ARTICLE 1. GENERAL PROVISIONS.

§31B-1-101. Definitions.   

In this chapter:

(1) "Articles of organization" means initial, amended and restated articles of organization and articles of merger. In the case of a foreign limited liability company, the term includes all records serving a similar function required to be filed in the office of the secretary of state or other official having custody of company records in the state or country under whose law it is organized.

(2) "At-will company" means a limited liability company other than a term company.

(3) "Business" includes every trade, occupation, profession and other lawful purpose, whether or not carried on for profit.

(4) "Debtor in bankruptcy" means a person who is the subject of an order for relief under Title 11 of the United States Code or a comparable order under a successor statute of general application or a comparable order under federal, state or foreign law governing insolvency.

(5) "Deliver" or "delivery" means any method of delivery used in conventional commercial practice, including, but not limited to, delivery by hand, mail, commercial delivery and electronic transmission.

(6) "Distinguishable" means, in relation to the name of a business a difference between names which would allow a person to recognize or perceive the name of the business as being noticeably different including at least a one-word difference between names when the words are common terms and the company is or might appear to be in a similar business and at least a word order difference between names when the different word is a proper name or an unusual term, or when the company is clearly in a different type of business from the existing name.

(7) "Distribution" means a transfer of money, property or other benefit from a limited liability company to a member in the member's capacity as a member or to a transferee of the member's distributional interest.

(8) "Distributional interest" means all of a member's interest in distributions by the limited liability company.

(9) "Electronic transmission" or "electronically transmitted" means any process of communication not directly involving the physical transfer of paper that is suitable for the retention, retrieval and reproduction of information by the recipient.

(10) "Entity" means a person other than an individual.

(11) "Foreign limited liability company" means an unincorporated entity organized under laws other than the laws of this state which afford limited liability to its owners comparable to the liability under section 3-303 and is not required to obtain a certificate of authority to transact business under any law of this state other than this chapter.

(12) "Limited liability company" means a limited liability company organized under this chapter.

(13) "Manager" means a person, whether or not a member of a manager-managed company, who is vested with authority under section 3-301.

(14) "Manager-managed company" means a limited liability company which is so designated in its articles of organization.

(15) "Member-managed company" means a limited liability company other than a manager-managed company.

(16) "Operating agreement" means the agreement under section 1-103 concerning the relations among the members, managers and limited liability company. The term includes amendments to the agreement.

(17) "Person" means an individual, corporation, business trust, estate, trust, partnership, limited liability company, association, joint venture, government, governmental subdivision, agency, or instrumentality or any other legal or commercial entity.

(18) "Principal office" means the office, whether or not in this state, where the principal executive office of a domestic or foreign limited liability company is located.

(19) "Record" means information that is inscribed on a tangible medium or that is stored in an electronic or other medium and is retrievable in perceivable form.

(20) "Sign" or "signature" means to identify a record by means of a signature, mark or other symbol, with intent to authenticate it and includes, but is not limited to, any manual, facsimile, conformed or electronic signature.

(21) "State" means a state of the United States, the District of Columbia, the Commonwealth of Puerto Rico or any territory or insular possession subject to the jurisdiction of the United States.

(22) "Term company" means a limited liability company in which its members have agreed to remain members until the expiration of a term specified in the articles of organization.

(23) "Transfer" includes an assignment, conveyance, deed, bill of sale, lease, mortgage, security interest, encumbrance and gift.

§31B-1-102. Knowledge and notice.
      (a) A person knows a fact if the person has actual knowledge of it.
      (b) A person has notice of a fact if the person:
      (1) Knows the fact;
      (2) Has received a notification of the fact; or
      (3) Has reason to know the fact exists from all of the facts known to the person at the time in question.
      (c) A person notifies or gives a notification of a fact to another by taking steps reasonably required to inform the other person in ordinary course, whether or not the other person knows the fact.
      (d) A person receives a notification when the notification:
      (1) Comes to the person's attention; or
      (2) Is duly delivered at the person's place of business or at any other place held out by the person as a place for receiving communications.
      (e) An entity knows, has notice or receives a notification of a fact for purposes of a particular transaction when the individual conducting the transaction for the entity knows, has notice, or receives a notification of the fact, or in any event when the fact would have been brought to the individual's attention had the entity exercised reasonable diligence. An entity exercises reasonable diligence if it maintains reasonable routines for communicating significant information to the individual conducting the transaction for the entity and there is reasonable compliance with the routines. Reasonable diligence does not require an individual acting for the entity to communicate information unless the communication is part of the individual's regular duties or the individual has reason to know of the transaction and that the transaction would be materially affected by the information.

§31B-1-103. Effect of operating agreement; nonwaivable provisions.
      (a) Except as otherwise provided in subsection (b) of this section, all members of a limited liability company may enter into an operating agreement, which need not be in writing, to regulate the affairs of the company and the conduct of its business, and to govern relations among the members, managers and company. To the extent the operating agreement does not otherwise provide, this chapter governs relations among the members, managers and company.
      (b) The operating agreement may not:
      (1) Unreasonably restrict a right to information or access to records under section 4-408;
      (2) Eliminate the duty of loyalty under section 4-409(b) or 6-603(b)(3), but the agreement may:
      (i) Identify specific types or categories of activities that do not violate the duty of loyalty, if not manifestly unreasonable; and
      (ii) Specify the number or percentage of members or disinterested managers that may authorize or ratify, after full disclosure of all material facts, a specific act or transaction that otherwise would violate the duty of loyalty;
      (3) Unreasonably reduce the duty of care under section 4-409(c) or 6-603(b)(3);
      (4) Eliminate the obligation of good faith and fair dealing under section 4-409(d), but the operating agreement may determine the standards by which the performance of the obligation is to be measured, if the standards are not manifestly unreasonable;
      (5) Vary the right to expel a member in an event specified in section 6-601(6);
      (6) Vary the requirement to wind up the limited liability company's business in a case specified in section 8-801(b)(4) or (b)(5); or
      (7) Restrict rights of a person, other than a manager, member and transferee of a member's distributional interest, under this chapter.

§31B-1-104. Supplemental principles of law.
      (a) Unless displaced by particular provisions of this chapter, the principles of law and equity supplement this chapter.
      (b) If an obligation to pay interest arises under this chapter and the rate is not specified, the rate is that specified in section thirty-one, article six, chapter fifty-six of this code.

§31B-1-105. Name.
      (a) The name of a limited liability company must contain “limited liability company” or “limited company” or the abbreviation “L.L.C.”, “LLC”, “L.C.” or “LC”. “Limited” may be abbreviated as “Ltd.” and “company” may be abbreviated as “Co.”.
      (b) Except as authorized by subsections (c) and (d) of this section, the name of a limited liability company must be distinguishable upon the records of the secretary of state from:
      (1) The name of any corporation, limited partnership, limited liability partnership or limited liability company incorporated, organized or authorized to transact business in this state;
      (2) A name reserved or registered under sections 1-106 or 1-107 of this article or under sections twelve or thirteen of article one, chapter thirty-one of this code.
      (3) A fictitious name approved under section 10-1005 for a foreign company authorized to transact business in this state because its real name is unavailable.
      (c) A limited liability company may apply to the secretary of state for authorization to use a name that is not distinguishable upon the records of the secretary of state from one or more of the names described in subsection (b) of this section. The secretary of state shall authorize use of the name applied for if:
      (1) The present user, registrant or owner of a reserved name consents to the use in a record and submits an undertaking in form satisfactory to the secretary of state to change the name to a name that is distinguishable upon the records of the secretary of state from the name applied for; or
      (2) The applicant delivers to the secretary of state a certified copy of the final judgment of a court of competent jurisdiction establishing the applicant's right to use the name applied for in this state.
      (d) A limited liability company may use the name, including a fictitious name, of another domestic or foreign company which is used in this state if the other company is organized or authorized to transact business in this state and the company proposing to use the name has:
      (1) Merged with the other company;
      (2) Been formed by reorganization with the other company; or
      (3) Acquired substantially all of the assets, including the name, of the other company.

