reglab/statecodes huggingface dataset:
2023 Michigan Compiled Laws › Chapter 450 - Corporations › Act 23 of 1993 - Michigan Limited Liability Company Act (450.4101 - 450.5200) › Article 2 - (450.4201...450.4216) › Section 450.4216 - Limited Liability Company; Powers.

450.4216 Limited liability company; powers.
Sec. 216.
Except as otherwise provided in an operating agreement, a limited liability company may do any of the following:
(a) Indemnify, hold harmless, and defend a member, manager, or other person from and against any and all losses, expenses, claims, and demands sustained by that person, except that the company may not indemnify a person for conduct described in section 407(a), (b), or (c).
(b) Purchase and maintain insurance on behalf of a member, manager, or other person against any liability or expense asserted against or incurred by that person, whether or not the company may indemnify that person under subdivision (a).
History:
Add. 2010, Act 290, Imd. Eff. Dec. 16, 2010
2023 Michigan Compiled Laws › Chapter 450 - Corporations › Act 23 of 1993 - Michigan Limited Liability Company Act (450.4101 - 450.5200) › Article 3 - (450.4301...450.4308) › Section 450.4301 - Members; Contribution.

450.4301 Members; contribution.
Sec. 301.
(1) A contribution of a member to a limited liability company may consist of any tangible or intangible property or benefit to the company, including cash, property, services performed, promissory notes, contracts for services to be performed, or other binding obligation to contribute cash or property or to perform services.
(2) A contribution of an obligation to contribute cash or property or to perform services may be in exchange for a present membership interest or for a future membership interest, including a future profits interest, as provided in an operating agreement.
History:
1993, Act 23, Eff. June 1, 1993 ;-- Am. 1997, Act 52, Imd. Eff. July 1, 1997 ;-- Am. 2002, Act 686, Imd. Eff. Dec. 30, 2002
2023 Michigan Compiled Laws › Chapter 450 - Corporations › Act 23 of 1993 - Michigan Limited Liability Company Act (450.4101 - 450.5200) › Article 3 - (450.4301...450.4308) › Section 450.4302 - Promise by Member to Contribute; Enforcement; Obligation to Perform; Rights of Company; Compromising Obligation; Enforcement by Creditor of Original Member's Obligation.

450.4302 Promise by member to contribute; enforcement; obligation to perform; rights of company; compromising obligation; enforcement by creditor of original member's obligation.
Sec. 302.
(1) A promise by a member to contribute to the limited liability company is not enforceable unless the promise is in writing and signed by the member.
(2) Unless otherwise provided in an operating agreement, a member is obligated to the limited liability company to perform any enforceable promise to contribute cash or property or to perform services, even if the member is unable to perform because of death, disability, or other reason. If a member does not make the required contribution of property or services, the member is obligated, at the option of the limited liability company, to contribute cash equal to that portion of value of the stated contribution that is not made.
(3) The rights of the limited liability company under subsection (2) are in addition to any other rights that the limited liability company may have under an operating agreement or applicable law.
(4) Unless otherwise provided in an operating agreement, a member's obligation to make a contribution or to return money or other property paid or distributed in violation of this act may be compromised only upon the unanimous vote of the members of the limited liability company entitled to vote. Notwithstanding a compromise of a member's obligation, a creditor of a limited liability company who extends credit or otherwise acts in reliance on the member's obligation after the member signs a writing that reflects the obligation and before the amendment of the writing to reflect the compromise may enforce the member's original obligation.
History:
1993, Act 23, Eff. June 1, 1993 ;-- Am. 1997, Act 52, Imd. Eff. July 1, 1997 ;-- Am. 2010, Act 290, Imd. Eff. Dec. 16, 2010
2023 Michigan Compiled Laws › Chapter 450 - Corporations › Act 23 of 1993 - Michigan Limited Liability Company Act (450.4101 - 450.5200) › Article 3 - (450.4301...450.4308) › Section 450.4303 - Distribution of Assets; Allocation; Manner; Basis.

