs of the limited liability company.
Subd. 6. [POWERS NEED NOT BE STATED.] It is not necessary
to set forth in the articles of organization any of the limited
liability company powers granted by this chapter.
Sec. 8. [322B.12] [LIMITED LIABILITY COMPANY NAME.]
Subdivision 1. [REQUIREMENTS AND PROHIBITIONS.] The
limited liability company name must:
(1) be in the English language or in any other language
expressed in English letters or characters;
(2) contain the words "limited liability company," or must
contain the abbreviation "LLC" or, in the case of an
organization formed pursuant to section 319A.03, must contain
the words "professional limited liability company," or the
abbreviation "PLC";
(3) not contain the word corporation or incorporated and
must not contain the abbreviation of either or both of these
words;
(4) not contain a word or phrase that indicates or implies
that it is organized for a purpose other than a legal business
purpose; and
(5) be distinguishable upon the records in the office of
the secretary of state from the name of a domestic limited
liability company, corporation, or limited partnership, whether
profit or nonprofit, or a foreign limited liability company,
corporation, or limited partnership authorized or registered to
do business in this state, whether profit or nonprofit, or a
name the right to which is, at the time of organization,
reserved or provided for in sections 302A.117, 317A.117,
322B.125, 322A.03, or 333.001 to 333.54, unless there is filed
with the articles of organization one of the following:
(i) the written consent of the domestic limited liability
company, corporation, or limited partnership or foreign limited
liability company, corporation, or limited partnership
authorized or registered to do business in this state or the
holder of a reserved name or a name filed by or registered with
the secretary of state under sections 333.001 to 333.54 having a
name that is not distinguishable;
(ii) a certified copy of a final decree of a court in this
state establishing the prior right of the applicant to the use
of the name in this state; or
(iii) the applicant's affidavit that the limited liability
company, corporation, or limited partnership with the name that
is not distinguishable has been organized, incorporated, or on
file in this state for at least three years prior to the
affidavit, if it is a domestic limited liability company,
corporation, or limited partnership, or has been authorized or
registered to do business in this state for at least three years
prior to the affidavit, if it is a foreign limited liability
company, corporation, or limited partnership, or that the holder
of a name filed or registered with the secretary of state under
sections 333.001 to 333.54 filed or registered that name at
least three years prior to the affidavit, and has not during the
three-year period filed any document with the secretary of
state; that the applicant has mailed written notice to the
limited liability company, corporation, or limited partnership
or the holder of a name filed or registered with the secretary
of state under sections 333.001 to 333.54 by certified mail,
return receipt requested, properly addressed to the registered
office of the limited liability company or corporation or in
care of the agent of the limited partnership, or the address of
the holder of a name filed or registered with the secretary of
state under sections 333.001 to 333.54, shown in the records of
the secretary of state, that the applicant intends to use a name
that is not distinguishable and the notice has been returned to
the applicant as undeliverable to the addressee limited
liability company, corporation, or limited partnership or holder
of a name filed or registered with the secretary of state under
sections 333.001 to 333.54; that the applicant, after diligent
inquiry, has been unable to find any telephone listing for the
limited liability company, corporation, or limited partnership
with the name that is not distinguishable in the county in which
is located the registered office of the limited liability
company or corporation shown in the records of the secretary of
state or has been unable to find any telephone listing for the
holder of a name filed or registered with the secretary of state
under sections 333.001 to 333.54 in the county in which is
located the address of the holder shown in the records of the
secretary of state; and that the applicant has no knowledge that
the limited liability company, corporation, or limited
partnership or holder of a name filed or registered with the
secretary of state under sections 333.001 to 333.54 is currently
engaged in business in this state.
Subd. 2. [DETERMINATION.] The secretary of state shall
determine whether a name is "distinguishable" from another name
for purposes of this section and section 322B.125.
Subd. 3. [OTHER LAWS AFFECTING USE OF NAMES.] This section
and section 322B.125 do not abrogate or limit the law of unfair
competition or unfair practices, or sections 333.001 to 333.54,
or the laws of the United States with respect to the right to
acquire and protect copyrights, trade names, trademarks, service
names, service marks, or any other rights to the exclusive use
of names or symbols, or derogate the common law or the
principles of equity.
Subd. 4. [USE OF A NAME BY A SURVIVING ORGANIZATION.] A
limited liability company that is merged with another limited
liability company or domestic or foreign corporation, or that is
organized by the reorganization of one or more limited liability
companies or domestic or foreign corporations, or that acquires
by sale, lease, or other disposition to or exchange with a
limited liability company all or substantially all of the assets
of another limited liability company or domestic or foreign
corporation including its name, may have the same name as that
used in this state by any of the other limited liability
companies or domestic or foreign corporations, if the other
limited liability company or domestic or foreign corporation was
organized under the laws of, or is authorized to transact
business in, this state.
Subd. 5. [INJUNCTION.] The use of a name by a limited
liability company in violation of this section does not affect
or vitiate its limited liability company existence, but a court
in this state may, upon application of the state or of a person
interested or affected, enjoin the limited liability company
from doing business under a name assumed in violation of this
section, although its articles of organization may have been
filed with the secretary of state and a certificate of
organization issued.
Subd. 6. [CONTEST OF REGISTRATION OF NAME.] A person doing
business in this state may contest the subsequent registration
of a name with the office of the secretary of state as provided
in section 5.22.
Sec. 9. [322B.125] [RESERVED NAME.]
Subdivision 1. [WHO MAY RESERVE.] The exclusive right to
the use of a limited liability company name otherwise permitted
by section 322B.12 may be reserved by:
(1) a person doing business in this state under that name;
(2) a person intending to organize under this chapter;
(3) a domestic limited liability company intending to
change its name;
(4) a foreign limited liability company intending to make
application for a certificate of authority to transact business
in this state;
(5) a foreign limited liability company authorized to
transact business in this state and intending to change its
name;
(6) a person intending to organize a foreign limited
liability company and intending to have the foreign limited
liability company make application for a certificate of
authority to transact business in this state; or
(7) a foreign limited liability company doing business
under that name or a name deceptively similar to that name in
one or more states other than this state and not described in
clause (4), (5), or (6).
Subd. 2. [METHOD OF RESERVATION.] The reservation is made
by filing with the secretary of state a request that the name be
reserved. If the name is available for use by the applicant,
the secretary of state shall reserve the name for the exclusive
use of the applicant for a period of 12 months. The reservation
may be renewed for successive 12-month periods.
Subd. 3. [TRANSFER OF RESERVATION.] The right to the
exclusive use of a limited liability company name reserved
pursuant to this section may be transferred to another person by
or on behalf of the applicant for whom the name was reserved by
filing with the secretary of state a notice of the transfer and
specifying the name and address of the transferee.
Sec. 10. [322B.13] [REGISTERED OFFICE AND AGENT.]
Subdivision 1. [REGISTERED OFFICE.] A limited liability
company shall continuously maintain a registered office in this
state. A registered office need not be the same as the
principal place of business of the limited liability company and
need not be the same as the principal executive office of a
limited liability company.
Subd. 2. [REGISTERED AGENT.] A limited liability company
may designate in its articles of organization a registered
agent. The registered agent may be a natural person residing in
this state, a domestic corporation or a domestic limited
liability company, or a foreign corporation or foreign limited
liability company authorized to transact business in this
state. The registered agent must maintain a business office
that is identical with the registered office.
Sec. 11. [322B.135] [CHANGE OF REGISTERED OFFICE OR
AGENT.]
Subdivision 1. [STATEMENT.] A limited liability company
may change its registered office, designate or change its
registered agent, or state a change in the name of its
registered agent, by filing with the secretary of state a
statement containing:
(1) the name of the limited liability company;
(2) if the address of its registered office is to be
changed, the new address of its registered office;
(3) if its registered agent is to be designated or changed,
the name of its new registered agent;
(4) if the name of its registered agent is to be changed,
the name of its registered agent as changed;
(5) a statement that the address of its registered office
and the address of the business office of its registered agent,
as changed, will be identical; and
(6) a statement that the change of registered office or
registered agent was authorized by resolution approved by the
affirmative vote of a majority of the governors present.
Subd. 2. [RESIGNATION OF AGENT.] A registered agent of a
limited liability company may resign by filing with the
secretary of state a signed written notice of resignation,
including a statement that a signed copy of the notice has been
given to the limited liability company at its principal
executive office, or to a legal representative of the limited
liability company. The appointment of the agent terminates 30
days after the notice is filed with the secretary of state.
Subd. 3. [CHANGE OF BUSINESS ADDRESS OR NAME OF AGENT.] If
the business address or name of a registered agent changes, the
agent shall change the address of the registered office or the
name of the registered agent, as the case may be, of each
limited liability company represented by that agent by filing
with the secretary of state a statement as required in
subdivision 1, except that it need be signed only by the
registered agent, need not be responsive to clause (3) or (6),
and must state that a copy of the statement has been mailed to
each of those limited liability companies or to the legal
representative of each of those limited liability companies.
Sec. 12. [322B.14] [AMENDMENT OF ARTICLES OF
ORGANIZATION.]
The articles of organization of a limited liability company
may be amended at any time to include or modify any provision
that is required or permitted to appear in the articles or to
omit any provision not required to be included in the articles,
except that when articles are amended to restate them, the name
and address of each organizer may be omitted. Unless otherwise
provided in this chapter, the articles may be amended or
modified only in accordance with sections 322B.14 to 322B.16.
An amendment that merely restates the then existing articles of
organization, as amended, is not an amendment for the purposes
of section 322B.63, subdivision 2, or 322B.33, subdivision 9.
Sec. 13. [322B.145] [PROCEDURE FOR AMENDMENT BEFORE
CONTRIBUTION.]
Before any contribution is reflected in the required
records of a limited liability company, the articles of
organization may be amended pursuant to section 322B.60 by the
organizers or by the board of governors. The articles of
organization may be amended by the board of governors to change
a statement pursuant to section 322B.40, subdivision 6,
establishing or fixing the rights and preferences of a class or
series of membership interests before any contribution
pertaining to that class or series is reflected in the required
records of the limited liability company.
Sec. 14. [322B.15] [PROCEDURE FOR AMENDMENT AFTER
CONTRIBUTION.]
Subdivision 1. [MANNER OF AMENDMENT.] After any
contribution has been reflected in the required records of a
limited liability company, the articles of organization may be
amended in the manner set forth in this section.
Subd. 2. [SUBMISSION TO MEMBERS.] A resolution approved by
the affirmative vote of a majority of the governors present, or
proposed by a member or members owning three percent or more of
the voting power of the members entitled to vote, that sets
forth the proposed amendment must be submitted to a vote at the
next regular or special meeting of the members of which notice
has not yet been given but still can be timely given. Any
number of amendments may be submitted to the members and voted
upon at one meeting, but the same or substantially the same
amendment proposed by a member or members need not be submitted
to the members or be voted upon at more than one meeting during
a 15-month period. The resolution may amend the articles of
organization in their entirety to restate and supersede the
original articles of organization and all amendments to them.
Subd. 3. [NOTICE.] Written notice of the members' meeting
setting forth the substance of the proposed amendment must be
given to each member in the manner provided in section 322B.34
for the giving of notice of meetings of members.
Subd. 4. [APPROVAL BY MEMBERS.] (a) The proposed amendment
is adopted when approved by the affirmative vote of the owners
of a majority of the voting power of the members present and
entitled to vote, except as provided in paragraphs (b) and (c),
and subdivision 5.
(b) For a closely held limited liability company, if the
articles of organization provide for a specified proportion
equal to or larger than the majority necessary to transact a
specified type of business at a meeting, or if it is proposed to
amend the articles to provide for a specified proportion equal
to or larger than the majority necessary to transact a specified
type of business at a meeting, the affirmative vote necessary to
add the provision to, or to amend an existing provision in, the
articles of organization is the larger of:
(1) the specified proportion or, in the absence of a
specific provision, the affirmative vote necessary to transact
the type of business described in the proposed amendment at a
meeting immediately before the effectiveness of the proposed
amendment; or
(2) the specified proportion that would, upon effectiveness
of the proposed amendment, be necessary to transact the
specified type of business at a meeting.
(c) For limited liability companies other than closely held
limited liability companies, if the articles provide for a
larger proportion to transact a specified type of business at a
meeting, the affirmative vote of that larger proportion is
necessary to amend the articles to decrease the proportion
necessary to transact the business.
Subd. 5. [CERTAIN RESTATEMENTS.] An amendment that merely
restates the existing articles, as amended, may be authorized by
a resolution approved by the board of governors and may, but
need not, be submitted to and approved by the members as
provided in subdivisions 2, 3, and 4.
Sec. 15. [322B.155] [CLASS OR SERIES VOTING ON
AMENDMENTS.]
The owners of the outstanding membership interests of a
class or series are entitled to vote as a class or series upon a
proposed amendment, whether or not entitled to vote on the
amendment by the provisions of the articles of organization, if
the amendment would:
(1) effect an exchange, reclassification, or cancellation
of all or part of the membership interests of the class or
series;
(2) effect an exchange, or create a right of exchange, of
all or any part of the membership interests of another class or
series for the membership interests of the class or series;
(3) change the rights or preferences of the membership
interests of the class or series;
(4) change the membership interests of the class or series
into the same or a different number of membership interests of
the same or another class or series;
(5) create a new class or series of membership interests
having rights and preferences prior and superior to the
membership interests of that class or series, or increase the
rights and preferences or the number of membership interests, of
a class or series having rights and preferences prior or
superior to the membership interests of that class or series;
(6) divide the membership interests of the class into
series and determine the designation of each series and the
variations in the relative rights and preferences between the
membership interests of each series or authorize the board of
governors to do so;
(7) limit or deny any existing preemptive rights of the
membership interests of the class or series; or
(8) cancel or otherwise affect distributions on the
membership interests of the class or series.
Sec. 16. [322B.16] [ARTICLES OF AMENDMENT.]
When an amendment has been adopted, articles of amendment
must be prepared that contain:
(1) the name of the limited liability company;
(2) the amendment adopted;
(3) with respect to an amendment restating the articles, a
statement that the amendment restating the articles of
organization correctly sets forth without change the
corresponding provisions of the articles as previously amended
if the amendment was approved only by the board;
(4) if the amendment provides for but does not establish
the manner for effecting an exchange, reclassification,
division, combination, or cancellation of membership interests,
a statement of the manner in which it will be effected; and
(5) a statement that the amendment has been adopted
pursuant to this chapter.
Sec. 17. [322B.165] [EFFECT OF AMENDMENT.]
Subdivision 1. [EFFECT ON CAUSE OF ACTION.] An amendment
does not affect an existing cause of action in favor of or
against the limited liability company, nor a pending suit to
which the limited liability company is a party, nor the existing
rights of persons other than members.
Subd. 2. [EFFECT OF CHANGE OF NAME.] If the limited
liability company name is changed by the amendment, a suit
brought by or against the limited liability company under its
former name does not abate for that reason.
Subd. 3. [EFFECT OF AMENDMENTS RESTATING ARTICLES.] When
effective under section 322B.175, an amendment restating the
articles of organization in their entirety supersedes the
original articles of organization and all amendments to the
original articles of organization.
Sec. 18. [322B.17] [FILING OF ARTICLES OF ORGANIZATION.]
Articles of organization and articles of amendment must be
filed with the secretary of state.
Sec. 19. [322B.175] [EFFECTIVE DATE OF ARTICLES OF
ORGANIZATION.]
Articles of organization are effective and limited
liability company existence begins when the articles of
organization are filed with the secretary of state accompanied
by a payment of $135, which includes a $100 organization fee in
addition to the $35 filing fee required by section 322B.03,
subdivision 18. Articles of amendment and articles of merger
are effective when filed with the secretary of state or at
another time within 30 days after filing if the articles of
amendment so provide. Articles of merger must be accompanied by
a fee of $60, which includes a $25 merger fee in addition to the
$35 filing fee required by section 322B.03, subdivision 18.
Sec. 20. [322B.18] [PRESUMPTION AND CERTIFICATE OF
ORGANIZATION.]
When the articles of organization have been filed with the
secretary of state and the required fee has been paid to the
secretary of state, it is presumed that all conditions precedent
required to be performed by the organizers have been complied
with and that the limited liability company has been organized,
and the secretary of state shall issue a certificate of
organization to the limited liability company. This presumption
does not apply against this state in a proceeding to cancel or
revoke the certificate of organization or to compel the
involuntary dissolution of the limited liability company.
POWERS
Sec. 21. [322B.20] [POWERS.]
Subdivision 1. [GENERALLY AND LIMITATIONS.] A limited
liability company has the powers set forth in this section,
subject to any limitations provided in any other statute of this
state or in its articles of organization.
Subd. 2. [DURATION.] A limited liability company has a
limited duration of 30 years from the date the articles of
organization are filed with the secretary of state, unless the
articles of organization state a shorter duration.
Subd. 3. [LEGAL CAPACITY.] A limited liability company may
sue and be sued, and complain, defend, and participate as a
party or otherwise in any legal, administrative, or arbitration
proceeding, in its limited liability company name.
Subd. 4. [PROPERTY OWNERSHIP.] A limited liability company
may purchase, lease, or otherwise acquire, own, hold, improve,
use, and otherwise deal in and with, real or personal property,
or any interest in property, wherever situated.
Subd. 5. [PROPERTY DISPOSITION.] A limited liability
company may sell, convey, mortgage, create a security interest
in, lease, exchange, transfer, or otherwise dispose of all or
any part of its real or personal property, or any interest in
this property, wherever situated.
Subd. 6. [TRADING IN SECURITIES AND OBLIGATIONS.] A
limited liability company may purchase, subscribe for, or
otherwise acquire, own, hold, vote, use, employ, sell, exchange,
mortgage, lend, create a security interest in, or otherwise
dispose of and otherwise use and deal in and with, securities or
other interests in, or obligations of, a person or direct or
indirect obligations of any domestic or foreign government or
instrumentality of a government.
Subd. 7. [CONTRACTS AND MORTGAGES.] A limited liability
company may make contracts and incur liabilities, borrow money,
and secure any of its obligations by mortgage of or creation of
a security interest in all or any of its property, franchises,
and income.
Subd. 8. [INVESTMENT.] A limited liability company may
invest and reinvest its funds.
Subd. 9. [HOLDING PROPERTY AS SECURITY.] A limited
liability company may take and hold real and personal property,
whether or not of a kind sold or otherwise dealt in by the
limited liability company, as security for the payment of money
loaned, advanced, or invested.
Subd. 10. [LOCATION.] A limited liability company may
conduct its business, carry on its operations, have offices, and
exercise the powers granted by this chapter anywhere in the
universe.
Subd. 11. [DONATIONS.] A limited liability company may
make donations, irrespective of limited liability company
benefit, for: (1) the public welfare; (2) social, community,
charitable, religious, educational, scientific, civic, literary,
and testing for public safety purposes; and for similar or
related purposes; (3) for the purpose of fostering national or
international amateur sports competition; and (4) the prevention
of cruelty to children and animals.
Subd. 12. [PENSIONS AND BENEFITS.] A limited liability
company may pay pensions, retirement allowances, and
compensation for past services to and for the benefit of, and
establish, maintain, continue, and carry out, wholly or
partially at the expense of the limited liability company,
employee or incentive benefit plans, trusts, and provisions to
or for the benefit of, any or all of its and its related limited
liability companies' managers, governors, employees, and agents
and the families, dependents, and beneficiaries of any of them.
It may indemnify and purchase and maintain insurance for and on
behalf of a fiduciary of any of these employee benefit and
incentive plans, trusts, and provisions.
Subd. 13. [PARTICIPATING IN MANAGEMENT.] A limited
liability company may participate in any capacity in the
promotion, organization, ownership, management, and operation of
any organization or in any transaction, undertaking, or
arrangement that the participating limited liability company
would have power to conduct by itself, whether or not the
participation involves sharing or delegation of control with or
to others.
Subd. 14. [INSURANCE.] A limited liability company may
provide for its benefit life insurance and other insurance with
respect to the services of any or all of its managers,
governors, employees, and agents, or on the life of a member for
the purpose of acquiring at the death of the member any or all
membership interests in the limited liability company owned by
the member.
Subd. 15. [LIMITED LIABILITY COMPANY SEAL.] A limited
liability company may have, alter at its pleasure, and use a
limited liability company seal as provided in section 322B.21.
Subd. 16. [OPERATING AGREEMENT.] A limited liability
company may adopt, amend, and repeal an operating agreement
relating to the management of the business or the regulation of
the affairs of the limited liability company as provided in
section 322B.603.
Subd. 17. [COMMITTEES.] A limited liability company may
establish committees of the board of governors, elect or appoint
persons to the committees, and define their duties as provided
in section 322B.66 and fix their compensation.
Subd. 18. [MANAGERS, EMPLOYEES, AND AGENTS.] A limited
liability company may elect or appoint managers, employees and
agents of the limited liability company, and define their duties
as provided in sections 322B.67 to 322B.69, and fix their
compensation.
Subd. 19. [CONTRIBUTIONS.] A limited liability company may
accept contributions under section 322B.40 and may enter into
contribution agreements under section 322B.42 and contribution
allowance agreements under section 322B.43.
Subd. 20. [LOANS, GUARANTIES, AND SURETIES.] A limited
liability company may lend money to, guarantee an obligation of,
become a surety for, or otherwise financially assist persons as
provided in section 322B.693.
Subd. 21. [ADVANCES.] A limited liability company may make
advances to its governors, managers, and employees and those of
its subsidiaries as provided in section 322B.696.
Subd. 22. [INDEMNIFICATION.] A limited liability company
shall indemnify those persons identified in section 322B.699
against certain expenses and liabilities only as provided in
section 322B.699 and may indemnify other persons.
Subd. 23. [ASSUMED NAMES.] A limited liability company may
conduct all or part of its business under one or more assumed
names as provided in sections 333.001 to 333.06.
Subd. 24. [OTHER POWERS.] A limited liability company may
have and exercise all other powers necessary or convenient to
effect any or all of the business purposes for which the limited
liability company is organized.
Sec. 22. [322B.21] [LIMITED LIABILITY COMPANY SEAL.]
Subdivision 1. [SEAL NOT REQUIRED.] A limited liability
company may, but need not, have a limited liability company
seal, and the use or nonuse of a limited liability company seal
does not affect the validity, recordability, or enforceability
of a document or act. If a limited liability company has a
limited liability company seal, the use of the seal by the
limited liability company on a document is not necessary.
Subd. 2. [REQUIRED WORDS AND USE.] If a limited liability
company has a limited liability company seal, the seal may
consist of a mechanical imprinting device, or a rubber stamp
with a facsimile of the seal affixed on it, or a facsimile or
reproduction of either. The seal need include only the word
"Seal," but it may also include a part or all of the name of the
limited liability company and a combination, derivation, or
abbreviation of either or both of the phrases "a Minnesota
Limited Liability Company" and "Limited Liability Company Seal."
If a limited liability company seal is used, it or a facsimile
of it may be affixed, engraved, printed, placed, stamped with
indelible ink, or in any other manner reproduced on any document.
Sec. 23. [322B.22] [EFFECT OF LACK OF POWER AND ULTRA
VIRES.]
The doing, continuing, or performing by a limited liability
company of an act, or an executed or wholly or partially
executory contract, conveyance or transfer to or by the limited
liability company, if otherwise lawful, is not invalid because
the limited liability company was without the power to do,
continue, or perform the act, contract, conveyance, or transfer,
unless the lack of power is established in a court in this state:
(1) in a proceeding by a member against the limited
liability company to enjoin the doing, continuing, or performing
of the act, contract, conveyance, or transfer. If the
unauthorized act, continuation, or performance sought to be
enjoined is being, or to be, performed or made pursuant to a
contract to which the limited liability company is a party, the
court may, if just and reasonable in the circumstances, set
aside and enjoin the performance of the contract and in so doing
may allow to the limited liability company or to the other
parties to the contract compensation for the loss or damage
sustained as a result of the action of the court in setting
aside and enjoining the performance of the contract;
(2) in a proceeding by or in the name of the limited
liability company, whether acting directly or through a legal
representative, or through members in a representative or
derivative suit, against the incumbent or former managers or
governors of the limited liability company for exceeding or
otherwise violating their authority, or against a person having
actual knowledge of the lack of power; or
(3) in a proceeding by the attorney general, as provided in
section 322B.843, to dissolve the limited liability company, or
in a proceeding by the attorney general to enjoin the limited
liability company from the transaction of unauthorized business.
Sec. 24. [322B.23] [TRANSACTION OF BUSINESS OUTSIDE
MINNESOTA.]