§31B-1-106. Reserved name.
      (a) A person may reserve the exclusive use of the name of a limited liability company, including a fictitious name for a foreign company whose name is not available, by delivering an application to the secretary of state for filing. The application must set forth the name and address of the applicant and the name proposed to be reserved. If the secretary of state finds that the name applied for is available, it must be reserved for the applicant's exclusive use for a one hundred twenty-day period. The reservation may be renewed for one additional period of one hundred twenty days, but may not thereafter be reserved by the same or associated persons within one calendar year of the expiration of the last reservation period.
      (b) The owner of a name reserved for a limited liability company may transfer the reservation to another person by delivering to the secretary of state a signed notice of the transfer which states the name and address of the transferee.

§31B-1-107. Registered name.
      (a) A foreign limited liability company may register its name subject to the requirements of section 10-1005, if the name is distinguishable upon the records of the secretary of state from names that are not available under section 1-105(b).
      (b) A foreign limited liability company registers its name, or its name with any addition required by section 10-1005, by delivering to the secretary of state for filing an application:
      (1) Setting forth its name, or its name with any addition required by section 10-1005, the state or country and date of its organization and a brief description of the nature of the business in which it is engaged; and
      (2) Accompanied by a certificate of existence, or a record of similar import, from the state or country of organization.
      (c) A foreign limited liability company whose registration is effective may renew it for successive years by delivering for filing in the office of the secretary of state a renewal application complying with subsection (b) of this section between the first day of October and the thirty-first day of December of the preceding year. The renewal application renews the registration for the following calendar year.
      (d) A foreign limited liability company whose registration is effective may qualify as a foreign company under its name or consent in writing to the use of its name by a limited liability company later organized under this chapter or by another foreign company later authorized to transact business in this state. The registered name terminates when the limited liability company is organized or the foreign company qualifies or consents to the qualification of another foreign company under the registered name.

§31B-1-108. Designated office and agent for service of process.

(a) A limited liability company and a foreign limited liability company authorized to do business in this state may continuously maintain in this state:

(1) An office, which need not be a place of its business in this state; and

(2) An agent and address of the agent for service of process on the company.

(b) An agent shall be an individual resident of this state, a domestic corporation, another limited liability company or a foreign corporation or foreign company authorized to do business in this state.

(c) Every limited liability company shall pay an annual fee of twenty-five dollars for the services of the secretary of state as attorney-in-fact for the limited liability company, which fee shall be due and payable at the initial registration of the limited liability company and every year thereafter the same time that the annual report required under section two hundred eleven, article two of this chapter is due and one half of each fee shall be deposited in the state fund, general revenue and one half of the fees in the service fees and collections account established by section two, article one, chapter fifty-nine of this code for the operation of the office of the secretary of state. The secretary of state shall dedicate sufficient resources from that fund or other funds to provide the services required in this chapter.

(d) The secretary of state shall keep a record of all processes, notices and demands served pursuant to this section and record the time of and the action taken regarding the service.

(e) This section does not affect the right to serve process, notice or demand in any manner otherwise provided by law.

§31B-1-109. Change of designated office or agent for service of process.

A limited liability company may change its designated office or agent for service of process by delivering to the secretary of state for filing a statement of change which sets forth:

(1) The name of the company;

(2) The address of its current designated office, if any;

(3) If the current designated office is to be changed, the address of the new designated office;

(4) The name and address of its current agent for service of process, if any;

(5) If the current agent for service of process or address of that agent is to be changed, the new address or the name and address of the new agent for service of process.

§31B-1-110. Resignation of agent for service of process.
      (a) An agent for service of process of a limited liability company may resign by delivering to the secretary of state for filing a record of the statement of resignation.
      (b) After filing a statement of resignation, the secretary of state shall mail a copy to the designated office and another copy to the limited liability company at its principal office.
      (c) An agency is terminated on the thirty-first day after the statement is filed in the office of the secretary of state.

§31B-1-111. Service of process.
      (a) An agent for service of process appointed by a limited liability company or a foreign limited liability company is an agent of the company for service of any process, notice or demand required or permitted by law to be served upon the company.
      (b) If a limited liability company or foreign limited liability company fails to appoint or maintain an agent for service of process in this state or the agent for service of process cannot with reasonable diligence be found at the agent's address, the secretary of state is an agent of the company upon whom process, notice or demand may be served.
      (c) Service of any process, notice or demand on the secretary of state may be made by delivering to and leaving with the secretary of state, the assistant secretary of state or clerk having charge of the limited liability company department of the secretary of state, the original process, notice or demand and two copies thereof for each defendant, along with the fee required by section two, article one, chapter fifty-nine of this code. No process, notice or demand may be served on or accepted by the secretary of state less than ten days before the return day thereof. If the process, notice or demand is served on the secretary of state, the secretary of state shall forward one of the copies by registered or certified mail, return receipt requested, to the company at its designated office and shall file in his or her office a copy of such process, notice or demand, with a note thereon endorsed of the time of service, or acceptance, as the case may be. Such service or acceptance of such process, notice or demand is sufficient if such return receipt is signed by an agent or employee of such company, or the registered or certified mail so sent by the secretary of state is refused by the addressee and the registered or certified mail is returned to the secretary of state, showing thereon the stamp of the United States postal service that delivery thereof has been refused, and such return receipt or registered or certified mail is appended to the original process, notice or demand and filed therewith in the clerk’s office of the court from which such process, notice or demand was issued.
      (d) The secretary of state shall keep a record of all processes, notices and demands served pursuant to this section and record the time of and the action taken regarding the service.
      (e) This section does not affect the right to serve process, notice or demand in any manner otherwise provided by law.

§31B-1-112. Nature of business and powers.
      (a) A limited liability company may be organized under this chapter for any lawful purpose, subject to any law of this state governing or regulating business.
      (b) Unless its articles of organization provide otherwise, a limited liability company has the same powers as an individual to do all things necessary or convenient to carry on its business or affairs, including power to:
      (1) Sue and be sued, and defend in its name;
      (2) Purchase, receive, lease, or otherwise acquire, and own, hold, improve, use and otherwise deal with real or personal property, or any legal or equitable interest in property, wherever located;
      (3) Sell, convey, mortgage, grant a security interest in, lease, exchange and otherwise encumber or dispose of all or any part of its property;
      (4) Purchase, receive, subscribe for or otherwise acquire, own, hold, vote, use, sell, mortgage, lend, grant a security interest in or otherwise dispose of and deal in and with, shares or other interests in or obligations of any other entity;
      (5) Make contracts and guarantees, incur liabilities, borrow money, issue its notes, bonds and other obligations, which may be convertible into or include the option to purchase other securities of the limited liability company, and secure any of its obligations by a mortgage on or a security interest in any of its property, franchises or income;
      (6) Lend money, invest and reinvest its funds and receive and hold real and personal property as security for repayment;
      (7) Be a promoter, partner, member, associate or manager of any partnership, joint venture, trust or other entity;
      (8) Conduct its business, locate offices and exercise the powers granted by this chapter within or without this state;
      (9) Elect managers and appoint officers, employees and agents of the limited liability company, define their duties, fix their compensation and lend them money and credit;
      (10) Pay pensions and establish pension plans, pension trusts, profit sharing plans, bonus plans, option plans and benefit or incentive plans for any or all of its current or former members, managers, officers, employees and agents;
      (11) Make donations for the public welfare or for charitable, scientific or educational purposes; and
      (12) Make payments or donations, or do any other act, not inconsistent with law, that furthers the business of the limited liability company.

ARTICLE 2. ORGANIZATION.

§31B-2-201. Limited liability company as legal entity.
      A limited liability company is a legal entity distinct from its members.

§31B-2-202. Organization.
      (a) One or more persons may organize a limited liability company, consisting of one or more members, by delivering articles of organization to the office of the secretary of state for filing, together with a fee in the amount of one hundred dollars.
      (b) Unless a delayed effective date is specified, the existence of a limited liability company begins when the articles of organization are filed.
      (c) The filing of the articles of organization by the secretary of state is conclusive proof that the organizers satisfied all conditions precedent to the creation of a limited liability company.

§31B-2-203. Articles of organization.

