Source: https://www.floridabar.org/the-florida-bar-journal/floridas-new-revised-llc-act-part-iv/
Timestamp: 2020-02-27 02:42:48
Document Index: 30697836

Matched Legal Cases: ['§605', '§605', '§605', '§605', '§605', '§605', '§605', '§605', '§605', '§605', '§605', '§605', '§605', '§605', '§605', '§605', '§605', '§605', '§605', '§605', '§605', '§605', '§605', '§605', '§605', '§605', '§605', '§605', '§605', '§605', '§605', '§605', '§605', '§605', '§605', '§605', '§605', '§605', '§605', '§605', '§605', '§605', '§605', '§605', '§605', '§605', '§605', '§605', '§605', '§605', '§605', '§605', '§605', '§605', '§605', '§605', '§605', '§605']

Florida’s New Revised LLC Act, Part IV – The Florida Bar
Florida’s New Revised LLC Act, Part IV
Vol. 88, No. 3 March 2014 Pg 27 Louis T. M. Conti and Gregory M. Marks Business Law
This is the fourth in a four-part installment of articles describing the new Florida Revised LLC Act in Ch. 605 (new act), which became effective January 1. This installment addresses foreign LLCs, mergers, conversions, domestications, interest exchanges, and appraisal rights. When reading the following descriptions of the new act, please keep in mind that these are statutory default rules that may be over-ridden or otherwise modified by the operating agreement, except to the extent prohibited in the nonwaivable provisions1 of the new act.
References to the “uniform act” refer to the Revised Uniform Limited Liability Company Act of 2006 as amended through 2013, while references to “existing law” refer to the Florida Limited Liability Company Act in Chapter 608.
Foreign LLCs Doing Business in Florida
The new act covers foreign LLCs doing business in Florida in §§605.0901 through 605.0911 and generally follows the uniform act in format and substance with modifications conducive to the nomenclature and filing requirement of the Florida Department of State (DOS), Division of Corporations. The new rules are not materially different than existing law and provide for foreign LLCs to apply for certificates of authority to do business in Florida. Perhaps the most important section for foreign LLCs is §605.0901, which confirms the governing law that applies to a foreign LLC is the law of the state or other jurisdiction of their formation as to internal affairs and the liability of members and managers for debts, obligations, and liabilities of the company. This is particularly important for foreign series LLCs operating in Florida, since Florida intentionally does not provide for series LLCs and does not address the operation of series LLCs in the state. While this provision does not specifically pertain to the “internal shields” of a series LLC, at least it provides some statutory authority for the general proposition that the laws of the state of formation of a foreign series LLC should be applicable to protect members and managers as to the “LLC’s obligations and liabilities.” Of course, that does not solve the issues that may arise in connection with the liabilities of the series within the series LLC, particularly if each “series” has different members and managers. Note that some state series LLC statutes treat the series LLC as one legal entity while others treat each series within the series LLC as legal entities in their own right. Florida DOS will require that a foreign series LLC register each series as a separate “filer” for purposes of obtaining a certificate of authority. It remains to be seen how Florida courts will deal with the liabilities of each series within a series LLC.
Interestingly, in a departure from existing law, the requirements to obtain a certificate of authority begin with a warning shot across the bow: “A foreign limited liability company may not transact business in this state until it obtains a certificate of authority from the [d]epartment.”2 It then goes on to describe the requirements for obtaining the certificate, which are generally consistent with existing law, and a nonexhaustive list of activities that do not constitute “transacting business” (hence do not require a certificate of authority),3 which are also consistent with existing law, as are the consequences of doing business in Florida without having first obtained a certificate of authority.4
In a new twist, the new act makes it clear that if the application meets all of the requirements specified in the act, the DOS “shall, upon payment of all filing fees, authorize the foreign LLC to transact business in this state and file the application for a certificate of authority.”5 A foreign LLC may not maintain a legal action without a certificate of authority; however, the failure to have that certificate does not impair the limited liability of the entity, the validity of a contract or other action taken by it, or its right to defend itself in a legal action brought within Florida.6
The new act provides clear guidance on amending,7 revoking,8 withdrawing,9 and reinstating following revocation10 of a certificate of authority. It also provides for actions by the Department of Legal Affairs to enjoin foreign LLCs from conducting business in Florida in violation of the new act.11
Organic Transactions: Mergers, Conversions, Interest Exchanges, and Domestications
The new act12 provides for a variety of “organic” transformations involving a Florida LLC, covering not only mergers and conversions as permitted under existing law, but expanding the playing field to include interest exchanges and in-bound domestications of non-U.S. entities.
