Minnesota Session Laws - 1993, Regular Session

  
    Laws of Minnesota 1993 

                        CHAPTER 137-S.F.No. 181 
           An act relating to limited liability companies; 
          clarifying the application of financial institution, 
          workers' compensation, unemployment compensation, 
          taxation, and usury laws; modifying certain powers of, 
          and rules applicable to, limited liability companies 
          and their members and affiliates; amending Minnesota 
          Statutes 1992, sections 48.24, subdivisions 1, 7, and 
          8; 51A.02, subdivision 43; 176.011, subdivision 10; 
          176.041, subdivision 1a; 268.04, subdivision 9; 
          268.161, subdivision 9; 290.92, subdivision 1; 
          297A.01, subdivision 2; 302A.011, subdivision 25; 
          302A.161, subdivision 12; 302A.501, subdivision 1; 
          302A.521, subdivision 1; 302A.551, subdivision 3; 
          302A.673, subdivision 1; 319A.02, subdivision 7; 
          322B.03, subdivision 41, and by adding subdivisions; 
          322B.115, subdivisions 1 and 2; 322B.20, subdivisions 
          5, 7, 12, 14, and 21; 322B.30, subdivisions 2 and 3; 
          322B.306, subdivisions 1, 3, and 4; 322B.31, 
          subdivision 3; 322B.313; 322B.316; 322B.323, 
          subdivision 2; 322B.373, subdivision 1; 322B.54, 
          subdivision 3; 322B.693, subdivision 1; 322B.696; 
          322B.699, subdivision 1; 322B.77, subdivisions 1 and 
          3; 322B.80, subdivision 1, and by adding a 
          subdivision; 322B.873; 322B.91, subdivision 1; 
          322B.92; 322B.93; 322B.935, subdivisions 2 and 3; and 
          334.021; proposing coding for new law in Minnesota 
          Statutes, chapter 322B. 
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
    Section 1.  Minnesota Statutes 1992, section 48.24, 
subdivision 1, is amended to read: 
    Subdivision 1.  The total liabilities to any such bank, as 
principal, guarantor or endorser of any individual, including 
the liabilities of any corporation or limited liability company 
which the individual owns or controls a majority interest, any 
partnership, unincorporated association, limited liability 
company, or corporation, including the liabilities of the 
several members of a partnership or unincorporated association, 
and in case of a corporation or limited liability company of all 
subsidiaries thereof in which such corporation or limited 
liability company owns or controls a majority interest, shall 
never exceed 20 percent of its capital actually paid in cash and 
of its actual surplus fund, except that obligations not to 
exceed 25 percent of said capital and surplus to any one 
borrower shall not be included as liabilities for the purposes 
of this section, but shall be liabilities of the borrowers, 
provided they are secured by not less than a like amount of any 
one of the various types of obligations of the United States or 
which are fully guaranteed as to principal and interest by the 
United States, and providing that such bonds or obligations have 
a market value of at least ten percent in excess of the amount 
loaned thereon at the time each loan is made.  
    For the purpose of this section the members of a family 
living together in one household, if borrowed funds are to be 
used in the conduct of a common enterprise, shall be regarded as 
one person and the total liabilities of the members of the 
family shall be limited as herein provided.  The endorser or 
guarantor of any obligation which is exempt from loaning limits 
according to the provisions of this section shall also be exempt 
from such loaning limits to the extent of the amount of 
liability on such obligations for the purposes of this section 
but shall be liable thereon.  Individual extensions of credit 
which result in liabilities of individuals or, corporations, or 
limited liability companies exceeding the limitations set forth 
in this section shall be construed to conform to the provisions 
of this subdivision upon reduction in an amount sufficient to 
reduce the total liability to not more than the legal amount, 
but until paid in full shall not exempt the officer or employee 
of the bank from being personally liable to the bank for the 
amount of the original excess portion of the loan as set forth 
in subdivision 8.  
    Sec. 2.  Minnesota Statutes 1992, section 48.24, 
subdivision 7, is amended to read: 
    Subd. 7.  Obligations of any person, copartnership, limited 
liability company, association or corporation in the form of 
notes or drafts secured by shipping documents or instruments 
transferring or securing title covering feeder livestock which 
is free from all other encumbrances, when the market value of 
the livestock securing the obligation at the time of the making 
of the loan is not less than 115 percentum of the face amount of 
the notes covered by such documents, shall be subject under this 
subdivision to a limitation of 20 percent of capital and surplus 
in addition to 20 percent of capital and surplus as included in 
provisions of subdivision 1.  Feeder livestock loans as referred 
to in this subdivision is defined to include only obligations 
secured by liens or giving title to cattle, sheep, goats, hogs 
or poultry being fattened for market, but excluding dairy 
cattle, milk goats, poultry used for production of eggs, or 
barnyard or work animals. 