(a) Articles of organization of a limited liability company must set forth:

(1) The name of the company;

(2) The address of the initial designated office;

(3) The name and address of the initial agent for service of process;

(4) The name and address of each organizer and of each member having authority to execute instruments on behalf of the limited liability company;

(5) Whether the company is to be a term company and, if so, the term specified;

(6) Whether the company is to be manager-managed and, if so, the name and address of each initial manager; and

(7) Whether one or more of the members of the company are to be liable for its debts and obligations under section 3-303(c).

(b) Articles of organization of a limited liability company may set forth:

(1) Provisions permitted to be set forth in an operating agreement; or

(2) Other matters not inconsistent with law.

(c) Articles of organization of a limited liability company may not vary the nonwaivable provisions of section 1-103(b). As to all other matters, if any provision of an operating agreement is inconsistent with the articles of organization:

(1) The operating agreement controls as to managers, members and members' transferees; and

(2) The articles of organization control as to persons other than managers, members and their transferees who reasonably rely on the articles to their detriment.

§31B-2-204. Amendment or restatement of articles of organization.
      (a) Articles of organization of a limited liability company may be amended at any time by delivering articles of amendment to the secretary of state for filing. The articles of amendment must set forth the:
      (1) Name of the limited liability company;
      (2) Date of filing of the articles of organization; and
      (3) Amendment to the articles.
      (b) A limited liability company may restate its articles of organization at any time. Restated articles of organization must be signed and filed in the same manner as articles of amendment. Restated articles of organization must be designated as such in the heading and state in the heading or in an introductory paragraph the limited liability company's present name and, if it has been changed, all of its former names and the date of the filing of its initial articles of organization.

§31B-2-205. Signing of records.
      (a) Except as otherwise provided in this chapter, a record to be filed by or on behalf of a limited liability company in the office of the secretary of state must be signed in the name of the company by a:
      (1) Manager of a manager-managed company;
      (2) Member of a member-managed company;
      (3) Person organizing the company, if the company has not been formed; or
      (4) Fiduciary, if the company is in the hands of a receiver, trustee or other court-appointed fiduciary.
      (b) A record signed under subsection (a) of this section must state adjacent to the signature the name and capacity of the signer.
      (c) Any person may sign a record to be filed under subsection (a) of this section by an attorney-in-fact. Powers of attorney relating to the signing of records to be filed under subsection (a) of this section by an attorney-in-fact need not be filed in the office of the secretary of state as evidence of authority by the person filing but must be retained by the company.

§31B-2-206. Filing in office of secretary of state.

(a) Articles of organization or any other record authorized to be filed under this chapter must be in a medium permitted by the secretary of state and must be delivered to the office of the secretary of state. Delivery may be made by electronic transmission if permitted by the secretary of state. Unless the secretary of state determines that a record fails to comply as to form with the filing requirements of this chapter, and if all filing fees have been paid, the secretary of state shall file the record and send a receipt for the record and the fees to the limited liability company or its representative.

(b) Upon request and payment of a fee, the secretary of state shall send to the requester a certified copy of the requested record.

(c) Except as otherwise provided in subsection (d) of this section and section 2-207(c), a record accepted for filing by the secretary of state is effective:

(1) At the time of filing on the date it is filed, as evidenced by the secretary of state's date and time endorsement on the original record; or

(2) At the time specified in the record as its effective time on the date it is filed.

(d) A record may specify a delayed effective time and date, and if it does so the record becomes effective at the time and date specified. If a delayed effective date but no time is specified, the record is effective at the close of business on that date. If a delayed effective date is later than the ninetieth day after the record is filed, the record is effective on the ninetieth day.

§31B-2-207. Correcting filed record.
      (a) A limited liability company or foreign limited liability company may correct a record filed by the secretary of state if the record contains a false or erroneous statement or was defectively signed.
      (b) A record is corrected:
      (1) By preparing articles of correction that:
      (i) Describe the record, including its filing date, or attach a copy of it to the articles of correction;
      (ii) Specify the incorrect statement and the reason it is incorrect or the manner in which the signing was defective; and
      (iii) Correct the incorrect statement or defective signing; and
      (2) By delivering the corrected record to the secretary of state for filing.
      (c) Articles of correction are effective retroactively on the effective date of the record they correct except as to persons relying on the uncorrected record and adversely affected by the correction. As to those persons, articles of correction are effective when filed.

§31B-2-208. Certificate of existence or authorization.
      (a) A person may request the secretary of state to furnish a certificate of existence for a limited liability company or a certificate of authorization for a foreign limited liability company.
      (b) A certificate of existence for a limited liability company must set forth:
      (1) The company's name;
      (2) That it is duly organized under the laws of this state, the date of organization, whether its duration is at-will or for a specified term, and, if the latter, the period specified;
      (3) If payment is reflected in the records of the secretary of state and if nonpayment affects the existence of the company, that all fees, taxes and penalties owed to this state have been paid;
      (4) Whether its most recent annual report required by section 2-211 has been filed with the secretary of state;
      (5) That articles of termination have not been filed; and
      (6) Other facts of record in the office of the secretary of state which may be requested by the applicant.
      (c) A certificate of authorization for a foreign limited liability company must set forth:
      (1) The company's name used in this state;
      (2) That it is authorized to transact business in this state;
      (3) If payment is reflected in the records of the secretary of state and nonpayment affects the authorization of the company, that all fees, taxes and penalties owed to this state have been paid;
      (4) Whether its most recent annual report required by section 2-211 has been filed with the secretary of state;
      (5) That a certificate of cancellation has not been filed; and
      (6) Other facts of record in the office of the secretary of state which may be requested by the applicant.
      (d) Subject to any qualification stated in the certificate, a certificate of existence or authorization issued by the secretary of state may be relied upon as conclusive evidence that the domestic or foreign limited liability company is in existence or is authorized to transact business in this state.

§31B-2-209. Liability for false statement in filed record.
      If a record authorized or required to be filed under this chapter contains a false statement, one who suffers loss by reliance on the statement may recover damages for the loss from a person who signed the record or caused another to sign it on the person's behalf and knew the statement to be false at the time the record was signed.

§31B-2-210. Filing by judicial act.
      If a person required by section 2-205 to sign any record fails or refuses to do so, any other person who is adversely affected by the failure or refusal may petition the circuit court to direct the signing of the record. If the court finds that it is proper for the record to be signed and that a person so designated has failed or refused to sign the record, it shall order the secretary of state to sign and file an appropriate record.

§31B-2-211. Annual report for secretary of state.

(a) A limited liability company, and a foreign limited liability company authorized to transact business in this state, shall deliver to the secretary of state for filing an annual report that sets forth:

(1) The name of the company and the state or country under whose law it is organized;

(2) The address of its designated office, if any and the name and address of its agent for service of process in this state, if any;

(3) The address of its principal office; and

(4) The names and business addresses of any managers and the name and address of each member having authority to execute instruments on behalf of the limited liability company.

(b) Information in an annual report must be current as of the date the annual report is signed on behalf of the limited liability company.

(c) The first annual report must be delivered to the secretary of state between the first day of January and the first day of April of the year following the calendar year in which a limited liability company was organized or a foreign company was authorized to transact business. Subsequent annual reports must be delivered to the secretary of state between the first day of January and the first day of April of the ensuing calendar years.

(d) If an annual report does not contain the information required in subsection (a) of this section, the secretary of state shall promptly notify the reporting limited liability company or foreign limited liability company and return the report to it for correction. If the report is corrected to contain the information required in subsection (a) of this section and delivered to the secretary of state within thirty days after the effective date of the notice, it is timely filed.

ARTICLE 3. RELATIONS OF MEMBERS AND MANAGERS TO PERSONS DEALING WITH LIMITED LIABILITY COMPANY.