The structure of the new act for organic transactions is a big improvement over existing law, with the provisions for each organic transaction modeled in the same manner (there are six sections for each of the four types of transactions, each set in the same order and having the same descriptive captions, with the subsections of each section in the same order). Generally, these provisions correspond to article 10 of the uniform act, except that the definitions (other than those dealing with appraisal rights13) have been relocated to the general definition section of the new act14 and the appraisal rights provisions in the existing law have been placed at the end (the uniform act does not contain appraisal rights).
A corollary of simplifying and “homogenizing” these organic transaction provisions into a logically coherent and more user-friendly structure is that several new definitions were used in the uniform act to express concepts in a more generic manner. To navigate the statute effectively, one must become familiar with these definitions — many of which are elaborated with other definitions and very precise conditional terms. Some examples are “entity” (and the items excluded from that term),15 “governor” and “governor interest,”16 “interest” and “interest holder,”17 “interest holder liability,”18 “organic law” and “organic rules,”19 and “private organic rules” and “public organic record.”20 It will take a few times reading the definitions to appreciate their utility and to gain an understanding of how they work within the transaction rules themselves. Since existing law contains a separate section for the definitions for the appraisal remedy provisions, the drafting committee believed it best to continue using this construct under the new statute.21
The new act contains rules of general application22 to organic transactions, which precede the four sets of specific rules dealing with each transaction. The first general rule23 makes it clear that the LLC statutory provisions do not supersede other laws that also apply to the transactions, such as fraudulent transfer laws, bankruptcy laws, U.C.C. articles 8 and 9, and anti-takeover or change-of-control statutes (such as the affiliated transaction statute or the control share acquisition statute). The second general rule24 prohibits entities engaged in transactions from avoiding restrictions on the use of property held for charitable purposes without a court order and clarifies the legal effect of a merger on a bequest, gift, or similar transfer. Another general rule25 carries forward the nonexclusivity rules under current law, recognizing the validity of an organic transaction carried out under other applicable law, even though it may have the same effect as one carried out under the LLC statute. The next general rule26 allows a reference in a plan of merger, interest exchange, conversion, or domestication to refer to facts ascertainable outside the plan if the manner in which the facts will operate under the plan is specified in the plan. This could also be the basis for allowing a plan to incorporate by reference the provisions of other instruments and records. The last general rule27 describes the events that will trigger the appraisal rights remedy, how it may be waived, restricted, or eliminated, and certain limitations on the remedy. It also provides procedural rules governing appraisal rights, incorporating another part of the statute for this purpose.28
Sections 605.1021-605.1026 set forth the rules dealing with mergers involving a Florida LLC. They authorize the combination of one or more domestic LLCs with or into one or more other domestic or foreign entities. The definition of “entities” is very broad, allowing myriad cross-species transactions. The jurisdiction laws of each party to the merger must permit that party to engage in the merger. As under existing law, the new statute provides that in the case of a merger involving an LLC that is a not-for-profit company, the surviving entity must also be a not-for-profit entity.