450.4303 Distribution of assets; allocation; manner; basis.
Sec. 303.
(1) Distributions of cash or other assets of a limited liability company shall be allocated among the members and among classes of members in the manner provided in an operating agreement. If an operating agreement does not provide for an allocation, distributions shall be allocated as follows:
(a) Prior to July 1, 1997, on the basis of the value, as stated in the records the limited liability company is required to keep under section 213 or as determined by any other reasonable method, of the contributions made by each member to the extent that the contributions have been received by the limited liability company and have not been returned.
(b) On and after July 1, 1997, except as otherwise provided in subsection (2), in equal shares to all members. A membership interest held by 2 or more persons, whether as fiduciaries, members of a partnership, tenants in common, joint tenants, tenants by the entirety, or otherwise, is considered as held by 1 member for an allocation under this subdivision.
(2) If a limited liability company in existence before July 1, 1997 allocated distributions on the basis of subsection (1)(a), the limited liability company shall continue to allocate distributions pursuant to subsection (1)(a) until the allocation is changed by an operating agreement.
History:
1993, Act 23, Eff. June 1, 1993 ;-- Am. 1997, Act 52, Imd. Eff. July 1, 1997 ;-- Am. 2002, Act 686, Imd. Eff. Dec. 30, 2002
2023 Michigan Compiled Laws › Chapter 450 - Corporations › Act 23 of 1993 - Michigan Limited Liability Company Act (450.4101 - 450.5200) › Article 3 - (450.4301...450.4308) › Section 450.4304 - Distribution; Conditions for Receiving.

450.4304 Distribution; conditions for receiving.
Sec. 304.
(1) Except as otherwise provided in this act and subject to subsection (2), a member is entitled to receive a distribution from a limited liability company before the withdrawal of the member from the limited liability company or before the dissolution and winding up of the limited liability company to the extent and at the times or upon the happening of the events specified in an operating agreement.
(2) If an operating agreement does not address a member's right to receive a distribution before the withdrawal of the member from the limited liability company or before the dissolution and winding up of the limited liability company, the unanimous approval of the members is required for any distribution to that member.
History:
1993, Act 23, Eff. June 1, 1993 ;-- Am. 1997, Act 52, Imd. Eff. July 1, 1997 ;-- Am. 2002, Act 686, Imd. Eff. Dec. 30, 2002 ;-- Am. 2010, Act 290, Imd. Eff. Dec. 16, 2010
2023 Michigan Compiled Laws › Chapter 450 - Corporations › Act 23 of 1993 - Michigan Limited Liability Company Act (450.4101 - 450.5200) › Article 3 - (450.4301...450.4308) › Section 450.4305 - Distributions to Withdrawing Member.

450.4305 Distributions to withdrawing member.
Sec. 305.
Until the effective date of withdrawal, a withdrawing member shall share in any distribution made in accordance with section 304. An operating agreement may provide for an additional distribution to a withdrawing member. If a provision in an operating agreement permits withdrawal but is silent on an additional withdrawal distribution, a member withdrawing in accordance with the operating agreement is entitled to receive as a distribution, within a reasonable time after withdrawal, the fair value of the member's interest in the limited liability company as of the date of withdrawal based upon the member's share of distributions as determined under section 303.
History:
1993, Act 23, Eff. June 1, 1993 ;-- Am. 1997, Act 52, Imd. Eff. July 1, 1997
2023 Michigan Compiled Laws › Chapter 450 - Corporations › Act 23 of 1993 - Michigan Limited Liability Company Act (450.4101 - 450.5200) › Article 3 - (450.4301...450.4308) › Section 450.4306 - Distributions; Demand, Acceptance, and Receipt of Distribution; Form.

450.4306 Distributions; demand, acceptance, and receipt of distribution; form.
Sec. 306.
Except as provided in an operating agreement, a member, regardless of the nature of the member's contribution, has no right to demand and receive a distribution from a limited liability company in any form other than cash, and a member may not be compelled to accept from a limited liability company a distribution of an asset in kind to the extent that the percentage of the asset distributed to the member exceeds a percentage of that asset that is equal to the percentage in which the member shares in distributions from the limited liability company.
History:
1993, Act 23, Eff. June 1, 1993
2023 Michigan Compiled Laws › Chapter 450 - Corporations › Act 23 of 1993 - Michigan Limited Liability Company Act (450.4101 - 450.5200) › Article 3 - (450.4301...450.4308) › Section 450.4308 - Distribution; Violating Operating Agreement or MCL 450.4307; Liability of Members or Managers; Presumption of Assent; Knowledge of Violation; Contribution; Commencement of Proceeding.