§31B-3-301. Agency of members and managers.
      (a) Subject to subsections (b) and (c) of this section:
      (1) Each member is an agent of the limited liability company for the purpose of its business and an act of a member, including the signing of an instrument in the company's name, for apparently carrying on in the ordinary course the company's business or business of the kind carried on by the company binds the company, unless the member had no authority to act for the company in the particular matter and the person with whom the member was dealing knew or had notice that the member lacked authority.
      (2) An act of a member which is not apparently for carrying on in the ordinary course the company's business or business of the kind carried on by the company binds the company only if the act was authorized by the other members.
      (b) Subject to subsection (c) of this section, in a manager-managed company:
      (1) A member is not an agent of the company for the purpose of its business solely by reason of being a member. Each manager is an agent of the company for the purpose of its business and an act of a manager, including the signing of an instrument in the company's name, for apparently carrying on in the ordinary course the company's business or business of the kind carried on by the company binds the company, unless the manager had no authority to act for the company in the particular matter and the person with whom the manager was dealing knew or had notice that the manager lacked authority.
      (2) An act of a manager which is not apparently for carrying on in the ordinary course the company's business or business of the kind carried on by the company binds the company only if the act was authorized under section 4-404.
      (c) Unless the articles of organization limit their authority, any member of a member-managed company or manager of a manager-managed company may sign and deliver any instrument transferring or affecting the company's interest in real property. The instrument is conclusive in favor of a person who gives value without knowledge of the lack of the authority of the person signing and delivering the instrument.

§31B-3-302. Limited liability company liable for member's or manager's actionable conduct.
      A limited liability company is liable for loss or injury caused to a person, or for a penalty incurred, as a result of a wrongful act or omission, or other actionable conduct, of a member or manager acting in the ordinary course of business of the company or with authority of the company.

§31B-3-303. Liability of members and managers.
      (a) Except as otherwise provided in subsection (c) of this section, the debts, obligations and liabilities of a limited liability company, whether arising in contract, tort or otherwise, are solely the debts, obligations and liabilities of the company. A member or manager is not personally liable for a debt, obligation or liability of the company solely by reason of being or acting as a member or manager.
      (b) The failure of a limited liability company to observe the usual company formalities or requirements relating to the exercise of its company powers or management of its business is not a ground for imposing personal liability on the members or managers for liabilities of the company.
      (c) All or specified members of a limited liability company are liable in their capacity as members for all or specified debts, obligations or liabilities of the company if:
      (1) A provision to that effect is contained in the articles of organization; and
      (2) A member so liable has consented in writing to the adoption of the provision or to be bound by the provision.

ARTICLE 4. RELATIONS OF MEMBERS TO EACH OTHER AND TO LIMITED LIABILITY COMPANY.

§31B-4-401. Form of contribution.
      A contribution of a member of a limited liability company may consist of tangible or intangible property or other benefit to the company, including money, promissory notes, services performed or other agreements to contribute cash or property, or contracts for services to be performed.

§31B-4-402. Member's liability for contributions.
      (a) A member's obligation to contribute money, property or other benefit to, or to perform services for, a limited liability company is not excused by the member's death, disability or other inability to perform personally. If a member does not make the required contribution of property or services, the member is obligated at the option of the company to contribute money equal to the value of that portion of the stated contribution which has not been made.
      (b) A creditor of a limited liability company who extends credit or otherwise acts in reliance on an obligation described in subsection (a) of this section, and without notice of any compromise under section 4-404(c)(5), may enforce the original obligation.

§31B-4-403. Member's and manager's rights to payments and reimbursement.
      (a) A limited liability company shall reimburse a member or manager for payments made and indemnify a member or manager for liabilities incurred by the member or manager in the ordinary course of the business of the company or for the preservation of its business or property.
      (b) A limited liability company shall reimburse a member for an advance to the company beyond the amount of contribution the member agreed to make.
      (c) A payment or advance made by a member which gives rise to an obligation of a limited liability company under subsection (a) or (b) of this section constitutes a loan to the company upon which interest accrues from the date of the payment or advance.
      (d) A member is not entitled to remuneration for services performed for a limited liability company, except for reasonable compensation for services rendered in winding up the business of the company.

§31B-4-404. Management of limited liability company.
      (a) In a member-managed company:
      (1) Each member has equal rights in the management and conduct of the company's business; and
      (2) Except as otherwise provided in subsection (c) of this section or in section 8-801(b)(3)(i), any matter relating to the business of the company may be decided by a majority of the members.
      (b) In a manager-managed company:
      (1) Each manager has equal rights in the management and conduct of the company's business;
      (2) Except as otherwise provided in subsection (c) of this section or in section 8-801(b)(3)(i), any matter relating to the business of the company may be exclusively decided by the manager or, if there is more than one manager, by a majority of the managers; and
      (3) A manager:
      (i) Must be designated, appointed, elected, removed or replaced by a vote, approval or consent of a majority of the members; and
      (ii) Holds office until a successor has been elected and qualified, unless the manager sooner resigns or is removed.
      (c) The only matters of a member or manager-managed company's business requiring the consent of all of the members are:
      (1) The amendment of the operating agreement under section 1-103;
      (2) The authorization or ratification of acts or transactions under section 1-103(b)(2)(ii) which would otherwise violate the duty of loyalty;
      (3) An amendment to the articles of organization under section 2-204;
      (4) The compromise of an obligation to make a contribution under section 4-402(b);
      (5) The compromise, as among members, of an obligation of a member to make a contribution or return money or other property paid or distributed in violation of this chapter;
      (6) The making of interim distributions under section 4-405(a), including the redemption of an interest;
      (7) The admission of a new member;
      (8) The use of the company's property to redeem an interest subject to a charging order;
      (9) The consent to dissolve the company under section 8-801(b)(2);
      (10) A waiver of the right to have the company's business wound up and the company terminated under section 8-802(b);
      (11) The consent of members to merge with another entity under section 9-904(c)(1); and
      (12) The sale, lease, exchange or other disposal of all, or substantially all, of the company's property with or without goodwill.
      (d) Action requiring the consent of members or managers under this chapter may be taken or without a meeting.
      (e) A member or manager may appoint a proxy to vote or otherwise act for the member or manager by signing an appointment instrument, either personally or by the member's or manager's attorney-in-fact.

§31B-4-405. Sharing of and right to distributions.
      (a) Any distributions made by a limited liability company before its dissolution and winding up must be in equal shares.
      (b) A member has no right to receive, and may not be required to accept, a distribution in kind.
      (c) If 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.

§31B-4-406. Limitations on distributions.
      (a) A distribution may not be made if:
      (1) The limited liability company would not be able to pay its debts as they become due in the ordinary course of business; or
      (2) The company's total assets would be less than the sum of its total liabilities plus the amount that would be needed, if the company were to be dissolved, wound up and terminated at the time of the distribution, to satisfy the preferential rights upon dissolution, winding up and termination of members whose preferential rights are superior to those receiving the distribution.
      (b) A limited liability company may base a determination that a distribution is not prohibited under subsection (a) of this section on financial statements prepared on the basis of accounting practices and principles that are reasonable in the circumstances or on a fair valuation or other method that is reasonable in the circumstances.
      (c) Except as otherwise provided in subsection (e) of this section, the effect of a distribution under subsection (a) of this section is measured:
      (1) In the case of distribution by purchase, redemption or other acquisition of a distributional interest in a limited liability company, as of the date money or other property is transferred or debt incurred by the company; and
      (2) In all other cases, as of the date the:
      (i) Distribution is authorized if the payment occurs within one hundred twenty days after the date of authorization; or
      (ii) Payment is made if it occurs more than one hundred twenty days after the date of authorization.
      (d) A limited liability company's indebtedness to a member incurred by reason of a distribution made in accordance with this section is at parity with the company's indebtedness to its general, unsecured creditors.
      (e) Indebtedness of a limited liability company, including indebtedness issued in connection with or as part of a distribution, is not considered a liability for purposes of determinations under subsection (a) of this section if its terms provide that payment of principal and interest are made only if and to the extent that payment of a distribution to members could then be made under this section. If the indebtedness is issued as a distribution, each payment of principal or interest on the indebtedness is treated as a distribution, the effect of which is measured on the date the payment is made.