    Sec. 3.  Minnesota Statutes 1992, section 48.24, 
subdivision 8, is amended to read: 
    Subd. 8.  When a bank shall allow any individual, 
partnership, limited liability company, unincorporated 
association, or corporation, or any officer or director of the 
bank, to become indebted to it, directly or indirectly, in 
excess of the amount, exclusive of interest permitted by the 
laws of this state, the officer or employee of the bank 
willfully permitting or approving the loan shall be guilty of a 
gross misdemeanor and, in addition thereto, shall be personally 
liable to the bank for the amount of the loan in excess of the 
statutory limit. 
    Sec. 4.  Minnesota Statutes 1992, section 51A.02, 
subdivision 43, is amended to read: 
    Subd. 43.  [ORGANIZATION.] "Organization" means a 
corporation, government or governmental subdivision or agency, 
trust, estate, partnership, joint venture, cooperative, limited 
liability company, or association. 
    Sec. 5.  Minnesota Statutes 1992, section 176.011, 
subdivision 10, is amended to read: 
    Subd. 10.  [EMPLOYER.] "Employer" means any person who 
employs another to perform a service for hire; and includes 
corporation, partnership, limited liability company, 
association, group of persons, state, county, town, city, school 
district, or governmental subdivision. 
    Sec. 6.  Minnesota Statutes 1992, section 176.041, 
subdivision 1a, is amended to read: 
    Subd. 1a.  [ELECTION OF COVERAGE.] The persons, 
partnerships, limited liability companies, and corporations 
described in this subdivision may elect to provide the insurance 
coverage required by this chapter. 
    (a) An owner or owners of a business or farm may elect 
coverage for themselves.  
    (b) A partnership owning a business or farm may elect 
coverage for any partner.  
    (c) A family farm corporation as defined in section 500.24, 
subdivision 2, clause (c), may elect coverage for any executive 
officer.  
    (d) A closely held corporation which had less than 22,880 
hours of payroll in the previous calendar year may elect 
coverage for any executive officer if that executive officer is 
also an owner of at least 25 percent of the stock of the 
corporation.  
    (e) A person, partnership, limited liability company, or 
corporation hiring an independent contractor, as defined by 
rules adopted by the commissioner, may elect to provide coverage 
for that independent contractor.  
    A person, partnership, limited liability company, or 
corporation may charge the independent contractor a fee for 
providing the coverage only if the independent contractor (1) 
elects in writing to be covered, (2) is issued an endorsement 
setting forth the terms of the coverage, the name of the 
independent contractors, and the fee and how it is calculated. 
    The persons, partnerships, and corporations described in 
this subdivision may also elect coverage for an employee who is 
a spouse, parent, or child, regardless of age, of an owner, 
partner, or executive officer, who is eligible for coverage 
under this subdivision.  Coverage may be elected for a spouse, 
parent, or child whether or not coverage is elected for the 
related owner, partner, or executive director and whether or not 
the person, partnership, or corporation employs any other person 
to perform a service for hire.  Any person for whom coverage is 
elected pursuant to this subdivision shall be included within 
the meaning of the term employee for the purposes of this 
chapter. 
    Notice of election of coverage or of termination of 
election under this subdivision shall be provided in writing to 
the insurer.  Coverage or termination of coverage is effective 
the day following receipt of notice by the insurer or at a 
subsequent date if so indicated in the notice.  The insurance 
policy shall be endorsed to indicate the names of those persons 
for whom coverage has been elected or terminated under this 
subdivision.  An election of coverage under this subdivision 
shall continue in effect as long as a policy or renewal policy 
of the same insurer is in effect.  
    Nothing in this subdivision shall be construed to limit the 
responsibilities of owners, partnerships, limited liability 
companies, or corporations to provide coverage for their 
employees, if any, as required under this chapter. 
    Sec. 7.  Minnesota Statutes 1992, section 268.04, 
subdivision 9, is amended to read: 
    Subd. 9.  [EMPLOYING UNIT.] "Employing unit" means any 
individual or type of organization, including any 
partnership, limited liability company, association, trust, 
estate, joint-stock company, insurance company, or corporation, 
whether domestic or foreign, or the receiver, trustee in 
bankruptcy, trustee or successor of any of the foregoing, or the 
legal representative of a deceased person, which has or 
subsequent to January 1, 1936, had in its employ one or more 
individuals performing services for it.  All individuals 
performing services within this state for any employing unit 
which maintains two or more separate establishments within this 
state shall be deemed to be employed by a single employing 
unit.  Each individual employed to perform or assist in 
performing the work of any agent or individual employed by an 
employing unit shall be deemed to be employed by such employing 
unit whether such individual was hired or paid directly by such 
employing unit or by such agent or individual, provided the 
employing unit had actual or constructive knowledge of such 
work.  Any private or nonprofit organization or government 
agency providing or authorizing the hiring of homeworkers, 
personal care attendants, or other individuals performing 
similar services in the private home of an individual is the 
employing unit of the homeworker, attendant or similar worker 
whether the agency pays the employee directly or provides funds 
to the recipient of the services to pay for the services.  