By enacting this chapter the Minnesota legislature
recognizes the limited liability company as an important and
constructive form of business organization. The legislature
understands that:
(1) businesses organized under this chapter will often
transact business in other states;
(2) for businesses organized under this chapter to function
effectively and for this chapter to be a useful enactment, this
chapter must be accorded the same comity and full faith and
credit that states typically accord to each other's corporate
laws; and
(3) specifically, it is essential that other states
recognize both the legal existence of limited liability
companies formed under this chapter and the legal status of all
members of these limited liability companies.
The legislature therefore specifically seeks that, subject
to any reasonable registration requirements, other states extend
to this chapter the same full faith and credit under section 1
of Article IV of the Constitution of the United States, and the
same comity, that Minnesota extends to statutes that other
states enact to provide for the establishment and operation of
business organizations.
MEMBERS AND MEMBERSHIP INTERESTS
Sec. 25. [322B.30] [NATURE OF A MEMBERSHIP INTEREST AND
STATEMENT OF INTEREST OWNED.]
Subdivision 1. [GENERALLY.] A membership interest is
personal property. A member has no interest in specific limited
liability company property. All property of the limited
liability company is property of the limited liability company
itself.
Subd. 2. [STATEMENT OF MEMBERSHIP INTEREST.] At the
request of any member, the limited liability company shall state
in writing the particular membership interest owned by that
member as of the moment the limited liability company makes the
statement. The statement must describe the member's rights to
vote, to share in profits and losses, and to share in
distributions, as well as any assignment of the member's rights
then in effect. The statement is not a certificated security as
defined in section 336.8-102(1)(a), is not a negotiable
instrument, and may not serve as a vehicle by which a transfer
of any membership interest may be effected.
Subd. 3. [GRANT OF A SECURITY INTEREST.] For the purpose
of any law relating to security interests, a membership interest
and financial rights are each a general intangible, as defined
in section 336.9-106, and not a certificated security as defined
in section 336.8-102(1)(a) and not an uncertificated security as
defined in section 336.8-102(1)(b).
Sec. 26. [322B.303] [PERSONAL LIABILITY OF MEMBERS AS
MEMBERS.]
Subdivision 1. [LIMITED LIABILITY RULE.] Subject to
subdivision 2, a member, governor, manager, or other agent of a
limited liability company is not, merely on account of this
status, personally liable for the acts, debts, liabilities, or
obligations of the limited liability company.
Subd. 2. [PIERCING THE VEIL.] The case law that states the
conditions and circumstances under which the corporate veil of a
corporation may be pierced under Minnesota law also applies to
limited liability companies.
Subd. 3. [LIMITED LIABILITY AFTER DISSOLUTION.] The
limited liability described in subdivisions 1 and 2 continues in
full force regardless of any dissolution, winding up, and
termination of a limited liability company.
Sec. 27. [322B.306] [TERMINATION OF A MEMBERSHIP
INTEREST.]
Subdivision 1. [MEMBER'S POWER TO TERMINATE MEMBERSHIP.] A
member always has the power, though not necessarily the right,
to terminate its membership by resigning or retiring at any
time. A member's resignation or retirement, whether rightful or
wrongful, causes dissolution under section 322B.80, subdivision
1, clause (5), unless dissolution avoidance consent is obtained
from the remaining members. A member has no power to transfer
all or part of the member's membership interest, except as
provided in sections 322B.31 and 322B.313.
Subd. 2. [WHEN EXPULSION PERMITTED.] Unless otherwise
provided in the articles of organization, a member may not be
expelled.
Subd. 3. [EFFECT OF TERMINATION OF MEMBERSHIP ON THE
GOVERNANCE RIGHTS OF THE TERMINATED MEMBER.] If for any reason
the continued membership of a member is terminated:
(1) if dissolution under section 322B.80, subdivision 1,
clause (5), is avoided through dissolution avoidance consent,
then the member whose membership has terminated loses all
governance rights and will be considered merely an assignee of
the financial rights owned before the termination of membership;
and
(2) if dissolution under section 322B.80, subdivision 1,
clause (5), is not avoided through dissolution avoidance
consent, the member whose continued membership has terminated
retains all governance rights owned before the termination of
the membership and may exercise those rights through the winding
up and termination of the limited liability company.
Subd. 4. [ADDITIONAL EFFECTS IF TERMINATION OF MEMBERSHIP
IS WRONGFUL.] If a member resigns or retires in contravention of
the articles of organization or a member control agreement then:
(1) the member who has wrongfully resigned or retired is
liable to all the other members and to the limited liability
company to the extent damaged by the wrongful resignation or
retirement; and
(2) if dissolution avoidance consent is not obtained but
the business of the limited liability company is continued under
a business continuation agreement, then unless otherwise
provided in the business continuation agreement:
(i) the member who has wrongfully resigned or retired has
the right as against the successor organization to have the
value of the resigned or retired membership interest determined
and paid in cash; but
(ii) in ascertaining the value of the resigned or retired
membership interest, the value of the goodwill of the business
must not be considered.
Sec. 28. [322B.31] [ASSIGNMENT OF FINANCIAL RIGHTS.]
Subdivision 1. [ASSIGNMENT OF FINANCIAL RIGHTS PERMITTED.]
Except as provided in subdivision 3, a member's financial rights
are transferable in whole or in part.
Subd. 2. [EFFECT OF ASSIGNMENT OF FINANCIAL RIGHTS.] An
assignment of a member's financial rights entitles the assignee
to receive, to the extent assigned, only the share of profits
and losses and the distributions to which the assignor would
otherwise be entitled. An assignment of a member's financial
rights does not dissolve the limited liability company and does
not entitle or empower the assignee to become a member, to
exercise any governance rights, to receive any notices from the
limited liability company, or to cause dissolution. The
assignment may not allow the assignee to control the member's
exercise of governance rights.
Subd. 3. [RESTRICTIONS OF ASSIGNMENT OF FINANCIAL
RIGHTS.] (a) A restriction on the assignment of financial rights
may be imposed in the articles, in the operating agreement, by a
resolution adopted by the members, or by an agreement among or
other written action by members or among them and the limited
liability company. A restriction is not binding with respect to
financial rights reflected in the required records before the
adoption of the restriction, unless the owners of those
financial rights are parties to the agreement or voted in favor
of the restriction.
(b) A written restriction on the assignment of financial
rights that is not manifestly unreasonable under the
circumstances and is noted conspicuously in the required records
may be enforced against the owner of the restricted financial
rights or a successor or transferee of the owner, including a
pledgee or a legal representative. Unless noted conspicuously
in the required records, a restriction, even though permitted by
this section, is ineffective against a person without knowledge
of the restriction.
Sec. 29. [322B.313] [ASSIGNMENT OF A COMPLETE MEMBERSHIP
INTEREST AND OF GOVERNANCE RIGHTS COUPLED WITH AN ASSIGNMENT OF
FINANCIAL RIGHTS.]
Subdivision 1. [TRANSFER OF MEMBERSHIP INTERESTS
RESTRICTED.] A member may assign the member's full membership
interest only by assigning all of the member's governance rights
coupled with a simultaneous assignment to the same assignee of
all the member's financial rights. A member's governance rights
are assignable, in whole or in part, only as provided in this
section.
Subd. 2. [WHEN UNANIMOUS CONSENT REQUIRED.] Subject to
subdivision 6, a member may, without the consent of any other
member, assign governance rights, in whole or in part, to
another person already a member at the time of the assignment.
Any other assignment of any governance rights is effective only
if all the members, other than the member seeking to make the
assignment, approve the assignment by unanimous written consent.
Subd. 3. [EFFECT ON MEMBERSHIP.] When an assignment of
governance rights coupled with financial rights is effective
under subdivision 2:
(1) the assignee becomes a member, if not already a member;
and
(2) if the assignor does not retain any governance rights,
the assignor ceases to be a member, and the unanimous written
consent required under subdivision 2, clause (2), also
constitutes the dissolution avoidance consent necessary to avoid
dissolution that would otherwise ensue under section 322B.80,
subdivision 1, clause (5), on account of the assignor ceasing to
be a member.
Subd. 4. [EFFECT ON LIABILITY FOR CONTRIBUTIONS AND
ILLEGAL DISTRIBUTIONS.] When an assignment is effective under
subdivision 2:
(1) the assignee is liable for any obligations of the
assignor under sections 322B.40 (including liability for
unperformed promises that have been reflected as contributions
in the required records) and 322B.55 existing at the time of
transfer, except to the extent that, at the time the assignee
became a member, the liability was unknown to the assignee, and
could not be ascertained from the required records; and
(2) the assignor is not released from liability to the
limited liability company for obligations of the assignor
existing at the time of transfer under sections 322B.40 and
322B.55.
Subd. 5. [CONSEQUENCES OF INEFFECTIVE ASSIGNMENT.] If any
purported or attempted assignment of governance rights is
ineffective for failure to obtain the consent required in
subdivision 2:
(1) the purported or attempted assignment is ineffective in
its entirety; and
(2) any assignment of financial rights that accompanied the
purported or attempted assignment of governance rights is void.
Subd. 6. [RESTRICTIONS ON ASSIGNMENT OF GOVERNANCE
RIGHTS.] Restrictions on the transfer of governance rights may
be imposed following the same procedures and under the same
conditions as stated in section 322B.31, subdivision 3, for
restricting the transfer of financial rights.
Sec. 30. [322B.316] [EFFECTIVE DATE OF ASSIGNMENTS.]
Any permissible assignment of financial rights under
section 322B.31 and of governance rights coupled with financial
rights under section 322B.313 will be effective as to and
binding on the limited liability company only when the
assignee's name, address, and the nature and extent of the
assignment are reflected in the required records of the limited
liability company.
Sec. 31. [322B.32] [RIGHTS OF JUDGMENT CREDITOR.]
On application to a court of competent jurisdiction by any
judgment creditor of a member, the court may charge a member's
or an assignee's financial rights with payment of the
unsatisfied amount of the judgment with interest. To the extent
so charged, the judgment creditor has only the rights of an
assignee of a member's financial rights under section 322B.31.
This chapter does not deprive any member or assignee of
financial rights of the benefit of any exemption laws applicable
to the membership interest. This section is the sole and
exclusive remedy of a judgment creditor with respect to the
judgment debtor's membership interest.
Sec. 32. [322B.323] [POWERS OF ESTATE OF A DECEASED OR
INCOMPETENT MEMBER.]
Subdivision 1. [GENERAL RULE.] If a member who is an
individual dies or a court of competent jurisdiction adjudges
the member to be incompetent to manage the member's person or
property, or an order for relief under the bankruptcy code is
entered with respect to the member, the member's executor,
administrator, guardian, conservator, trustee, or other legal
representative may exercise all of the member's rights for the
purpose of settling the estate or administering the member's
property. If a member is a corporation, trust, or other entity
and is dissolved, terminated, or placed by a court in
receivership or bankruptcy, the powers of that member may be
exercised by its legal representative or successor.
Subd. 2. [WHEN MEMBERSHIP IS TERMINATED.] If an event
referred to in subdivision 1 causes the termination of a
member's membership interest and the remaining members give
dissolution avoidance consent, then:
(1) as provided in section 322B.306, subdivision 3, the
terminated member's interest will be considered to be merely
that of an assignee of the financial rights owned before the
termination of membership; and
(2) the rights to be exercised by the legal representative
of the terminated member will be limited accordingly.
Sec. 33. [322B.326] [SHARING OF PROFITS AND LOSSES.]
Unless otherwise provided in the articles of organization
or by the board of governors under section 322B.40, subdivisions
5 and 6, the profits and losses of a limited liability company
are to be allocated among the members, and among classes and
series of members, in proportion to the value of the
contributions of the members reflected in the required records.
Sec. 34. [322B.33] [PREEMPTIVE RIGHTS.]
Subdivision 1. [PRESUMPTION AND MODIFICATION.] Unless
denied or limited in the articles of organization or by the
board of governors pursuant to section 322B.40, subdivision 5,
clause (2), a member of a limited liability company has the
preemptive rights provided in this section.
Subd. 2. [DEFINITION.] A preemptive right is the right of
a member to make contributions of a certain amount or to make a
contribution allowance agreement specifying future contributions
of a certain amount before the limited liability company may
accept new contributions from other persons or to make
contribution allowance agreements with other persons.
Subd. 3. [WHEN RIGHT ACCRUES.] A member has a preemptive
right whenever the limited liability company proposes to accept
contributions from other persons, or to make contribution
allowance agreements with other persons, pertaining to
membership interests of the same series or class as the series
or class owned by the member.
Subd. 4. [EXEMPTIONS.] No preemptive rights arise as to
contributions to be accepted from others or as to contribution
allowance agreements to be made with others when the
contribution is:
(1) to be made in a form other than money;
(2) to be made or reflected pursuant to a plan of merger or
exchange;
(3) to be made or reflected pursuant to an employee or
incentive benefit plan approved at a meeting by the affirmative
vote of the owners of a majority of the voting power of all
membership interests entitled to vote;
(4) to be made pursuant to a previously made contribution
allowance agreement; or
(5) to be made or reflected pursuant to a plan of
reorganization approved by a court of competent jurisdiction
pursuant to a statute of this state or of the United States.
Subd. 5. [EXTENT OF PREEMPTIVE RIGHT.] The extent to which
each member may make a new contribution, or obtain the right to
make a new contribution under a contribution allowance
agreement, by exercise of a preemptive right as to any class or
series is the ratio that the value of that member's
contributions, as reflected in the required records as
pertaining to that class or series before the contribution,
bears to the total value of all members' contributions reflected
in the required records as pertaining to that class or series
before the new contribution.
Subd. 6. [WAIVER.] A member may waive a preemptive right
in writing. The waiver is binding upon the member whether or
not consideration has been given for the waiver. Unless
otherwise provided in the waiver, a waiver of preemptive rights
is effective only for the proposed contribution or contribution
allowance agreement described in the waiver.
Subd. 7. [NOTICE.] When proposing to accept new
contributions, or to make contribution allowance agreements,
with respect to which members have preemptive rights under this
section, the board of governors shall cause notice to be given
to each member entitled to preemptive rights. The notice must
be given at least ten days before the date by which the member
must exercise a preemptive right and must contain:
(1) the extent of the member's preemptive right, being:
(i) in the case of a preemptive right to make a
contribution, the amount of the contribution to be made, and
(ii) in the case of a preemptive right to make a
contribution allowance agreement, the amount of the contribution
to be allowed under that contribution allowance agreement;
(2) the method used to determine the extent of the member's
preemptive right;
(3) the terms and conditions upon which the member may make
a contribution or make a contribution allowance agreement; and
(4) the time within which and the method by which the
member must exercise the right.
Subd. 8. [CONTRIBUTION AND PARTICIPATION BY OTHERS.] If a
member does not exercise preemptive rights to make a
contribution or to make a contribution allowance agreement, then
for a period not exceeding one year after the date fixed by the
board of governors for the exercise of those preemptive rights
and to the extent of the preemptive rights not exercised, the
board of governors may accept contributions or make contribution
allowance agreements on terms no less favorable to the limited
liability company than those offered to the member.
Subd. 9. [MODIFICATION.] No amendment to the articles of
organization that has the effect of denying, limiting, or
modifying the preemptive rights provided in this section shall
be adopted if the votes of a proportion of the voting power
sufficient to elect a governor at an election of the entire
board of governors under cumulative voting are cast against the
amendment.
Sec. 35. [322B.333] [REGULAR MEETINGS OF MEMBERS.]
Subdivision 1. [FREQUENCY.] Regular meetings of members
may be held on an annual or other less frequent periodic basis,
but need not be held unless required by the articles of
organization or operating agreement or by subdivision 2.
Subd. 2. [DEMAND BY MEMBER.] If a regular meeting of
members has not been held during the immediately preceding 15
months, a member or members owning three percent or more of the
voting power of all members entitled to vote may demand a
regular meeting of members by written notice of demand given to
the chief manager or the treasurer of the limited liability
company. Within 30 days after receipt of the demand by one of
those managers, the board of governors shall cause a regular
meeting of members to be called and held on notice no later than
90 days after receipt of the demand, all at the expense of the
limited liability company. If the board of governors fails to
cause a regular meeting to be called and held as required by
this subdivision, the member or members making the demand may
call the regular meeting by giving notice as required by section
322B.34, all at the expense of the limited liability company.
Subd. 3. [TIME AND PLACE.] A regular meeting, if any, must
be held on the day or date and at the time and place fixed by,
or in a manner authorized by, the articles or operating
agreement, except that a meeting called by or at the demand of a
member pursuant to subdivision 2 must be held in the county
where the principal executive office of the limited liability
company is located.
Subd. 4. [ELECTIONS REQUIRED AND OTHER BUSINESS.] At each
regular meeting of members there must be an election of
qualified successors for governors who serve for an indefinite
term or whose terms have expired or are due to expire within six
months after the date of the meeting. No other particular
business is required to be transacted at a regular meeting. Any
business appropriate for action by the members may be transacted
at a regular meeting.
Sec. 36. [322B.336] [SPECIAL MEETINGS OF MEMBERS.]
Subdivision 1. [WHO MAY CALL.] Special meetings of the
members may be called for any purpose or purposes at any time,
by:
(1) the chief manager;
(2) the treasurer;
(3) two or more governors;
(4) a person authorized in the articles or operating
agreement to call special meetings; or
(5) a member or members owning ten percent or more of the
voting power of all membership interests entitled to vote.
Subd. 2. [DEMAND BY MEMBERS.] A member or members owning
the voting power specified in subdivision 1, clause (5), may
demand a special meeting of members by written notice of demand
given to the chief manager or treasurer of the limited liability
company and containing the purposes of the meeting. Within 30
days after receipt of the demand by one of those managers, the
board of governors shall cause a special meeting of members to
be called and held on notice no later than 90 days after receipt
of the demand, all at the expense of the limited liability
company. If the board of governors fails to cause a special
meeting to be called and held as required by this subdivision,
the member or members making the demand may call the meeting by
giving notice as required by section 322B.34, all at the expense
of the limited liability company.
Subd. 3. [TIME AND PLACE.] Special meetings must be held
on the date and at the time and place fixed by the chief
manager, the treasurer, the board of governors, or a person
authorized by the articles or operating agreement to call a
meeting, except that a special meeting called by or at the
demand of a member or members pursuant to subdivision 2 must be
held in the county where the principal executive office is
located.
Subd. 4. [BUSINESS LIMITED.] The business transacted at a
special meeting is limited to the purposes stated in the notice
of the meeting. Any business transacted at a special meeting
that is not included in those stated purposes is voidable by or
on behalf of the limited liability company, unless all of the
members have waived notice of the meeting in accordance with
section 322B.34, subdivision 4.
Sec. 37. [322B.34] [NOTICE.]
Subdivision 1. [TO WHOM GIVEN.] Except as otherwise
provided in this chapter, notice of all meetings of members must
be given to every owner of membership interests entitled to
vote, unless:
(1) the meeting is an adjourned meeting and the date, time,
and place of the meeting were announced at the time of
adjournment; or
(2) the following have been mailed by first class mail to a
member at the address in the limited liability company records
and returned undeliverable:
(i) two consecutive annual meeting notices and notice of
any special meetings held during the period between the two
annual meetings; and
(ii) all payment of distributions, provided there are at
least two sent during a 12-month period.
An action or meeting that is taken or held without notice
under clause (2) has the same force and effect as if notice was
given. If the member delivers a written notice of the member's
current address to the limited liability company, the notice
requirement is reinstated.
Subd. 2. [WHEN GIVEN.] In all instances where a specific
minimum notice period has not otherwise been fixed by law, the
notice must be given at least ten days before the date of the
meeting, or a shorter time provided in the articles of
organization or operating agreement, and not more than 60 days
before the date of the meeting.
Subd. 3. [CONTENTS.] The notice must contain the date,
time, and place of the meeting, and any other information
required by this chapter. In the case of a special meeting, the
notice must contain a statement of the purposes of the meeting.
The notice may also contain any other information required by
the articles of organization or operating agreement or
considered necessary or desirable by the board of governors or
by any other person or persons calling the meeting.
Subd. 4. [WAIVER AND OBJECTIONS.] A member may waive
notice of a meeting of members. A waiver of notice by a member
entitled to notice is effective whether given before, at, or
after the meeting, and whether given in writing, orally, or by
attendance. Attendance by a member at a meeting is a waiver of
notice of that meeting, except where the member objects at the
beginning of the meeting to the transaction of business because
the meeting is not lawfully called or convened, or objects
before a vote on an item of business because the item may not
lawfully be considered at that meeting and does not participate
in the consideration of the item at that meeting.
Sec. 38. [322B.343] [ELECTRONIC COMMUNICATIONS.]
Subdivision 1. [ELECTRONIC CONFERENCES.] If and to the
extent authorized in the operating agreement or by the board of
governors of a closely held limited liability company, a
conference among members by any means of communication through
which the members may simultaneously hear each other during the
conference constitutes a regular or special meeting of members,
if the same notice is given of the conference to every owner of
membership interests entitled to vote as would be required by
this chapter for a meeting, and if the membership interests held
by the members participating in the conference would be
sufficient to constitute a quorum at a meeting. Participation
in a conference by that means constitutes presence at the
meeting in person or by proxy if all the other requirements of
section 322B.363 are met.
Subd. 2. [PARTICIPATION BY ELECTRONIC MEANS.] If and to
the extent authorized in the operating agreement or by the board
of governors of a closely held limited liability company, a
member may participate in a regular or special meeting of
members not described in subdivision 1 by any means of
communication through which the member, other members so
participating, and all members physically present at the meeting
may simultaneously hear each other during the meeting.
Participation in a meeting by that means constitutes presence at
the meeting in person or by proxy if all the other requirements
of section 322B.363 are met.
Subd. 3. [WAIVER.] Waiver of notice of a meeting by means
of communication described in subdivisions 1 and 2 may be given
in the manner provided in section 322B.34, subdivision 4.
Participation in a meeting by means of communication described
in subdivisions 1 and 2 is a waiver of notice of that meeting,
except where the member objects at the beginning of the meeting
to the transaction of business because the meeting is not
lawfully called or convened, or objects before a vote on an item
of business because the item may not lawfully be considered at
the meeting and does not participate in the consideration of the
item at that meeting.
Sec. 39. [322B.346] [ACT OF MEMBERS.]
Subdivision 1. [MAJORITY REQUIRED.] The members shall take
action by the affirmative vote of the owners of the greater of:
(1) a majority of the voting power of the membership interests
present and entitled to vote on that item of business; or (2) a
majority of the voting power that would constitute a quorum for
the transaction of business at the meeting, except where this
chapter or the articles of organization require a larger
proportion. If the articles require a larger proportion than is
required by this chapter for a particular action, the articles
control.
Subd. 2. [VOTING BY CLASS.] In any case where a class or
series of membership interests is entitled by this chapter, the
articles of organization, the operating agreement, or the terms
of the membership interests to vote as a class or series, the
matter being voted upon must also receive the affirmative vote
of the owners of the same proportion of the membership interests
present of that class or series, or of the total outstanding
membership interests of that class or series, as the proportion
required pursuant to subdivision 1, unless the articles require
a larger proportion. Unless otherwise stated in the articles or
operating agreement in the case of voting as a class, the
minimum percentage of the total voting power of membership
interests of the class or series that must be present is equal
to the minimum percentage of all membership interests entitled
to vote required to be present under section 322B.353.
Sec. 40. [322B.35] [ACTION WITHOUT A MEETING.]
Subdivision 1. [METHOD.] An action required or permitted
to be taken at a meeting of the members may be taken by written
action signed by all of the members. If the articles so
provide, any action may be taken by written action signed by the
members who own voting power equal to the voting power that
would be required to take the same action at a meeting of the
members at which all members were present.
Subd. 2. [EFFECTIVE TIME.] The written action is effective
when signed by the required members, unless a different
effective time is provided in the written action.
Subd. 3. [NOTICE AND LIABILITY.] When written action is
permitted to be taken by less than all members, all members must
be notified immediately of its text and effective date. Failure
to provide the notice does not invalidate the written action. A
member who does not sign or consent to the written action has no
liability for the action or actions taken by the written action.
Sec. 41. [322B.353] [QUORUM.]
The owners of a majority of the voting power of the
membership interests entitled to vote at a meeting are a quorum
for the transaction of business, unless a larger or smaller
proportion is provided in the articles or operating agreement.
If a quorum is present when a duly called or held meeting is
convened, the members present may continue to transact business
until adjournment, even though the withdrawal of members
originally present leaves less than the proportion otherwise
required for a quorum.
Sec. 42. [322B.356] [VOTING RIGHTS.]
Subdivision 1. [DETERMINATION.] The board of governors may
fix a date not more than 60 days, or a shorter time period
provided in the articles of organization or operating agreement,
before the date of a meeting of members as the date for the
determination of the owners of membership interests entitled to
notice of and entitled to vote at the meeting. When a date is
so fixed, only members on that date are entitled to notice of
and permitted to vote at that meeting of members.