§31B-4-407. Liability for unlawful distributions.
      (a) A member of a member-managed company or a member or manager of a manager-managed company who votes for or assents to a distribution made in violation of section 4-406, the articles of organization, or the operating agreement is personally liable to the company for the amount of the distribution which exceeds the amount that could have been distributed without violating section 4-406, the articles of organization, or the operating agreement if it is established that the member or manager did not perform the member's or manager's duties in compliance with section 4-409.
      (b) A member of a manager-managed limited liability company who knew a distribution was made in violation of section 4-406, the articles of organization, or the operating agreement is personally liable to the company, but only to the extent that the distribution received by the member exceeded the amount that could properly have been paid under section 4-406.
      (c) A member or manager against whom an action is brought under this section may implead in the action all:
      (1) Other members or managers who voted for or assented to the distribution in violation of subsection (a) of this section and may compel contribution from them; and
      (2) Members who received a distribution in violation of subsection (b) of this section and may compel contribution from the member in the amount received in violation of subsection (b) of this section.
      (d) A proceeding under this section is barred unless it is commenced within two years after the distribution.

§31B-4-408. Member's right to information.
      (a) A limited liability company shall provide members and their agents and attorneys access to its records, if any, at the company's principal office or other reasonable locations specified in the operating agreement. The company shall provide former members and their agents and attorneys access for proper purposes to records pertaining to the period during which they were members. The right of access provides the opportunity to inspect and copy records during ordinary business hours. The company may impose a reasonable charge, limited to the costs of labor and material, for copies of records furnished.
      (b) A limited liability company shall furnish to a member, and to the legal representative of a deceased member or member under legal disability:
      (1) Without demand, information concerning the company's business or affairs reasonably required for the proper exercise of the member's rights and performance of the member's duties under the operating agreement or this chapter; and
      (2) On demand, other information concerning the company's business or affairs, except to the extent the demand or the information demanded is unreasonable or otherwise improper under the circumstances.
      (c) A member has the right upon written demand given to the limited liability company to obtain at the company's expense a copy of any written operating agreement.

§31B-4-409. General standards of member's and manager's conduct.
      (a) The only fiduciary duties a member owes to a member-managed company and its other members are the duty of loyalty and the duty of care imposed by subsections (b) and (c) of this section.
      (b) A member's duty of loyalty to a member-managed company and its other members is limited to the following:
      (1) To account to the company and to hold as trustee for it any property, profit or benefit derived by the member in the conduct or winding up of the company's business or derived from a use by the member of the company's property, including the appropriation of a company's opportunity;
      (2) To refrain from dealing with the company in the conduct or winding up of the company's business as or on behalf of a party having an interest adverse to the company; and
      (3) To refrain from competing with the company in the conduct of the company's business before the dissolution of the company.
      (c) A member's duty of care to a member-managed company and its other members in the conduct of and winding up of the company's business is limited to refraining from engaging in grossly negligent or reckless conduct, intentional misconduct or a knowing violation of law.
      (d) A member shall discharge the duties to a member-managed company and its other members under this chapter or under the operating agreement and exercise any rights consistently with the obligation of good faith and fair dealing.
      (e) A member of a member-managed company does not violate a duty or obligation under this chapter or under the operating agreement merely because the member's conduct furthers the member's own interest.
      (f) A member of a member-managed company may lend money to and transact other business with the company. As to each loan or transaction, the rights and obligations of the member are the same as those of a person who is not a member, subject to other applicable law.
      (g) This section applies to a person winding up the limited liability company's business as the personal or legal representative of the last surviving member as if the person were a member.
      (h) In a manager-managed company:
      (1) A member who is not also a manager owes no duties to the company or to the other members solely by reason of being a member;
      (2) A manager is held to the same standards of conduct prescribed for members in subsections (b) through (f) of this section;
      (3) A member who pursuant to the operating agreement exercises some or all of the rights of a manager in the management and conduct of the company's business is held to the standards of conduct in subsections (b) through (f) of this section to the extent that the member exercises the managerial authority vested in a manager by this chapter; and
      (4) A manager is relieved of liability imposed by law for violation of the standards prescribed by subsections (b) through (f) of this section to the extent of the managerial authority delegated to the members by the operating agreement.

§31B-4-410. Actions by members.
      (a) A member may maintain an action against a limited liability company or another member for legal or equitable relief, with or without an accounting as to the company's business, to enforce:
      (1) The member's rights under the operating agreement;
      (2) The member's rights under this chapter; and
      (3) The rights and otherwise protect the interests of the member, including rights and interests arising independently of the member's relationship to the company.
      (b) The accrual, and any time limited for the assertion, of a right of action for a remedy under this section is governed by other law. A right to an accounting upon a dissolution and winding up does not revive a claim barred by law.

§31B-4-411. Continuation of term company after expiration of specified term.
      (a) If a term company is continued after the expiration of the specified term, the rights and duties of the members and managers remain the same as they were at the expiration of the term except to the extent inconsistent with rights and duties of members and managers of an at-will company.
      (b) If the members in a member-managed company or the managers in a manager-managed company continue the business without any winding up of the business of the company, it continues as an at-will company.

ARTICLE 5. TRANSFEREES AND CREDITORS OF MEMBER.

§31B-5-501. Member's distributional interest.
      (a) A member is not a coowner of, and has no transferable interest in, property of a limited liability company.
      (b) A distributional interest in a limited liability company is personal property and, subject to sections 5-502 and 5-503, may be transferred, in whole or in part.
      (c) An operating agreement may provide that a distributional interest may be evidenced by a certificate of the interest issued by the limited liability company and, subject to section 5-503, may also provide for the transfer of any interest represented by the certificate.

§31B-5-502. Transfer of distributional interest.
      A transfer of a distributional interest does not entitle the transferee to become or to exercise any rights of a member. A transfer entitles the transferee to receive, to the extent transferred, only the distributions to which the transferor would be entitled.

§31B-5-503. Rights of transferee.
      (a) A transferee of a distributional interest may become a member of a limited liability company if and to the extent that the transferor gives the transferee the right in accordance with authority described in the operating agreement or all other members consent.
      (b) A transferee who has become a member, to the extent transferred, has the rights and powers, and is subject to the restrictions and liabilities, of a member under the operating agreement of a limited liability company and this chapter. A transferee who becomes a member also is liable for the transferor member's obligations to make contributions under section 4-402 and for obligations under section 4-407 to return unlawful distributions, but the transferee is not obligated for the transferor member's liabilities unknown to the transferee at the time the transferee becomes a member.
      (c) Whether or not a transferee of a distributional interest becomes a member under subsection (a) of this section, the transferor is not released from liability to the limited liability company under the operating agreement or this chapter.
      (d) A transferee who does not become a member is not entitled to participate in the management or conduct of the limited liability company's business, require access to information concerning the company's transactions or inspect or copy any of the company's records.
      (e) A transferee who does not become a member is entitled to:
      (1) Receive, in accordance with the transfer, distributions to which the transferor would otherwise be entitled;
      (2) Receive, upon dissolution and winding up of the limited liability company's business:
      (i) In accordance with the transfer, the net amount otherwise distributable to the transferor;
      (ii) A statement of account only from the date of the latest statement of account agreed to by all the members;
      (3) Seek under section 8-801(b)(6) a judicial determination that it is equitable to dissolve and wind up the company's business.
      (f) A limited liability company need not give effect to a transfer until it has notice of the transfer.

§31B-5-504. Rights of creditor.
      (a) On application by a judgment creditor of a member of a limited liability company or of a member's transferee, a court having jurisdiction may charge the distributional interest of the judgment debtor to satisfy the judgment. The court may appoint a receiver of the share of the distributions due or to become due to the judgment debtor and make all other orders, directions, accounts and inquiries the judgment debtor might have made or which the circumstances may require to give effect to the charging order.
      (b) A charging order constitutes a lien on the judgment debtor's distributional interest. The court may order a foreclosure of a lien on a distributional interest subject to the charging order at any time. A purchaser at the foreclosure sale has the rights of a transferee.
      (c) At any time before foreclosure, a distributional interest in a limited liability company which is charged may be redeemed:
      (1) By the judgment debtor;
      (2) With property other than the company's property, by one or more of the other members; or
      (3) With the company's property, but only if permitted by the operating agreement.
      (d) This chapter does not affect a member's right under exemption laws with respect to the member's distributional interest in a limited liability company.
      (e) This section provides the exclusive remedy by which a judgment creditor of a member or a transferee may satisfy a judgment out of the judgment debtor's distributional interest in a limited liability company.