450.4308 Distribution; violating operating agreement or MCL 450.4307; liability of members or managers; presumption of assent; knowledge of violation; contribution; commencement of proceeding.
Sec. 308.
(1) A member or manager that votes for or assents to a distribution in violation of an operating agreement or section 307 is personally liable, jointly and severally, to the limited liability company for the amount of the distribution that exceeds what could have been distributed without violating the operating agreement or section 307 if it is established that the member or manager did not comply with section 404.
(2) For purposes of liability under subsection (1), a member or manager entitled to participate in a decision to make a distribution is presumed to have assented to a distribution unless the member or manager does 1 of the following:
(a) Votes against the distribution.
(b) Files a written dissent with the limited liability company within a reasonable time after the member or manager has knowledge of the decision.
(3) A member that accepts or receives a distribution with knowledge of facts indicating it is in violation of an operating agreement or section 307 is liable to the limited liability company for the amount the member accepts or receives that exceeds the member's share of the amount that could have been distributed without violating section 307 or the operating agreement.
(4) Each member or manager held liable under subsection (1) for an unlawful distribution is entitled to contribution from each other member or manager who could be held liable under subsection (1) or (3). The contribution of a person held liable under both subsections (1) and (3) shall not exceed the person's liability under either subsection (1) or (3), whichever is greater.
(5) A proceeding under this section is barred unless it is commenced within 2 years after the date on which the effect of the distribution is measured under section 307.
History:
1993, Act 23, Eff. June 1, 1993 ;-- Am. 1997, Act 52, Imd. Eff. July 1, 1997 ;-- Am. 2010, Act 290, Imd. Eff. Dec. 16, 2010
2023 Michigan Compiled Laws › Chapter 450 - Corporations › Act 23 of 1993 - Michigan Limited Liability Company Act (450.4101 - 450.5200) › Article 4 - (450.4401...450.4409) › Section 450.4401 - Management Vested in Members.

450.4401 Management vested in members.
Sec. 401.
Unless the articles of organization state that the business of the limited liability company is to be managed by 1 or more managers, the business of the limited liability company shall be managed by the members, subject to any provision in an operating agreement restricting or enlarging the management rights and duties of any member or group of members. If management is vested in the members, both of the following apply:
(a) The members are considered managers for purposes of applying this act, including section 406 regarding the agency authority of managers, unless the context clearly requires otherwise.
(b) The members have, and are subject to, all duties and liabilities of managers and to all limitations on liability and indemnification rights of managers.
History:
1993, Act 23, Eff. June 1, 1993 ;-- Am. 1997, Act 52, Imd. Eff. July 1, 1997 ;-- Am. 2010, Act 290, Imd. Eff. Dec. 16, 2010
2023 Michigan Compiled Laws › Chapter 450 - Corporations › Act 23 of 1993 - Michigan Limited Liability Company Act (450.4101 - 450.5200) › Article 4 - (450.4401...450.4409) › Section 450.4402 - Managers; Delegation; Qualifications; Number; Notice of Delegation.

450.4402 Managers; delegation; qualifications; number; notice of delegation.
Sec. 402.
(1) The articles of organization may provide that the business of the limited liability company shall be managed by or under the authority of 1 or more managers. The delegation of the management of a limited liability company to managers is subject to any provision in the articles of organization or in an operating agreement restricting or enlarging the management rights and duties of any manager or group of managers.
(2) An operating agreement may prescribe qualifications for managers, including a requirement that the managers be members.
(3) The number of managers shall be specified in or fixed in accordance with an operating agreement.
(4) If the articles of organization delegate management of a limited liability company to managers, the articles of organization constitute notice to third parties that managers, not members, have the agency authority described in section 406.
History:
1993, Act 23, Eff. June 1, 1993 ;-- Am. 1997, Act 52, Imd. Eff. July 1, 1997
2023 Michigan Compiled Laws › Chapter 450 - Corporations › Act 23 of 1993 - Michigan Limited Liability Company Act (450.4101 - 450.5200) › Article 4 - (450.4401...450.4409) › Section 450.4403 - Managers; Selection; Vote; Removal; Notice.