Subd. 2. [VOTING POWER.] Unless otherwise provided in the
articles or by the board of governors under section 322B.40,
subdivisions 5 and 6, members have voting power in proportion to
the value of the contributions of the members as reflected in
the required records.
Subd. 3. [NONMEMBERS.] The articles of organization may
give or prescribe the manner of giving a creditor, security
holder, or other person a right to vote under this section, but
no prescription under this subdivision may have the effect of
transferring from an assignor of financial rights to the
assignee the assignor's voting rights.
Subd. 4. [JOINTLY OWNED MEMBERSHIP INTERESTS.] Membership
interests owned by two or more members may be voted by any one
of them unless the limited liability company receives written
notice from any one of them denying the authority of that person
to vote those membership interests.
Subd. 5. [MANNER OF VOTING AND PRESUMPTION.] Except as
provided in subdivision 4, an owner of a membership interest
entitled to vote may vote any portion of the membership interest
in any way the member chooses. If a member votes without
designating the proportion voted in a particular way, the member
is considered to have voted all of the membership interest in
that way.
Sec. 43. [322B.36] [VOTING BY ORGANIZATIONS AND LEGAL
REPRESENTATIVES.]
Subdivision 1. [MEMBERSHIP INTERESTS HELD BY ANOTHER
ORGANIZATION.] Membership interests of a limited liability
company reflected in the required records as being owned by
another domestic or foreign organization may be voted by the
chief manager, chief executive officer, or another legal
representative of that organization.
Subd. 2. [MEMBERSHIP INTERESTS HELD BY SUBSIDIARY.] Except
as provided in subdivision 3, membership interests of a limited
liability company reflected in the required records as being
owned by a subsidiary are not entitled to vote on any matter.
Subd. 3. [MEMBERSHIP INTERESTS CONTROLLED IN A FIDUCIARY
CAPACITY.] Membership interests of a limited liability company
in the name of, or under the control of, the limited liability
company or a subsidiary in a fiduciary capacity are not entitled
to vote on any matter, except to the extent that the settlor or
beneficiary possesses and exercises a right to vote or gives the
limited liability company binding instructions on how to vote
the membership interests.
Subd. 4. [VOTING BY CERTAIN REPRESENTATIVES.] Subject to
section 322B.323, membership interests under the control of a
person in a capacity as a personal representative, an
administrator, executor, guardian, conservator, or the like may
be voted by the person, either in person or by proxy, without
reflecting in the required records those membership interests in
the name of the person.
Subd. 5. [VOTING BY TRUSTEE IN BANKRUPTCY OR RECEIVER.]
Membership interests reflected in the required records in the
name of a trustee in bankruptcy or a receiver may be voted by
the trustee or receiver either in person or by proxy.
Membership interests under the control of a trustee in
bankruptcy or a receiver may be voted by the trustee or receiver
without reflecting in the required records the name of the
trustee or receiver, if authority to do so is contained in an
appropriate order of the court by which the trustee or receiver
was appointed. The right to vote of trustees in bankruptcy and
receivers is subject to section 322B.323.
Subd. 6. [MEMBERSHIP INTERESTS HELD BY OTHER
ORGANIZATIONS.] Membership interests reflected in the required
records in the name of an organization not described in
subdivisions 1 to 5 may be voted either in person or by proxy by
the legal representative of that organization.
Subd. 7. [GRANT OF SECURITY INTEREST.] The grant of a
security interest in a membership interest does not entitle the
holders of the security interest to vote except as provided in
section 322B.313.
Sec. 44. [322B.363] [PROXIES.]
Subdivision 1. [AUTHORIZATION.] A member may cast or
authorize the casting of a vote by filing a written appointment
of a proxy with a manager of the limited liability company at or
before the meeting at which the appointment is to be effective.
A written appointment of a proxy may be signed by the member or
authorized by the member by transmission of a telegram,
cablegram, or other means of electronic transmission. The
telegram, cablegram, or other means of electronic transmission
must set forth or be submitted with information from which it
can be determined that the telegram, cablegram, or other
electronic transmission was authorized by the member. Any
reproduction of the writing or transmission may be substituted
or used in lieu of the original writing or transmission for any
purpose for which the original transmission could be used, if
the copy, facsimile telecommunication, or other reproduction is
a complete and legible reproduction of the entire original
writing or transmission. An appointment of a proxy for
membership interests owned jointly by two or more members is
valid if signed or otherwise authorized by any one of them,
unless the limited liability company receives from any one of
those members written notice either denying the authority of
that person to appoint a proxy or appointing a different proxy.
Subd. 2. [DURATION.] The appointment of a proxy is valid
for 11 months, unless a longer period is expressly provided in
the appointment. No appointment is irrevocable and any
agreement purporting to grant an irrevocable proxy is void. A
member who revokes a proxy is not liable in any way for damages,
restitution, or other claim.
Subd. 3. [TERMINATION.] An appointment may be terminated
at will. Termination may be made by filing written notice of
the termination of the appointment with a manager of the limited
liability company, or by filing a new written appointment of a
proxy with a manager of the limited liability company.
Termination in either manner revokes all prior proxy
appointments and is effective when filed with a manager of the
limited liability company.
Subd. 4. [REVOCATION BY DEATH OR INCAPACITY.] The death or
incapacity of a person appointing a proxy does not revoke the
authority of the proxy, unless written notice of the death or
incapacity is received by a manager of the limited liability
company before the proxy exercises the authority under that
appointment.
Subd. 5. [MULTIPLE PROXIES.] Unless the appointment
specifically provides otherwise, if two or more persons are
appointed as proxies for a member:
(1) any one of them may vote the membership interests on
each item of business in accordance with specific instructions
contained in the appointment; and
(2) if no specific instructions are contained in the
appointment with respect to voting the membership interests on a
particular item of business, the membership interests must be
voted as a majority of the proxies determine. If the proxies
are equally divided, the membership interests must not be voted.
Subd. 6. [VOTE OF PROXY ACCEPTED AND LIABILITY.] Unless
the appointment of a proxy contains a restriction, limitation,
or specific reservation of authority, the limited liability
company may accept a vote or action taken by a person named in
the appointment. The vote of a proxy is final, binding, and not
subject to challenge, but the proxy is liable to the member for
damages resulting from a failure to exercise the proxy or from
an exercise of the proxy in violation of the authority granted
in the appointment.
Subd. 7. [LIMITED AUTHORITY.] If a proxy is given
authority by a member to vote on less than all items of business
considered at a meeting of members, the member is considered to
be present and entitled to vote by the proxy for purposes of
section 322B.346, subdivision 1, only with respect to those
items of business for which the proxy has authority to vote. A
proxy who is given authority by a member who abstains with
respect to an item of business is considered to have authority
to vote on the item of business for purposes of this subdivision.
Subd. 8. [LIMITATIONS ON PROXIES.] A member may not grant
any proxy to any person who is an assignee of any member's
financial rights and who is not also a member.
Sec. 45. [322B.366] [MEMBER VOTING AGREEMENTS.]
Subdivision 1. [GENERAL RULE.] Except as provided in
subdivision 2, a written agreement among persons who are then
members or who have signed contribution agreements, relating to
the voting of their membership interests, is valid and
specifically enforceable by and against the parties to the
agreement. The agreement may override the provisions of section
322B.363, subdivisions 1 to 7, regarding proxies.
Subd. 2. [LIMITATION ON VOTING AGREEMENTS.] Any assignee
of any member's financial rights may not be a party to an
agreement under subdivision 1, unless that assignee is also a
member. A voting agreement may not relate to the consents
referred to in sections 322B.80, subdivision 1, clause (5);
322B.313, subdivision 2; 322B.42, subdivision 5; or 322B.43,
subdivision 3.
Sec. 46. [322B.37] [MEMBER CONTROL AGREEMENTS.]
Subdivision 1. [AUTHORIZATION AND SCOPE.] A written
agreement among persons who are then members or who have signed
contribution agreements, relating to the control of any phase of
the business and affairs of the limited liability company, its
liquidation, dissolution and termination, or the relations among
members or persons who have signed contribution agreements is
valid as provided in subdivision 2. Wherever this chapter
provides that a particular result may or must be obtained
through a provision in the articles of organization (other than
a provision required by section 322B.115, subdivision 1, to be
contained in the articles) or in the operating agreement, the
same result can be accomplished through a member control
agreement valid under this section or through a procedure
established by a member control agreement valid under this
section. A member control agreement may waive, in whole or in
part, a member's dissenting rights under sections 322B.383 and
322B.386, but may not waive dissenters' rights under section
322B.873, subdivision 2, clause (1). A member control agreement
may not include an agreement to give transfer consent. A member
control agreement may include a business continuation agreement
only if the articles of organization grant the members the power
to enter into business continuation agreements.
Subd. 2. [METHOD OF APPROVAL.] A written agreement among
persons described in subdivision 1 that relates to the control
of or the liquidation, dissolution and termination of the
limited liability company, the relations among them, or any
phase of the business and affairs of the limited liability
company, including, without limitation, the management of its
business, the declaration and payment of distributions, the
sharing of profits and losses, the election of governors or
managers, the employment of members by the limited liability
company, or the arbitration of disputes, is valid, if the
agreement is signed by all persons who are then the members of
the limited liability company, whether or not the members all
have voting power, and all those who have signed contribution
agreements, regardless of whether those signatories will, when
members, have voting power. An agreement authorized under this
section may allocate to the members authority ordinarily
exercised by the board of governors, allocate to the board of
governors authority ordinarily exercised by the members, or
structure the governance of the limited liability company in any
agreed fashion.
Subd. 3. [ENFORCEABILITY AND COPIES.] (a) An agreement
valid under subdivisions 1 and 2 is enforceable by persons who
are parties to it and is binding upon and enforceable against
only those persons and other persons having knowledge of the
existence of the agreement. A copy of the agreement must be
filed with the limited liability company. The limited liability
company shall note in its required records that the members'
interests are governed by a member control agreement entered
into under this section.
(b) A member control agreement valid under subdivisions 1
and 2 is specifically enforceable, except that an agreement to
give dissolution avoidance consent is not specifically
enforceable.
(c) A member control agreement may waive dissenters'
rights, subject to section 322B.873, subdivision 3.
(d) A member or any assignee of financial rights has the
right upon written demand to obtain a copy of any member control
agreement from the limited liability company at the company's
expense.
Subd. 4. [LIABILITY.] If an agreement authorized under
this section takes away from any person any of the authority and
responsibility which that person would otherwise possess under
this chapter, the effect of the agreement is also to relieve
that person of liability imposed by law for acts and omissions
in the possession or exercise of that authority and
responsibility and to impose that liability on the person or
persons possessing the authority and responsibility under the
agreement.
Subd. 5. [OTHER AGREEMENTS.] This section does not apply
to, limit, or restrict agreements otherwise valid, nor is the
procedure set forth in this section the exclusive method of
agreement among members or between the members and the limited
liability company with respect to any of the matters described.
Sec. 47. [322B.373] [REQUIRED RECORDS AND INFORMATION.]
Subdivision 1. [REQUIRED RECORDS.] A limited liability
company shall keep at its principal executive office, or at
another place or places within the United States determined by
the board of governors:
(1) a current list of the full name and last-known
business, residence, or mailing address of each member,
governor, and chief manager;
(2) a current list of the full name and last-known
business, residence, or mailing address of each assignee of
financial rights and a description of the rights assigned;
(3) a copy of the articles of organization and all
amendments to the articles;
(4) copies of any currently effective written operating
agreement;
(5) copies of the limited liability company's federal,
state, and local income tax returns and reports, if any, for the
three most recent years;
(6) financial statements required by section 322B.376;
(7) records of all proceedings of members for the last
three years;
(8) records of all proceedings of the board of governors
for the last three years;
(9) reports made to members generally within the last three
years;
(10) member control agreements described in section
322B.37;
(11) a statement of all contributions accepted under
section 322B.40, subdivision 3, including for each contribution:
(i) the identity of the member to whom the contribution
relates;
(ii) the class or series to which the contribution
pertains;
(iii) the amount of cash accepted by the limited liability
company or promised to be paid to the limited liability company;
(iv) a description of any services rendered to or for the
benefit of the limited liability company or promised to be
rendered to or for the benefit of the limited liability company;
and
(v) the value accorded under section 322B.40, subdivision 4
to:
(A) any other property transferred or promised to be
transferred to the limited liability company; and
(B) any services rendered to or for the benefit of the
limited liability company or promised to be rendered to or for
the benefit of the limited liability company;
(12) a statement of all contribution agreements made under
section 322B.42, including for each contribution agreement:
(i) the identity of the would-be contributor;
(ii) the class or series to which the future contribution
pertains; and
(iii) as to each future contribution to be made, the same
information as subdivision 1, clause (11) requires for
contributions already accepted;
(13) a statement of all contribution allowance agreements
made under section 322B.43, including for each contribution
allowance agreement:
(i) the identity of the would-be contributor;
(ii) the class or series to which the future contribution
would pertain; and
(iii) as to each future contribution allowed to be made,
the same information as subdivision 1, clause (11) requires for
contributions already accepted;
(14) an explanation of any restatement of value made under
section 322B.41;
(15) any written consents obtained from members under this
chapter;
(16) a copy of agreements, contracts, or other arrangements
or portions of them incorporated by reference under section
322B.40, subdivision 6.
Subd. 2. [RIGHT TO INSPECT.] (a) A member of a limited
liability company has an absolute right, upon written demand, to
examine and copy, in person or by a legal representative, at any
reasonable time all documents referred to in subdivision 1.
(b) A member of a limited liability company has a right,
upon written demand, to examine and copy, in person or by a
legal representative, other limited liability company records at
any reasonable time only if the member demonstrates a proper
purpose for the examination.
(c) For purposes of this section, a "proper purpose" is one
reasonably related to the person's interest as a member of the
limited liability company.
Subd. 3. [PROTECTIVE ORDERS.] On application of the
limited liability company, a court in this state may issue a
protective order permitting the limited liability company to
withhold portions of the records of proceedings of the board of
governors for a reasonable period of time, not to exceed 12
months, in order to prevent premature disclosure of confidential
information that would be likely to cause competitive injury to
the limited liability company. A protective order may be
renewed for successive reasonable periods of time, each not to
exceed 12 months and in total not to exceed 36 months, for good
cause shown. In the event a protective order is issued, the
statute of limitations for any action that the member might
bring as a result of information withheld automatically extends
for the period of delay. If the court does not issue a
protective order with respect to any portion of the records of
proceedings as requested by the limited liability company, it
shall award reasonable expenses, including attorney's fees and
disbursements, to the member. This subdivision does not limit
the right of a court to grant other protective orders or impose
other reasonable restrictions on the nature of the limited
liability company records that may be copied or examined under
subdivision 2 or the use or distribution of the records by the
demanding member.
Subd. 4. [OTHER USE PROHIBITED.] A member who has gained
access under this section to any limited liability company
record may not use or furnish to another for use the limited
liability company record or a portion of the contents for any
purpose other than a proper purpose. Upon application of the
limited liability company, a court may issue a protective order
or order other relief as may be necessary to enforce the
provisions of this subdivision.
Subd. 5. [COST OF COPIES.] Copies of the information
referred to in subdivision 1 must be furnished at the expense of
the limited liability company. In all other cases, the limited
liability company may charge the requesting party a reasonable
fee to cover the expenses of providing the copy.
Subd. 6. [COMPUTERIZED RECORDS.] The records maintained by
a limited liability company may utilize any information storage
technique, including, for example, punched holes, printed or
magnetized spots, or micro-images, even though that makes them
illegible visually, if the records can be converted accurately
and within a reasonable time, into a form that is legible
visually and whose contents are assembled by related subject
matter to permit convenient use by people in the normal course
of business. A limited liability company shall convert any of
the records referred to in subdivision 2 upon the request of a
person entitled to inspect them, and the expense of the
conversion shall be borne by the person who bears the expense of
copying pursuant to subdivision 5. A copy of the conversion is
admissible in evidence, and is acceptable for all other
purposes, to the same extent as the existing or original records
would be if they were legible visually.
Sec. 48. [322B.376] [FINANCIAL STATEMENTS.]
A limited liability company shall, upon written request by
a member, furnish annual financial statements, including at
least a balance sheet as of the end of each fiscal year and a
statement of income for the fiscal year, prepared on the basis
of accounting methods reasonable in the circumstances. The
financial statements may be consolidated statements of the
limited liability company and one or more of its subsidiaries.
In the case of statements audited by a public accountant, each
copy must be accompanied by a report setting forth the opinion
of the accountant on the statements; in other cases, each copy
must be accompanied by a statement of the treasurer or other
person in charge of the limited liability company's financial
records stating the reasonable belief of the person that the
financial statements were prepared in accordance with accounting
methods reasonable in the circumstances, describing the basis of
presentation, and describing any respects in which the financial
statements were not prepared on a basis consistent with those
prepared for the previous year.
Sec. 49. [322B.38] [EQUITABLE REMEDIES.]
If a limited liability company or a manager or governor of
the limited liability company violates a provision of this
chapter, a court in this state may, in an action brought by a
member of the limited liability company, grant any equitable
relief it considers just and reasonable in the circumstances and
award expenses, including attorneys' fees and disbursements, to
the member.
Sec. 50. [322B.383] [RIGHTS OF DISSENTING MEMBERS.]
Subdivision 1. [ACTIONS CREATING DISSENTERS' RIGHTS.]
Subject to a member control agreement under section 322B.37, a
member of a limited liability company may dissent from, and
obtain payment for the fair value of the member's membership
interests in the event of, any of the following limited
liability company actions:
(1) an amendment of the articles of organization that
materially and adversely affects the rights or preferences of
the membership interests of the dissenting member in that it:
(i) alters or abolishes a preferential right of the
membership interests;
(ii) creates, alters, or abolishes a right in respect of
the redemption of the membership interests, including a
provision respecting a sinking fund for the redemption or
repurchase of the membership interests;
(iii) alters or abolishes a preemptive right of the owner
of the membership interests to make a contribution;
(iv) excludes or limits the right of a member to vote on a
matter, or to cumulate votes, except as the right may be
excluded or limited through the acceptance of contributions or
the making of contribution agreements pertaining to membership
interests with similar or different voting rights;
(v) changes a member's right to resign or retire;
(vi) establishes or changes the conditions for or
consequences of expulsion;
(vii) changes the statement required under section
322B.115, subdivision 1, clause (5);
(viii) changes the statement required under section
322B.115, subdivision 1, clause (6); or
(2) a sale, lease, transfer, or other disposition of all or
substantially all of the property and assets of the limited
liability company not made in the usual or regular course of its
business, but not including a disposition in dissolution
described in section 322B.813, subdivision 4, or a disposition
pursuant to an order of a court, or a disposition for cash on
terms requiring that all or substantially all of the net
proceeds of disposition be distributed to the members in
accordance with their respective membership interests within one
year after the date of disposition;
(3) a plan of merger to which the limited liability company
is a party, except as provided in section 322B.873, subdivision
2, clause (1)(i) and subject to section 322B.873, subdivision 3;
(4) a plan of exchange to which the limited liability
company is a party as the organization whose ownership interests
will be acquired by the acquiring organization, if the
membership interests being acquired are entitled to be voted on
the plan;
(5) any other limited liability company action taken
pursuant to a member vote with respect to which the articles of
organization, the operating agreement, or a resolution approved
by the board of governors directs that dissenting members may
obtain payment for their membership interests; or
(6) a resolution of the board of governors under section
322B.873, subdivision 2, to implement a business continuation
agreement.
Subd. 2. [OTHER RIGHTS.] The members of a limited
liability company who have a right under this section to obtain
payment for their membership interests do not have a right at
law or in equity to have a limited liability company action
described in subdivision 1 set aside or rescinded, except when
the limited liability company action is fraudulent with regard
to the complaining member or the limited liability company.
Sec. 51. [322B.386] [PROCEDURES FOR ASSERTING DISSENTERS'
RIGHTS.]
Subdivision 1. [DEFINITIONS.] (a) For purposes of this
section, the terms defined in this subdivision have the meanings
given them.
(b) "Limited liability company" means a limited liability
company whose members have obtained rights to dissent under
section 322B.383, subdivision 1, and includes any successor by
merger.
(c) "Fair value of the membership interests" means the
value of the membership interests of a limited liability company
immediately before the effective date of the limited liability
company action referred to in section 322B.383, subdivision 1.
(d) "Interest" means interest beginning five days after the
effective date of the limited liability company action referred
to in section 322B.383, subdivision 1, up to and including the
date of payment, calculated at the rate provided in section
549.09 for interest on verdicts and judgments.
(e) "Member" includes a former member when dissenters'
rights exist because:
(1) the membership of that former member has terminated
causing dissolution; and
(2) the dissolved limited liability company has then either
entered into a winding up merger under section 322B.81,
subdivision 3, or has disposed of its assets pursuant to a
business continuation agreement under section 322B.873,
subdivision 2.
Subd. 2. [NOTICE OF ACTION.] If a limited liability
company calls a member meeting at which any action described in
section 322B.383, subdivision 1, is to be voted upon, the notice
of the meeting must inform each member of the right to dissent
and must include a copy of section 322B.383 and this section,
and if applicable, sections 322B.873, subdivisions 2 and 3, and
a brief description of the procedure to be followed under these
sections. For members who have assigned some or all of their
financial rights, the description must also include the
procedures under subdivision 9.
Subd. 3. [NOTICE OF DISSENT.] If the proposed action must
be approved by the members, a member who wishes to exercise
dissenters' rights must file with the limited liability company
before the vote on the proposed action a written notice of
intent to demand the fair value of the membership interests
owned by the member and must not vote the membership interests
in favor of the proposed action.
Subd. 4. [NOTICE OF PROCEDURE.] (a) After the proposed
action has been approved by the board of governors and, if
necessary, the members, the limited liability company shall send
to all members who have complied with subdivision 3 and to all
members entitled to dissent if no member vote was required, a
notice that contains:
(1) the address to which a demand for payment must be sent
in order to obtain payment and the date by which the demand must
be received;
(2) a form to be used to certify the date on which the
member acquired the membership interests and to demand payment;
and
(3) a copy of section 322B.383, this section and, if
applicable, section 322B.873, subdivisions 2 and 3, and a brief
description of the procedures to be followed under these
sections.
(b) In order to receive the fair value of the membership
interests, a dissenting member must demand payment within 30
days after the notice was given, but the dissenter retains all
other rights of a member until the proposed action takes effect.
Subd. 5. [PAYMENT.] (a) After the limited liability
company action takes effect, or after the limited liability
company receives a valid demand for payment, whichever is later,
the limited liability company shall remit to each dissenting
member who has complied with subdivisions 3 and 4 the amount the
limited liability company estimates to be the fair value of the
membership interests, plus interest, accompanied by:
(1) the limited liability company's closing balance sheet
and statement of income for a fiscal year ending not more than
16 months before the effective date of the limited liability
company action, together with the latest available interim
financial statements;
(2) an estimate by the limited liability company of the
fair value of the membership interests and a brief description
of the method used to reach the estimate; and
(3) a copy of section 322B.383, this section, and, if
applicable, section 322B.873, subdivisions 2 and 3, and a brief
description of the procedure to be followed in demanding
supplemental payment.
(b) The limited liability company may withhold the
remittance described in paragraph (a) from a person who was not
a member on the date the action dissented from was first
announced to the public. If the dissenter has complied with
subdivisions 3 and 4, the limited liability company shall
forward to the dissenter the materials described in paragraph
(a), a statement of the reason for withholding the remittance,
and an offer to pay to the dissenter the amount listed in the
materials if the dissenter agrees to accept that amount in full
satisfaction. The dissenter may decline the offer and demand
payment under subdivision 6. Failure to do so entitles the
dissenter only to the amount offered. If the dissenter makes
demand, subdivisions 7 and 8 apply.
Subd. 6. [SUPPLEMENTAL PAYMENT.] If a dissenter believes
that the amount remitted under subdivision 5 is less than the
fair value of the membership interests plus interest, the
dissenter may give written notice to the limited liability
company of the dissenter's own estimate of the fair value of the
membership interests, plus interest, within 30 days after the
limited liability company mails the remittance under subdivision
5, and demand payment of the difference. Otherwise, a dissenter
is entitled only to the amount remitted by the limited liability
company.