ARTICLE 6. MEMBER'S DISSOCIATION.

§31B-6-601. Events causing member's dissociation.
      A member is dissociated from a limited liability company upon the occurrence of any of the following events:
      (1) The company's having notice of the member's express will to withdraw upon the date of notice or on a later date specified by the member;
      (2) An event agreed to in the operating agreement as causing the member's dissociation;
      (3) Upon transfer of all of a member's distributional interest, other than a transfer for security purposes or a court order charging the member's distributional interest which has not been foreclosed;
      (4) The member's expulsion pursuant to the operating agreement;
      (5) The member's expulsion by unanimous vote of the other members if:
      (i) It is unlawful to carry on the company's business with the member;
      (ii) There has been a transfer of substantially all of the member's distributional interest, other than a transfer for security purposes, or a court order charging the member's distributional interest, which has not been foreclosed;
      (iii) Within ninety days after the company notifies a corporate member that it will be expelled because it has filed a certificate of dissolution or the equivalent, its charter has been revoked, or its right to conduct business has been suspended by the jurisdiction of its incorporation, the member fails to obtain a revocation of the certificate of dissolution or a reinstatement of its charter or its right to conduct business; or
      (iv) A partnership or a limited liability company that is a member has been dissolved and its business is being wound up;
      (6) On application by the company or another member, the member's expulsion by judicial determination because the member:
      (i) Engaged in wrongful conduct that adversely and materially affected the company's business;
      (ii) Willfully or persistently committed a material breach of the operating agreement or of a duty owed to the company or the other members under section 4-409; or
      (iii) Engaged in conduct relating to the company's business which makes it not reasonably practicable to carry on the business with the member;
      (7) The member's:
      (i) Becoming a debtor in bankruptcy;
      (ii) Executing an assignment for the benefit of creditors;
      (iii) Seeking, consenting to, or acquiescing in the appointment of a trustee, receiver or liquidator of the member or of all or substantially all of the member's property; or
      (iv) Failing, within ninety days after the appointment, to have vacated or stayed the appointment of a trustee, receiver or liquidator of the member or of all or substantially all of the member's property obtained without the member's consent or acquiescence, or failing within ninety days after the expiration of a stay to have the appointment vacated;
      (8) In the case of a member who is an individual:
      (i) The member's death;
      (ii) The appointment of a guardian or general conservator for the member; or
      (iii) A judicial determination that the member has otherwise become incapable of performing the member's duties under the operating agreement;
      (9) In the case of a member that is a trust or is acting as a member by virtue of being a trustee of a trust, distribution of the trust's entire rights to receive distributions from the company, but not merely by reason of the substitution of a successor trustee;
      (10) In the case of a member that is an estate or is acting as a member by virtue of being a personal representative of an estate, distribution of the estate's entire rights to receive distributions from the company, but not merely the substitution of a successor personal representative; or
      (11) Termination of the existence of a member if the member is not an individual, estate or trust other than a business trust.

§31B-6-602. Member's power to dissociate; wrongful dissociation.
      (a) Unless otherwise provided in the operating agreement, a member has the power to dissociate from a limited liability company at any time, rightfully or wrongfully, by express will pursuant to section 6-601(1).
      (b) If the operating agreement has not eliminated a member's power to dissociate, the member's dissociation from a limited liability company is wrongful only if:
      (1) It is in breach of an express provision of the agreement; or
      (2) Before the expiration of the specified term of a term company:
      (i) The member withdraws by express will;
      (ii) The member is expelled by judicial determination under section 6-601(6);
      (iii) The member is dissociated by becoming a debtor in bankruptcy; or
      (iv) In the case of a member who is not an individual, trust other than a business trust, or estate, the member is expelled or otherwise dissociated because it willfully dissolved or terminated its existence.
      (c) A member who wrongfully dissociates from a limited liability company is liable to the company and to the other members for damages caused by the dissociation. The liability is in addition to any other obligation of the member to the company or to the other members.
      (d) If a limited liability company does not dissolve and wind up its business as a result of a member's wrongful dissociation under subsection (b) of this section, damages sustained by the company for the wrongful dissociation must be offset against distributions otherwise due the member after the dissociation.

§31B-6-603. Effect of member's dissociation.
      (a) If under section 8-801 a member's dissociation from a limited liability company results in a dissolution and winding up of the company's business, article eight of this chapter applies. If a member's dissociation from the company does not result in a dissolution and winding up of the company's business under section 8-801:
      (1) In an at-will company, the company must cause the dissociated member's distributional interest to be purchased under article seven of this chapter; and
      (2) In a term company:
      (i) If the company dissolves and winds up its business on or before the expiration of its specified term, article eight of this chapter applies to determine the dissociated member's rights to distributions; and
      (ii) If the company does not dissolve and wind up its business on or before the expiration of its specified term, the company must cause the dissociated member's distributional interest to be purchased under article seven of this chapter on the date of the expiration of the term specified at the time of the member's dissociation.
      (b) Upon a member's dissociation from a limited liability company:
      (1) The member's right to participate in the management and conduct of the company's business terminates, except as otherwise provided in section 8-803, and the member ceases to be a member and is treated the same as a transferee of a member;
      (2) The member's duty of loyalty under section 4-409(b)(3) terminates; and
      (3) The member's duty of loyalty under section 4-409(b)(1) and (2) and duty of care under section 4-409(c) continue only with regard to matters arising and events occurring before the member's dissociation, unless the member participates in winding up the company's business pursuant to section 8-803.

ARTICLE 7. MEMBER'S DISSOCIATION WHEN BUSINESS NOT WOUND UP.

§31B-7-701. Company purchase of distributional interest.
      (a) A limited liability company shall purchase a distributional interest of a:
      (1) Member of an at-will company for its fair value determined as of the date of the member's dissociation if the member's dissociation does not result in a dissolution and winding up of the company's business under section 8-801; or
      (2) Member of a term company for its fair value determined as of the date of the expiration of the specified term that existed on the date of the member's dissociation if the expiration of the specified term does not result in a dissolution and winding up of the company's business under section 8-801.
      (b) A limited liability company must deliver a purchase offer to the dissociated member whose distributional interest is entitled to be purchased not later than thirty days after the date determined under subsection (a) of this section. The purchase offer must be accompanied by:
      (1) A statement of the company's assets and liabilities as of the date determined under subsection (a) of this section;
      (2) The latest available balance sheet and income statement, if any; and
      (3) An explanation of how the estimated amount of the payment was calculated.
      (c) If the price and other terms of a purchase of a distributional interest are fixed or are to be determined by the operating agreement, the price and terms so fixed or determined govern the purchase unless the purchaser defaults. If a default occurs, the dissociated member is entitled to commence a proceeding to have the company dissolved under section 8-801(b)(5)(iv).
      (d) If an agreement to purchase the distributional interest is not made within one hundred twenty days after the date determined under subsection (a) of this section, the dissociated member, within another one hundred twenty days, may commence a proceeding against the limited liability company to enforce the purchase. The company at its expense shall notify in writing all of the remaining members, and any other person the court directs, of the commencement of the proceeding. The jurisdiction of the court in which the proceeding is commenced under this subsection is plenary and exclusive.
      (e) The court shall determine the fair value of the distributional interest in accordance with the standards set forth in section 7-702 together with the terms for the purchase. Upon making these determinations, the court shall order the limited liability company to purchase or cause the purchase of the interest.
      (f) Damages for wrongful dissociation under section 6-602(b), and all other amounts owing, whether or not currently due, from the dissociated member to a limited liability company, must be offset against the purchase price.