    Sec. 8.  Minnesota Statutes 1992, section 268.161, 
subdivision 9, is amended to read: 
    Subd. 9.  [PERSONAL LIABILITY.] Any officer, director, or 
any employee having 20 percent ownership interest of a 
corporation which is an employer under sections 268.03 to 
268.231, and any manager, governor, or member of a limited 
liability company having 20 percent ownership interest of a 
limited liability company which is an employer under sections 
268.03 to 268.231, who 
    (1) has control of or supervision over the filing of and 
responsibility for filing contribution reports or of making 
payment of contributions under these sections, and who 
    (2) willfully fails to file the reports or to make payments 
as required, shall be personally liable for contributions or 
reimbursement, including interest, penalties, and costs in the 
event the corporation does not pay to the department those 
amounts for which the employer is liable.  
    Any personal representative of the estate of a decedent or 
fiduciary who voluntarily distributes the assets filed therein 
without reserving a sufficient amount to pay the contributions, 
interest, and penalties due pursuant to this chapter shall be 
personally liable for the deficiency. 
    The personal liability of any person as provided herein 
shall survive dissolution, reorganization, bankruptcy, 
receivership, or assignment for the benefit of creditors.  For 
the purposes of this subdivision, all wages paid by the 
corporation shall be considered earned from the person 
determined to be personally liable. 
    An official designated by the commissioner shall make an 
initial determination as to the personal liability under this 
section.  The determination shall be final unless the person 
found to be personally liable shall within 30 days after mailing 
of notice of determination to the person's last known address 
file a written appeal.  Proceedings on the appeal shall be 
conducted in the same manner as an appeal from a determination 
of employer liability under section 268.12, subdivision 13. 
    Sec. 9.  Minnesota Statutes 1992, section 290.92, 
subdivision 1, is amended to read: 
    Subdivision 1.  [DEFINITIONS.] (1)  [WAGES.] For purposes 
of this section, the term "wages" means the same as that term is 
defined in section 3401(a) and (f) of the Internal Revenue Code 
of 1986, as amended through December 31, 1991, except wages 
shall not include agricultural labor as defined in section 
3121(g) of the Internal Revenue Code of 1986, as amended through 
December 31, 1991. 
    (2)  [PAYROLL PERIOD.] For purposes of this section the 
term "payroll period" means a period for which a payment of 
wages is ordinarily made to the employee by the employee's 
employer, and the term "miscellaneous payroll period" means a 
payroll period other than a daily, weekly, biweekly, 
semimonthly, monthly, quarterly, semiannual, or annual payroll 
period. 
    (3)  [EMPLOYEE.] For purposes of this section the term 
"employee" means any resident individual performing services for 
an employer, either within or without, or both within and 
without the state of Minnesota, and every nonresident individual 
performing services within the state of Minnesota, the 
performance of which services constitute, establish, and 
determine the relationship between the parties as that of 
employer and employee.  As used in the preceding sentence, the 
term "employee" includes an officer of a corporation, and an 
officer, employee, or elected official of the United States, a 
state, or any political subdivision thereof, or the District of 
Columbia, or any agency or instrumentality of any one or more of 
the foregoing. 
    (4)  [EMPLOYER.] For purposes of this section the term 
"employer" means any person, including individuals, fiduciaries, 
estates, trusts, partnerships, limited liability companies, and 
corporations transacting business in or deriving any income from 
sources within the state of Minnesota for whom an individual 
performs or performed any service, of whatever nature, as the 
employee of such person, except that if the person for whom the 
individual performs or performed the services does not have 
legal control of the payment of the wages for such services, the 
term "employer," except for purposes of paragraph (1), means the 
person having legal control of the payment of such wages.  As 
used in the preceding sentence, the term "employer" includes any 
corporation, individual, estate, trust, or organization which is 
exempt from taxation under section 290.05 and further includes, 
but is not limited to, officers of corporations who have legal 
control, either individually or jointly with another or others, 
of the payment of the wages. 
    (5)  [NUMBER OF WITHHOLDING EXEMPTIONS CLAIMED.] For 
purposes of this section, the term "number of withholding 
exemptions claimed" means the number of withholding exemptions 
claimed in a withholding exemption certificate in effect under 
subdivision 5, except that if no such certificate is in effect, 
the number of withholding exemptions claimed shall be considered 
to be zero. 