Subd. 7. [PETITION AND DETERMINATION.] If the limited
liability company receives a demand under subdivision 6, it
shall, within 60 days after receiving the demand, either pay to
the dissenter the amount demanded or agreed to by the dissenter
after discussion with the limited liability company or file in
court a petition requesting that the court determine the fair
value of the membership interests, plus interest. The petition
must be filed in the county in which the registered office of
the limited liability company is located, except that a
surviving foreign corporation that receives a demand relating to
the membership interests of a constituent limited liability
company shall file the petition in the county in this state in
which the last registered office of the constituent limited
liability company was located. The petition must name as
parties all dissenters who have demanded payment under
subdivision 6 and who have not reached agreement with the
limited liability company. The jurisdiction of the court is
plenary and exclusive. The court may appoint appraisers, with
powers and authorities the court considers proper, to receive
evidence on and recommend the amount of the fair value of the
membership interests. The court shall determine whether the
member or members in question have fully complied with the
requirements of this section, and shall determine the fair value
of the membership interests, taking into account any and all
factors the court finds relevant, computed by any method or
combination of methods that the court, in its discretion, sees
fit to use, whether or not used by the limited liability company
or by a dissenter. The fair value of the membership interests
as determined by the court is binding on all members, wherever
located. A dissenter is entitled to judgment for the amount by
which the fair value of the membership interests as determined
by the court, plus interest, exceeds the amount, if any,
remitted under subdivision 5, but is not liable to the limited
liability company for the amount, if any, by which the amount,
if any, remitted to the dissenter under subdivision 5 exceeds
the fair value of the membership interests as determined by the
court, plus interest.
Subd. 8. [COSTS, FEES AND EXPENSES.] (a) The court shall
determine the costs and expenses of a proceeding under
subdivision 7, including the reasonable expenses and
compensation of any appraisers appointed by the court, and shall
assess those costs and expenses against the limited liability
company, except that the court may assess part or all of those
costs and expenses against a dissenter whose action in demanding
payment under subdivision 6 is found to be arbitrary, vexatious,
or not in good faith.
(b) If the court finds that the limited liability company
has failed to comply substantially with this section, the court
may assess all fees and expenses of any experts or attorneys as
the court considers equitable. These fees and expenses may also
be assessed against a person who has acted arbitrarily,
vexatiously, or not in good faith in bringing the proceeding,
and may be awarded to a party injured by those actions.
(c) The court may award, in its discretion, fees and
expenses to an attorney for the dissenters out of the amount
awarded to the dissenters, if any.
Subd. 9. [PROCEDURES AS TO ASSIGNEES OF FINANCIAL RIGHTS.]
When an assignment of some or all of the financial rights of a
membership interest is in effect, then as to that membership
interest the provisions of subdivisions 1 to 8 must be followed
subject to the following revisions.
(a) All rights to be exercised and actions to be taken by a
member under subdivision 2 to 8 shall be taken by the member and
not by any assignee of the member's financial rights. As
between the limited liability company and the assignees, the
actions taken or omitted by the member bind the assignees.
(b) Instead of remitting a payment under subdivision 5,
paragraph (a), the limited liability company shall forward to
the dissenter member:
(i) the materials described in subdivision 5, paragraph
(a);
(ii) an offer to pay the amount listed in the materials,
with that amount to be allocated among and paid to the member
and the assignees of financial rights according to the terms of
the assignments reflected in the required records; and
(iii) a statement of that allocation.
(c) If the dissenter member accepts the amount of the offer
made under paragraph (b) but disputes the allocation, the
dissenter shall promptly so notify the limited liability company
and promptly after the notification bring an action to determine
the proper allocation. The suit must be filed in the county in
which the registered office of the limited liability company is
located, or in the case of a surviving foreign corporation that
is complying with this section following a merger or an exchange
with a constituent limited liability company the suit must be
filed in the county in this state in which the last registered
office of the constituent limited liability company was
located. The suit must name as parties the member, the limited
liability company and all assignees of the member's financial
rights. Upon being served with the action, the limited
liability company shall promptly pay into the court the amount
offered under paragraph (b) and shall then be dismissed from the
action.
(d) If the dissenter considers the amount offered under
paragraph (b) inadequate, the dissenter may decline the offer
and demand payment under subdivision 6. If the dissenter makes
demand, subdivisions 7 and 8 apply, with the court having
jurisdiction also to determine the correctness of the allocation.
(e) If the member fails to take action under either
paragraph (c) or (d), then:
(i) as to the limited liability company, both the member
and the assignees of the member's financial rights are limited
to the amount and allocation offered under paragraph (b); and
(ii) the limited liability company discharges its
obligation of payment by making payment according to the amount
and allocation offered under paragraph (b).
CONTRIBUTIONS
Sec. 52. [322B.40] [AUTHORIZATION, FORM AND ACCEPTANCE OF
CONTRIBUTIONS.]
Subdivision 1. [BOARD OF GOVERNORS MAY AUTHORIZE.] Subject
to any restrictions in the articles of organization and only
when authorized by the board of governors, a limited liability
company may accept contributions under subdivisions 2 and 3,
make contribution agreements under section 322B.42, and make
contribution allowance agreements under section 322B.43.
Subd. 2. [PERMISSIBLE FORMS.] A person may make a
contribution to a limited liability company:
(1) by paying money or transferring the ownership of an
interest in property to the limited liability company, or
rendering services to or for the benefit of the limited
liability company; or
(2) through a written obligation signed by the person to
pay money or transfer ownership of an interest in property to
the limited liability company or to perform services to or for
the benefit of the limited liability company.
Subd. 3. [ACCEPTANCE OF CONTRIBUTIONS.] No purported
contribution is to be treated or considered as a contribution,
unless:
(1) the board of governors accepts the contribution on
behalf of the limited liability company and in that acceptance
describes the contribution, including terms of future
performance, if any, and states the value being accorded to the
contribution; and
(2) the fact of contribution and the contribution's
accorded value are both reflected in the required records of the
limited liability company.
Subd. 4. [VALUATION.] The determinations of the board of
governors as to the amount or fair value or the fairness to the
limited liability company of the contribution accepted or to be
accepted by the limited liability company or the terms of
payment or performance, including under a contribution agreement
in section 322B.42, and a contribution allowance agreement in
section 322B.43, are presumed to be proper if they are made in
good faith and on the basis of accounting methods, or a fair
valuation or other method, reasonable in the circumstances.
Governors who are present and entitled to vote, and who,
intentionally or without reasonable investigation, fail to vote
against approving a consideration that is unfair to the limited
liability company, or overvalue property or services received or
to be received by the limited liability company as a
contribution, are jointly and severally liable to the limited
liability company for the benefit of the then members who did
not consent to and are damaged by the action, to the extent of
the damages of those members. A governor against whom a claim
is asserted pursuant to this subdivision, except in case of
knowing participation in a deliberate fraud, is entitled to
contribution on an equitable basis from other governors who are
liable under this subdivision.
Subd. 5. [TERMS OF MEMBERSHIP INTERESTS.] All the
membership interests of a limited liability company must:
(1) be of one class, without series, unless the articles of
organization establish, or authorize the board of governors to
establish, more than one class or series within classes;
(2) be ordinary membership interests entitled to vote as
provided in section 322B.356, and have equal rights and
preferences in all matters not otherwise provided for by the
board of governors unless and to the extent that the articles of
organization have fixed the relative rights and preferences of
different classes and series; and
(3) share profits and losses as provided in section
322B.323, and be entitled to distributions as provided in
sections 322B.50, 322B.51, and 322B.873, subdivision 1, clause
(3).
Subd. 6. [PROCEDURE FOR FIXING TERMS.] (a) Subject to any
restrictions in the articles of organization, the power granted
in subdivision 5 may be exercised by a resolution or resolutions
establishing a class or series, setting forth the designation of
the class or series, and fixing the relative rights and
preferences of the class or series. Any of the rights and
preferences of a class or series:
(1) may be made dependent upon facts ascertainable outside
the articles of organization, or outside the resolution or
resolutions establishing the class or series, if the manner in
which the facts operate upon the rights and preferences of the
class or series is clearly and expressly set forth in the
articles of organization or in the resolution or resolutions
establishing the class or series; and
(2) may incorporate by reference some or all of the terms
of any agreements, contracts, or other arrangements entered into
by the limited liability company in connection with the
establishment of the class or series if the limited liability
company retains at its principal executive office a copy of the
agreements, contracts, or other arrangements or the portions
incorporated by reference.
(b) A statement setting forth the name of the limited
liability company and the text of the resolution and certifying
the adoption of the resolution and the date of adoption must be
filed with the secretary of state before the acceptance of any
contributions for which the resolution creates rights or
preferences not set forth in the articles of organization.
However, where the members have received notice of the creation
of membership interests with rights or preferences not set forth
in the articles of organization before the acceptance of the
contributions with respect to the membership interests, the
statement may be filed any time within one year after the
acceptance of contributions. The resolution is effective when
the statement has been filed with the secretary of state; or, if
it is not required to be filed with the secretary of state
before the acceptance of contributions, on the date of its
adoption by the governors.
(c) A statement filed with the secretary of state in
accordance with paragraph (b) is not considered an amendment of
the articles of organization for purposes of sections 322B.155
and 322B.383.
Subd. 7. [SPECIFIC TERMS.] Without limiting the authority
granted in this section, a limited liability company may have
membership interests of a class or series:
(1) subject to the right of the limited liability company
to redeem any of those membership interests at the price fixed
for their redemption by the articles of organization or by the
board of governors;
(2) entitling the members to cumulative, partially
cumulative, or noncumulative distributions;
(3) having preference over any class or series of
membership interests for the payment of distributions of any or
all kinds;
(4) convertible into membership interests of any other
class or any series of the same or another class; or
(5) having full, partial, or no voting rights, except as
provided in section 322B.155.
Sec. 53. [322B.41] [RESTATEMENT OF VALUE OF PREVIOUS
CONTRIBUTIONS.]
Subdivision 1. [DEFINITION.] As used in this section, an
"old" contribution is a contribution reflected in the required
records of a limited liability company before the time the
limited liability company accepts a new contribution.
Subd. 2. [RESTATEMENT REQUIRED.] Whenever a limited
liability company accepts a new contribution, the board shall
restate, as required by this section, the value of all old
contributions.
Subd. 3. [RESTATEMENT AS TO THE PARTICULAR SERIES OR CLASS
TO WHICH THE NEW CONTRIBUTION PERTAINS.] Unless otherwise
provided in the articles of organization, this subdivision
states the method of restating the value of old contributions
that pertain to the same series or class to which the new
contribution pertains:
(1) state the value the limited liability company has
accorded to the new contribution under section 322B.40,
subdivision 3, clause (1);
(2) determine what percentage the value stated under clause
(1) will constitute, after the restatement required by this
subdivision, of the total value of all contributions that
pertain to the particular series or class to which the new
contribution pertains;
(3) divide the value stated under clause (1) by the
percentage determined under clause (2), yielding the total
value, after the restatement required by this subdivision, of
all contributions pertaining to the particular series or class;
(4) subtract the value stated under clause (1) from the
value determined under clause (3), yielding the total value,
after the restatement required by this subdivision, of all the
old contributions pertaining to the particular series or class;
(5) subtract the value, as reflected in the required
records before the restatement required by this subdivision, of
the old contributions from the value determined under clause
(4), yielding the value to be allocated among and added to the
old contributions pertaining to the particular series or class;
and
(6) allocate the value determined under clause (5)
proportionally among the old contributions pertaining to the
particular series or class, add the allocated values to those
old contributions, and change the required records accordingly.
The values determined under clause (5) and allocated and
added under clause (6) may be positive, negative, or zero.
Subd. 4. [RESTATEMENT METHOD FOR OTHER SERIES OR CLASSES.]
Unless otherwise provided in the articles of organization, this
subdivision states the method of restating the value of old
contributions that do not pertain to the same series or class to
which the new contribution pertains;
(1) determine the percentage by which the restatement under
subdivision 3 has changed the total contribution value reflected
in the required records for the series or class to which the new
contribution pertains; and
(2) as to each old contribution that does not pertain to
the same series or class to which the new contribution pertains,
change the value reflected in the required records by the
percentage determined under clause (1). The percentage
determined under clause (1) may be positive, negative, or zero.
Subd. 5. [NEW CONTRIBUTIONS MAY BE AGGREGATED.] If a
limited liability company accepts more than one contribution
pertaining to the same series or class at the same time, then
for the purpose of the restatement required by this section the
limited liability company may consider all those new
contributions as if they were a single contribution.
Sec. 54. [322B.42] [CONTRIBUTION AGREEMENTS.]
Subdivision 1. [SIGNED WRITING.] A contribution agreement,
whether made before or after the formation of the limited
liability company, is not enforceable against the would-be
contributor unless it is in writing and signed by the would-be
contributor.
Subd. 2. [IRREVOCABLE PERIOD.] A contribution agreement is
irrevocable for a period of six months, unless the contribution
agreement provides for, or unless all other would-be
contributors who are a party to a contribution consent to, an
earlier revocation.
Subd. 3. [CURRENT AND DEFERRED PAYMENT.] A contribution
agreement, whether made before or after the formation of a
limited liability company, must be paid or performed in full at
the time or times, or in the installments, if any, specified in
the contribution agreement. In the absence of a provision in
the contribution agreement specifying the time at which the
contribution is to be paid or performed, the contribution must
be paid or performed at the time or times determined by the
board of governors, but a call made by the board of governors
for payment or performance on contributions must be uniform for
all membership interests of the same class or for all membership
interests of the same series.
Subd. 4. [FAILURE TO PAY REMEDIES.] (a) Unless otherwise
provided in the contribution agreement, in the event of default
in the payment or performance of an installment or call when
due, the limited liability company may proceed to collect the
amount due in the same manner as a debt due the limited
liability company, or, if the amount due remains unpaid for a
period of 20 days after written notice of demand for payment has
been given to the delinquent would-be contributor, the board of
governors may declare a forfeiture of the contribution agreement
or cancel it in accordance with this subdivision. If a would-be
contributor does not make a required contribution of property or
services, the limited liability company shall require the
would-be contributor to contribute cash equal to that portion of
the value, as stated in the limited liability company required
records, of the contribution that has not been made.
(b) Upon forfeiture of a contribution agreement, the
membership interests that were subject to the contribution
agreement may be offered for sale by the limited liability
company for a price in money equaling or exceeding the sum of
the full balance owed by the delinquent would-be contributor
plus the expenses incidental to the sale. Any excess of net
proceeds realized by the limited liability company over the sum
of the amount owed by the delinquent would-be contributor plus
the expenses incidental to the sale must be paid to the
delinquent would-be contributor or to a legal representative.
The payment must not exceed the amount of contribution actually
made by the delinquent would-be contributor.
(c) If, within 20 days after the limited liability company
offers to sell the membership interests that were subject to the
defaulted contribution agreement, no prospective purchaser
offers to purchase the membership interests for a money price
sufficient to pay the sum of the full balance owed by the
delinquent would-be contributor plus the expenses incidental to
the sale, or if the limited liability company has refunded to
the would-be contributor or a legal representative a portion of
the contribution agreement price actually paid, the contribution
agreement may be canceled and the limited liability company may
retain the portion of the contribution agreement price actually
paid that does not exceed ten percent of the contribution
agreement price.
Subd. 5. [RESTRICTIONS ON ASSIGNMENT.] A would-be
contributor's rights under a contribution agreement may not be
assigned, in whole or in part, to a person who was not a member
at the time of the assignment, unless all the members approve
the assignment by unanimous written consent.
Sec. 55. [322B.43] [CONTRIBUTION ALLOWANCE AGREEMENTS.]
Subdivision 1. [AGREEMENTS PERMITTED.] Subject to any
restrictions in the articles of organization, a limited
liability company may enter into contribution allowance
agreements under the terms, provisions, and conditions fixed by
the board of governors.
Subd. 2. [WRITING REQUIRED AND TERMS TO BE STATED.] Any
contribution allowance agreement must be in writing, and the
writing must state in full, summarize, or incorporate by
reference all the agreement's terms, provisions, and conditions.
Subd. 3. [RESTRICTIONS ON ASSIGNMENT.] A would-be
contributor's rights under a contribution allowance agreement
may not be assigned in whole or in part to a person who was not
a member at the time of the assignment, unless all the members
approve the assignment by unanimous written consent.
DISTRIBUTIONS
Sec. 56. [322B.50] [SHARING OF DISTRIBUTIONS.]
Unless otherwise provided in the articles of organization
or by the board of governors under section 322B.40, subdivisions
5 and 6, distributions of cash or other assets of a limited
liability company, including distributions on termination of the
limited liability company, must be allocated in proportion to
the value of the contributions of the members reflected in the
required records.
Sec. 57. [322B.51] [INTERIM DISTRIBUTIONS.]
Except as provided in the articles of organization, a
member is entitled to receive distributions before the limited
liability company's termination only as specified in the
operating agreement or by the act of the board of governors.
Sec. 58. [322B.52] [DISTRIBUTION IN KIND.]
Except as provided in the articles of organization, a
member, regardless of the nature of the member's contribution,
has no right to demand and receive any distribution from a
limited liability company in any form other than cash. Except
as provided in the articles of organization, a member may not be
compelled to accept a distribution of any asset in kind from a
limited liability company to the extent that the percentage of
the asset distributed to the member exceeds a percentage of that
asset that is equal to the percentage in which the member shares
in distributions from the limited liability company.
Sec. 59. [322B.53] [STATUS AS A CREDITOR.]
At the time a member becomes entitled to receive a
distribution, the member has the status of, and is entitled to
all remedies available to, a creditor of the limited liability
company with respect to the distribution.
Sec. 60. [322B.54] [LIMITATIONS ON DISTRIBUTION.]
Subdivision 1. [WHEN DISTRIBUTIONS ARE PERMITTED.] The
board of governors may authorize and cause the limited liability
company to make a distribution only if the board of governors
determines, in accordance with subdivision 2, that the limited
liability company will be able to pay its debts in the ordinary
course of business after making the distribution and the board
of governors does not know before the distribution is made that
the determination was or has become erroneous, and the limited
liability company may make the distribution if it is able to pay
its debts in the ordinary course of business after making the
distribution. The effect of a distribution on the ability of
the limited liability company to pay its debts in the ordinary
course of business after making the distribution must be
measured in accordance with subdivision 3. The right of the
board of governors to authorize, and the limited liability
company to make, distributions may be prohibited, limited, or
restricted by the articles of organization or operating
agreement or an agreement.
Subd. 2. [DETERMINATION PRESUMED PROPER.] A determination
that the limited liability company will be able to pay its debts
in the ordinary course of business after the distribution is
presumed to be proper if the determination is made in compliance
with the standard of conduct provided in section 322B.663 on the
basis of financial information prepared in accordance with
accounting methods, or a fair valuation or other method,
reasonable in the circumstances. No liability under section
322B.663 or 322B.56 will accrue if the requirements of this
subdivision have been met.
Subd. 3. [EFFECT MEASURED.] (a) In the case of a
distribution made by a limited liability company in connection
with a redemption of its membership interests, the effect of the
distribution must be measured as of the date on which money or
other property is transferred, or indebtedness payable in
installments or otherwise is incurred, by the limited liability
company, or as of the date on which the member ceases to be a
member of the limited liability company, whichever is the
earliest.
(b) The effect of any other distribution must be measured
as of the date of its authorization if payment occurs 120 days
or less following the date of authorization, or as of the date
of payment if payment occurs more than 120 days following the
date of authorization.
(c) Indebtedness of a limited liability company incurred or
issued in a distribution in accordance with this section to a
member who as a result of the transaction is no longer a member
is on a parity with the indebtedness of the limited liability
company to its general unsecured creditors, except to the extent
subordinated, agreed to, or secured by a pledge of any assets of
the limited liability company or a related limited liability
company, or subject to any other agreement between the limited
liability company and the member.
(d) Sections 322B.54 to 322B.56 supersede all other
statutes of this state with respect to distributions, and the
provisions of sections 513.41 to 513.51 do not apply to
distributions made by a limited liability company governed by
this chapter.
Subd. 4. [RESTRICTIONS.] (a) A distribution may be made to
the owners of a class or series of membership interests only if:
(1) all amounts payable to the owners of membership
interests having a preference for the payment of that kind of
distribution, other than those owners who give notice to the
limited liability company of their agreement to waive their
rights to that payment, are paid; and
(2) the payment of the distribution does not reduce the
remaining net assets of the limited liability company below the
aggregate preferential amount payable in the event of
liquidation to the owners of membership interests having
preferential rights, unless the distribution is made to those
members in the order and to the extent of their respective
priorities or the owners of membership interests who do not
receive distributions in that order give notice to the limited
liability company of their agreement to waive their rights to
that distribution.
A determination that the payment of the distribution does
not reduce the remaining net assets of the limited liability
company below the aggregate preferential amount payable in the
event of termination to the owners of membership interests
having preferential rights is presumed to be proper if the
determination is made in compliance with the standard of conduct
provided in section 322B.663 on the basis of financial
information prepared in accordance with accounting methods, or a
fair valuation or other method, reasonable in the
circumstances. Liability under section 322B.663 or 322B.56 will
not arise if the requirements of this paragraph are met.
(b) If the money or property available for distribution is
insufficient to satisfy all preferences, the distributions shall
be made pro rata according to the order of priority of
preferences by classes and by series within those classes unless
those owners who do not receive distributions in that order give
notice to the limited liability company of their agreement to
waive their rights to that distribution.
Sec. 61. [322B.55] [LIABILITY OF MEMBERS FOR ILLEGAL
DISTRIBUTIONS.]
Subdivision 1. [LIABILITY.] A member who receives a
distribution made in violation of section 322B.54 is liable to
the limited liability company, its receiver or other person
winding up its affairs, or a governor under section 322B.56,
subdivision 2, but only to the extent that the distribution
received by the member exceeded the amount that properly could
have been paid under section 322B.54.
Subd. 2. [STATUTE OF LIMITATIONS.] An action must not be
commenced under this section more than two years from the date
of the distribution.
Sec. 62. [322B.56] [LIABILITY OF GOVERNORS FOR ILLEGAL
DISTRIBUTIONS.]
Subdivision 1. [LIABILITY.] In addition to any other
liabilities, a governor who is present at a meeting and fails to
vote against, or who consents in writing to, a distribution made
in violation of section 322B.54 or a restriction contained in
the articles of organization or operating agreement or an
agreement, and who fails to comply with the standard of conduct
provided in section 322B.663, is liable to the limited liability
company jointly and severally with all other governors so liable
and to other governors under subdivision 3, but only to the
extent that the distribution exceeded the amount that properly
could have been paid under section 322B.54.
Subd. 2. [CONTRIBUTION FROM MEMBERS.] A governor against
whom an action is brought under this section with respect to a
distribution may implead in that action all members who received
the distribution and may compel pro rata contribution from them
in that action to the extent provided in section 322B.55,
subdivision 1.
Subd. 3. [IMPLEADER AND CONTRIBUTION FROM GOVERNORS.] A
governor against whom an action is brought under this section
with respect to a distribution may implead in that action all
other governors who voted for or consented in writing to the
distribution and may compel pro rata contribution from them in
that action.
Subd. 4. [STATUTE OF LIMITATIONS.] An action must not be
commenced under this section more than two years from the date
of the distribution.
ORGANIZATION AND GOVERNANCE
Sec. 63. [322B.60] [ORGANIZATION.]
Subdivision 1. [ROLE OF ORGANIZERS.] If the first board of
governors is not named in the articles of organization, the
organizers may elect the first board of governors or may act as
governors with all of the powers, rights, duties, and
liabilities of governors, until governors are elected or until a
contribution is accepted, whichever occurs first.
Subd. 2. [MEETING.] After the issuance of the certificate
of organization, the organizers or the governors named in the
articles of organization shall either hold an organizational
meeting at the call of a majority of the organizers or of the
governors named in the articles, or take written action, for the
purposes of transacting business and taking actions necessary or
appropriate to complete the organization of the limited
liability company, including, without limitation, amending the
articles, electing governors, adopting an operating agreement,
electing managers, adopting banking resolutions, authorizing or
ratifying the purchase, lease, or other acquisition of suitable
space, furniture, furnishings, supplies, and materials,
approving a limited liability company seal, adopting a fiscal
year for the limited liability company, contracting to receive
and accept contributions, and making any appropriate tax
elections. If a meeting is held, the person or persons calling
the meeting shall give at least three days notice of the meeting
to each organizer or governor named, stating the date, time, and
place of the meeting.
Sec. 64. [322B.603] [OPERATING AGREEMENT.]
Subdivision 1. [GENERALLY.] A limited liability company
may, but need not, have an operating agreement. The operating
agreement may contain any provision relating to the management
of the business or the regulation of the affairs of the limited
liability company not inconsistent with law or the articles of
organization. An act of the board under subdivision 2 and of
the members under subdivision 3 will be considered part of the
operating agreement only if the act expressly states that it is
intended to constitute or revise the operating agreement.