• A Plan — Each of the four organic transactions requires a plan. A merger requires a “plan of merger” that must identify the name, jurisdiction, and type of entity of each party, and the party that will be the surviving entity. It must also describe the manner and basis of converting the member or other ownership interests (and rights to acquire interests) in each party to the member or other ownership interests (or into other securities, money, obligations, other property or rights to acquire interests or securities), or any combination of the above. If the surviving entity is being created as part of the merger, the plan must also contain its public organic record and its private organic rules to be in place after the merger (if these rules are in a record — a tacit acknowledgement that operating agreements and other charter agreements may not be in writing or other record form). If the surviving entity already exists, the plan must contain any proposed amendments to or restatements of its public organic record or its private organic rules (again, if in a record) and all such amendments or restatements that become effective upon the merger.
The plan must also contain other provisions required under the laws of the jurisdiction of formation and the “organic rules” of each merging entity (illustrating the need to assure that the plan satisfies the statutory enabling conditions for each party). The plan may also contain any other provisions not prohibited by law. These plan requirements (as well as the plan requirements for the other three organic transactions) are nonwaivable, meaning they cannot be varied by the operating agreement.29 T he new definitions used in these rules are not as odd as they may seem at first, as the term “public organic record” simply means a record that is required to be filed with a governmental body, such as the DOS, to form an entity or to reflect an amendment to or restatement of that record, such as articles of incorporation, a certificate of limited partnership, articles of organization, or certificate of formation, and the like. “Private organic rules” simply mean the rules, whether or not in record, that govern the internal affairs of an entity and are not part of the public organic record of the entity, such as bylaws, partnership or limited partnership agreement, or an operating or limited liability company agreement. “Organic rules” are public and private organic rules taken together.
• Approval — The default rule for approval of a merger is a majority-in-interest of all members who have voting rights. These voting rights could be held by virtue of a member’s status as such or contractually conferred by the operating agreement with respect to the merger or another type of transaction having the effect of a merger. The new act makes it clear that nonvoting members do not automatically have voting rights with respect to a merger unless otherwise expressly provided for in the operating agreement. The default approval rule is waivable with the exception of the approval requirement for any member who will have interest holder liability in connection with the merger, in which case that member must approve the merger (even if that person does not have voting rights). An exception to this exception exists if the organic rules provide for approval of a merger in which some or all of the members become subject to interest holder liability (by the vote or consent of fewer than all of the members) and that member has previously approved being subject to the liability. “Interest holder liability” means personal liability for the liability of an entity that is imposed on a person solely by reason of the status of the person as an interest holder, or by the organic rules of the entity which makes one or more specified interest holders, or categories of interest holders liable in the capacity as interest holders for all or specified liabilities of the entity. It also includes an obligation under the organic rules of an entity to make contributions to the entity. “Interest holder” corresponds to the definition of “interest” and includes a shareholder, partner of a partnership, member, beneficial owner of certain trusts, and any other direct holder of an interest. The interest holders of all other parties to the merger must approve the merger in accordance with the requirements of their respective jurisdictional laws.
• Notice — The notice requirements for approving a merger now require a minimum of 10 days (shortened from 30 days), while the maximum remains 60 days. The form of the notice and time when notification is deemed made are consistent with existing law, with some clarifications. The notification required must be in writing and include 1) the date, time, and place of the meeting at which the plan of merger is to be submitted for approval by the members of the limited liability company; 2) a copy of the plan of merger; 3) the statements regarding the availability of appraisal rights, if any; and 4) the date on which such notification was given to the members. The notification may contain other information concerning the plan of merger not prohibited by applicable law. Note that a copy of the entire plan of merger must be delivered to members who have a right to approve the plan (under existing law, a summary of the plan would have sufficed). Again, it is worthwhile pointing out that these are default rules, and that the operating agreement may alter them. In addition, the general consent-in-lieu-of-meeting provision30 would also permit approval of the merger using that alternative approach. However, the above notification provisions would nonetheless apply to a situation in which consents are given in a record rather than via a meeting of the members (unless the operating agreement otherwise provides). Also note that while the separate merger approval requirement for managers in existing law no longer exists, the general voting provisions for a manager-managed LLC in the new act would continue to require the approval of the manager(s).31
• Amendment & Abandonment — A separate section deals with the amendment or abandonment of a plan of merger.32 The plan of merger, once approved, may only be amended with the consent of each party to the plan, except as otherwise provided in the plan or in the organic rules of each such entity. A merging LLC may approve an amendment to a plan of merger in the same manner that the plan was approved, if the plan does not provide for the manner in which it may be amended, or by the managers or members in the manner provided in the plan. However, if the amendment changes the consideration to be received by a member who had the right to vote on the merger, the organic rules of the surviving entity if the member had the right to approve them, or any other terms and conditions of the plan that would adversely affect that member in any material respect, then the consent of that member is required. After the plan has been approved but before articles of merger are filed, the plan of merger may be abandoned as provided in the plan. After the articles of merger have been filed but before the merger has become effective, the plan of merger may be abandoned by filing a “statement of abandonment” with the Department of State. While this technically changes existing law, it is consistent with historical Department of State practice.