    Sec. 10.  Minnesota Statutes 1992, section 297A.01, 
subdivision 2, is amended to read: 
    Subd. 2.  "Person" includes any individual, partner, 
officer, director, firm, partnership, joint venture, limited 
liability company, association, cooperative, social club, 
fraternal organization, municipal or private corporation whether 
organized for profit or not, estate, trusts, business trusts, 
receiver, trustee, syndicate, the United States, the state of 
Minnesota, any political subdivision of Minnesota, or any other 
group or combination acting as a unit, and the plural as well as 
the singular number.  As used in the preceding sentence, the 
term "person" includes, but is not limited to, directors and 
officers of corporations, governors and managers of a limited 
liability company, or members of partnerships who, either 
individually or jointly with others, have the control, 
supervision or responsibility of filing returns and making 
payment of the amount of tax imposed by this chapter.  "Person" 
shall also include any agent or consignee of any individual or 
organization enumerated in this subdivision. 
    Sec. 11.  Minnesota Statutes 1992, section 302A.011, 
subdivision 25, is amended to read: 
    Subd. 25.  [RELATED CORPORATION ORGANIZATION.] 
"Related corporation organization" of a specified corporation 
means: 
    (1) a parent or subsidiary of the specified corporation or; 
    (2) another subsidiary of a parent of the specified 
corporation; 
    (3) a limited liability company owning, directly or 
indirectly, more than 50 percent of the voting power of the 
shares entitled to vote for directors of the specified 
corporation; 
    (4) a limited liability company having more than 50 percent 
of the voting power of its membership interests entitled to vote 
for governors owned directly or indirectly by the specified 
corporation; 
    (5) a limited liability company having more than 50 percent 
of the voting power of its membership interests entitled to vote 
for governors owned directly or indirectly either (i) by a 
parent of the specified corporation or (ii) a limited liability 
company owning, directly or indirectly, more than 50 percent of 
the voting power of the shares entitled to vote for directors of 
the specified corporation; or 
    (6) a corporation having more than 50 percent of the voting 
power of its shares entitled to vote for director owned directly 
or indirectly by a limited liability company owning, directly or 
indirectly, more than 50 percent of the voting power of the 
shares entitled to vote for directors of the specified 
corporation.  
    Sec. 12.  Minnesota Statutes 1992, section 302A.161, 
subdivision 12, is amended to read: 
    Subd. 12.  [PENSIONS; BENEFITS.] A corporation 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 corporation, employee or incentive benefit plans, trusts, 
and provisions to or for the benefit of, any or all of its and 
its related corporations' organizations' officers, managers, 
directors, governors, employees, and agents and, in the case of 
a related organization that is a limited liability company, 
members who provide services to the limited liability company, 
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.  
    Sec. 13.  Minnesota Statutes 1992, section 302A.501, 
subdivision 1, is amended to read: 
    Subdivision 1.  [PREREQUISITES.] A corporation 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 directors 
present and:  
    (a) Is in the usual and regular course of business of the 
corporation; 
    (b) Is with, or for the benefit of, a related corporation 
organization, an organization in which the corporation has a 
financial interest, an organization with which the corporation 
has a business relationship, or an organization to which the 
corporation has the power to make donations; 
    (c) Is with, or for the benefit of, an officer or other 
employee of the corporation or a subsidiary, including an 
officer or employee who is a director of the corporation or a 
subsidiary, and may reasonably be expected, in the judgment of 
the board, to benefit the corporation; or 
    (d) Has been approved by (1) the holders of two-thirds of 
the voting power of the shares entitled to vote which are owned 
by persons other than the interested person or persons, or (2) 
the unanimous affirmative vote of the holders of all outstanding 
shares, whether or not entitled to vote.  
    Sec. 14.  Minnesota Statutes 1992, section 302A.521, 
subdivision 1, is amended to read: 
    Subdivision 1.  [DEFINITIONS.] (a) For purposes of this 
section, the terms defined in this subdivision have the meanings 
given them.  
     (b) "Corporation" includes a domestic or foreign 
corporation that was the predecessor of the corporation 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 
director, the position of director in a corporation, (2) with 
respect to a person other than a director, the elective or 
appointive office or position held by an officer, member of a 
committee of the board, or the employment relationship 
undertaken by an employee of the corporation, and (3) with 
respect to a director, officer, or employee of the corporation 
who, while a director, officer, or employee of the corporation, 
is or was serving at the request of the corporation or whose 
duties in that position involve or involved service as a 
director, officer, partner, trustee, employee, or agent of 
another organization or employee benefit plan, the position of 
that person as a director, 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 
corporation.  
    (e) "Special legal counsel" means counsel who has not 
represented the corporation or a related corporation 
organization, or a director, officer, member of a committee of 
the board, or employee, whose indemnification is in issue.  