§31B-7-702. Court action to determine fair value of distributional interest.
      (a) In an action brought to determine the fair value of a distributional interest in a limited liability company, the court shall:
      (1) Determine the fair value of the interest, considering among other relevant evidence the going concern value of the company, any agreement among some or all of the members fixing the price or specifying a formula for determining value of distributional interests for any purpose, the recommendations of any appraiser appointed by the court, and any legal constraints on the company's ability to purchase the interest;
      (2) Specify the terms of the purchase, including, if appropriate, terms for installment payments, subordination of the purchase obligation to the rights of the company's other creditors, security for a deferred purchase price and a covenant not to compete or other restriction on a dissociated member; and
      (3) Require the dissociated member to deliver an assignment of the interest to the purchaser upon receipt of the purchase price or the first installment of the purchase price.
      (b) After the dissociated member delivers the assignment, the dissociated member has no further claim against the company, its members, officers or managers, if any, other than a claim to any unpaid balance of the purchase price and a claim under any agreement with the company or the remaining members that is not terminated by the court.
      (c) If the purchase is not completed in accordance with the specified terms, the company is to be dissolved upon application under section 8-801(b)(5)(iv). If a limited liability company is so dissolved, the dissociated member has the same rights and priorities in the company's assets as if the sale had not been ordered.
      (d) If the court finds that a party to the proceeding acted arbitrarily, vexatiously or not in good faith, it may award one or more other parties their reasonable expenses, including attorney's fees and the expenses of appraisers or other experts, incurred in the proceeding. The finding may be based on the company's failure to make an offer to pay or to comply with section 7-701(b).
      (e) Interest must be paid on the amount awarded from the fair market value determined under section 7-701(a) to the date of payment.

§31B-7-703. Dissociated member's power to bind limited liability company.
      For two years after a member dissociates without the dissociation resulting in a dissolution and winding up of a limited liability company's business, the company, including a surviving company under article nine of this chapter, is bound by an act of the dissociated member which would have bound the company under section 3-301 before dissociation only if at the time of entering into the transaction the other party:
      (1) Reasonably believed that the dissociated member was then a member;
      (2) Did not have notice of the member's dissociation; and
      (3) Is not deemed to have had notice under section 7-704.

§31B-7-704. Statement of dissociation.
      (a) A dissociated member or a limited liability company may file in the office of the secretary of state a statement of dissociation stating the name of the company and that the member is dissociated from the company.
      (b) For the purposes of sections 3-301 and 7-703, a person not a member is deemed to have notice of the dissociation ninety days after the statement of dissociation is filed.

ARTICLE 8. WINDING UP COMPANY'S BUSINESS.

§31B-8-801. Events causing dissolution and winding up of company's business.
      (a) In this section, "future distributions" means the total distributions that, as of the date of dissociation, are reasonably estimated to be made to the remaining members if the company were continued until the projected date of its termination, reduced by the amount of distributions that would have been made to the remaining members if the business of the company were dissolved and wound up on the date of dissociation.
      (b) A limited liability company is dissolved, and its business must be wound up, upon the occurrence of any of the following events:
      (1) An event specified in the operating agreement;
      (2) Consent of the number or percentage of members specified in the operating agreement;
      (3) Dissociation of a member who is also a manager or, if none, a member of an at-will company, and dissociation of a member who is also a manager or, if none, a member of a term company but only if the dissociation was for a reason provided in section 6-601(7) through (11) and occurred before the expiration of the specified term, but the company is not dissolved and required to be wound up by reason of the dissociation if:
      (i) Within ninety days after the dissociation, the business of the company is continued by the agreement of:
      (A) The remaining members that would be entitled to receive a majority of any distributions that would be made to them assuming the business of the company were dissolved and wound up on the date of the dissociation; and
      (B) The remaining members that would be entitled to receive a majority of any future distributions that would be made to them assuming the business of the company were continued after the date of the dissociation; or
      (ii) The business of the company is continued under a right to continue stated in the operating agreement;
      (4) An event that makes it unlawful for all or substantially all of the business of the company to be continued, but any cure of illegality within ninety days after notice to the company of the event is effective retroactively to the date of the event for purposes of this section;
      (5) On application by a member or a dissociated member, upon entry of a judicial decree that:
      (i) The economic purpose of the company is likely to be unreasonably frustrated;
      (ii) Another member has engaged in conduct relating to the company's business that makes it not reasonably practicable to carry on the company's business with that member;
      (iii) It is not otherwise reasonably practicable to carry on the company's business in conformity with the articles of organization and the operating agreement;
      (iv) The company failed to purchase the petitioner's distributional interest as required by section 7-701; or
      (v) The managers or members in control of the company have acted, are acting or will act in a manner that is illegal, oppressive, fraudulent or unfairly prejudicial to the petitioner;
      (6) On application by a transferee of a member's interest, a judicial determination that it is equitable to wind up the company's business:
      (i) After the expiration of the specified term, if the company was for a specified term at the time the applicant became a transferee by member dissociation, transfer or entry of a charging order that gave rise to the transfer; or
      (ii) At any time, if the company was at will at the time the applicant became a transferee by member dissociation, transfer or entry of a charging order that gave rise to the transfer.

§31B-8-802. Limited liability company continues after dissolution.
      (a) Subject to subsection (b) of this section, a limited liability company continues after dissolution only for the purpose of winding up its business.
      (b) At any time after the dissolution of a limited liability company and before the winding up of its business is completed, the members, including a dissociated member whose dissociation caused the dissolution, may unanimously waive the right to have the company's business wound up and the company terminated. In that case:
      (1) The limited liability company resumes carrying on its business as if dissolution had never occurred and any liability incurred by the company or a member after the dissolution and before the waiver is determined as if the dissolution had never occurred; and
      (2) The rights of a third party accruing under section 8-804(a) or arising out of conduct in reliance on the dissolution before the third party knew or received a notification of the waiver are not adversely affected.

§31B-8-803. Right to wind up limited liability company's business.
      (a) After dissolution, a member who has not wrongfully dissociated may participate in winding up a limited liability company's business, but on application of any member, member's legal representative or transferee, the circuit court, for good cause shown, may order judicial supervision of the winding up.
      (b) A legal representative of the last surviving member may wind up a limited liability company's business.
      (c) A person winding up a limited liability company's business may preserve the company's business or property as a going concern for a reasonable time, prosecute and defend actions and proceedings, whether civil, criminal or administrative, settle and close the company's business, dispose of and transfer the company's property, discharge the company's liabilities, distribute the assets of the company pursuant to section 8-806, settle disputes by mediation or arbitration and perform other necessary acts.

§31B-8-804. Member's or manager's power and liability as agent after dissolution.
      (a) A limited liability company is bound by a member's or manager's act after dissolution that:
      (1) Is appropriate for winding up the company's business; or
      (2) Would have bound the company under section 3-301 before dissolution, if the other party to the transaction did not have notice of the dissolution.
      (b) A member or manager who, with knowledge of the dissolution, subjects a limited liability company to liability by an act that is not appropriate for winding up the company's business is liable to the company for any damage caused to the company arising from the liability.

§31B-8-805. Articles of termination.
      (a) At any time after dissolution and winding up, a limited liability company may terminate its existence by filing with the secretary of state articles of termination stating:
      (1) The name of the company;
      (2) The date of the dissolution; and
      (3) That the company's business has been wound up and the legal existence of the company has been terminated.
      (b) The existence of a limited liability company is terminated upon the filing of the articles of termination, or upon a later effective date, if specified in the articles of termination.

§31B-8-806. Distribution of assets in winding up limited liability company's business.
      (a) In winding up a limited liability company's business, the assets of the company must be applied to discharge its obligations to creditors, including members who are creditors. Any surplus must be applied to pay in money the net amount distributable to members in accordance with their right to distributions under subsection (b) of this section.
      (b) Each member is entitled to a distribution upon the winding up of the limited liability company's business consisting of a return of all contributions which have not previously been returned and a distribution of any remainder in equal shares.