450.4403 Managers; selection; vote; removal; notice.
Sec. 403.
(1) A vote of a majority in interest of the members entitled to vote in accordance with section 502(1) is required to select 1 or more managers to fill initial positions or vacancies.
(2) The members may remove 1 or more managers with or without cause unless an operating agreement provides that managers may be removed only for cause.
(3) The members may remove a manager for cause only at a meeting called expressly for that purpose, and the manager shall have reasonable advance notice of the allegations against that manager and an opportunity to be heard at the meeting.
History:
1993, Act 23, Eff. June 1, 1993 ;-- Am. 1997, Act 52, Imd. Eff. July 1, 1997 ;-- Am. 2002, Act 686, Imd. Eff. Dec. 30, 2002 ;-- Am. 2010, Act 290, Imd. Eff. Dec. 16, 2010
2023 Michigan Compiled Laws › Chapter 450 - Corporations › Act 23 of 1993 - Michigan Limited Liability Company Act (450.4101 - 450.5200) › Article 4 - (450.4401...450.4409) › Section 450.4404 - Managers; Duties; Action for Failure to Perform Duties.

450.4404 Managers; duties; action for failure to perform duties.
Sec. 404.
(1) A manager shall discharge the duties of manager in good faith, with the care an ordinarily prudent person in a like position would exercise under similar circumstances, and in a manner the manager reasonably believes to be in the best interests of the limited liability company.
(2) In discharging the manager's duties, a manager may rely on information, opinions, reports, or statements, including, but not limited to, financial statements or other financial data, if prepared or presented by any of the following:
(a) One or more other managers or members or employees of the limited liability company whom the manager reasonably believes to be reliable and competent in the matter presented.
(b) Legal counsel, public accountants, engineers, or other persons as to matters the manager reasonably believes are within the person's professional or expert competence.
(c) A committee of managers of which the manager is not a member if the manager reasonably believes the committee merits confidence.
(3) A manager is not entitled to rely on the information, opinions, reports, or statements described in subsection (2) if the manager has knowledge concerning the matter in question that makes reliance otherwise permitted by subsection (2) unwarranted.
(4) A manager is not liable for an action taken as a manager or the failure to take an action if the manager performs the duties of the manager's office in compliance with this section.
(5) Except as otherwise provided in an operating agreement or by vote of the members pursuant to section 502(4) and (7), a manager shall account to the limited liability company and hold as trustee for it any profit or benefit derived by the manager from any transaction connected with the conduct or winding up of the limited liability company or from any personal use by the manager of its property.
(6) An action against a manager for failure to perform the duties imposed by this act shall be commenced within 3 years after the cause of action has accrued or within 2 years after the cause of action is discovered or should reasonably have been discovered by the complainant, whichever occurs first.
History:
1993, Act 23, Eff. June 1, 1993 ;-- Am. 1997, Act 52, Imd. Eff. July 1, 1997 ;-- Am. 2010, Act 290, Imd. Eff. Dec. 16, 2010
2023 Michigan Compiled Laws › Chapter 450 - Corporations › Act 23 of 1993 - Michigan Limited Liability Company Act (450.4101 - 450.5200) › Article 4 - (450.4401...450.4409) › Section 450.4405 - Managers; Voting Requirements.

450.4405 Managers; voting requirements.
Sec. 405.
(1) Except as otherwise provided in the articles of organization or an operating agreement, voting by managers shall be as provided in this section.
(2) If management of a limited liability company is delegated to managers under section 402 and the limited liability company has more than 1 manager, each manager has 1 vote and the vote of a majority of all managers is required to decide or resolve any difference on any matter connected with carrying on the business of the limited liability company that is within the scope of the managers' authority.
(3) If management of a limited liability company remains in the members, section 502 applies to voting by the members.
History:
1993, Act 23, Eff. June 1, 1993 ;-- Am. 1997, Act 52, Imd. Eff. July 1, 1997 ;-- Am. 2002, Act 686, Imd. Eff. Dec. 30, 2002
2023 Michigan Compiled Laws › Chapter 450 - Corporations › Act 23 of 1993 - Michigan Limited Liability Company Act (450.4101 - 450.5200) › Article 4 - (450.4401...450.4409) › Section 450.4406 - Manager as Agent.

450.4406 Manager as agent.
Sec. 406.
A manager is an agent of the limited liability company for the purpose of its business, and the act of a manager, including the execution in the limited liability company name of any instrument, that apparently carries on in the usual way the business of the limited liability company of which the manager is a manager binds the limited liability company, unless both of the following apply:
(a) The manager does not have the authority to act for the limited liability company in that particular matter.
(b) The person with whom the manager is dealing has actual knowledge that the manager lacks authority to act or the articles of organization or this act establishes that the manager lacks authority to act.
History:
1993, Act 23, Eff. June 1, 1993 ;-- Am. 2002, Act 686, Imd. Eff. Dec. 30, 2002 ;-- Am. 2010, Act 290, Imd. Eff. Dec. 16, 2010
2023 Michigan Compiled Laws › Chapter 450 - Corporations › Act 23 of 1993 - Michigan Limited Liability Company Act (450.4101 - 450.5200) › Article 4 - (450.4401...450.4409) › Section 450.4407 - Managers; Eliminating or Limiting Liability; Exceptions.