    Sec. 15.  Minnesota Statutes 1992, section 302A.551, 
subdivision 3, is amended to read: 
    Subd. 3.  [EFFECT MEASURED.] (a) In the case of a 
distribution made by a corporation in connection with a 
purchase, redemption, or other acquisition of its shares, the 
effect of the distribution shall 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 
corporation, or as of the date on which the shareholder ceases 
to be a shareholder of the corporation with respect to the 
shares, whichever is the earliest.  
    (b) The effect of any other distribution shall 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 corporation incurred or issued in a 
distribution in accordance with this section to a shareholder 
who as a result of the transaction is no longer a shareholder is 
on a parity with the indebtedness of the corporation to its 
general unsecured creditors, except to the extent subordinated, 
agreed to, or secured by a pledge of any assets of the 
corporation or a related corporation organization, or subject to 
any other agreement between the corporation and the shareholder. 
    (d) Sections 302A.551 to 302A.559 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 corporation governed by this chapter.  
    Sec. 16.  Minnesota Statutes 1992, section 302A.673, 
subdivision 1, is amended to read: 
    Subdivision 1.  [BUSINESS COMBINATION WITH INTERESTED 
SHAREHOLDER; APPROVAL BY DIRECTORS.] (a) Notwithstanding 
anything to the contrary contained in this chapter (except the 
provisions of subdivision 3), an issuing public corporation may 
not engage in any business combination, or vote, consent, or 
otherwise act to authorize a subsidiary of the issuing public 
corporation to engage in any business combination, with, with 
respect to, proposed by or on behalf of, or pursuant to any 
written or oral agreement, arrangement, relationship, 
understanding, or otherwise with, any interested shareholder of 
the issuing public corporation or any affiliate or associate of 
the interested shareholder for a period of four years following 
the interested shareholder's share acquisition date unless the 
business combination or the acquisition of shares made by the 
interested shareholder on the interested shareholder's share 
acquisition date is approved before the interested shareholder's 
share acquisition date by a committee of the board of the 
issuing public corporation formed in accordance with paragraph 
(d). 
     (b) If a good faith definitive proposal regarding a 
business combination is made in writing to the board of the 
issuing public corporation, a committee of the board formed in 
accordance with paragraph (d) shall consider and take action on 
the proposal and respond in writing within 30 days after receipt 
of the proposal by the issuing public corporation, setting forth 
its decision regarding the proposal. 
      (c) If a good faith definitive proposal to acquire shares 
is made in writing to the board of the issuing public 
corporation, a committee of the board formed in accordance with 
paragraph (d), shall consider and take action on the proposal 
and respond in writing within 30 days after receipt of the 
proposal by the issuing public corporation, setting forth its 
decision regarding the proposal.  
      (d)(1) When a business combination or acquisition of shares 
is proposed pursuant to this subdivision, the board shall 
promptly form a committee composed of all of the board's 
disinterested directors.  The committee shall take action on the 
proposal by the affirmative vote of a majority of committee 
members.  No larger proportion or number of votes shall be 
required.  Notwithstanding the provisions of section 302A.241, 
subdivision 1, the committee shall not be subject to any 
direction or control by the board with respect to the 
committee's consideration of, or any action concerning, a 
business combination or acquisition of shares pursuant to this 
section. 
      (2) A committee formed pursuant to this subdivision shall 
be composed of one or more members.  Only disinterested 
directors may be members of a committee formed pursuant to this 
subdivision.  However, if the board has no disinterested 
directors, the board shall select three or more disinterested 
persons to be committee members.  Committee members are deemed 
to be directors for purposes of sections 302A.251, 302A.255, and 
302A.521. 
    (3) For purposes of this subdivision, a director or person 
is "disinterested" if the director or person is neither an 
officer nor an employee, nor has been an officer or employee 
within five years preceding the formation of the committee 
pursuant to this section, of the issuing public corporation, or 
of a related corporation organization. 
    Sec. 17.  Minnesota Statutes 1992, section 319A.02, 
subdivision 7, is amended 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, directors, 
officers, directors, shareholders and shares of stock shall 
refer to articles of organization, operating agreement, 
governors, managers, members and membership interests, 
respectively. 
    Sec. 18.  Minnesota Statutes 1992, section 322B.03, is 
amended by adding a subdivision to read: 
    Subd. 17a.  [DOMESTIC CORPORATION.] "Domestic corporation" 
means a corporation, other than a foreign corporation, organized 
for profit and incorporated under or governed by chapter 302A. 
    Sec. 19.  Minnesota Statutes 1992, section 322B.03, is 
amended by adding a subdivision to read: 
    Subd. 19a.  [FOREIGN CORPORATION.] "Foreign corporation" 
means a corporation organized for profit that is incorporated 
under laws other than the laws of this state for a purpose or 
purposes for which a corporation may be incorporated under 
chapter 302A. 
    Sec. 20.  Minnesota Statutes 1992, section 322B.03, is 
amended by adding a subdivision to read: 
    Subd. 36a.  [PARENT.] "Parent" of a specified limited 
liability company means a limited liability company or a 
corporation that directly or indirectly owns more than 50 
percent of the voting power of the membership interests entitled 
to vote for governors of the specified limited liability company.