• Articles — The filing of articles of merger with the Department of State is required for any merger involving a Florida LLC,33 stating that the merger has been approved 1) by each domestic merging entity that is an LLC; 2) by each other merging entity in accordance with the laws of its jurisdiction of formation; and 3) by each member who will have interest-holder liability resulting from the merger (and whose approval is required under the rules discussed above). The articles must also include any amendment to the public organic record of the surviving entity approved as part of the plan of merger, and if the surviving entity is created by the merger and is a domestic entity, its public organic record must be attached. If the surviving entity is created by the merger and is a Florida LLP, its statement of qualification must be attached. If the surviving entity is a foreign entity that does not have a certificate of authority to transact business in this state, a mailing address to which the department may send any process served on the department pursuant to §605.0117 and Ch. 48 is required. Finally, the articles must state that the surviving entity has agreed to pay to any members of any Florida LLC with appraisal rights the amount to which such members are entitled under the provisions of the appraisal remedy provisions of the statute and specify the effective date of the merger (if other than the filing date, which may be as many as 90 days after filing with the Department of State).
• Filing for Real Property — A copy of the articles of merger, certified by the Department of State, may be filed in the real estate records of any county in which any party to the merger holds an interest in real estate. This was carried over from existing law for purposes of evidencing the effect of the merger on real estate held by a merging entity. Another carry-over is the provision intended to avoid duplicate filings for the same transaction. If another Florida LLC or other Florida entity that is a party to the merger has already filed articles or a certificate of merger that substantially complies with the filing requirements of the LLC statute, then the LLC is not required to file articles of merger for the same merger.
& #x2022; Effect — The effect of a merger is described in a separate section.34 It provides that the surviving entity continues in existence, while the merged entities cease to exist (and the certificate of authority in Florida of a foreign merging entity is automatically cancelled). The property of each merging entity vests in the surviving entity without transfers, reversion, or impairment and rights (and the property of the surviving entity continues to be owned by the surviving entity). All debts, obligations, and other liabilities of each merging entity are debts, obligations, and other liabilities of the surviving entity, and except as otherwise provided by law or the plan of merger, all the rights, privileges, immunities, powers, and purposes of each merging entity vest in the surviving entity.
When the merger becomes effective, the interests or rights to acquire interests in each merging entity to be converted in the merger are deemed converted, and the interest holders of those interests are entitled only to the rights provided to them under the plan of merger and to any appraisal rights they may have under the LLC statute and the merging entity’s organic law. Unless provided in the organic law or organic rules of a merging entity, 1) the merger does not give rights that an interest holder, “governor,” or third party would have upon a dissolution, liquidation or winding up of the merged entity; 2) the merging entity is not required to wind up its affairs, pay its liabilities, or distribute its assets; and 3) the merger does not constitute a dissolution of the merging entity. For this purpose, “governor” includes a director of a corporation, the general partner of a general or limited partnership, the manager of a manager-managed LLC, and the member of a member-managed LLC, as well as any other person under whose authority the powers of an entity are exercised and under whose direction the activities and affairs of the entity are managed pursuant to the organic law and organic rules of the entity.