§31B-8-807. Known claims against dissolved limited liability company.
      (a) A dissolved limited liability company may dispose of the known claims against it by following the procedure described in this section.
      (b) A dissolved limited liability company shall notify its known claimants in writing of the dissolution. The notice must:
      (1) Specify the information required to be included in a claim;
      (2) Provide a mailing address where the claim is to be sent;
      (3) State the deadline for receipt of the claim, which may not be less than one hundred twenty days after the date the written notice is received by the claimant; and
      (4) State that the claim will be barred if not received by the deadline.
      (c) A claim against a dissolved limited liability company is barred if the requirements of subsection (b) of this section are met, and:
      (1) The claim is not received by the specified deadline; or
      (2) In the case of a claim that is timely received but rejected by the dissolved company, the claimant does not commence a proceeding to enforce the claim within ninety days after the receipt of the notice of the rejection.
      (d) For purposes of this section, "claim" does not include a contingent liability or a claim based on an event occurring after the effective date of dissolution.

§31B-8-808. Other claims against dissolved limited liability company.
      (a) A dissolved limited liability company may publish notice of its dissolution and request persons having claims against the company to present them in accordance with the notice.
      (b) The notice must:
      (1) Be published at least once in a newspaper of general circulation in the county in which the dissolved limited liability company's principal office is located or, if none in this state, in which its designated office is or was last located;
      (2) Describe the information required to be contained in a claim and provide a mailing address where the claim is to be sent; and
      (3) State that a claim against the limited liability company is barred unless a proceeding to enforce the claim is commenced within five years after publication of the notice.
      (c) If a dissolved limited liability company publishes a notice in accordance with subsection (b) of this section, the claim of each of the following claimants is barred unless the claimant commences a proceeding to enforce the claim against the dissolved company within five years after the publication date of the notice:
      (1) A claimant who did not receive written notice under section 8-807;
      (2) A claimant whose claim was timely sent to the dissolved company but not acted on; and
      (3) A claimant whose claim is contingent or based on an event occurring after the effective date of dissolution.
      (d) A claim not barred under this section may be enforced:
      (1) Against the dissolved limited liability company, to the extent of its undistributed assets; or
      (2) If the assets have been distributed in liquidation, against a member of the dissolved company to the extent of the member's proportionate share of the claim or the company's assets distributed to the member in liquidation, whichever is less, but a member's total liability for all claims under this section may not exceed the total amount of assets distributed to the member.

§31B-8-809. Grounds for administrative dissolution.
      The secretary of state may commence a proceeding to dissolve a limited liability company administratively if the company does not:
      (1) Pay any fees, taxes or penalties imposed by this chapter or other law within sixty days after they are due;
      (2) Deliver its annual report to the secretary of state within sixty days after it is due.

§31B-8-810. Procedure for and effect of administrative dissolution.
      (a) If the secretary of state determines that a ground exists for administratively dissolving a limited liability company, the secretary of state shall enter a record of the determination and serve the company with a copy of the record.
      (b) If the company does not correct each ground for dissolution or demonstrate to the reasonable satisfaction of the secretary of state that each ground determined by the secretary of state does not exist within sixty days after service of the notice, the secretary of state shall administratively dissolve the company by signing a certification of the dissolution that recites the ground for dissolution and its effective date. The secretary of state shall file the original of the certificate and serve the company with a copy of the certificate.
      (c) A company administratively dissolved continues its existence but may carry on only business necessary to wind up and liquidate its business and affairs under section 8-802 and to notify claimants under sections 8-807 and 8-808.
      (d) The administrative dissolution of a company does not terminate the authority of its agent for service of process.

§31B-8-811. Reinstatement following administrative dissolution.
      (a) A limited liability company administratively dissolved may apply to the secretary of state for reinstatement within two years after the effective date of dissolution. The application must:
      (1) Recite the name of the company and the effective date of its administrative dissolution;
      (2) State that the ground for dissolution either did not exist or have been eliminated;
      (3) State that the company's name satisfies the requirements of section 1-105; and
      (4) Contain a certificate from the tax commissioner reciting that all taxes owed by the company have been paid.
      (b) If the secretary of state determines that the application contains the information required by subsection (a) of this section and that the information is correct, the secretary of state shall cancel the certificate of dissolution and prepare a certificate of reinstatement that recites this determination and the effective date of reinstatement, file the original of the certificate, and serve the company with a copy of the certificate.
      (c) When reinstatement is effective, it relates back to and takes effect as of the effective date of the administrative dissolution and the company may resume its business as if the administrative dissolution had never occurred.

§31B-8-812. Appeal from denial of reinstatement.
      (a) If the secretary of state denies a limited liability company's application for reinstatement following administrative dissolution, the secretary of state shall serve the company with a record that explains the reason or reasons for denial.
      (b) The company may appeal the denial of reinstatement to the circuit court within thirty days after service of the notice of denial is perfected. The company appeals by petitioning the court to set aside the dissolution and attaching to the petition copies of the secretary of state's certificate of dissolution, the company's application for reinstatement and the secretary of state's notice of denial.
      (c) The court may summarily order the secretary of state to reinstate the dissolved company or may take other action the court considers appropriate.
      (d) The court's final decision may be appealed as in other civil proceedings.

ARTICLE 9. CONVERSIONS AND MERGERS.

§31B-9-901. Definitions.
      In this article:
      (1) "Corporation" means a corporation under chapter thirty-one of this code, a predecessor law, or comparable law of another jurisdiction.
      (2) "General partner" means a partner in a partnership and a general partner in a limited partnership.
      (3) "Limited partner" means a limited partner in a limited partnership.
      (4) "Limited partnership" means a limited partnership created under article nine, chapter forty-seven of this code, a predecessor law, or comparable law of another jurisdiction.
      (5) "Partner" includes a general partner and a limited partner.
      (6) "Partnership" means a general partnership under chapter forty-seven-b of this code, a predecessor law, or comparable law of another jurisdiction.
      (7) "Partnership agreement" means an agreement among the partners concerning the partnership or limited partnership.
      (8) "Shareholder" means a shareholder in a corporation.

§31B-9-902. Conversion of partnership or limited partnership to limited liability company.
      (a) A partnership or limited partnership may be converted to a limited liability company pursuant to this section.
      (b) The terms and conditions of a conversion of a partnership or limited partnership to a limited liability company must be approved by all of the partners or by a number or percentage of the partners required for conversion in the partnership agreement.
      (c) An agreement of conversion must set forth the terms and conditions of the conversion of the interests of partners of a partnership or of a limited partnership, as the case may be, into interests in the converted limited liability company or the cash or other consideration to be paid or delivered as a result of the conversion of the interests of the partners, or a combination thereof.
      (d) After a conversion is approved under subsection (b) of this section, the partnership or limited partnership shall file articles of organization in the office of the secretary of state which satisfy the requirements of section 2-203 and contain:
      (1) A statement that the partnership or limited partnership was converted to a limited liability company from a partnership or limited partnership, as the case may be;
      (2) Its former name;
      (3) A statement of the number of votes cast by the partners entitled to vote for and against the conversion and, if the vote is less than unanimous, the number or percentage required to approve the conversion under subsection (b) of this section; and
      (4) In the case of a limited partnership, a statement that the certificate of limited partnership is to be canceled as of the date the conversion took effect.
      (e) In the case of a limited partnership, the filing of articles of organization under subsection (d) of this section cancels its certificate of limited partnership as of the date the conversion took effect.
      (f) A conversion takes effect when the articles of organization are filed in the office of the secretary of state or at any later date specified in the articles of organization.
      (g) A general partner who becomes a member of a limited liability company as a result of a conversion remains liable as a partner for an obligation incurred by the partnership or limited partnership before the conversion takes effect.
      (h) A general partner's liability for all obligations of the limited liability company incurred after the conversion takes effect is that of a member of the company. A limited partner who becomes a member as a result of a conversion remains liable only to the extent the limited partner was liable for an obligation incurred by the limited partnership before the conversion takes effect.

§31B-9-903. Effect of conversion; entity unchanged.
      (a) A partnership or limited partnership that has been converted pursuant to this article is for all purposes the same entity that existed before the conversion.
      (b) When a conversion takes effect:
      (1) All property owned by the converting partnership or limited partnership vests in the limited liability company;
      (2) All debts, liabilities and other obligations of the converting partnership or limited partnership continue as obligations of the limited liability company;
      (3) An action or proceeding pending by or against the converting partnership or limited partnership may be continued as if the conversion had n