Subd. 2. [POWER OF BOARD OF GOVERNORS.] An initial
operating agreement may be adopted pursuant to section 322B.60
by the organizers or by the first board of governors. Unless
reserved by the articles of organization to the members, the
power to adopt, amend, or repeal the operating agreement is
vested in the board of governors. The power of the board of
governors is subject to the power of the members, exercisable in
the manner provided in subdivision 3, to adopt, amend, or repeal
the operating agreement adopted, amended, or repealed by the
board of governors. After the adoption of the initial operating
agreement, the board of governors shall not adopt, amend, or
repeal an operating agreement provision fixing a quorum for
meetings of members, prescribing procedures for removing
governors or filling vacancies in the board of governors, or
fixing the number of governors or their classifications,
qualifications, or terms of office, but may adopt or amend an
operating agreement provision to increase the number of
governors.
Subd. 3. [POWER OF MEMBERS AND PROCEDURE.] If a member or
members owning three percent or more of the voting power of the
members entitled to vote propose a resolution for action by the
members to adopt, amend, or repeal operating agreement
provisions adopted, amended, or repealed by the board of
governors and the resolution sets forth the provision or
provisions proposed for adoption, amendment, or repeal, the
limitations and procedures for submitting, considering, and
adopting the resolution are the same as provided in section
322B.15, subdivisions 2 to 4, for amendment of the articles of
organization.
BOARD OF GOVERNORS
Sec. 65. [322B.606] [BOARD OF GOVERNORS.]
Subdivision 1. [BOARD OF GOVERNORS TO MANAGE.] The
business and affairs of a limited liability company is to be
managed by or under the direction of a board of governors,
subject to the provisions of subdivision 2 and section 322B.37.
The first board of governors may be named in the articles of
organization or elected by the organizers pursuant to section
322B.60 or by the members.
Subd. 2. [MEMBER MANAGEMENT.] The owners of the membership
interests entitled to vote for governors of the limited
liability company may, by unanimous affirmative vote, take any
action that this chapter requires or permits the board of
governors to take. As to an action taken by the members in that
manner:
(1) the governors have no duties, liabilities, or
responsibilities as governors under this chapter with respect to
or arising from the action;
(2) the members collectively and individually have all of
the duties, liabilities, and responsibilities of governors under
this chapter with respect to and arising from the action;
(3) if the action relates to a matter required or permitted
by this chapter or by any other law to be approved or adopted by
the board of governors, either with or without approval or
adoption by the members, the action is considered to have been
approved or adopted by the board of governors; and
(4) a requirement that an instrument filed with a
governmental agency contain a statement that the action has been
approved and adopted by the board of governors is satisfied by a
statement that the members have taken the action under this
subdivision.
Sec. 66. [322B.61] [NUMBER.]
The board of governors consists of one or more governors.
The number of governors must be fixed by or in the manner
provided in the articles of organization or the operating
agreement. The number of governors may be increased or, subject
to section 322B.636, decreased at any time by amendment to or in
the manner provided in the articles or operating agreement.
Sec. 67. [322B.613] [QUALIFICATIONS AND ELECTION.]
Governors must be natural persons. The method of election
and any additional qualifications for governors may be imposed
by or in the manner provided in the articles or operating
agreement.
Sec. 68. [322B.616] [TERMS.]
Unless fixed terms are provided for in the articles or
operating agreement, a governor serves for an indefinite term
that expires at the next regular meeting of the members. A
fixed term of a governor must not exceed five years. A governor
holds office for the term for which the governor was elected and
until a successor is elected and has qualified, or until the
earlier death, resignation, removal, or disqualification of the
governor.
Sec. 69. [322B.62] [ACTS NOT VOID OR VOIDABLE.]
The expiration of a governor's term with or without the
election of a qualified successor does not make prior or
subsequent acts of the governors or the board of governors void
or voidable.
Sec. 70. [322B.623] [COMPENSATION.]
Subject to any limitations in the articles or operating
agreement, the board of governors may fix the compensation of
governors.
Sec. 71. [322B.626] [CLASSIFICATION OF GOVERNORS.]
Governors may be divided into classes as provided in the
articles or operating agreement.
Sec. 72. [322B.63] [CUMULATIVE VOTING FOR GOVERNORS.]
Subdivision 1. [VOTING RIGHTS.] Unless the articles of
organization provide that there is no cumulative voting, and
except as provided in section 322B.636, subdivision 5, each
member entitled to vote for governors has the right to cumulate
voting power in the election of governors by giving written
notice of intent to cumulate voting power to any manager of the
limited liability company before the meeting, or to the
presiding manager at the meeting at which the election is to
occur at anytime before the election of governors at the
meeting, in which case:
(1) the presiding manager at the meeting shall announce,
before the election of governors, that members shall cumulate
their voting power; and
(2) each member shall cumulate that voting power either by
casting for one candidate the amount of voting power equal to
the number of governors to be elected multiplied by the voting
power represented by the membership interests owned by that
member, or by distributing all of that voting power on the same
principle among any number of candidates.
Subd. 2. [MODIFICATIONS.] No amendment to the articles or
operating agreement that has the effect of denying, limiting, or
modifying the right to cumulative voting for members provided in
this section may be adopted if the votes of a proportion of the
voting power sufficient to elect a governor at an election of
the entire board of governors under cumulative voting are cast
against the amendment.
Sec. 73. [322B.633] [RESIGNATION.]
A governor may resign at any time by giving written notice
to the limited liability company. The resignation is effective
without acceptance when the notice is given to the limited
liability company, unless a later effective time is specified in
the notice.
Sec. 74. [322B.636] [REMOVAL OF GOVERNORS.]
Subdivision 1. [MODIFICATION.] The provisions of this
section apply unless modified by the articles of organization or
the operating agreement.
Subd. 2. [REMOVAL OF GOVERNORS.] A governor may be removed
at any time, with or without cause, if:
(1) the governor was named by the board of governors to
fill a vacancy;
(2) the members have not elected governors in the interval
between the time of the appointment to fill a vacancy and the
time of the removal; and
(3) a majority of the remaining governors present
affirmatively vote to remove the governor.
Subd. 3. [REMOVAL BY MEMBERS.] Any one or all of the
governors may be removed at any time, with or without cause, by
the affirmative vote of the owners of the proportion of the
voting power of the membership interests of the classes or
series the governor represents sufficient to elect them, except
as provided in subdivision 4.
Subd. 4. [EXCEPTION FOR LIMITED LIABILITY COMPANIES WITH
CUMULATIVE VOTING.] In a limited liability company having
cumulative voting, unless the entire board of governors is
removed simultaneously, a governor is not removed from the board
of governors if there are cast against removal of the governor
the votes of a proportion of the voting power sufficient to
elect the governor at an election of the entire board of
governors under cumulative voting.
Subd. 5. [ELECTION OF REPLACEMENTS.] New governors may be
elected at a meeting at which governors are removed. If the
limited liability company allows cumulative voting and a member
notifies the presiding manager at any time before the election
of new governors of intent to cumulate the votes of the member,
the presiding manager shall announce before the election that
cumulative voting is in effect, and members shall cumulate their
votes as provided in section 322B.63, subdivision 1, clause (2).
Sec. 75. [322B.64] [VACANCIES.]
Unless different rules for filling vacancies are provided
for in the articles or operating agreement:
(1)(i) vacancies on the board of governors resulting from
the death, resignation, removal, or disqualification of a
governor may be filled by the affirmative vote of a majority of
the remaining governors, even though less than a quorum; and
(ii) vacancies on the board of governors resulting from
newly created governorships may be filled by the affirmative
vote of a majority of the governors serving at the time of the
increase; and
(2) each governor elected under this section to fill a
vacancy holds office until a qualified successor is elected by
the members at the next regular or special meeting of the
members.
Sec. 76. [322B.643] [BOARD OF GOVERNORS MEETINGS.]
Subdivision 1. [TIME AND PLACE.] Meetings of the board of
governors may be held from time to time as provided in the
articles of organization or operating agreement at any place
within or without the state that the board of governors may
select or by any means described in subdivision 2. If the board
of governors fails to select a place for a meeting, the meeting
must be held at the principal executive office, unless the
articles or operating agreement provide otherwise.
Subd. 2. [ELECTRONIC COMMUNICATIONS.] (a) A conference
among governors by any means of communication through which the
governors may simultaneously hear each other during the
conference constitutes a board of governors meeting, if the same
notice is given of the conference as would be required by
subdivision 3 for a meeting, and if the number of governors
participating in the conference would be sufficient to
constitute a quorum at a meeting. Participation in a meeting by
that means constitutes presence in person at the meeting.
(b) A governor may participate in a board of governors
meeting not described in paragraph (a) by any means of
communication through which the governor, other governors so
participating, and all governors physically present at the
meeting may simultaneously hear each other during the meeting.
Participation in a meeting by that means constitutes presence in
person at the meeting.
Subd. 3. [CALLING MEETINGS AND NOTICE.] Unless the
articles of organization or operating agreement provide for a
different time period, a governor may call a board meeting by
giving ten days notice to all governors of the date, time, and
place of the meeting. The notice need not state the purpose of
the meeting unless the articles or operating agreement require
it.
Subd. 4. [PREVIOUSLY SCHEDULED MEETINGS.] If the day or
date, time, and place of a board of governors meeting have been
provided in the articles or operating agreement, or announced at
a previous meeting of the board of governors, no notice is
required. Notice of an adjourned meeting need not be given
other than by announcement at the meeting at which adjournment
is taken.
Subd. 5. [WAIVER OF NOTICE.] A governor may waive notice
of a meeting of the board of governors. A waiver of notice by a
governor entitled to notice is effective whether given before,
at, or after the meeting, and whether given in writing, orally,
or by attendance. Attendance by a governor at a meeting is a
waiver of notice of that meeting, except where the governor
objects at the beginning of the meeting to the transaction of
business because the meeting is not lawfully called or convened
and does not participate in the meeting after the objection.
Sec. 77. [322B.646] [ABSENT GOVERNORS.]
If the articles of organization or operating agreement so
provide, a governor may give advance written consent or
opposition to a proposal to be acted on at a board of governors
meeting. If the governor is not present at the meeting, consent
or opposition to a proposal does not constitute presence for
purposes of determining the existence of a quorum, but consent
or opposition must be counted as a vote in favor of or against
the proposal and must be entered in the minutes or other record
of action at the meeting, if the proposal acted on at the
meeting is substantially the same or has substantially the same
effect as the proposal to which the governor has consented or
objected.
Sec. 78. [322B.65] [QUORUM.]
A majority, or a larger or smaller proportion or number
provided in the articles of organization or operating agreement,
of the governors currently holding office is a quorum for the
transaction of business. In the absence of a quorum, a majority
of the governors present may adjourn a meeting from time to time
until a quorum is present. If a quorum is present when a duly
called or held meeting is convened, the governors present may
continue to transact business until adjournment, even though the
withdrawal of a number of governors originally present leaves
less than the proportion or number otherwise required for a
quorum.
Sec. 79. [322B.653] [ACT OF THE BOARD OF GOVERNORS.]
The board of governors shall take action by the affirmative
vote of a majority of governors present at a duly held meeting,
except where this chapter or the articles require the
affirmative vote of a larger proportion or number. If the
articles require a larger proportion or number than is required
by this chapter for a particular action, the articles control.
Sec. 80. [322B.656] [ACTION WITHOUT A MEETING.]
Subdivision 1. [METHOD.] An action required or permitted
to be taken at a board of governors meeting may be taken by
written action signed by all of the governors. If the articles
so provide, any action, other than an action requiring member
approval, may be taken by written action signed by the number of
governors that would be required to take the same action at a
meeting of the board of governors at which all governors were
present.
Subd. 2. [EFFECTIVE TIME.] The written action is effective
when signed by the required number of governors, unless a
different effective time is provided in the written action.
Subd. 3. [NOTICE AND LIABILITY.] When written action is
permitted to be taken by less than all governors, all governors
must be notified immediately of its text and effective date.
Failure to provide the notice does not invalidate the written
action. A governor who does not sign or consent to the written
action has no liability for the action or actions taken by the
written action.
Sec. 81. [322B.66] [COMMITTEES.]
Subdivision 1. [GENERALLY.] A resolution approved by the
affirmative vote of a majority of the board of governors may
establish committees having the authority of the board in the
management of the business of the limited liability company only
to the extent provided in the resolution. Committees may
include a special litigation committee consisting of one or more
independent governors or other independent persons to consider
legal rights or remedies of the limited liability company and
whether those rights and remedies should be pursued. Committees
other than special litigation committees are subject at all
times to the direction and control of the board of governors.
Subd. 2. [MEMBERSHIP.] Committee members must be natural
persons. Unless the articles or operating agreement provide for
a different membership or manner of appointment, a committee
consists of one or more persons, who need not be governors,
appointed by affirmative vote of a majority of the governors
present.
Subd. 3. [PROCEDURE.] Sections 322B.643 to 322B.656 apply
to committees and members of committees to the same extent as
those sections apply to the board of governors and governors.
Subd. 4. [MINUTES.] Minutes, if any, of committee meetings
must be made available upon request to members of the committee
and to any governor.
Subd. 5. [STANDARD OF CONDUCT.] The establishment of,
delegation of authority to, and action by a committee does not
alone constitute compliance by a governor with the standard of
conduct set forth in section 322B.663.
Subd. 6. [COMMITTEE MEMBERS CONSIDERED GOVERNORS.]
Committee members are considered to be governors for purposes of
sections 322B.663, 322B.666, and 322B.699.
Sec. 82. [322B.663] [STANDARD OF CONDUCT.]
Subdivision 1. [STANDARD AND LIABILITY.] A governor shall
discharge the duties of the position of governor in good faith,
in a manner the governor reasonably believes to be in the best
interests of the limited liability company, and with the care an
ordinarily prudent person in a like position would exercise
under similar circumstances. A person who so performs those
duties is not liable by reason of being or having been a
governor of the limited liability company.
Subd. 2. [RELIANCE.] (a) A governor is entitled to rely on
information, opinions, reports, or statements, including
financial statements and other financial data, in each case
prepared or presented by:
(1) one or more managers or employees of the limited
liability company whom the governor reasonably believes to be
reliable and competent in the matters presented;
(2) counsel, public accountants, or other persons as to
matters that the governor reasonably believes are within the
person's professional or expert competence; or
(3) a committee of the board of governors upon which the
governor does not serve, duly established in accordance with
section 322B.66, as to matters within its designated authority,
if the governor reasonably believes the committee to merit
confidence.
(b) Paragraph (a) does not apply to a governor who has
knowledge concerning the matter in question that makes the
reliance otherwise permitted by paragraph (a) unwarranted.
Subd. 3. [PRESUMPTION OF ASSENT AND DISSENT.] A governor
who is present at a meeting of the board of governors when an
action is approved by the affirmative vote of a majority of the
governors present is presumed to have assented to the action
approved, unless the governor:
(1) objects at the beginning of the meeting to the
transaction of business because the meeting is not lawfully
called or convened and does not participate in the meeting after
the objection, in which case the governor is not considered to
be present at the meeting for any purpose of this chapter;
(2) votes against the action at the meeting; or
(3) is prohibited by section 322B.666 from voting on the
action.
Subd. 4. [ELIMINATION OR LIMITATION OF LIABILITY.] A
governor's personal liability to the limited liability company
or its members for monetary damages for breach of fiduciary duty
as a governor may be eliminated or limited in the articles of
organization. The articles may not eliminate or limit the
liability of a governor:
(1) for any breach of the governor's duty of loyalty to the
limited liability company or its members;
(2) for acts or omissions not in good faith or that involve
intentional misconduct or a knowing violation of law;
(3) under section 322B.56 or 80A.23;
(4) for any transaction from which the governor derived an
improper personal benefit; or
(5) for any act or omission occurring before the date when
the provision in the articles of organization eliminating or
limiting liability becomes effective.
Subd. 5. [CONSIDERATIONS.] In discharging the duties of
the position of governor, a governor may, in considering the
best interests of the limited liability company, consider the
interests of the limited liability company's employees,
customers, suppliers, and creditors, the economy of the state
and nation, community and societal considerations, and the
long-term as well as short-term interests of the limited
liability company and its members including the possibility that
these interests may be best served by the continued independence
of the limited liability company.
Sec. 83. [322B.666] [GOVERNOR CONFLICTS OF INTEREST.]
Subdivision 1. [CONFLICT AND PROCEDURE WHEN CONFLICT
ARISES.] A contract or other transaction between a limited
liability company and one or more of its governors, or between a
limited liability company and an organization in or of which one
or more of its governors are governors, directors, managers,
officers, or legal representatives or have a material financial
interest, is not void or voidable because the governor or
governors or the other organizations are parties or because the
governor or governors are present at the meeting of the members
or the board of governors or a committee at which the contract
or transaction is authorized, approved, or ratified, if:
(1) the contract or transaction was, and the person
asserting the validity of the contract or transaction sustains
the burden of establishing that the contract or transaction was,
fair and reasonable as to the limited liability company at the
time it was authorized, approved, or ratified;
(2) the material facts as to the contract or transaction
and as to the manager's or managers' interest are fully
disclosed or known to the members and the contract or
transaction is approved in good faith by (i) the owners of
two-thirds of the voting power of the membership interests
entitled to vote that are owned by persons other than the
interested governor or governors, or (ii) the unanimous
affirmative vote of all members, whether or not entitled to
vote;
(3) the material facts as to the contract or transaction
and as to the governor's or governors' interest are fully
disclosed or known to the board of governors or a committee, and
the board of governors or committee authorizes, approves, or
ratifies the contract or transaction in good faith by a majority
of the board of governors or committee, but the interested
governor or governors are not counted in determining the
presence of a quorum and must not vote; or
(4) the contract or transaction is a distribution described
in section 322B.54, subdivision 1, or a merger or exchange
described in section 322B.70, subdivision 1 or 2.
Subd. 2. [MATERIAL FINANCIAL INTEREST.] For purposes of
this section:
(1) a governor does not have a material financial interest
in a resolution fixing the compensation of the governor or
fixing the compensation of another governor as a governor,
manager, employee, or agent of the limited liability company,
even though the first governor is also receiving compensation
from the limited liability company; and
(2) a governor has a material financial interest in each
organization in which the governor, or the spouse, parents,
children and spouses of children, brothers and sisters and
spouses of brothers and sisters of the governor, or any
combination of them have a material financial interest.
MANAGERS
Sec. 84. [322B.67] [MANAGERS REQUIRED.]
A limited liability company must have one or more natural
persons exercising the functions of the offices, however
designated, of chief manager and treasurer.
Sec. 85. [322B.673] [DUTIES OF REQUIRED MANAGERS.]
Subdivision 1. [PRESUMPTION AND MODIFICATION.] Unless the
articles of organization or the operating agreement provide
otherwise, the chief manager and treasurer have the duties
specified in this section.
Subd. 2. [CHIEF MANAGER.] The chief manager shall:
(1) have general active management of the business of the
limited liability company;
(2) when present, preside at all meetings of the board of
governors and of the members;
(3) see that all orders and resolutions of the board of
governors are carried into effect;
(4) sign and deliver in the name of the limited liability
company any deeds, mortgages, bonds, contracts or other
instruments pertaining to the business of the limited liability
company, except in cases in which the authority to sign and
deliver is required by law to be exercised by another person or
is expressly delegated by the articles or operating agreement or
the board of governors to some other manager or agent of the
limited liability company;
(5) maintain records of and, whenever necessary, certify
all proceedings of the board of governors and the members; and
(6) perform other duties prescribed by the board of
governors.
Subd. 3. [TREASURER.] The treasurer shall:
(1) keep accurate financial records for the limited
liability company;
(2) deposit all money, drafts, and checks in the name of
and to the credit of the limited liability company in the banks
and depositories designated by the board of governors;
(3) endorse for deposit all notes, checks, and drafts
received by the limited liability company as ordered by the
board of governors, making proper vouchers for them;
(4) disburse limited liability company funds and issue
checks and drafts in the name of the limited liability company,
as ordered by the board of governors;
(5) give to the chief manager and the board of governors,
whenever requested, an account of all transactions by the
treasurer and of the financial condition of the limited
liability company; and
(6) perform other duties prescribed by the board of
governors or by the chief manager.
Sec. 86. [322B.676] [OTHER MANAGERS.]
The board of governors may elect or appoint, in a manner
set forth in the articles of organization or operating agreement
or in a resolution approved by the affirmative vote of a
majority of the governors present, any other managers or agents
the board of governors considers necessary for the operation and
management of the limited liability company. Each of these
managers and agents has the powers, rights, duties,
responsibilities, and terms in office provided for in the
articles or operating agreement or determined by the board of
governors.
Sec. 87. [322B.679] [MULTIPLE MANAGERIAL POSITIONS.]
Any number of managerial positions or functions of those
positions may be held or exercised by the same person. If a
document must be signed by persons holding different positions
or functions and a person holds or exercises more than one of
those positions or functions, that person may sign the document
in more than one capacity, but only if the document indicates
each capacity in which the person signs.
Sec. 88. [322B.68] [MANAGERS CONSIDERED ELECTED.]
In the absence of an election or appointment of managers by
the board of governors, the person or persons exercising the
principal functions of the chief manager or the treasurer are
considered to have been elected to those offices, except for the
purpose of determining the location of the principal executive
office, which in that case is the registered office of the
limited liability company.
Sec. 89. [322B.683] [CONTRACT RIGHTS.]
The election or appointment of a person as a manager or
agent does not, of itself, create contract rights. A limited
liability company may enter into a contract with a manager or
agent for a period of time if, in the board of governors'
judgment, the contract would be in the best interests of the
limited liability company. The fact that the contract may be
for a term longer than the terms of the governors who authorized
or approved the contract does not make the contract void or
voidable.
Sec. 90. [322B.686] [RESIGNATION, REMOVAL AND VACANCY.]
Subdivision 1. [RESIGNATION.] A manager may resign at any
time by giving written notice to the limited liability company.
The resignation is effective without acceptance when the notice
is given to the limited liability company, unless a later
effective date is specified in the notice.
Subd. 2. [REMOVAL.] A manager may be removed at any time,
with or without cause, by a resolution approved by the
affirmative vote of a majority of the governors present, subject
to the provisions of a member control agreement. The removal is
without prejudice to any contractual rights of the manager.
Subd. 3. [VACANCY.] A vacancy in an office because of
death, resignation, removal, disqualification, or other cause
may, or in the case of a vacancy in the office of chief manager
or treasurer must, be filled for the unexpired portion of the
term in the manner provided in the articles or operating
agreement, or determined by the board of governors, or pursuant
to section 322B.68.
Sec. 91. [322B.689] [DELEGATION.]
Unless prohibited by the articles or operating agreement or
by a resolution approved by the affirmative vote of a majority
of the governors present, a manager elected or appointed by the
board of governors may, without the approval of the board,
delegate some or all of the duties and powers of an office to
other persons. A manager who delegates the duties or powers of
an office remains subject to the standard of conduct for a
manager with respect to the discharge of all duties and powers
so delegated.
Sec. 92. [322B.69] [STANDARD OF CONDUCT.]
A manager shall discharge the duties of an office in good
faith, in a manner the manager reasonably believes to be in the
best interests of the limited liability company, and with the
care an ordinarily prudent person in a like position would
exercise under similar circumstances. A person exercising the
principal functions of an office or to whom some or all of the
duties and powers of an office are delegated pursuant to section
322B.689 is considered a manager for purposes of this section
and sections 322B.38 and 322B.699.
LOANS AND OBLIGATIONS
Sec. 93. [322B.693] [LOANS, GUARANTEES AND SURETYSHIP.]
Subdivision 1. [PREREQUISITES.] A limited liability
company may lend money to, guarantee an obligation of, become a
surety for, or otherwise financially assist a person, if the
transaction, or a class of transactions to which the transaction
belongs, is approved by the affirmative vote of a majority of
the governors present and:
(1) is in the usual and regular course of business of the
limited liability company;
(2) is with, or for the benefit of, a related limited
liability company, an organization in which the limited
liability company has a financial interest, an organization with
which the limited liability company has a business relationship,
or an organization to which the limited liability company has
the power to make donations;
(3) is with, or for the benefit of, a manager or other
employee of the limited liability company or a subsidiary,
including a manager or employee who is a governor of the limited
liability company or a subsidiary, and may reasonably be
expected, in the judgment of the board of governors, to benefit
the limited liability company; or
(4) has been approved by the owners of two-thirds of the
voting power of persons other than the interested person or
persons, or the unanimous affirmative vote of all members,
whether or not ordinarily entitled to vote.
Subd. 2. [INTEREST AND SECURITY.] A loan, guaranty, surety
contract, or other financial assistance under subdivision 1 may
be with or without interest and may be unsecured or may be
secured in any manner, including, without limitation, a grant of
a security interest in a member's financial rights in the
limited liability company.