If a person not having “interest holder liability” with respect to any merging entity becomes subject to interest-holder liability with respect to a domestic entity as a result of the merger, the liability will extend only to those debts, obligations, and other liabilities that arise after the merger becomes effective and only to the extent provided in the organic law of that entity.35 In the case of a person who ceases to hold an interest in a domestic merging entity with respect to which the person had interest-holder liability, the new act essentially provides that 1) the merger does not discharge the liability if it arose prior to the merger, and any rights of contribution that the person had under the organic law or the organic rules of the domestic merging entity will continue to apply to the release, collection, or discharge of that continuing liability as if the merger had not occurred; and 2) the person is not liable for a debt, obligation, or other liability that arises after the merger becomes effective.
Interest Exchange
Sections 605.1031 through 605.1036 add the concept of an interest exchange to the available options for consolidating or affiliating a Florida LLC with another entity. The interest exchange is new to Florida LLCs, but has been a part of the Florida corporate statute for many years. In an interest exchange, the acquiring entity acquires all of one or more classes of the interests in the acquired entity and the acquired entity continues in existence. An interest exchange also allows for an acquisition through the use of securities of an entity other than the acquiring entity, such as membership interests or stock in a parent entity or another affiliate.
The interest exchange provisions in the new law follow the same pattern (six model sections) as the merger provisions discussed above and substantially follow the Uniform Act. Due to the space constraints for this article, each of the six sections will not be discussed in detail.
The enabling provision for interest exchanges36 states that a Florida LLC may acquire all of one or more classes or series of another Florida or foreign entity (or rights to acquire the same), in exchange for interests, securities, obligations, money, other property (or rights to acquire interests or securities), or any combination of the foregoing. Likewise, all of one or more classes or series of interests of a Florida LLC (or rights to acquire same) may be acquired by another Florida or foreign entity in exchange for interests, securities, obligations, money, other property (or rights to acquire interests or securities), or any combination thereof. The requirements for the plan of interest exchange are not unlike those for a plan of merger.37 The default rules for approval by an acquired Florida LLC (majority-in-interest of the voting members), notification to members regarding the vote for approving the plan, and amending and abandoning the plan follow the merger rules already discussed above.38 Unless required by the law of the jurisdiction of formation, the constituent documents of the acquiring entity, or the transaction documents relating to the particular interest exchange, the holders of interests in the acquiring entity are not required to vote on the interest exchange. The filing and content requirements for the articles of interest exchange that must be filed for an interest exchange involving a Florida LLC are also essentially the same as those that apply to mergers.39
When an interest exchange is effective, 1) the separate existence of each party continues; 2) the interests subject to the exchange cease to exist or are converted or exchanged, as provided in the plan of interest exchange; 3) the members holding those interests are entitled only to the rights provided to them under the plan of interest exchange and to any appraisal rights they have under the statute; 4) the acquiring entity becomes the interest holder of the specified interests in the acquiring entity; 5) the public organic record of the acquired entity is amended as provided in the articles of interest exchange (if applicable); and 6) the provisions of the private organic rules of the acquired entity (if in a record) are amended to the extent provided in the plan of interest exchange (if applicable).40 The rules relating to persons having or acquiring interest-holder liability are essentially the same as those described above for mergers, and except as otherwise provided in the organic rules of the acquired LLC, the interest exchange does not give rise to any rights that a member, manager, or third party would have upon a dissolution, liquidation, or winding up of the acquired entity.