    Sec. 21.  Minnesota Statutes 1992, section 322B.03, 
subdivision 41, is amended to read: 
    Subd. 41.  [RELATED LIMITED LIABILITY COMPANY 
ORGANIZATION.] "Related limited liability company organization" 
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. 
    Sec. 22.  Minnesota Statutes 1992, section 322B.03, is 
amended by adding a subdivision to read: 
    Subd. 45a.  [SUBSIDIARY.] "Subsidiary" of a specified 
limited liability company means a limited liability company or a 
corporation having more than 50 percent of the voting power of 
its membership interests entitled to vote for governors owned 
directly or indirectly by the specified limited liability 
company. 
    Sec. 23.  Minnesota Statutes 1992, section 322B.115, 
subdivision 1, is amended to read: 
    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, unless the articles of organization 
expressly authorize a longer period of duration; 
    (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.  
    Sec. 24.  Minnesota Statutes 1992, section 322B.115, 
subdivision 2, is amended to read: 
     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); 
    (19) unanimous consent is required for the transfer of 
governance rights to a person not already a member (section 
322B.313, subdivision 2); and 
    (20) unanimous consent is required to avoid dissolution 
(section 322B.80, subdivision 1, clause (5)(B)). 
    Sec. 25.  Minnesota Statutes 1992, section 322B.20, 
subdivision 5, is amended to read: 
    Subd. 5.  [PROPERTY DISPOSITION.] A limited liability 
company may sell, convey, mortgage, create a security interest 
in, otherwise encumber, assign, 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.  
    Sec. 26.  Minnesota Statutes 1992, section 322B.20, 
subdivision 7, is amended to read: 
    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 or other encumbrance or assignment of all 
or any of its property, franchises, and income.  
    Sec. 27.  Minnesota Statutes 1992, section 322B.20, 
subdivision 12, is amended to read: 
    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' organizations' officers, managers, 
directors, governors, employees, and agents and, in the case of 
a related organization that is a limited liability company, 
members who provide services to the limited liability company, 
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.  
    Sec. 28.  Minnesota Statutes 1992, section 322B.20, 
subdivision 14, is amended to read: 
    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 members, 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.  
    Sec. 29.  Minnesota Statutes 1992, section 322B.20, 
subdivision 21, is amended to read: 
    Subd. 21.  [ADVANCES.] A limited liability company may make 
advances to members who provide services to the limited 
liability company, its governors, managers, and employees and 
those of its subsidiaries as provided in section 322B.696.  
    Sec. 30.  Minnesota Statutes 1992, section 322B.30, 
subdivision 2, is amended to read: 
    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, restrictions on assignments of financial rights 
under section 322B.31, subdivision 3, or governance rights under 
section 322B.313, subdivision 6, then in effect, as well as any 
assignment of the member's rights then in effect other than a 
security interest.  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. 
    Sec. 31.  Minnesota Statutes 1992, section 322B.30, 
subdivision 3, is amended to read: 
    Subd. 3.  [GRANT OF A SECURITY INTEREST.] Notwithstanding 
any law to the contrary, for the purpose of any law relating to 
security interests, a membership interest, governance rights, 
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) and not chattel paper as 
defined in section 336.9-105(1)(b) and not an instrument as 
defined in section 336.9-105(1)(i) and not an account as defined 
in section 336.9-106. 
     Sec. 32.  Minnesota Statutes 1992, section 322B.306, 
subdivision 1, is amended to read: 
    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 is avoided under that clause.  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. 
    Sec. 33.  Minnesota Statutes 1992, section 322B.306, 
subdivision 3, is amended to read: 
    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 
under that clause, 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 
under that clause, the member whose continued membership has 
terminated retains all governance rights and financial rights 
owned before the termination of the membership and may exercise 
those rights through the winding up and termination of the 
limited liability company.  
    Sec. 34.  Minnesota Statutes 1992, section 322B.306, 
subdivision 4, is amended to read: 
    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) if dissolution avoidance consent is obtained, 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, section 322B.873 applies. 
    Sec. 35.  Minnesota Statutes 1992, section 322B.31, 
subdivision 3, is amended to read: 
    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) Subject to paragraph (c), 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.  
    (c) With regard to restrictions on the assignment of 
financial rights, a would-be assignee of financial rights is 
entitled to rely on a statement of membership interest issued by 
the limited liability company under section 322B.30.  A 
restriction on the assignment of financial rights, which is 
otherwise valid and in effect at the time of the issuance of a 
statement of membership interest but which is not reflected in 
that statement, is ineffective against an assignee who takes an 
assignment in reliance on the statement. 