Subd. 3. [BANKING AUTHORITY NOT GRANTED.] This section
does not grant any authority to act as a bank or to carry on the
business of banking.
Sec. 94. [322B.696] [ADVANCES.]
A limited liability company may, without a vote of the
governors or its members, advance money to its governors,
managers, or employees to cover expenses that can reasonably be
anticipated to be incurred by them in the performance of their
duties and for which they would be entitled to reimbursement in
the absence of an advance.
Sec. 95. [322B.699] [INDEMNIFICATION.]
Subdivision 1. [DEFINITIONS.] (a) For purposes of this
section, the terms defined in this subdivision have the meanings
given them.
(b) "Limited liability company" includes a domestic or
foreign limited liability company that was the predecessor of
the limited liability company referred to in this section in a
merger or other transaction in which the predecessor's existence
ceased upon consummation of the transaction.
(c) "Official capacity" means (1) with respect to a
governor, the position of governor in a limited liability
company, (2) with respect to a person other than a governor, the
elective or appointive office or position held by a manager,
member of a committee of the board of governors, or the
employment relationship undertaken by an employee of the limited
liability company, and (3) with respect to a governor, manager,
or employee of the limited liability company who, while a
governor, manager, or employee of the limited liability company,
is or was serving at the request of the limited liability
company or whose duties in that position involve or involved
service as a governor, director, manager, officer, partner,
trustee, employee, or agent of another organization or employee
benefit plan, the position of that person as a governor,
director, manager, officer, partner, trustee, employee, or
agent, as the case may be, of the other organization or employee
benefit plan.
(d) "Proceeding" means a threatened, pending, or completed
civil, criminal, administrative, arbitration, or investigative
proceeding, including a proceeding by or in the right of the
limited liability company.
(e) "Special legal counsel" means counsel who has not
represented the limited liability company or a related limited
liability company, or a governor, manager, member of a committee
of the board of governors, or employee, whose indemnification is
in issue.
Subd. 2. [INDEMNIFICATION.] (a) Subject to the provisions
of subdivision 4, a limited liability company shall indemnify a
person made or threatened to be made a party to a proceeding by
reason of the former or present official capacity of the person
against judgments, penalties, fines, including, without
limitation, excise taxes assessed against the person with
respect to an employee benefit plan, settlements, and reasonable
expenses, including attorney's fees and disbursements, incurred
by the person in connection with the proceeding, if, with
respect to the acts or omissions of the person complained of in
the proceeding, the person:
(1) has not been indemnified by another organization or
employee benefit plan for the same judgments, penalties, fines,
including, without limitation, excise taxes assessed against the
person with respect to an employee benefit plan, settlements,
and reasonable expenses, including attorney's fees and
disbursements, incurred by the person in connection with the
proceeding with respect to the same acts or omissions;
(2) acted in good faith;
(3) received no improper personal benefit and section
322B.666, if applicable, has been satisfied;
(4) in the case of a criminal proceeding, had no reasonable
cause to believe the conduct was unlawful; and
(5) in the case of acts or omissions occurring in the
official capacity described in subdivision 1, paragraph (c),
clause (1) or (2), reasonably believed that the conduct was in
the best interests of the limited liability company, or in the
case of acts or omissions occurring in the official capacity
described in subdivision 1, paragraph (c), clause (3),
reasonably believed that the conduct was not opposed to the best
interests of the limited liability company. If the person's
acts or omissions complained of in the proceeding relate to
conduct as a director, officer, trustee, employee, or agent of
an employee benefit plan, the conduct is not considered to be
opposed to the best interests of the limited liability company
if the person reasonably believed that the conduct was in the
best interests of the participants or beneficiaries of the
employee benefit plan.
(b) The termination of a proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo contendere or its
equivalent does not, of itself, establish that the person did
not meet the criteria set forth in this subdivision.
Subd. 3. [ADVANCES.] Subject to the provisions of
subdivision 4, if a person is made or threatened to be made a
party to a proceeding, the person is entitled, upon written
request to the limited liability company, to payment or
reimbursement by the limited liability company of reasonable
expenses, including attorney's fees and disbursements, incurred
by the person in advance of the final disposition of the
proceeding:
(1) upon receipt by the limited liability company of a
written affirmation by the person of a good faith belief that
the criteria for indemnification set forth in subdivision 2 have
been satisfied and a written undertaking by the person to repay
all amounts so paid or reimbursed by the limited liability
company, if it is ultimately determined that the criteria for
indemnification have not been satisfied; and
(2) after a determination that the facts then known to
those making the determination would not preclude
indemnification under this section.
The written undertaking required by clause (1) is an
unlimited general obligation of the person making it, but need
not be secured and shall be accepted without reference to
financial ability to make the repayment.
Subd. 4. [PROHIBITION OR LIMIT ON INDEMNIFICATION OR
ADVANCES.] The articles of organization or operating agreement
either may prohibit indemnification or advances of expenses
otherwise required by this section or may impose conditions on
indemnification or advances of expenses in addition to the
conditions contained in subdivisions 2 and 3 including, without
limitation, monetary limits on indemnification or advances of
expenses, if the conditions apply equally to all persons or to
all persons within a given class. A prohibition or limit on
indemnification or advances may not apply to or affect the right
of a person to indemnification or advances of expenses with
respect to any acts or omissions of the person occurring before
the effective date of a provision in the articles of
organization or the date of adoption of a provision in the
operating agreement establishing the prohibition or limit on
indemnification or advances.
Subd. 5. [REIMBURSEMENT TO WITNESSES.] This section does
not require, or limit the ability of, a limited liability
company to reimburse expenses, including attorney's fees and
disbursements, incurred by a person in connection with an
appearance as a witness in a proceeding at a time when the
person has not been made or threatened to be made a party to a
proceeding.
Subd. 6. [DETERMINATION OF ELIGIBILITY.] (a) All
determinations whether indemnification of a person is required
because the criteria set forth in subdivision 2 have been
satisfied and whether a person is entitled to payment or
reimbursement of expenses in advance of the final disposition of
a proceeding as provided in subdivision 3 must be made:
(1) by the board of governors by a majority of a quorum.
Governors who are, at the time, parties to the proceeding are
not counted for determining either a majority or the presence of
a quorum;
(2) if a quorum under clause (1) cannot be obtained, by a
majority of a committee of the board of governors, consisting
solely of two or more governors not at the time parties to the
proceeding, duly designated to act in the matter by a majority
of the full board of governors including governors who are
parties;
(3) if a determination is not made under clause (1) or (2),
by special legal counsel, selected either by a majority of the
board of governors or a committee by vote pursuant to clause (1)
or (2) or, if the requisite quorum of the full board of
governors cannot be obtained and the committee cannot be
established, by a majority of the full board of governors
including governors who are parties;
(4) if a determination is not made under clauses (1) to
(3), by the members, excluding the votes of membership interests
held by parties to the proceeding; or
(5) if an adverse determination is made under clauses (1)
to (4) or under paragraph (b), or if no determination is made
under clauses (1) to (4) or under paragraph (b) within 60 days
after the termination of a proceeding or after a request for an
advance of expenses, as the case may be, by a court in this
state, which may be the same court in which the proceeding
involving the person's liability took place, upon application of
the person and any notice the court requires.
(b) With respect to a person who is not, and was not at the
time of the acts or omissions complained of in the proceedings,
a governor, manager, or person possessing, directly or
indirectly, the power to direct or cause the direction of the
management or policies of the limited liability company, the
determination whether indemnification of this person is required
because the criteria set forth in subdivision 2 have been
satisfied and whether this person is entitled to payment or
reimbursement of expenses in advance of the final disposition of
a proceeding as provided in subdivision 3 may be made by an
annually appointed committee of the board of governors, having
at least one member who is a governor. The committee shall
report at least annually to the board of governors concerning
its actions.
Subd. 7. [INSURANCE.] A limited liability company may
purchase and maintain insurance on behalf of a person in that
person's official capacity against any liability asserted
against and incurred by the person in or arising from that
capacity, whether or not the limited liability company would
have been required to indemnify the person against the liability
under the provisions of this section.
Subd. 8. [DISCLOSURE.] A limited liability company that
indemnifies or advances expenses to a person in accordance with
this section in connection with a proceeding by or on behalf of
the limited liability company shall report to the members in
writing the amount of the indemnification or advance and to whom
and on whose behalf it was paid not later than the next meeting
of members.
Subd. 9. [INDEMNIFICATION OF OTHER PERSONS.] Nothing in
this section must be construed to limit the power of the limited
liability company to indemnify other persons by contract or
otherwise.
MERGER, EXCHANGE, TRANSFER
Sec. 96. [322B.70] [MERGER, EXCHANGE, TRANSFER.]
Subdivision 1. [MERGER.] With or without a business
purpose, a limited liability company may merge:
(1) with another limited liability company or a domestic
corporation pursuant to a plan of merger approved in the manner
provided in sections 322B.71 to 322B.75; and
(2) with any foreign corporation or foreign limited
liability company pursuant to a plan of merger approved in the
manner provided in section 322B.76.
Subd. 2. [EXCHANGE.] (a) A limited liability company may
acquire all of the ownership interests of one or more classes or
series of another limited liability company or domestic
corporation pursuant to a plan of exchange approved in the
manner provided in sections 322B.71 to 322B.75.
(b) A domestic corporation may acquire all of the ownership
interests of one or more classes or series of a limited
liability company pursuant to a plan of exchange approved in the
manner provided in sections 322B.71 to 322B.75.
(c) A foreign corporation or foreign limited liability
company may acquire all of the ownership interests of one or
more classes or series of a limited liability company pursuant
to a plan of exchange approved in the manner provided in section
322B.76.
Subd. 3. [TRANSFER.] A limited liability company may sell,
lease, transfer, or otherwise dispose of all or substantially
all of its property and assets in the manner provided in section
322B.77.
Subd. 4. [PERMITTED TRANSACTIONS.] A limited liability
company may participate in a merger or exchange only as
permitted by this section.
Sec. 97. [322B.71] [PLAN OF MERGER OR EXCHANGE.]
Subdivision 1. [CONTENTS OF PLAN.] A plan of merger or
exchange must contain:
(1) the name of the limited liability company and each
other constituent organization proposing to merge or participate
in an exchange, and:
(i) in the case of a merger, the name of the surviving
organization, which may be the limited liability company or the
other constituent organization; or
(ii) in the case of an exchange, the name of the acquiring
organization;
(2) the terms and conditions of the proposed merger or
exchange;
(3)(i) in the case of a merger, the manner and basis of
converting the ownership interests of the constituent
organizations into securities of the surviving organization or
of any other organization, or, in whole or in part, into money
or other property; or
(ii) in the case of an exchange, the manner and basis of
exchanging the ownership interests to be acquired for securities
of the acquiring organization or any other organization or, in
whole or part, for money or other property;
(4) in the case of a merger, a statement of any amendments
to the articles of organization or articles of incorporation, as
the case may be, of the surviving organization proposed as part
of the merger; and
(5) any other provisions with respect to the proposed
merger or exchange that are considered necessary or desirable.
Subd. 2. [OTHER AGREEMENTS.] The procedure authorized by
this section does not limit the power of a limited liability
company to acquire all or part of the ownership interests of one
or more classes or series of any other organization through a
negotiated agreement with the owners or otherwise.
Sec. 98. [322B.72] [PLAN APPROVAL.]
Subdivision 1. [GOVERNING BOARD APPROVAL AND NOTICE TO
OWNERS.] A resolution containing the plan of merger or exchange
must be approved by the affirmative vote of a majority of the
board members present at a meeting of the governing board of
each constituent organization and must then be submitted at a
regular or a special meeting to the owners of:
(1) each constituent organization, in the case of a plan of
merger; and
(2) the organization whose ownership interests will be
acquired by the acquiring organization in the exchange, in the
case of a plan of exchange.
If owners owning any class or series of stock of an organization
are entitled to vote on the plan of merger or exchange pursuant
to this section, written notice must be given to every owner of
that organization, whether or not entitled to vote at the
meeting, not less than 14 days nor more than 60 days before the
meeting, in the manner provided in section 302A.435 for notice
of meetings of shareholders in the case of a domestic
corporation and in the manner provided in section 322B.34 for
notice of meetings of members in the case of a limited liability
company. The written notice must state that a purpose of the
meeting is to consider the proposed plan of merger or exchange.
A copy or short description of the plan of merger or exchange
must be included in or enclosed with the notice.
Subd. 2. [APPROVAL BY OWNERS.] (a) At the meeting a vote
of the owners must be taken on the proposed plan. The plan of
merger or exchange is adopted when approved by the affirmative
vote of the owners of a majority of the voting power of all
ownership interests entitled to vote. Except as provided in
paragraph (b), a class or series of ownership interests of the
organization is entitled to vote as a class or series if any
provision of the plan would, if contained in a proposed
amendment to the articles of organization or articles of
incorporation, as the case may be, entitle the class or series
of ownership interests to vote as a class or series and, in the
case of an exchange, if the class or series is included in the
exchange.
(b) A class or series of ownership interests of the
organization is not entitled to vote as a class or series solely
because the plan of merger or exchange effects a cancellation of
the ownership interests of the class or series if the plan of
merger or exchange effects a cancellation of all ownership
interests of the organization of all classes and series that are
existing immediately before the merger or exchange and owners of
ownership interests of that class or series are entitled to
obtain payment for the fair value of their shares under section
322B.383 or 302A.471, as the case may be, in the event of the
merger or exchange.
Subd. 3. [WHEN APPROVAL BY SHAREHOLDERS OF A SURVIVING
CORPORATION IS NOT REQUIRED.] Notwithstanding subdivisions 1 and
2, submission of a plan of merger to a vote at a meeting of
shareholders of a surviving corporation is not required if:
(1) the articles of the corporation will not be amended in
the transaction;
(2) each holder of shares of the corporation that were
outstanding immediately before the effective date of the
transaction will hold the same number of shares with identical
rights immediately after that date;
(3) the number of shares of the corporation entitled to
vote immediately after the merger, plus the number of shares of
the corporation entitled to vote issuable on conversion of
securities other than shares or on the exercise of rights to
purchase securities issued by virtue of the terms of the
transaction, will not exceed by more than 20 percent, the number
of shares of the corporation entitled to vote immediately before
the transaction; and
(4) the number of participating shares of the corporation
immediately after the merger, plus the number of participating
shares of the corporation issuable on conversion, or on the
exercise of rights to purchase, securities issued in the
transaction, will not exceed by more than 20 percent, the number
of participating shares of the corporation immediately before
the transaction. "Participating shares" are outstanding shares
of the corporation that entitle their holders to participate
without limitation in distributions by the corporation.
Sec. 99. [322B.73] [ARTICLES OF MERGER OR EXCHANGE AND
CERTIFICATE.]
Subdivision 1. [CONTENTS OF ARTICLES OF MERGER OR
EXCHANGE.] Upon receiving the approval required by section
322B.72, articles of merger or exchange must be prepared that
contain the plan of merger or exchange, and a statement that the
plan has been approved by each constituent organization pursuant
to chapter 322B.
Subd. 2. [ARTICLES SIGNED AND FILED.] The articles of
merger or exchange must be signed on behalf of each constituent
organization and filed with the secretary of state.
Subd. 3. [CERTIFICATE OF MERGER OR EXCHANGE.] The
secretary of state shall issue a certificate of merger to the
surviving organization, or its legal representative, and a
certificate of exchange to the acquiring organization, or its
legal representative.
Sec. 100. [322B.74] [ABANDONMENT.]
Subdivision 1. [BY OWNERS OR PLAN.] After a plan of merger
or exchange has been approved by the owners entitled to vote on
the approval of the plan as provided in section 322B.72, and
before the effective date of the plan, it may be abandoned:
(1) if the owners of ownership interests of each of the
constituent organizations entitled to vote on the approval of
the plan as provided in section 322B.72 have approved the
abandonment at a meeting by the affirmative vote of the owners
of a majority of the voting power of the ownership interests
entitled to vote and, if the owners of a constituent
organization are not entitled to vote on the approval of the
plan under section 322B.72, the governing board of that
constituent organization has approved the abandonment by the
affirmative vote of a majority of the board members present;
(2) if the plan itself provides for abandonment and all
conditions for abandonment set forth in the plan are met; or
(3) pursuant to subdivision 2.
Subd. 2. [BY THE GOVERNING BOARD.] A plan of merger or
exchange may be abandoned, before the effective date of the
plan, by a resolution of the governing board of any constituent
organization abandoning the plan of merger or exchange approved
by the affirmative vote of a majority of the board members
present, subject to the contract rights of any other person
under the plan.
Subd. 3. [FILING OF ARTICLES.] If articles of merger or
exchange have been filed with the secretary of state, but have
not yet become effective, the constituent organizations, in the
case of abandonment under subdivision 1, clause (1), the
constituent organizations or any one of them, in the case of
abandonment under subdivision 1, clause (2), or the abandoning
organization in the case of abandonment under subdivision 2,
shall file with the secretary of state articles of abandonment
that contain:
(1) the names of the constituent organizations;
(2) the provision of this section under which the plan is
abandoned; and
(3) if the plan is abandoned under subdivision 2, the text
of the resolution approved by the affirmative vote of a majority
of the board members present abandoning the plan.
Sec. 101. [322B.75] [EFFECTIVE DATE OF MERGER OR EXCHANGE
AND EFFECT.]
Subdivision 1. [EFFECTIVE DATE.] A merger or exchange is
effective when the articles of merger or exchange are filed with
the secretary of state or on a later date specified in the
articles of merger or exchange.
Subd. 2. [EFFECT ON CONSTITUENT ORGANIZATIONS.] When a
merger becomes effective:
(1) the constituent organizations become a single entity,
the surviving limited liability company or corporation, as the
case may be;
(2) the separate existence of all constituent organizations
except the surviving organization ceases;
(3) as to any limited liability company that was a
constituent organization and is not the surviving organization,
the articles of merger serve as the articles of termination,
and, unless previously filed, the notice of dissolution;
(4)(i) if the surviving organization is a limited liability
company, the surviving limited liability company has all the
rights, privileges, immunities, and powers, and is subject to
all the duties and liabilities of a limited liability company
organized under this chapter; and
(ii) if the surviving organization is a domestic
corporation, the surviving domestic corporation has all the
rights, privileges, immunities, and powers, and is subject to
all the duties and liabilities of a domestic corporation
organized under chapter 302A;
(5) the surviving organization, whether a limited liability
company or a domestic or foreign corporation, possesses all the
rights, privileges, immunities, and franchises, of a public as
well as of a private nature, of each of the constituent
organizations. All property, real, personal, and mixed, and all
debts due on any account, including subscriptions to shares and
contribution agreements, as the case may be, and all other
choses in action, and every other interest of or belonging to or
due to each of the constituent organizations vests in the
surviving organization without any further act or deed.
Confirmatory deeds, assignments, or similar instruments to
accomplish that vesting may be signed and delivered at any time
in the name of a constituent organization by its current
officers or managers, as the case may be, or, if the
organization no longer exists, by its last officers or managers,
as the case may be. The title to any real estate or any
interest in real estate vested in any of the constituent
organizations does not revert nor in any way become impaired by
reason of the merger;
(6) the surviving organization is responsible and liable
for all the liabilities and obligations of each of the
constituent organizations. A claim of or against or a pending
proceeding by or against a constituent organization may be
prosecuted as if the merger had not taken place, or the
surviving organization may be substituted in the place of the
constituent organization. Neither the rights of creditors nor
any liens upon the property of a constituent organization are
impaired by the merger; and
(7) the articles of organization or articles of
incorporation, as the case may be, of the surviving organization
are considered to be amended to the extent that changes in its
articles, if any, are contained in the plan of merger.
Subd. 3. [EFFECT ON OWNERS.] When a merger or exchange
becomes effective, the ownership interests to be converted or
exchanged under the terms of the plan cease to exist in the case
of a merger, or are considered to be exchanged in the case of an
exchange. The owners of those ownership interests are entitled
only to the securities, money, or other property into which
those ownership interests have been converted or for which those
ownership interests have been exchanged in accordance with the
plan, subject to any dissenters' rights under section 302A.471
or 322B.383, as the case may be.
Sec. 102. [322B.76] [MERGER OR EXCHANGE WITH FOREIGN
CORPORATION.]
Subdivision 1. [WHEN PERMITTED.] A limited liability
company may merge with or participate in an exchange with a
foreign corporation or a foreign limited liability company by
following the procedures set forth in this section, if:
(1) with respect to a merger, the merger is permitted by
the laws of the state under which the foreign corporation or
foreign limited liability company is incorporated or organized;
and
(2) with respect to an exchange, the organization whose
ownership interests will be acquired is either a limited
liability company or a domestic corporation, whether or not the
exchange is permitted by the laws of the state under which the
foreign corporation or foreign limited liability company is
incorporated or organized.
Subd. 2. [LAWS APPLICABLE BEFORE TRANSACTION.] Each
limited liability company shall comply with the provisions of
sections 322B.70 to 322B.76 with respect to the merger or
exchange of ownership interests of organizations and each
foreign corporation or foreign limited liability company shall
comply with the applicable provisions of the laws under which it
was incorporated or organized or by which it is governed.
Subd. 3. [SURVIVING DOMESTIC LIMITED LIABILITY
COMPANY.] If the surviving organization in a merger will be a
domestic limited liability company, it shall comply with all the
provisions of this chapter.
Subd. 4. [SURVIVING FOREIGN CORPORATION OR FOREIGN LIMITED
LIABILITY COMPANY.] If the surviving organization in a merger
will be a foreign corporation or foreign limited liability
company and will transact business in this state, it shall
comply, as the case may be, with the provisions of chapter 303
with respect to foreign corporations or with the provisions of
this chapter with respect to foreign limited liability companies.
In every case the surviving foreign corporation or foreign
limited liability company shall file with the secretary of state:
(1) an agreement that it may be served with process in this
state in a proceeding for the enforcement of an obligation of a
constituent organization and in a proceeding for the enforcement
of the rights of a dissenting owner of an ownership interest of
a constituent organization against the surviving foreign
corporation or foreign limited liability company;
(2) an irrevocable appointment of the secretary of state as
its agent to accept service of process in any proceeding, and an
address to which process may be forwarded; and
(3) an agreement that it will promptly pay to the
dissenting owners of an ownership interests of each constituent
domestic limited liability company and constituent domestic
corporation the amount, if any, to which they are entitled under
section 302A.473 or 322B.386, as the case may be.
Sec. 103. [322B.77] [TRANSFER OF ASSETS AND WHEN
PERMITTED.]
Subdivision 1. [MEMBER APPROVAL AND WHEN NOT REQUIRED.] A
limited liability company, by affirmative vote of a majority of
the governors present, may sell, lease, transfer, or otherwise
dispose of all or substantially all of its property and assets
in the usual and regular course of its business and grant a
security interest in all or substantially all of its property
and assets whether or not in the usual and regular course of its
business, upon those terms and conditions and for those
considerations, which may be money, securities, or other
instruments for the payment of money or other property, as the
board of governors considers expedient, in which case no member
approval is required.
Subd. 2. [MEMBER APPROVAL AND WHEN REQUIRED.] A limited
liability company, by affirmative vote of a majority of the
governors present, may sell, lease, transfer, or otherwise
dispose of all or substantially all of its property and assets,
including its good will, not in the usual and regular course of
its business, upon those terms and conditions and for those
considerations, which may be money, securities, or other
instruments for the payment of money or other property, as the
board of governors considers expedient, when approved at a
regular or special meeting of the members by the affirmative
vote of the owners of a majority of the voting power of the
interests entitled to vote. Written notice of the meeting must
be given to all members whether or not they are entitled to vote
at the meeting. The written notice must state that a purpose of
the meeting is to consider the sale, lease, transfer, or other
disposition of all or substantially all of the property and
assets of the limited liability company.
Subd. 3. [SIGNING OF DOCUMENTS.] Confirmatory deeds,
assignments, or similar instruments to evidence a sale, lease,
transfer, or other disposition may be signed and delivered at
any time in the name of the transferor by its current managers
or, if the limited liability company no longer exists, by its
last managers.
Subd. 4. [TRANSFEREE LIABILITY.] The transferee is liable
for the debts, obligations, and liabilities of the transferor
only to the extent provided in the contract or agreement between
the transferee and the transferor or to the extent provided by
this chapter or other statutes of this state.
DISSOLUTION
Sec. 104. [322B.80] [DISSOLUTION.]