An interesting provision dealing with what are defined as “protected agreements” is intended to give persons not familiar with an interest exchange a chance to become familiar with the new law.41 The special rule also applies to conversions.42 This convention provides that if a protected agreement contains a provision that applies to a “merger” of a Florida LLC, but does not expressly refer to an “interest exchange,” then such provision shall nonetheless be deemed to apply to an interest exchange in which the Florida LLC is the acquired entity (in the same manner as if an interest exchange were a merger) until such provision is amended after January 1, 2014. A “protected agreement” is an agreement binding on an entity or any governors or interest holders, a record evidencing indebtedness and any related agreement, or the organic rules of an entity — in each case, if the agreement or record was in effect on January 1.
Sections 605.1041 through 605.1046 allow a Florida LLC to convert into a different type of entity and for other entities to convert into a Florida LLC. Under these rules it is even possible for an LLC existing in one jurisdiction to convert itself into an LLC in another jurisdiction. While the structure and language of the new act regarding conversions is very different from the existing law, the substance of the new conversion provisions is effectively the same as existing law.
In order for another entity (whether Florida or foreign) to convert into a Florida LLC, or for a Florida LLC to convert into a different entity (Florida or foreign), the law governing the other entity must authorize the conversion. The requirements for the plan of conversion are substantially the same as those for a plan of merger discussed above, and the default rules for approval by a converting Florida LLC (majority-in-interest of the voting members), notification to members regarding the vote for approving the plan, and amending and abandoning the plan follow the merger rules already discussed above.43 Similar to the merger rules, the conversion must be approved by the entity (whether Florida or foreign) converting into the Florida LLC in the manner required under the law governing the converting entity. Inasmuch as the Florida corporate, partnership, and limited partnership statutes provide for conversions of those entities into LLCs, the approval requirements of those statutes must continue to be satisfied in converting one of those entities into an LLC. The filing and content requirements for the articles of conversion involving a Florida LLC are also essentially the same as those that apply to mergers.44
When the conversion is effective, in the case of a Florida LLC, the following is deemed to occur: 1) The converted entity is considered to be organized under and subject to the Florida LLC statute, and is deemed the same entity, without interruption, as the converting entity; 2) all property of the converting entity continues to be vested in the converted entity without transfer, reversion, or impairment, and all debts, obligations, and other liabilities of the converting entity continue as debts, obligations, and other liabilities of the converted entity; 3) all rights, privileges, immunities, powers, and purposes of the converting entity remain in the converted entity and the name of the converted entity may be substituted for the name of the converting entity in any pending legal proceeding; and 4) the interests or rights to acquire interests in the converting entity are converted, and the interest holders of the converting entity are entitled only to the rights provided to them under the plan of conversion and to any appraisal rights they have under the LLC statute and the converting entity’s organic law.45 In addition, in the case of a converting Florida LLC, the conversion does not give rise to any rights that a member, manager, or third party would otherwise have upon a dissolution, liquidation, or winding up of the LLC (except as otherwise provided in its operating agreement or articles of organization).
Domestication of Non-U.S. Entity
Sections 605.1051-605.1056 allow the domestication of a non-U.S. entity desiring to become a Florida LLC. This applies whether or not the non-U.S. entity is an LLC. A domestication differs from a conversion in that it allows the domesticating entity to retain its status and existence in the non-U.S. jurisdiction in which it existed before the domestication. The domestication must be permitted under the law of the entity’s jurisdiction of formation.
Like the other organic transaction provisions of the new act, a plan must be approved and articles must be filed with the Department of State. The plan of domestication must contain the name and jurisdiction of formation of the domesticating entity, and if applicable, the manner and basis of converting the interests and rights to acquire interests in the domesticating entity into interests, securities, obligations, money, other property, rights to acquire interests or securities, or any combination thereof. The plan must also contain the articles of organization, the operating agreement (if it will be written or otherwise in a record), and any other provision required by the law of the jurisdiction of formation of the domesticating entity or the organic rules of the domesticating entity. The plan may contain any other provision not prohibited by law.
