On January 8, 2021 the LLC law of Ohio was signed into effect. Ohio’s New LLC Law affects all LLC’s formed in Ohio after February 11, 2022. The old law was completely repealed and the new Ohio Revised Code section 1706 is its replacement. This replacement was made to bring Ohio’s LLC laws in step with the case law and the codes of other states. But what does it mean for you?
The new LLC Act retained the language of the old statute in that the formation documents are still Articles of Incorporation, the governing document for the LLC is still called an Operating Agreement, ownership in the LLC is still evidenced by Membership interests and a Statutory Agent is still the person or entity that receives notices for the LLC.
The new LLC Act allows for Series LLC’s to be formed under a parent LLC as long as the series LLC’s maintain separate Assets and limits the association with the parent LLC
The old LLC code bifurcated of management structure has been replaced with a more flexible management structure that allows the members of the LLC to structure the management of the LLC in a way that more accurately reflects to goals of the LLC.
Ohio’s New LLC Law sets forth a statutory default for fiduciary duties of the members of the LLC. This default can be modified in the Operating Agreement of the LLC but sets a minimum standard for the members of the LLC. The new LLC Act states certain provisions that are NOT allowed to be modified by the Operating Agreement of the LLC. This takes the ambiguity out of the interpretation of the language in the old code section of “unless otherwise provided in the Limited Liability Company agreement” and provides clearer guidelines for the LLC and its members. Thus all of the provisions of the new LLC Act should be considered ‘default provisions’ to be modified by the Operating Agreement except for those nor permitted to be modified by the new LLC Act.
The prior LLC statute did not allow for a bar date for claims against a dissolved LLC. The new LLC Act creates a bar date for claims to force a resolution of clams matters. Claimants are given notice of the claims bar date. If the claim is not made prior to that date the claim is barred from being brought against the dissolved LLC. IF a clam is brought but denied by the dissolved LLC then the claimant has 90 days in which to bring suit and if they do not they are barred from bringing the clam.
These are just a few of the changes that can affect your Limited Liability Company and the governance of it. Just filing the form with the Ohio Secretary of State is not enough. You need a lawyer to help you navigate the new law and make sure that you are using the protection of the LLC to your best benefit. Moseman Law Office can help.
Excerpted from Ohio Lawyer Volume 35, No. 4.
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