Subdivision 1. [DISSOLUTION EVENTS.] A limited liability
company dissolves upon the occurrence of any of the following
events:
(1) when the period fixed in the articles of organization
for the duration of the limited liability company expires;
(2) by order of a court pursuant to sections 322B.833 and
322B.843;
(3) by action of the organizers pursuant to section
322B.803;
(4) by action of the members pursuant to section 322B.806;
or
(5) upon the occurrence of an event that terminates the
continued membership of a member in the limited liability
company, including:
(i) death of any member;
(ii) retirement of any member;
(iii) resignation of any member;
(iv) redemption of a member's complete membership interest;
(v) assignment of a member's governance rights under
section 322B.313 which leaves the assignor with no governance
rights;
(vi) a buy-out of a member's membership interest under
section 322B.833 that leaves that member with no governance
rights;
(vii) expulsion of any member;
(viii) bankruptcy of any member;
(ix) dissolution of any member;
(x) a merger in which the limited liability company is not
the surviving organization;
(xi) an exchange in which the limited liability company is
not the acquiring organization; or
(xii) the occurrence of any other event that terminates the
continued membership of a member in the limited liability
company,
but the limited liability company is not dissolved and is not
required to be wound up by reason of any event that terminates
the continued membership of a member if (A) either there are at
least two remaining members or a new member is admitted as
provided in section 322B.11, and (B) the existence and business
of the limited liability company is continued by the consent of
all the remaining members under a right to do so stated in the
articles of organization and the consent is obtained no later
than 90 days after the termination of the continued membership.
Subd. 2. [PROCEDURES FOLLOWING DISSOLUTION.] A limited
liability company dissolved by one of the dissolution events
specified in subdivision 1 must be wound up and terminated under
the following dissolution provisions:
(1) when a limited liability company is dissolved under
subdivision 1, clause (1), by reason of the expiration of its
limited period of duration, the limited liability company must
be wound up and terminated under sections 322B.81 to 322B.82,
322B.826, 322B.83, and 322B.876;
(2) When a limited liability company is dissolved under
subdivision 1, clause (2), by reason of a court order, the
limited liability company must be wound up and terminated under
sections 322B.83 to 322B.856;
(3) when a limited liability company is dissolved under
subdivision 1, clause (3), by its organizers, the limited
liability company must be wound up and terminated under sections
322B.803 and 322B.81 to 322B.83;
(4) when a limited liability company is dissolved under
subdivision 1, clause (4), by its members, the limited liability
company must be wound up and terminated under sections 322B.806
to 322B.83 and 322B.873; and
(5) when a limited liability company is dissolved under
subdivision 1, clause (5), by reason of a termination of the
continued membership of a member, the limited liability company
must be wound up and terminated under sections 322B.81 to
322B.82, 322B.826, 322B.83, and 322B.873.
Sec. 105. [322B.803] [NONJUDICIAL DISSOLUTION AND
TERMINATION BY ORGANIZERS.]
Subdivision 1. [MANNER.] A limited liability company that
has not accepted contributions may be dissolved and terminated
by the organizers in the manner set forth in this section.
Subd. 2. [ARTICLES OF DISSOLUTION AND TERMINATION.] (a) A
majority of the organizers shall sign articles of dissolution
and termination containing:
(1) the name of the limited liability company;
(2) the date of organization;
(3) a statement that contributions have not been accepted;
(4) a statement that no debts remain unpaid.
(b) The articles of dissolution and termination shall be
filed with the secretary of state.
Subd. 3. [EFFECTIVE DATE.] When the articles of
dissolution and termination have been filed with the secretary
of state, the limited liability company is terminated.
Subd. 4. [CERTIFICATE OF TERMINATION.] The secretary of
state shall issue to the terminated limited liability company or
its legal representative a certificate of termination that
contains:
(1) the name of the limited liability company;
(2) the date and time the articles of dissolution and
termination were filed with the secretary of state; and
(3) a statement that the limited liability company is
terminated.
Sec. 106. [322B.806] [NONJUDICIAL DISSOLUTION BY MEMBERS.]
Subdivision 1. [MANNER.] A limited liability company may
be dissolved by the members when authorized in the manner set
forth in this section.
Subd. 2. [NOTICE AND APPROVAL.] (a) Written notice shall
be given to each member, whether or not entitled to vote at a
meeting of members, within the time and in the manner provided
in section 322B.34 for notice of meetings of members and,
whether the meeting is a regular or a special meeting, must
state that a purpose of the meeting is to consider dissolving
the limited liability company and that dissolution must be
followed by the winding up and termination of the limited
liability company.
(b) The proposed dissolution must be submitted for approval
at a meeting of members. If the proposed dissolution is
approved at a meeting by the affirmative vote of the owners of a
majority of the voting power of all membership interests
entitled to vote, the limited liability company is dissolved.
Sec. 107. [322B.81] [FILING NOTICE OF DISSOLUTION AND
EFFECT.]
Subdivision 1. [CONTENTS.] If dissolution of the limited
liability company is approved pursuant to section 322B.806,
subdivision 2, or it occurs under section 322B.80, subdivision
1, clause (1) or (5), the limited liability company shall file
with the secretary of state a notice of dissolution. The notice
must contain:
(1) the name of the limited liability company;
(2)(i) if the dissolution is approved pursuant to section
322B.806, subdivision 2, the date and place of the meeting at
which the resolution was approved; and a statement that the
requisite vote of the members was received, or that members
validly took action without a meeting;
(ii) if the dissolution occurs under section 322B.80,
subdivision 1, clause (1), by the expiration of the limited
liability company's duration, a statement of the expiration
date; and
(iii) if the dissolution occurs under section 322B.80,
subdivision 1, clause (5), by the termination of a membership
interest of a member, a statement that the continued membership
of a member has terminated and the date of that termination.
Subd. 2. [WINDING UP.] When the notice of dissolution has
been filed with the secretary of state, and subject to section
322B.823, the limited liability company shall cease to carry on
its business, except to the extent necessary for the winding up
of the business of the limited liability company. The members
shall retain the right to revoke the dissolution in accordance
with section 322B.823 and the right to remove governors or fill
vacancies on the board of governors. The limited liability
company existence continues to the extent necessary to wind up
the affairs of the limited liability company until the
dissolution is revoked or articles of termination are filed with
the secretary of state.
Subd. 3. [CERTAIN MERGERS PERMITTED DURING WINDING UP.] As
part of winding up, the limited liability company may
participate in a merger with another limited liability company
or with a domestic or foreign corporation under sections 322B.70
to 322B.76, but the dissolved limited liability company shall
not be the surviving organization.
Subd. 4. [REMEDIES CONTINUED.] The filing with the
secretary of state of a notice of dissolution does not affect
any remedy in favor of the limited liability company or any
remedy against it or its governors, managers, or members in
those capacities, except as provided in section 322B.816,
322B.82, or 322B.863.
Sec. 108. [322B.813] [PROCEDURE IN WINDING UP.]
Subdivision 1. [PROCEDURES TO BE FOLLOWED WHERE WINDING UP
ACCOMPLISHED BY MERGER.] If the business of the limited
liability company is wound up and terminated by merging the
dissolved limited liability company into a successor
organization:
(1) the procedures stated in sections 322B.70 to 322B.76
must be followed;
(2) sections 322B.816 to 322B.823 and sections 322B.863 to
322B.866 do not apply; and
(3) once the merger is effective, a creditor or claimant of
the terminated limited liability company, and all those claiming
through or under the creditor or claimant, are barred from suing
the terminated limited liability company on that claim or
otherwise realizing upon or enforcing it against the terminated
limited liability company, but the creditor, claimant, and those
claiming under the creditor and claimant, may, if not otherwise
barred by law, assert their claims against the surviving
organization of the merger.
Subd. 2. [PROCEDURES TO BE FOLLOWED OTHERWISE.] If the
business of the limited liability company is to be wound up and
terminated other than by merging the dissolved limited liability
company into a successor organization, the procedures stated in
subdivisions 3 to 5 must be followed.
Subd. 3. [COLLECTION AND PAYMENT.] When a notice of
dissolution has been filed with the secretary of state, the
board of governors, or the managers acting under the direction
of the board of governors, shall proceed as soon as possible:
(1) to give notice to creditors and claimants under section
322B.816 or to proceed under section 322B.82;
(2) subject to any business continuation agreement, to
collect or make provision for the collection of all known debts
due or owing to the limited liability company, including
unperformed contribution agreements; and
(3) except as provided in sections 322B.816, 322B.82, and
322B.863, to pay or make provision for the payment of all known
debts, obligations, and liabilities of the limited liability
company according to their priorities under section 322B.873.
Subd. 4. [TRANSFER OF ASSETS.] Notwithstanding section
322B.77, when a notice of dissolution has been filed with the
secretary of state, the governors may sell, lease, transfer, or
otherwise dispose of all or substantially all of the property
and assets of a dissolved limited liability company without a
vote of the members.
Subd. 5. [DISTRIBUTION TO MEMBERS.] All tangible or
intangible property, including money, remaining after the
discharge of the debts, obligations, and liabilities of the
limited liability company must be distributed to the members in
accordance with sections 322B.52 and 322B.873.
Sec. 109. [322B.816] [WINDING UP PROCEDURE FOR LIMITED
LIABILITY COMPANIES THAT GIVE NOTICE TO CREDITORS AND
CLAIMANTS.]
Subdivision 1. [WHEN PERMITTED AND HOW GIVEN.] When a
notice of dissolution has been filed with the secretary of
state, and the business of the limited liability company is not
to be wound up and terminated by merging the dissolved limited
liability company into a successor organization under section
322B.81, subdivision 3, then the limited liability company may
give notice of the filing to each creditor of and claimant
against the limited liability company known or unknown, present
or future, and contingent or noncontingent. If notice to
creditors and claimants is given, it must be given by publishing
the notice once each week for four successive weeks in a legal
newspaper in the county or counties where the registered office
and the principal executive office of the limited liability
company are located and by giving written notice to known
creditors and claimants pursuant to section 322B.03, subdivision
32.
Subd. 2. [REQUIRED CONTENTS.] The notice to creditors and
claimants must contain:
(1) a statement that the limited liability company has
dissolved and is in the process of winding up its affairs;
(2) a statement that the limited liability company has
filed with the secretary of state a notice of dissolution;
(3) the date of filing the notice of dissolution;
(4) the address of the office to which written claims
against the limited liability company must be presented; and
(5) the date by which all the claims must be received,
which must be the later of 90 days after published notice or,
with respect to a particular known creditor or claimant, 90 days
after the date on which written notice was given to that
creditor or claimant. Published notice is considered given on
the date of first publication for the purpose of determining
this date.
Subd. 3. [OPTIONAL CONTENTS WHERE BUSINESS BEING
CONTINUED.] If the business of the limited liability company is
being continued under a business continuation agreement, the
notice to creditors may also contain all, but not less than all,
of the following:
(1) a statement that the business of the dissolved limited
liability company is being continued by a successor
organization;
(2) the name and address of the successor organization;
(3) an undertaking by the successor organization to assume
all the liabilities of the dissolved limited liability company;
and
(4) a statement that creditors of the dissolved limited
liability company do not need to file claims against the limited
liability company in order to preserve their rights to enforce
those claims against the successor organization.
Neither the existence of a business continuation agreement
nor the giving of the information described in this subdivision
affects a creditor's or claimant's right to proceed against the
dissolved limited liability company.
Subd. 4. [CLAIMS AGAINST LIMITED LIABILITY COMPANIES THAT
GIVE NOTICE.] (a) A limited liability company that gives notice
to creditors and claimants has 30 days from the receipt of each
claim filed according to the procedures set forth by the limited
liability company on or before the date set forth in the notice
to accept or reject the claim by giving written notice to the
person submitting it. A claim not expressly rejected in this
manner is considered accepted.
(b) A creditor or claimant to whom notice is given and
whose claim is rejected by the limited liability company has 60
days from the date of rejection, 180 days from the date the
limited liability company filed with the secretary of state the
notice of dissolution, or 90 days after the date on which notice
was given to the creditor or claimant, whichever is longer, to
pursue any other remedies with respect to the claim.
(c) A creditor or claimant to whom notice is given who
fails to file a claim according to the procedures set forth by
the limited liability company on or before the date set forth in
the notice is barred from suing the dissolved limited liability
company on that claim or otherwise realizing upon or enforcing
it against the dissolved limited liability company, except as
provided in section 322B.863. If the dissolved limited
liability company gave the additional information referred to in
subdivision 3, nothing in this section bars the creditor or
claimant from seeking to enforce its rights against the
successor organization.
(d) A creditor or claimant whose claim is rejected by the
limited liability company under paragraph (b) is barred from
suing on that claim or otherwise realizing upon or enforcing it
whether against the dissolved limited liability company or any
successor organization, if the creditor or claimant does not
initiate legal, administrative, or arbitration proceedings with
respect to the claim within the time provided in paragraph (b).
Subd. 5. [ARTICLES OF TERMINATION AND WHEN FILED.]
Articles of termination for a limited liability company that has
given notice to creditors and claimants under this section must
be filed with the secretary of state after:
(1) the 90-day period in subdivision 2, clause (5), has
expired and the payment of claims of all creditors and claimants
filing a claim within that period has been made or provided for;
or
(2) the longest of the periods described in subdivision 4,
paragraph (b), has expired and there are no pending legal,
administrative, or arbitration proceedings by or against the
limited liability company commenced within the time provided in
subdivision 4, paragraph (b).
Subd. 6. [CONTENTS OF ARTICLES OF TERMINATION.] The
articles of termination must state:
(1) the last date on which the notice was given and that
the payment of all creditors and claimants filing a claim within
the 90-day period in subdivision 2, clause (5), has been made or
provided for, or the date on which the longest of the periods
described in subdivision 4, paragraph (b), expired;
(2) that the remaining property, assets, and claims of the
limited liability company have been distributed in accordance
with section 322B.873, or that adequate provision has been made
for that distribution; and
(3) that there are no pending legal, administrative, or
arbitration proceedings by or against the limited liability
company commenced within the time provided in subdivision 4,
paragraph (b), or that adequate provision has been made for the
satisfaction of any judgment, order, or decree that may be
entered against it in a pending proceeding.
Sec. 110. [322B.82] [WINDING UP PROCEDURE FOR LIMITED
LIABILITY COMPANIES THAT DO NOT GIVE NOTICE TO CREDITORS AND
CLAIMANTS.]
Subdivision 1. [ARTICLES OF TERMINATION AND WHEN FILED.]
Articles of termination for a limited liability company whose
business is not to be wound up and terminated by merging the
dissolved limited liability company into a successor
organization under section 322B.81, subdivision 3, and that has
not given notice to creditors and claimants in the manner
provided in section 322B.816 must be filed with the secretary of
state after:
(1) the payment of claims of all known creditors and
claimants has been made or provided for; or
(2) at least two years have elapsed from the date of filing
the notice of dissolution.
Subd. 2. [CONTENTS.] The articles of termination must
state:
(1) if articles of termination are being filed pursuant to
subdivision 1, clause (1), that all known debts, obligations,
and liabilities of the limited liability company have been paid
and discharged or that adequate provision has been made for
payment or discharge;
(2) that the remaining property, assets, and claims of the
limited liability company have been distributed in accordance
with section 322B.873, or that adequate provision has been made
for that distribution; and
(3) that there are no pending legal, administrative, or
arbitration proceedings by or against the limited liability
company, or that adequate provision has been made for the
satisfaction of any judgment, order, or decree that may be
entered against it in a pending proceeding.
Subd. 3. [CLAIMS AGAINST LIMITED LIABILITY COMPANIES THAT
DO NOT GIVE NOTICE AND ARE NOT WOUND UP AND TERMINATED THROUGH
MERGER.] (a) If the limited liability company has paid or
provided for all known creditors or claimants at the time
articles of termination are filed, a creditor or claimant who
does not file a claim or pursue a remedy in a legal,
administrative, or arbitration proceeding within two years after
the date of filing the notice of dissolution is barred from
suing on that claim or otherwise realizing upon or enforcing it.
(b) If the limited liability company has not paid or
provided for all known creditors and claimants at the time
articles of termination are filed, a person who does not file a
claim or pursue a remedy in a legal, administrative, or
arbitration proceeding within two years after the date of filing
the notice of dissolution is barred from suing on that claim or
otherwise realizing upon or enforcing it, except as provided in
section 322B.863.
Sec. 111. [322B.823] [REVOCATION OF DISSOLUTION.]
Subdivision 1. [GENERALLY.] Except as provided in
subdivisions 4 and 5, winding up proceedings commenced pursuant
to section 322B.806 may be revoked before the filing of articles
of termination.
Subd. 2. [NOTICE TO MEMBERS AND APPROVAL.] Written notice
must be given to every member entitled to vote at a members'
meeting within the time and in the manner provided in section
322B.34 for notice of meetings of members and must state that a
purpose of the meeting is to consider the advisability of
revoking the dissolution. The proposed revocation must be
submitted to the members at the meeting. If the proposed
revocation is approved at a meeting by the affirmative vote of
the owners of a majority of the voting power of all membership
interests entitled to vote, the dissolution is revoked.
Subd. 3. [EFFECTIVE DATE AND EFFECT.] Revocation of
dissolution is effective when a notice of revocation is filed
with the secretary of state. After the notice is filed the
limited liability company may cease to wind up and resume
business.
Subd. 4. [RESTRICTIONS ON REVOCATION.] If a dissolved
limited liability company is being wound up and terminated by
being merged into a successor organization under section
322B.81, subdivision 3, and the plan of merger has been approved
under section 322B.72, then the dissolution may be revoked under
this section only after the plan of merger has been properly
abandoned under section 322B.74.
Subd. 5. [REVOCATION PROHIBITED.] When dissolution occurs
under section 322B.80, subdivision 1, clause (1), (2), or (5),
revocation is prohibited.
Sec. 112. [322B.826] [EFFECTIVE DATE OF TERMINATION AND
CERTIFICATE OF TERMINATION.]
Subdivision 1. [EFFECTIVE DATE.] When the articles of
termination have been filed with the secretary of state, the
limited liability company is terminated.
Subd. 2. [CERTIFICATE.] The secretary of state shall issue
to the dissolved limited liability company or its legal
representative a certificate of termination that contains:
(1) the name of the limited liability company;
(2) the date the articles of termination were filed with
the secretary of state; and
(3) a statement that the limited liability company is
terminated.
Sec. 113. [322B.83] [SUPERVISED WINDING UP AND TERMINATION
FOLLOWING A NONJUDICIAL DISSOLUTION.]
After an event of dissolution has occurred and before a
certificate of termination has been issued, the limited
liability company or, for good cause shown, a member or creditor
may apply to a court within the county in which the registered
office of the limited liability company is situated to have the
dissolution conducted or continued under the supervision of the
court as provided in sections 322B.833 to 322B.863.
Sec. 114. [322B.833] [JUDICIAL INTERVENTION AND EQUITABLE
REMEDIES, DISSOLUTION, AND TERMINATION.]
Subdivision 1. [WHEN PERMITTED.] A court may grant any
equitable relief it considers just and reasonable in the
circumstances or may dissolve, wind up, and terminate a limited
liability company:
(1) in a supervised winding up and termination pursuant to
section 322B.83;
(2) in an action by a member when it is established that:
(i) the governors or the persons having the authority
otherwise vested in the board of governors are deadlocked in the
management of the affairs of the limited liability company and
the members are unable to break the deadlock;
(ii) the governors or those in control of the limited
liability company have acted fraudulently, illegally, or in a
manner unfairly prejudicial toward one or more members in their
capacities as members, governors, or managers, or as employees
of a closely held limited liability company;
(iii) the members of the limited liability company are so
divided in voting power that, for a period that includes the
time when two consecutive regular meetings were held, they have
failed to elect successors to governors whose terms have expired
or would have expired upon the election and qualification of
their successors;
(iv) the limited liability company assets are being
misapplied or wasted; or
(v) an event of dissolution has occurred under section
322B.80, subdivision 1, clause (1), (4) or (5) but the limited
liability company is not acting to wind up its affairs;
(3) in an action by a creditor when:
(i) the claim of the creditor has been reduced to judgment
and an execution on the judgment has been returned unsatisfied;
or
(ii) the limited liability company has admitted in writing
that the claim of the creditor is due and owing and it is
established that the limited liability company is unable to pay
its debts in the ordinary course of business; or
(4) in an action by the attorney general to dissolve the
limited liability company in accordance with section 322B.843
when it is established that a decree of termination is
appropriate.
Subd. 2. [BUY-OUT ON MOTION.] In an action under
subdivision 1, clause (2), involving a closely held limited
liability company at the time the action is commenced and in
which one or more of the circumstances described in that clause
is established, the court may, upon motion of a limited
liability company or a member, order the sale by a plaintiff or
a defendant of all membership interests of the limited liability
company held by the plaintiff or defendant to either the limited
liability company or the moving members, whichever is specified
in the motion, if the court determines in its discretion that an
order would be fair and equitable to all parties under all of
the circumstances of the case.
The purchase price of any membership interest so sold must
be the fair value of the membership interest as of the date of
the commencement of the action or as of another date found
equitable by the court. If the articles of organization, a
member control agreement or business continuation agreement
states a price for the redemption or buy-out of membership
interests, the court shall order the sale for the price and on
the terms set forth in them, unless the court determines that
the price or terms are unreasonable under all the circumstances
of the case.
Within five days after the entry of the order, the limited
liability company shall provide each selling member with the
information it is required to provide under section 322B.386,
subdivision 5, paragraph (a).
If the parties are unable to agree on fair value within 40
days of entry of the order, the court shall determine the fair
value of the membership interests under the provisions of
section 322B.386, subdivision 7, may allow interest or costs as
provided in section 322B.386, subdivisions 1 and 8, and may
allocate payment among the member whose membership interest is
being sold and any assignees of the financial rights of that
member.
The purchase price must be paid in one or more installments
as agreed on by the parties, or, if no agreement can be reached
within 40 days of entry of the order, as ordered by the court.
Upon entry of an order for the sale of a membership interest
under this subdivision and provided that the limited liability
company or the moving members post a bond in adequate amount
with sufficient sureties or otherwise satisfy the court that any
full purchase price of the membership interest, plus the
additional costs, expenses, and fees awarded by the court, will
be paid when due and payable, the selling member shall no longer
have any rights or status as a member, manager, or governor,
except the right to receive the fair value of the membership
interest plus other amounts as might be awarded.
Subd. 3. [CONDITION OF LIMITED LIABILITY COMPANY.] In
determining whether to order relief under this section and in
determining what particular relief to order, the court shall
take into consideration the financial condition of the limited
liability company but shall not refuse to order any particular
form of relief solely on the ground that the limited liability
company has accumulated or current operating profits.
Subd. 4. [CONSIDERATIONS IN GRANTING RELIEF INVOLVING
CLOSELY HELD LIMITED LIABILITY COMPANIES.] In determining
whether to order relief under this section and in determining
what particular relief to order, the court shall take into
consideration the duty that all members in a closely held
limited liability company owe one another to act in an honest,
fair, and reasonable manner in the operation of the limited
liability company and the reasonable expectations of the members
as they exist at the inception and develop during the course of
the members' relationship with the limited liability company and
with each other.
Subd. 5. [CONSIDERATIONS AS TO DISSOLUTION.] In
determining what relief to order, the court shall take into
account that any relief that results in the termination of a
member's membership interest will cause dissolution of the
limited liability company. If the court orders relief that
results in dissolution of the limited liability company, the
court shall make appropriate orders providing for the winding up
and termination of the dissolved limited liability company.
Subd. 6. [LIQUIDATION REMEDY.] In deciding whether to
order winding up through liquidation, the court shall consider
whether lesser relief suggested by one or more parties, or
provided in a business continuation agreement, such as any form
of equitable relief, or a buy-out or partial liquidation coupled
with the continuation of the business of the dissolved limited
liability company through a successor organization, would be
adequate to permanently relieve the circumstances established
under subdivision 1, clause (2) or (3). Lesser relief may be
ordered in any case where it would be appropriate under all the
facts and circumstances of the case.
Subd. 7. [EXPENSES.] If the court finds that a party to a
proceeding brought under this section has acted arbitrarily,
vexatiously, or otherwise not in good faith, it may in its
discretion award reasonable expenses, including attorneys' fees
and disbursements, to any of the other parties.
Subd. 8. [VENUE AND PARTIES.] Proceedings under this
section must be brought in a court within the county in which
the registered office of the limited liability company is
located. It is not necessary to make members parties to the
action or proceeding unless relief is sought against them
personally.
Sec. 115. [322B.836] [JUDICIAL INTERVENTION PROCEDURES.]
Subdivision 1. [ACTION BEFORE HEARING.] In proceedings
under section 322B.833, the court may issue injunctions, appoint
receivers with all powers and duties the court directs, take
other actions required to preserve the limited liability company
assets wherever situated, and carry on the business of the
limited liability company until a full hearing can be held.