The plan of domestication must be approved by the owners of the non-U.S. entity in accordance with the laws of its jurisdiction of formation (and any owner who will have interest holder liability, subject to the same exception that applies to the other transactions discussed above).46 A plan of domestication may be amended or abandoned under the same kinds of rules applicable to the other organic transactions.47
Articles of domestication must be filed with the Department of State and contain 1) the date on which the domesticating entity was first formed; 2) its name before the filing of the articles; 3) the articles of organization of the domesticated LLC, as an attachment; 4) the effective date of the domestication, if not the same as the filing date of filing of the articles; 5) the jurisdiction of the domesticating entity; and 6) a statement that the domestication has been approved in accordance with the laws governing the domesticating entity.48 When a domestication becomes effective, the domesticated entity is considered organized under and subject to the Florida LLC statute and is deemed the same entity, without interruption, as the domesticating entity, in the same manner as a converting entity. The other provisions governing the effect of domestication49 are substantially the same as those that apply to a conversion.
The appraisal rights provisions of the new act50 have been carried forward in essentially the same form as they exist under existing law, but with five events that trigger the appraisal rights. Under existing law, this remedy only applies to mergers and conversions. Under the new statute51 it will also apply to five additional events: 1) an interest exchange in which a member of the LLC whose interest is subject to the exchange possessed the right to vote upon it; 2) a sale of substantially all of the assets of the LLC when the member possessed the right to vote upon the sale (unless the sale is pursuant to court order or the sale is for cash, substantially all of which must be distributed to members within one year); 3) an amendment to the operating agreement or articles of organization of the LLC reducing the member’s interest to a fractional amount which the LLC will be obligated or have the right to repurchase (customarily called a “squeeze-out”); 4) an amendment to the operating agreement or articles of the LLC that alters or abolishes voting, or other rights, in a manner adverse to a member (except as the right may be affected by the voting or other rights of new interests then being authorized); or 5) an amendment to the organic rules of an entity that alters or abolishes the appraisal rights in the LLC statute in a manner adverse to a member. The new law also authorizes the operating agreement to extend the statutory appraisal rights to another transaction or event.
Consistent with existing law, the new act52 allows an LLC, in its articles of organization or operating agreement, to modify, restrict, or eliminate appraisal rights, as long as such actions are approved by each member whose appraisal rights are modified, restricted, or eliminated. If the articles of organization or operating agreement approved by a member contain an express waiver of appraisal rights, then those instruments will constitute a waiver of those rights.
The special definitions that apply to the appraisal rights rules are set forth in a separate section53 and are essentially the same as those under existing law. One notable change was made to the term “fair value.” The new act provides that the valuation must not reflect any discount for “lack of marketability or minority status.” Under existing law the prohibition on applying this discount applies only to LLCs with 10 or fewer members. The special limitations that apply to the appraisal rights under existing law have been carried over for interests that are 1) covered securities under the Securities Act of 1933; 2) traded in an organized market and part of a class or series that has at least 2,000 members and a market value of at least $20 million; or 3) issued by a registered open-end management investment company in which the interests can be redeemed at net asset value at the holder’s option. Likewise, the special exception to these exceptions in existing law continues to apply if the LLC’s assets are being acquired by a more than 20 percent stockholder (with limited exceptions), a person who has the power to appoint managers or senior executives, or in a situation in which a senior executive is getting a financial benefit generally not available to other members (with exceptions).54
Sections 605.1101-605.1107 contain a number of miscellaneous sections dealing with diverse matters, including 1) expressing that when applying and construing the new law, consideration must be given to the need to promote uniformity of the law with respect to the uniform act upon which it is based; 2) stating that the new law modifies, limits, or supersedes certain provisions of the Electronic Signatures in Global and National Commerce Act, but not certain Florida statutory rules dealing with electronic transmissions, facsimile signatures, or the Uniform Electronic Transaction Act; 3) carrying forward the income tax exemption rules for Florida LLCs that exist under Existing Law; 4) certain enforcement powers of the Department of State; 5) a reservation of power by the legislature to amend or repeal the new law; 6) a customary statutory savings clause pertaining to the repeal of existing law; and a 7) customary severability clause.