450.4407 Managers; eliminating or limiting liability; exceptions.
Sec. 407.
A provision in the articles of organization or an operating agreement may eliminate or limit the monetary liability of a manager to the limited liability company or its members for breach of any duty established in section 404, except that the provision does not eliminate or limit the liability of a manager for any of the following:
(a) The receipt of a financial benefit to which the manager is not entitled.
(b) Liability under section 308.
(c) A knowing violation of law.
(d) An act or omission occurring before the date when the provision becomes effective.
History:
1993, Act 23, Eff. June 1, 1993
2023 Michigan Compiled Laws › Chapter 450 - Corporations › Act 23 of 1993 - Michigan Limited Liability Company Act (450.4101 - 450.5200) › Article 4 - (450.4401...450.4409) › Section 450.4408 - Repealed. 2010, Act 290, Imd. Eff. Dec. 16, 2010.

450.4408 Repealed. 2010, Act 290, Imd. Eff. Dec. 16, 2010.
Compiler's Notes:
The repealed section pertained to indemnification of manager against losses, expenses, claims, and demands for alleged acts or omissions.
2023 Michigan Compiled Laws › Chapter 450 - Corporations › Act 23 of 1993 - Michigan Limited Liability Company Act (450.4101 - 450.5200) › Article 4 - (450.4401...450.4409) › Section 450.4409 - Manager or Agent With Interest in Company; Effect; Majority Vote by Members With No Interest in Transaction; Claims.

450.4409 Manager or agent with interest in company; effect; majority vote by members with no interest in transaction; claims.
Sec. 409.
(1) Except as otherwise provided in an operating agreement, a transaction in which a manager or agent of a limited liability company is determined to have an interest shall not, because of the interest, be enjoined, be set aside, or give rise to an award of damages or other sanctions, in a proceeding by a member or by or in the right of the company, if the manager or agent interested in the transaction establishes any of the following:
(a) The transaction was fair to the company at the time entered into.
(b) The material facts of the transaction and the manager's or agent's interest were disclosed or known to the managers and the managers authorized, approved, or ratified the transaction.
(c) The material facts of the transaction and the manager's or agent's interest were disclosed or known to the members entitled to vote and they authorized, approved, or ratified the transaction.
(2) Except as otherwise provided in the articles of organization or an operating agreement, a transaction is authorized, approved, or ratified for purposes of subsection (1)(b) if it receives the affirmative vote of a majority of the managers that have no interest in the transaction. The presence of, or a vote cast by, a manager with an interest in the transaction does not affect the validity of an action taken under subsection (1)(b).
(3) Except as otherwise provided in the articles of organization or an operating agreement, a transaction is authorized, approved, or ratified for purposes of subsection (1)(c) if it receives a majority of votes cast by the members entitled to vote that do not have an interest in the transaction.
(4) Satisfying the requirements of subsection (1) does not preclude other claims relating to a transaction in which a manager or agent is determined to have an interest. Those claims shall be evaluated under principles of law applicable to a transaction in which a similarly situated person does not have an interest.
History:
Add. 2010, Act 290, Imd. Eff. Dec. 16, 2010
2023 Michigan Compiled Laws › Chapter 450 - Corporations › Act 23 of 1993 - Michigan Limited Liability Company Act (450.4101 - 450.5200) › Article 5 - (450.4501...450.4515) › Section 450.4501 - Members; Admission; Liability for Acts, Debts, or Obligations.