    (d) Notwithstanding any provision of law, articles of 
organization, member control agreement, operating agreement, 
other agreement, resolution, or action to the contrary, a 
security interest in a member's financial rights may be 
foreclosed and otherwise enforced, and a secured party may 
assign a member's financial rights in accordance with chapter 
336, without the consent or approval of the member whose 
financial rights are subject to the security interest. 
    Sec. 36.  Minnesota Statutes 1992, section 322B.313, is 
amended to read: 
    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 
GOVERNANCE RIGHTS 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, 
unless the articles of organization provide for written consent 
by fewer than all members.  Subject to subdivision 6, a member 
may grant a security interest in a complete membership interest 
or governance rights without obtaining the consent required by 
this subdivision.  However, a secured party may not take or 
assign ownership of governance rights without first obtaining 
the consent required by this subdivision.  If a secured party 
has a security interest in both a member's financial rights and 
governance rights, including a security interest in a complete 
membership interest, this subdivision's requirement that the 
secured party obtain consent applies only to taking or assigning 
ownership of the governance rights and does not apply to taking 
or assigning ownership of the financial rights. 
    Subd. 3.  [EFFECT ON MEMBERSHIP.] When an assignment of 
governance rights coupled with financial rights is effective 
under subdivision 2: 
    (1) if the assignment is not a security interest, 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 if the consent required to avoid dissolution is not 
greater than the consent required under subdivision 2. 
    Subd. 4.  [EFFECT ON LIABILITY FOR CONTRIBUTIONS AND 
ILLEGAL DISTRIBUTIONS.] When an assignment other than a security 
interest is effective under subdivision 2, unless the written 
consent under subdivision 2 otherwise provides:  
    (1) the assignee is liable for any in proportion to the 
interest assigned for the 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. 
    Subd. 7.  [FORECLOSURE OF SECURITY 
INTEREST.] Notwithstanding any provision of law, articles of 
organization, member control agreement, operating agreement, 
other agreement, resolution, or action to the contrary, a 
security interest in a member's full membership interest or 
governance rights may be foreclosed and otherwise enforced, and 
a secured party may assign a member's complete membership 
interest or governance rights in accordance with chapter 336, 
all without the consent or approval of the member whose full 
membership interest or governance rights are the subject of the 
security interest. 
    Sec. 37.  Minnesota Statutes 1992, section 322B.316, is 
amended to read: 
    322B.316 [EFFECTIVE DATE OF ASSIGNMENTS.] 
    Any permissible and otherwise valid assignment of financial 
rights under section 322B.31 and or of governance rights coupled 
with financial rights or a complete membership interest 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, except that a permissible and otherwise valid security 
interest in a complete membership interest, financial rights, or 
governance rights will be effective as to and binding on the 
limited liability company as provided in chapter 336 whether or 
not the information about the secured party or the permissible 
and otherwise valid security interest is reflected in the 
required records of the limited liability company.  
     Sec. 38.  Minnesota Statutes 1992, section 322B.323, 
subdivision 2, is amended to read: 
    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 is avoided under section 322B.80, 
subdivision 1, clause (5), 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. 39.  Minnesota Statutes 1992, section 322B.373, 
subdivision 1, is amended to read: 
    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 other than a secured party, 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.  
    Sec. 40.  Minnesota Statutes 1992, section 322B.54, 
subdivision 3, is amended to read: 
    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 organization, 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. 
    Sec. 41.  Minnesota Statutes 1992, section 322B.693, 
subdivision 1, is amended to read: 
    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 organization, 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 member who provides 
services to the limited liability company, or a manager or other 
employee of the limited liability company or a subsidiary, 
including a member, 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.  
    Sec. 42.  Minnesota Statutes 1992, section 322B.696, is 
amended to read: 
    322B.696 [ADVANCES.] 
    A limited liability company may, without a vote of the 
governors or its members, advance money to its members who 
provide services, 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. 43.  Minnesota Statutes 1992, section 322B.699, 
subdivision 1, is amended to read: 
    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, or the scope of the services provided by 
members of the limited liability company who provide services to 
the limited liability company, and (3) with respect to a 
governor, manager, member, or employee of the limited liability 
company who, while a member, 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, member, partner, trustee, employee, or agent 
of another organization or employee benefit plan, the position 
of that person as a governor, director, manager, 
officer, member, 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 organization, or a governor, manager, member 
of a committee of the board of governors, or employee, whose 
indemnification is in issue.  
    Sec. 44.  Minnesota Statutes 1992, section 322B.77, 
subdivision 1, is amended to read: 
    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 mortgage of or security interest in and otherwise encumber and 
assign for purposes of security 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.  
    Sec. 45.  Minnesota Statutes 1992, section 322B.77, 
subdivision 3, is amended to read: 
    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 authorized agents or, if the limited liability 
company no longer exists, by its last managers. 