Section 605.1108 is the final section of the new act, and contains the effectiveness dates and certain grandfathering rules. The new act was generally effective January 1, and governs all Florida LLCs organized on or after that date. A Florida LLC formed in Florida before January 1 will continue to be subject to existing law, unless it elects to be governed by the new act earlier than 2015. In addition, all records filed on or after January 1 with the Department of State by a Florida or foreign LLC must comply with the filing requirements of the new act.55 O n and after January 1, 2015, all LLCs are subject to the new act. The election by an LLC formed before January 1, to become subject to the new act before January 1, 2015, must be made in the manner provided in its operating agreement (or by law) for amending the operating agreement. With regard to LLCs in existence prior to January 1, 2014, this section also provides that 1) the company’s articles of organization are deemed to be its articles of organization under the new act, and 2) for purposes of classifying the LLC as a “manager-managed” LLC,56 the language in the company’s articles of organization designating the company’s management structure operates as if that language were in the operating agreement.
1 Fla. Stat. §605.0105(3).
2 Fla. Stat. §605.0902.
3 Fla. Stat. §605.0905.
4 Fla. Stat. §605.0904.
5 Fla. Stat. §605.0903.
6 Fla. Stat. §605.0904.
7 Fla. Stat. §605.0907.
8 Fla. Stat. §605.0908.
9 Fla. Stat. §605.0910.
10 Fla. Stat. §605.0909.
11 Fla. Stat. §605.0913.
12 Fla. Stat. §§605.1001-605.1072.
13 Fla. Stat. §605.1061.
14 Fla. Stat. §605.0102.
15 Fla. Stat. §§605.0102(23)(a) and (b).
16 Fla. Stat. §§605.0102(27) and (28).
17 Fla. Stat. §§605.0102(29) and (31).
18 Fla. Stat. §605.0102(32).
19 Fla. Stat. §§605.0102(46) and (47).
20 Fla. Stat. §§605.0102(55) and (58).
21 Fla. Stat. §605.1061.
22 Fla. Stat. §§605.1001-605.1006.
23 Fla. Stat. §605.1001.
24 Fla. Stat. §605.1002.
25 Fla. Stat. §605.1004.
26 Fla. Stat. §605.1005.
27 Fla. Stat. §605.1006.
28 Fla. Stat. §§605.1061-605.1072.
29 Fla. Stat. §605.0105(3)(o).
30 Fla. Stat. §605.04073(4).
31 Fla. Stat. §605.04073(2)(b).
32 Fla. Stat. §605.1024.
33 Fla. Stat. §605.1025(1)(c).
34 Fla. Stat. §605.1026.
35 Fla. Stat. §605.1026(3).
36 Fla. Stat. §605.1031.
37 Fla. Stat. §605.1032.
38 Fla. Stat. §§605.1033 and 605.1034.
39 Fla. Stat. §605.1035.
40 Fla. Stat. §605.1036.
41 Fla. Stat. §605.1031(3).
43 Fla. Stat. §§605.1042-605.1044.
44 Fla. Stat. §605.1045.
45 Fla. Stat. §605.1046.
46 Fla. Stat. §605.1053.
47 Fla. Stat. §605.1054.
48 Fla. Stat. §605.1055.
49 Fla. Stat. §605.1056.
50 Fla. Stat. §605.1006 and Fla. Stat. §§605.1061-605.1072.
51 Fla. Stat. §605.1006(1).
52 Fla. Stat. §605.1006(2).
53 Fla. Stat. §605.1061.
54 Fla. Stat. §605.1006(4).
55 The new filing forms are on the SunBiz website. Florida Department of State, Division of Corporations, Forms, http://www.sunbiz.org/downloads.html.
56 Fla. Stat. §605.0102(39).