450.4501 Members; admission; liability for acts, debts, or obligations.
Sec. 501.
(1) A person may be admitted as a member of a limited liability company in connection with the formation of the limited liability company in any of the following ways:
(a) If an operating agreement includes requirements for admission, by complying with those requirements.
(b) If an operating agreement does not include requirements for admission, if either of the following are met:
(i) The person signs the initial operating agreement.
(ii) The person's status as a member is reflected in the records, tax filings, or other written statements of the limited liability company.
(c) In any manner established in a written agreement of the members.
(2) A person may be admitted as a member of a limited liability company after the formation of the limited liability company in any of the following ways:
(a) If the person is acquiring a membership interest directly from the limited liability company, by complying with the provisions of an operating agreement prescribing the requirements for admission or, in the absence of provisions prescribing the requirements for admission in an operating agreement, upon the unanimous vote of the members entitled to vote.
(b) If the person is an assignee of a membership interest, as provided in section 506.
(c) If the person is becoming a member of a surviving limited liability company as the result of a merger or conversion approved under this act, as provided in the plan of merger or plan of conversion.
(3) A limited liability company may admit a person as a member that does not make a contribution or incur an obligation to make a contribution to the limited liability company.
(4) Unless otherwise provided by law or in an operating agreement, a person that is a member or manager, or both, of a limited liability company is not liable for the acts, debts, or obligations of the limited liability company.
History:
1993, Act 23, Eff. June 1, 1993 ;-- Am. 1997, Act 52, Imd. Eff. July 1, 1997 ;-- Am. 2002, Act 686, Imd. Eff. Dec. 30, 2002 ;-- Am. 2010, Act 290, Imd. Eff. Dec. 16, 2010
2023 Michigan Compiled Laws › Chapter 450 - Corporations › Act 23 of 1993 - Michigan Limited Liability Company Act (450.4101 - 450.5200) › Article 5 - (450.4501...450.4515) › Section 450.4503 - Members; Obtaining Certain Financial Statements and Tax Returns; Inspecting and Copying Records; Obtaining Other Information; Formal Accounting of Company's Affairs.

450.4503 Members; obtaining certain financial statements and tax returns; inspecting and copying records; obtaining other information; formal accounting of company's affairs.
Sec. 503.
(1) Upon written request of a member, a limited liability company shall send a copy of its most recent annual financial statement and its most recent federal, state, and local income tax returns, and any other returns or filings the limited liability company has submitted or is required to submit to any federal, state, local, or other governmental taxing authority, to the member by mail or electronic transmission.
(2) Upon reasonable request, a member may obtain true and full information regarding the current state of a limited liability company's financial condition.
(3) Upon reasonable written request and during ordinary business hours, a member or the member's designated representative may inspect and copy, at the member's expense, any of the records a limited liability company is required to maintain under section 213, at the location where the records are kept.
(4) Upon reasonable written request, a member may obtain other information regarding a limited liability company's affairs or may inspect, personally or through a representative and during ordinary business hours, other books and records of the limited liability company, as is just and reasonable.
(5) A member may have a formal accounting of a limited liability company's affairs, as provided in an operating agreement or whenever circumstances render it just and reasonable.
History:
1993, Act 23, Eff. June 1, 1993 ;-- Am. 1997, Act 52, Imd. Eff. July 1, 1997 ;-- Am. 2002, Act 686, Imd. Eff. Dec. 30, 2002 ;-- Am. 2010, Act 290, Imd. Eff. Dec. 16, 2010
2023 Michigan Compiled Laws › Chapter 450 - Corporations › Act 23 of 1993 - Michigan Limited Liability Company Act (450.4101 - 450.5200) › Article 5 - (450.4501...450.4515) › Section 450.4504 - Membership Interest as Personal Property.

450.4504 Membership interest as personal property.
Sec. 504.
(1) A membership interest is personal property and may be held in any manner in which personal property may be held. A husband and wife may hold a membership interest in joint tenancy in the same manner and subject to the same restrictions, consequences, and conditions that apply to the ownership of real estate held jointly by a husband and wife under the laws of this state, with full right of ownership by survivorship in case of the death of either.
(2) A member has no interest in specific limited liability company property.
History:
1993, Act 23, Eff. June 1, 1993 ;-- Am. 2002, Act 686, Imd. Eff. Dec. 30, 2002
2023 Michigan Compiled Laws › Chapter 450 - Corporations › Act 23 of 1993 - Michigan Limited Liability Company Act (450.4101 - 450.5200) › Article 5 - (450.4501...450.4515) › Section 450.4505 - Membership Interest; Assignment; Liability of Assignee; Assignor as Member; Liability of Assignor Not Released.