    Sec. 46.  Minnesota Statutes 1992, section 322B.80, 
subdivision 1, is amended to read: 
     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 either by the 
consent of all the remaining members under a right to do so 
consent stated in the articles of organization and the consent 
is obtained no later than 90 days after the termination of the 
continued membership or under a separate right to continue 
stated in the articles of organization.  
    Sec. 47.  Minnesota Statutes 1992, section 322B.80, is 
amended by adding a subdivision to read: 
     Subd. 3.  [SECURITY INTERESTS.] Notwithstanding any 
provision of law, articles of organization, member control 
agreement, operating agreement, other agreement, resolution, or 
action to the contrary, a limited liability company is not 
dissolved and is not required to be wound up upon the granting 
of a security interest in a member's membership interest, 
governance rights, or financial rights, or upon the foreclosure 
or other enforcement of a security interest in a member's 
financial rights, or upon the secured party's assignment, 
acceptance, or retention of a member's financial rights in 
accordance with chapter 336. 
    Sec. 48.  Minnesota Statutes 1992, section 322B.873, is 
amended to read: 
    322B.873 [DISPOSITION OF ASSETS UPON DISSOLUTION.] 
    Subdivision 1.  [DISPOSITION UPON LIQUIDATION.] Subject to 
subdivision 4, 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 subdivisions 3 and 4; 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, including providing for installment payments: 
    (i) in determining the fair value of the membership 
interest, the value of the good will 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 other 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 provided for in subdivision 4.  
    Subd. 4.  [DAMAGES AND OFFSETS FOR WRONGFUL DISSOCIATION 
AND BREACH OF A MEMBER CONTROL AGREEMENT.] A member who 
wrongfully resigns or retires is liable to the limited liability 
company for any damages caused by the member's wrongful 
resignation or retirement.  Any member who breaches a member 
control agreement is liable to the limited liability company for 
any damages caused by the breach.  Any payment due a member 
under this section, including payments to dissenters due to 
winding up merger under section 322B.81, subdivision 3, is 
subject to offset these damages. 
     Sec. 49.  [322B.901] [FOREIGN LIMITED LIABILITY 
PARTNERSHIPS CONSIDERED FOREIGN LIMITED LIABILITY COMPANIES.] 
    For the purposes of sections 322B.90 to 322B.955, the term 
"foreign limited liability company" includes a foreign limited 
liability partnership 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 or for which a professional limited liability 
company may be organized under chapter 319A. 
    Sec. 50.  Minnesota Statutes 1992, section 322B.91, 
subdivision 1, is amended to read: 
    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 a 
certificate of status from the filing office in the jurisdiction 
in which the foreign limited liability company is organized and 
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; and 
    (5) the date the foreign limited liability company expires 
in the jurisdiction of its organization. 
    Sec. 51.  Minnesota Statutes 1992, section 322B.92, is 
amended to read: 
    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: 
     (1) in the case of a change in its name, a termination or a 
merger, a certificate to that effect authenticated by the proper 
officer of the state or country under the laws of which the 
foreign limited liability company is organized; or 
     (2) in the case of a change in the name or address of the 
registered agent required to be maintained by section 322B.925, 
an amendment to the certificate of authority signed by an 
authorized person. 
    Sec. 52.  Minnesota Statutes 1992, section 322B.93, is 
amended to read: 
    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.  
    The filing with the secretary of state of a certificate of 
termination or a certificate of merger if the limited liability 
company is not the surviving organization from the proper 
officer of the state or country under the laws of which the 
limited liability company is organized constitutes a valid 
application of withdrawal and the authority of the limited 
liability company to transact business in this state shall cease 
upon filing of the certificate. 
    Sec. 53.  Minnesota Statutes 1992, section 322B.935, 
subdivision 2, is amended to read: 
    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 address in the 
jurisdiction of organization; 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.  
    Sec. 54.  Minnesota Statutes 1992, section 322B.935, 
subdivision 3, is amended to read: 
    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 address of the 
principal executive place of business or the office required to 
be maintained in the jurisdiction of organization of the foreign 
limited liability company.  
    Sec. 55.  Minnesota Statutes 1992, section 334.021, is 
amended to read: 
    334.021 [CORPORATION PROHIBITED FROM INTERPOSING DEFENSE OF 
USURY.] 
    No corporation shall hereafter interpose the defense of 
usury in any action.  The term "corporation," as used in this 
section, includes any cooperative corporation, cooperative 
association, limited liability company, or limited partnership, 
and further includes any association or joint stock company 
having any of the powers and privileges of corporations not 
possessed by an individual or a partnership. 
     Sec. 56.  [EFFECTIVE DATE.] 
    Sections 1 to 55 are effective retroactive to January 1, 
1993. 
    Presented to the governor May 11, 1993 
    Signed by the governor May 13, 1993, 2:59 p.m.