Subd. 2. [ACTION AFTER HEARING.] After a full hearing has
been held, upon whatever notice the court directs to be given to
all parties to the proceedings and to any other parties in
interest designated by the court, the court may appoint a
receiver to collect the limited liability company assets,
including all amounts owing to the limited liability company by
persons who have made contribution agreements and by persons who
have made contributions by means of enforceable promises of
future performance. A receiver has authority, subject to the
order of the court, to continue the business of the limited
liability company and to sell, lease, transfer, or otherwise
dispose of all or any of the property and assets of the limited
liability company either at public or private sale.
Subd. 3. [DISCHARGE OF OBLIGATIONS UPON LIQUIDATION.] If
the court determines that the limited liability company is to be
dissolved with winding up to be accomplished by liquidation,
then the assets of the limited liability company or the proceeds
resulting from a sale, lease, transfer, or other disposition
must be applied in the following order of priority to the
payment and discharge or:
(1) the costs and expenses of the proceedings, including
attorneys' fees and disbursements;
(2) debts, taxes, and assessments due the United States,
the state of Minnesota and their subdivisions, and other states
and their subdivisions, in that order;
(3) claims duly proved and allowed to employees under the
provisions of chapter 176; provided, that claims under this
clause shall not be allowed if the limited liability company
carried workers' compensation insurance, as provided by law, at
the time the injury was sustained;
(4) claims, including the value of all compensation paid in
any medium other than money, duly proved and allowed to
employees for services performed within three months preceding
the appointment of the receiver, if any; and
(5) other claims duly proved and allowed.
Subd. 4. [REMAINDER TO MEMBERS.] After payment of the
expenses of receivership and claims of creditors duly proved
under subdivision 3, the remaining assets, if any, must be
distributed to the members in accordance with section 322B.873,
subdivision 1.
Sec. 116. [322B.84] [QUALIFICATIONS OF RECEIVERS AND
POWERS.]
Subdivision 1. [QUALIFICATIONS.] A receiver shall be a
natural person or a domestic or foreign organization authorized
to transact business in this state. A receiver shall give bond
as directed by the court with the sureties required by the court.
Subd. 2. [POWERS.] A receiver may sue and defend in all
courts as receiver of the limited liability company. The court
appointing the receiver has exclusive jurisdiction of the
limited liability company and its property.
Sec. 117. [322B.843] [ACTION BY ATTORNEY GENERAL.]
Subdivision 1. [WHEN PERMITTED.] A limited liability
company may be involuntarily dissolved, wound up and terminated
by a decree of a court in this state in an action filed by the
attorney general when it is established that:
(1) the articles of organization were procured through
fraud;
(2) the limited liability company was organized for a
purpose not permitted by section 322B.10;
(3) the limited liability company failed to comply with the
requirements of sections 322B.10 to 322B.18 essential to
organization under this chapter;
(4) the limited liability company has flagrantly violated a
provision of this chapter, or has violated a provision of this
chapter more than once, or has violated more than one provision
of this chapter; or
(5) the limited liability company has acted, or failed to
act, in a manner that constitutes surrender or abandonment of
the limited liability company privileges or enterprise.
Subd. 2. [NOTICE TO LIMITED LIABILITY COMPANY AND
CORRECTION.] An action must not be commenced under this section
until 30 days after notice to the limited liability company by
the attorney general of the reason for the filing of the
action. If the reason for filing the action is an act that the
limited liability company has done, or omitted to do, and the
act or omission may be corrected by an amendment of the articles
of organization or the operating agreement or by performance of
or abstention from the act, the attorney general shall give the
limited liability company 30 additional days in which to effect
the correction before filing the action.
Sec. 118. [322B.846] [FILING CLAIMS IN JUDICIAL
INTERVENTION PROCEEDINGS.]
Subdivision 1. [JUDICIAL INTERVENTION PROCEEDINGS.] In
proceedings referred to in section 322B.833, the court may
require all creditors and claimants of the limited liability
company to file their claims under oath with the court
administrator or with the receiver in a form prescribed by the
court.
Subd. 2. [FILING OF CLAIMS.] If the court requires the
filing of claims, it shall fix a date not less than 120 days
from the date of the order as the last day for the filing of
claims, and shall prescribe the notice of the fixed date that
shall be given to creditors and claimants. Before the fixed
date, the court may extend the time for filing claims.
Creditors and claimants failing to file claims on or before the
fixed date may be barred, by order of court, from claiming an
interest in or receiving payment out of the property or assets
of the limited liability company.
Sec. 119. [322B.85] [DISCONTINUANCE OF PROCEEDINGS FOR
WINDING UP THROUGH LIQUIDATION.]
If the court has determined that the limited liability
company is to be dissolved, with winding up to be accomplished
by liquidation, and subsequently the court determines that the
grounds for dissolution no longer exist or that the grounds for
ordering winding up through liquidation no longer exist, the
court shall make whatever orders are just and reasonable under
the circumstances.
Sec. 120. [322B.853] [DECREE OF TERMINATION.]
Subdivision 1. [WHEN ENTERED.] If the court has ordered a
dissolution, or the court has intervened under section 322B.833,
subdivision 1, clause (1), or has ordered or caused a
dissolution under any other provision of that subdivision, then
after the affairs of the dissolved limited liability company
have been appropriately wound up the court shall enter a decree
terminating the dissolved limited liability company.
Subd. 2. [EFFECTIVE DATE.] When the decree terminating the
limited liability company has been entered, the limited
liability company is terminated.
Sec. 121. [322B.856] [FILING DECREE.]
After the court enters a decree terminating a limited
liability company, the court administrator shall cause a
certified copy of the decree to be filed with the secretary of
state. The secretary of state shall not charge a fee for filing
the decree.
Sec. 122. [322B.86] [DEPOSIT WITH STATE TREASURER OF
AMOUNT DUE CERTAIN MEMBERS.]
Upon termination of a limited liability company, the
portion of the assets distributable to a member who is unknown
or cannot be found, or who is under disability, if there is no
person legally competent to receive the distributive portion,
must be reduced to money and deposited with the state
treasurer. The amount deposited is appropriated to the state
treasurer and must be paid over to the member or a legal
representative, upon proof satisfactory to the state treasurer
of a right to payment.
Sec. 123. [322B.863] [CLAIMS BARRED AND EXCEPTIONS.]
Subdivision 1. [CLAIMS BARRED.] Except as provided in this
section, a creditor or claimant whose claims are barred under
section 322B.816, 322B.82, or 322B.846 includes a person who is
or becomes a creditor or claimant at any time before, during, or
following the conclusion of termination proceedings, and all
those claiming through or under the creditor or claimant.
Subd. 2. [CLAIMS REOPENED.] At any time within one year
after articles of termination have been filed with the secretary
of state pursuant to section 322B.816 or 322B.82, subdivision 1,
clause (2), or a decree of termination has been entered, a
creditor or claimant who shows good cause for not having
previously filed the claim may apply to a court in this state to
allow a claim:
(1) against the limited liability company to the extent of
undisposed assets; or
(2) if the undisposed assets are not sufficient to satisfy
the claim, against a member, whose liability is limited to a
portion of the claim that is equal to the portion of the
distributions to members in liquidation or termination received
by the member, but in no event may a member's liability exceed
the amount that the member actually received in the termination.
Subd. 3. [OBLIGATIONS INCURRED DURING TERMINATION
PROCEEDINGS.] All known contractual debts, obligations, and
liabilities incurred in the course of winding up and terminating
the limited liability company's affairs must be paid or provided
for by the limited liability company before the distribution of
assets to a member. A person to whom this kind of debt,
obligation, or liability is owed but not paid may pursue any
remedy before the expiration of the applicable statute of
limitations against the managers and governors of the limited
liability company who are responsible for, but who fail to
cause, the limited liability company to pay or make provision
for payment of the debts, obligations, and liabilities or
against members to the extent permitted under section 322B.56.
This subdivision does not apply to dissolution and termination
under the supervision or order of a court.
Sec. 124. [322B.866] [RIGHT TO SUE OR DEFEND AFTER
TERMINATION.]
After a limited liability company has been terminated, any
of its former managers, governors, or members may assert or
defend, in the name of the limited liability company, any claim
by or against the limited liability company.
Sec. 125. [322B.87] [OMITTED ASSETS.]
Title to assets remaining after payment of all debts,
obligations, or liabilities and after distributions to members
may be transferred by a court in this state.
Sec. 126. [322B.873] [DISPOSITION OF ASSETS UPON
DISSOLUTION.]
Subdivision 1. [DISPOSITION UPON LIQUIDATION.] Except when
the business of a dissolved limited liability company is being
continued under subdivision 2 or when the dissolved limited
liability company is being wound up and terminated under section
322B.81, subdivision 3, the assets of the dissolved limited
liability company must be disposed of to satisfying liabilities
according to the following priorities:
(1) to creditors, including members who are creditors, to
the extent otherwise permitted by law, in satisfaction of
liabilities of the limited liability company other than
liabilities for interim distributions to members under section
322B.51 or termination distributions under section 322B.50;
(2) unless otherwise provided in the articles of
organization, to members and former members of the limited
liability company in satisfaction of liabilities for
distributions under section 322B.50 or 322B.51; and
(3) unless otherwise provided in the articles of
organization, to members first for a return of their
contributions, as restated from time to time under section
322B.41, and secondly respecting their membership interests in
the proportions in which the members share in distributions.
A limited liability company may offset any amount due a
member under this subdivision by any amount owed to the limited
liability company by the member and by the amount of damages, if
any, suffered by the limited liability company as a result of
that member's breach of a member control agreement.
Subd. 2. [DISPOSITION UNDER A BUSINESS CONTINUATION
AGREEMENT.] If a business continuation agreement exists, then
after dissolution the board of governors shall resolve to
implement the business continuation agreement and the assets of
the dissolved limited liability company shall be disposed of
according to that agreement, except:
(1) members and former members shall have dissenters'
rights as provided in sections 322B.383 and 322B.386, but:
(i) no dissenters' rights shall exist if the business of
the dissolved limited liability company is being continued
pursuant to a business continuation agreement made after the
dissolution, and
(ii) any dissenters' rights that do exist are limited by
subdivision 3; and
(2) if the business of the dissolved limited liability
company is being continued, but not through a merger under
section 322B.81, subdivision 3, the dissolved limited liability
company shall comply with either section 322B.816 or 322B.82.
Subd. 3. [LIMITATIONS ON DISSENTERS' RIGHTS.] If a person
has agreed in a business continuation agreement to waive
dissenters' rights and nonetheless asserts dissenters' rights
under subdivision 2:
(1) those rights must be honored; but
(2) unless the business continuation agreement provides
otherwise:
(i) in determining the fair value of the membership
interest, the value of the goodwill of the business of the
dissolved limited liability company must not be considered; and
(ii) the payment due the dissenter is subject to an offset
equal to:
(A) any amount owed to the limited liability company by the
member;
(B) the amount of damages, if any, suffered by the limited
liability company as a result of the dissenter's breach of the
business continuation agreement; and
(C) the amount of damages, if any, suffered by the limited
liability company as a result of any breach by the dissenter of
any other member control agreement or part of a member control
agreement.
ACTIONS AGAINST LIMITED LIABILITY COMPANIES
Sec. 127. [322B.876] [SERVICE OF PROCESS ON LIMITED
LIABILITY COMPANY.]
Subdivision 1. [WHO MAY BE SERVED.] A process, notice, or
demand required or permitted by law to be served upon a limited
liability company may be served either upon the registered
agent, if any, of the limited liability company named in the
articles of organization, or upon a manager of the limited
liability company, or upon the secretary of state as provided in
this section.
Subd. 2. [SERVICE ON SECRETARY OF STATE AND WHEN
PERMITTED.] If a limited liability company has appointed and
maintained a registered agent in this state but neither its
registered agent nor a manager of the limited liability company
can be found at the registered office, or if a limited liability
company fails to appoint or maintain a registered agent in this
state and a manager of the limited liability company cannot be
found at the registered office, then the secretary of state is
the agent of the limited liability company upon whom the
process, notice, or demand may be served. The return of the
sheriff, or the affidavit of a person not a party, that no
registered agent or manager can be found at the registered
office in a county is conclusive evidence that the limited
liability company has no registered agent or manager at its
registered office. Service on the secretary of state of any
process, notice, or demand is considered personal service upon
the limited liability company and is made by filing with the
secretary of state duplicate copies of the process, notice, or
demand. The secretary of state shall immediately forward, by
certified mail, addressed to the limited liability company at
its registered office, a copy of the process, notice, or
demand. Service on the secretary of state is returnable in not
less than 30 days notwithstanding a shorter period specified in
the process, notice, or demand.
Subd. 3. [RECORD OF SERVICE.] A record must be maintained
in the office of the secretary of state of all processes,
notices, and demands served upon the secretary of state under
this section, including the date and time of service and the
action taken with reference to it.
Subd. 4. [OTHER METHODS OF SERVICE.] Nothing in this
section limits the right of a person to serve any process,
notice, or demand required or permitted by law to be served upon
a limited liability company in any other manner permitted by law.
Sec. 128. [322B.88] [WHEN A MEMBER IS NOT A PROPER PARTY.]
A member of a limited liability company is not a proper
party to a proceeding by or against a limited liability company
except when:
(1) the object of the proceeding is to determine or enforce
a member's right against, or liability to, the limited liability
company; or
(2) the proceeding involves a claim of personal liability
or responsibility of that member and that claim has some basis
other than the member's status as a member.
Sec. 129. [322B.883] [STATE INTERESTED IN PROCEEDINGS.]
If it appears at any stage of a proceeding in a court in
this state that the state is, or is likely to be, interested in
the proceeding or that it is a matter of general public
interest, the court shall order that a copy of the complaint or
petition be served upon the attorney general in the same manner
prescribed for serving a summons in a civil action. The
attorney general shall intervene in a proceeding when the
attorney general determines that the public interest requires
it, whether or not the attorney general has been served.
FOREIGN LIMITED LIABILITY COMPANIES
Sec. 130. [322B.90] [GOVERNING LAW.]
Subdivision 1. [STATE OF ORGANIZATION.] Subject to the
constitution of this state, the laws of the jurisdiction under
which a foreign limited liability company is organized govern
its organization and internal affairs and the liability of its
members. A foreign limited liability company may not be denied
a certificate of authority to transact business in this state by
reason of any difference between those laws and the laws of this
state.
Subd. 2. [LIMITATIONS.] A foreign limited liability
company holding a valid certificate of authority in this state
has no greater rights and privileges than a domestic limited
liability company. The certificate of authority does not
authorize the foreign limited liability company to exercise any
of its powers or purposes that a domestic limited liability
company is forbidden by law to exercise in this state.
Sec. 131. [322B.905] [NAME.]
A foreign limited liability company may apply for a
certificate of authority under any name that would be available
to a domestic limited liability company, whether or not the name
is the name under which it is authorized in its jurisdiction of
organization.
Sec. 132. [322B.91] [APPLICATION FOR CERTIFICATE OF
AUTHORITY.]
Subdivision 1. [APPLICATION INFORMATION.] Before
transacting business in this state, a foreign limited liability
company shall obtain a certificate of authority. An applicant
for the certificate shall file with the secretary of state an
application executed by an authorized person and setting forth:
(1) the name of the foreign limited liability company and,
if different, the name under which it proposes to transact
business in this state;
(2) the jurisdiction of its organization;
(3) the name and business address of the proposed
registered agent in this state, which agent shall be an
individual resident of this state, a domestic corporation, or a
foreign corporation having a place of business in, and
authorized to do business in, this state; and
(4) the address of the office required to be maintained in
the jurisdiction of its organization by the laws of that
jurisdiction or, if not so required, of the principal place of
business of the foreign limited liability company.
Subd. 2. [FEES.] The application must be accompanied by
payment of $185, which includes a $150 initial license fee in
addition to the $35 filing fee required by section 322B.03,
subdivision 18.
Sec. 133. [322B.915] [ISSUANCE OF CERTIFICATE OF
AUTHORITY.]
Subdivision 1. [ISSUANCE OF CERTIFICATE.] If the secretary
of state finds that an application for a certificate of
authority conforms to law and all fees have been paid, the
secretary shall:
(1) endorse on the application the word "Filed" and the
date of the filing of it;
(2) file the original of the application; and
(3) return the original of the application to the person
who filed it with a certificate of authority issued by the
secretary of state.
Subd. 2. [EFFECTIVE DATE OF CERTIFICATE.] A certificate of
authority issued under this section is effective from the date
the application is filed with the secretary of state accompanied
by the payment of the requisite fees.
Sec. 134. [322B.92] [AMENDMENTS TO THE CERTIFICATE OF
AUTHORITY.]
If any statement in the application for a certificate of
authority by a foreign limited liability company was false when
made or any arrangements or other facts described have changed,
making the application inaccurate in any respect, including but
not limited to a change in the name or address of the registered
agent required to be maintained by section 322B.925, the foreign
limited liability company shall promptly file with the secretary
of state an amendment to the certificate of authority, executed
by an authorized person correcting the statement.
Sec. 135. [322B.925] [REGISTERED AGENT AND CERTAIN
REPORTS.]
A foreign limited liability company authorized to transact
business in this state shall:
(1) appoint and continuously maintain a registered agent in
the same manner as provided in section 322B.13; or
(2) file a report upon any change in the name or business
address of its registered agent in the same manner as provided
in section 322B.135, subdivision 3.
Sec. 136. [322B.93] [CERTIFICATE OF WITHDRAWAL.]
A foreign limited liability company authorized to transact
business in this state may withdraw from this state upon
procuring from the secretary of state a certificate of
withdrawal. In order to procure the certificate, the foreign
limited liability company shall file with the secretary of state
an application for withdrawal, which must set forth:
(1) the name of the limited liability company and the state
or country under the laws of which it is organized;
(2) that the limited liability company is not transacting
business in this state;
(3) that the limited liability company surrenders its
authority to transact business in this state;
(4) that the limited liability company revokes the
authority of its registered agent in this state to accept
service of process and consents to that service of process in
any action, suit, or proceeding based upon any cause of action
arising in this state during the time the limited liability
company was authorized to transact business in this state may be
made on the limited liability company by service upon the
secretary of state; and
(5) a post office address to which a person may mail a copy
of any process against the limited liability company.
Sec. 137. [322B.935] [REVOCATION OF CERTIFICATE OF
AUTHORITY.]
Subdivision 1. [REVOCATION PROCEDURE.] The certificate of
authority of a foreign limited liability company to transact
business in this state may be revoked by the secretary of state
upon the occurrence of any of these events:
(1) the foreign limited liability company has failed to
appoint and maintain a registered agent as required by this
chapter, file a report upon any change in the name or business
address of the registered agent, or file in the office of the
secretary of state any amendment to its application for a
certificate of authority as specified in section 322B.92; or
(2) a misrepresentation has been made of any material
matter in any application, report, affidavit, or other document
submitted by the foreign limited liability company pursuant to
this chapter.
Subd. 2. [REVOCATION NOTICE.] No certificate of authority
of a foreign limited liability company shall be revoked by the
secretary of state unless:
(1) the secretary has given the foreign limited liability
company not less than 60 days' notice by mail addressed to its
registered office in this state or, if the foreign limited
liability company fails to appoint and maintain a registered
agent in this state, addressed to the office required to be
maintained pursuant to section 322B.13; and
(2) during the 60-day period, the foreign limited liability
company has failed to file the report of change regarding the
registered agent, to file any amendment, or to correct the
misrepresentation.
Subd. 3. [EFFECTIVE DATE.] Upon the expiration of 60 days
after the mailing of the notice, the authority of the foreign
limited liability company to transact business in this state
ceases. The secretary of state shall issue a certificate of
revocation and shall mail the certificate to the principal
executive office of the foreign limited liability company.
Sec. 138. [322B.94] [TRANSACTION OF BUSINESS WITHOUT
CERTIFICATE OF AUTHORITY.]
Subdivision 1. [ACCESS TO COURTS.] A foreign limited
liability company transacting business in this state may not
maintain any action, suit, or proceeding in any court of this
state until it possesses a certificate of authority.
Subd. 2. [CONTRACTS AND DEFENSE SUITS.] The failure of a
foreign limited liability company to obtain a certificate of
authority does not impair the validity of any contract or act of
the foreign limited liability company or prevent the foreign
limited liability company from defending any action, suit, or
proceeding in any court of this state.
Subd. 3. [DESIGNATED REGISTERED AGENT.] A foreign limited
liability company, by transacting business in this state without
a certificate of authority, appoints the secretary of state as
its agent upon whom any notice, process, or demand may be served.
Subd. 4. [FEES.] A foreign limited liability company that
transacts business in this state without a valid certificate of
authority is liable to the state for the years or parts of years
during which it transacted business in this state without the
certificate in an amount equal to all fees that would have been
imposed by this chapter upon that limited liability company had
it duly obtained the certificate, filed all reports required by
this chapter, and paid all penalties imposed by this chapter.
The attorney general shall bring proceedings to recover all
amounts due this state under the provisions of this section.
Subd. 5. [CIVIL PENALTY.] A foreign limited liability
company that transacts business in this state without a valid
certificate of authority is subject to a civil penalty, payable
to the state, not to exceed $5,000. Each governor or, in the
absence of governors, each member or agent who authorizes,
directs, or participates in the transaction of business in this
state on behalf of a foreign limited liability company that does
not have a certificate is subject to a civil penalty, payable to
the state, not to exceed $1,000.
Subd. 6. [INJUNCTION.] The civil penalties set forth in
subdivision 5 may be recovered in an action brought within the
district court for Ramsey county by the attorney general. Upon
a finding by the court that a foreign limited liability company
or any of its members, governors, or agents have transacted
business in this state in violation of this chapter, the court
shall issue, in addition to the imposition of a civil penalty,
an injunction restraining the further transaction of the
business of the foreign limited liability company and the
further exercise of any limited liability company's rights and
privileges in this state. The foreign limited liability company
must be enjoined from transacting business in this state until
all civil penalties plus any interest and court costs that the
court may assess have been paid and until the foreign limited
liability company has otherwise complied with the provisions of
this chapter.
Subd. 7. [MEMBER LIMITED LIABILITY.] A member of a foreign
limited liability company is not liable for the debts and
obligations of the limited liability company solely by reason of
the company's having transacted business in this state without a
valid certificate of authority.
Sec. 139. [322B.945] [TRANSACTIONS NOT CONSTITUTING
TRANSACTING BUSINESS.]
Subdivision 1. [EXCLUDED ACTS.] The following activities
of a foreign limited liability company, among others, do not
constitute transacting business within the meaning of this
chapter:
(1) maintaining, defending, or settling any proceeding;
(2) holding meetings of its members or carrying on any
other activities concerning its internal affairs;
(3) maintaining bank accounts;
(4) maintaining offices or agencies for the transfer,
exchange, and registration of the foreign limited liability
company's own securities or maintaining trustees or depositories
with respect to those securities;
(5) selling through independent contractors;
(6) soliciting or obtaining orders, whether by mail or
through employees or agents or otherwise, if the orders require
acceptance outside this state before they become contracts;
(7) creating or acquiring indebtedness, mortgages, and
security interests in real or personal property;
(8) securing or collecting debts or enforcing mortgages,
and security interests in property securing the debts;
(9) holding, protecting, renting, maintaining and operating
real or personal property in this state so acquired;
(10) selling or transferring title to property in this
state to any person; or
(11) conducting an isolated transaction that is completed
within 30 days and that is not one in the course of repeated
transactions of a like manner.
Subd. 2. [EFFECT OF PERSONAL JURISDICTION.] The term
"transacting business" as used in this section has no effect on
personal jurisdiction under section 543.19.
Subd. 3. [OWNERSHIP OF INCOME PRODUCING PROPERTY.] For
purposes of this section, any foreign limited liability company
that owns income-producing real or tangible personal property in
this state, other than property exempted under subdivision 1,
will be considered transacting business in this state.
Subd. 4. [SCOPE OF EXCLUDED TRANSACTIONS DEFINITIONS.] The
list of activities in subdivision 1 is not exhaustive. This
section does not apply in determining the contracts or
activities that may subject a foreign limited liability company
to service of process or taxation in this state or to regulation
under any other law of this state.
Sec. 140. [322B.95] [ACTION BY ATTORNEY GENERAL.]
The attorney general may bring an action to restrain a
foreign limited liability company from transacting business in
this state in violation of this chapter.
Sec. 141. [322B.955] [SERVICE OF PROCESS.]
Service of process on a foreign limited liability company
must be as provided in section 322B.876.
Sec. 142. [EFFECTIVE DATE.]
This article is effective January 1, 1993.
Presented to the governor April 17, 1992
Signed by the governor April 29, 1992, 7:54 a.m.
Official Publication of the State of Minnesota
Revisor of Statutes