450.4505 Membership interest; assignment; liability of assignee; assignor as member; liability of assignor not released.
Sec. 505.
(1) Except as provided in an operating agreement, a membership interest is assignable in whole or in part.
(2) An assignment of a membership interest does not of itself entitle the assignee to participate in the management and affairs of a limited liability company or to become or exercise any rights of a member. An assignment entitles the assignee to receive, to the extent assigned, only the distributions to which the assignor would be entitled.
(3) Unless otherwise provided in an operating agreement and except to the extent assumed by agreement, an assignee has no liability as a member solely as a result of the assignment.
(4) Except as provided in an operating agreement, a member ceases to be a member when the member's entire membership interest is assigned. The assignor is not released from any liability to the company under sections 302 and 308 even if the assignee becomes a member.
History:
1993, Act 23, Eff. June 1, 1993 ;-- Am. 2010, Act 290, Imd. Eff. Dec. 16, 2010
2023 Michigan Compiled Laws › Chapter 450 - Corporations › Act 23 of 1993 - Michigan Limited Liability Company Act (450.4101 - 450.5200) › Article 5 - (450.4501...450.4515) › Section 450.4506 - Assignee of Membership Interest; Conditions for Membership; Rights and Powers; Liability for Obligations of Assignor.

450.4506 Assignee of membership interest; conditions for membership; rights and powers; liability for obligations of assignor.
Sec. 506.
(1) Unless otherwise provided in an operating agreement, an assignee of a membership interest in a limited liability company that has more than 1 member may become a member only upon a unanimous vote of the members entitled to vote. An assignee of a membership interest in a limited liability company that has 1 member may become a member in accordance with the terms of the agreement between the member and the assignee.
(2) An assignee that becomes a member of a limited liability company has, to the extent assigned, the rights and powers, and is subject to the restrictions and liabilities, of a member under the articles of organization, an operating agreement, and this act. An assignee that becomes a member also is liable for any obligations the assignor has to make contributions and to return distributions under sections 302 and 308(3). An assignee is not obligated for liabilities unknown to the assignee at the time the assignee became a member unless the liabilities are shown on the financial records of the limited liability company.
History:
1993, Act 23, Eff. June 1, 1993 ;-- Am. 1997, Act 52, Imd. Eff. July 1, 1997 ;-- Am. 2002, Act 686, Imd. Eff. Dec. 30, 2002 ;-- Am. 2010, Act 290, Imd. Eff. Dec. 16, 2010
2023 Michigan Compiled Laws › Chapter 450 - Corporations › Act 23 of 1993 - Michigan Limited Liability Company Act (450.4101 - 450.5200) › Article 5 - (450.4501...450.4515) › Section 450.4507 - Charging Membership Interest With Payment of Judgment; Rights of Judgment Creditor; Rights and Powers of Member; Charging Order as Lien on Membership Interest; Section as Exclusive Remedy.

450.4507 Charging membership interest with payment of judgment; rights of judgment creditor; rights and powers of member; charging order as lien on membership interest; section as exclusive remedy.
Sec. 507.
(1) If a court of competent jurisdiction receives an application from any judgment creditor of a member of a limited liability company, the court may charge the membership interest of the member with payment of the unsatisfied amount of judgment with interest.
(2) If a limited liability company is served with a charging order and notified of the terms of that order, then to the extent described in the order, the member's judgment creditor described in the order is entitled to receive only any distribution or distributions to which the judgment creditor is entitled with respect to the member's membership interest.
(3) This act does not deprive any member of the benefit of any exemption laws applicable to the member's membership interest.
(4) Unless otherwise provided in an operating agreement or admitted as a member under section 501, a judgment creditor of a member that obtains a charging order does not become a member of the limited liability company, and the member that is the subject of the charging order remains a member of the limited liability company and retains all rights and powers of membership except the right to receive distributions to the extent charged.
(5) A charging order is a lien on the membership interest of the member that is the subject of the charging order. However, a person may not foreclose on that lien or on the membership interest under this act or any other law, and the charging order is not an assignment of the member's membership interest for purposes of section 505(4).
(6) This section provides the exclusive remedy by which a judgment creditor of a member may satisfy a judgment out of the member's membership interest in a limited liability company. A court order to which a member may have been entitled that requires a limited liability company to take an action, provide an accounting, or answer an inquiry is not available to a judgment creditor of that member attempting to satisfy a judgment out of the member's membership interest, and a court may not issue an order to a judgment creditor.
History:
1993, Act 23, Eff. June 1, 1993 ;-- Am. 2010, Act 290, Imd. Eff. Dec. 16, 2010
2023 Michigan Compiled Laws › Chapter 450 - Corporations › Act 23 of 1993 - Michigan Limited Liability Company Act (450.4101 - 450.5200) › Article 5 - (450.4501...450.4515) › Section 450.4508 - Encumbrance Against Membership Interest; Effect.

450.4508 Encumbrance against membership interest; effect.
Sec. 508.
Unless otherwise provided in an operating agreement, the pledge or granting of a security interest, lien, or other encumbrance in or against any or all of the membership interest of a member does not cause the member to cease to be a member or to lose the power to exercise any rights or powers of a member.
History:
1993, Act 23, Eff. June 1, 1993
2023 Michigan Compiled Laws › Chapter 450 - Corporations › Act 23 of 1993 - Michigan Limited Liability Company Act (450.4101 - 450.5200) › Article 5 - (450.4501...450.4515) › Section 450.4509 - Withdrawal of Member; Distribution; Expulsion.

450.4509 Withdrawal of member; distribution; expulsion.
Sec. 509.
(1) A member may withdraw from a limited liability company only as provided in an operating agreement. A member withdrawing pursuant to an operating agreement may become entitled to a withdrawal distribution as described in section 305.
(2) An operating agreement may provide for the expulsion of a member or for other events the occurrence of which will result in a person ceasing to be a member of the limited liability company.
History:
1993, Act 23, Eff. June 1, 1993 ;-- Am. 1997, Act 52, Imd. Eff. July 1, 1997
2023 Michigan Compiled Laws › Chapter 450 - Corporations › Act 23 of 1993 - Michigan Limited Liability Company Act (450.4101 - 450.5200) › Article 5 - (450.4501...450.4515) › Section 450.4510 - Commencement and Maintenance of Civil Suit by Company; Conditions.

450.4510 Commencement and maintenance of civil suit by company; conditions.
Sec. 510.
A member may commence and maintain a civil suit in the right of a limited liability company if all of the following conditions are met:
(a) Either management of the limited liability company is vested in a manager or managers that have the sole authority to cause the limited liability company to sue in its own right or management of the limited liability company is reserved to the members but the plaintiff does not have the authority to cause the limited liability company to sue in its own right under the provisions of an operating agreement.
(b) The plaintiff has made written demand on the managers or the members with the authority requesting that the managers or members cause the limited liability company to take suitable action.
(c) Ninety days have expired from the date the demand was made unless the member has earlier been notified that the demand has been rejected or unless irreparable injury to the limited liability company would result by waiting for the expiration of the 90-day period.
(d) The plaintiff was a member of the limited liability company at the time of the act or omission of which the member complains, or the member's status as a member devolved upon the member by operation of law or pursuant to this act or the terms of an operating agreement from a person that was a member at that time.
(e) The plaintiff fairly and adequately represents the interests of the limited liability company in enforcing the right of the limited liability company.
(f) The plaintiff continues to be a member until the time of judgment, unless the failure to continue to be a member is the result of action by the limited liability company in which the former member did not acquiesce and the demand was made before the termination of the former member's status as a member.
History:
1993, Act 23, Eff. June 1, 1993 ;-- Am. 2010, Act 290, Imd. Eff. Dec. 16, 2010
2023 Michigan Compiled Laws › Chapter 450 - Corporations › Act 23 of 1993 - Michigan Limited Liability Company Act (450.4101 - 450.5200) › Article 5 - (450.4501...450.4515) › Section 450.4511 - Investigation of Allegations; Stay of Derivative Proceeding.

450.4511 Investigation of allegations; stay of derivative proceeding.
Sec. 511.
If the limited liability company commences an investigation of the allegations made in the demand or complaint, the court may stay any derivative proceeding for a period as the court considers appropriate.
History:
1993, Act 23, Eff. June 1, 1993
2023 Michigan Compiled Laws › Chapter 450 - Corporations › Act 23 of 1993 - Michigan Limited Liability Company Act (450.4101 - 450.5200) › Article 5 - (450.4501...450.4515) › Section 450.4512 - Dismissal of Derivative Proceeding; Findings; Burden of Proof; Determination; “Disinterested” Defined.

450.4512 Dismissal of derivative proceeding; findings; burden of proof; determination; “disinterested” defined.
Sec. 512.
(1) The court shall dismiss a derivative proceeding if, on motion by the limited liability company, the court finds that 1 of the groups specified in subsection (3) has made a determination in good faith after conducting a reasonable investigation upon which its conclusions are based that the maintenance of the derivative proceeding is not in the best interests of the company.
(2) If the determination is made pursuant to subsection (3)(a) or (b), the company has the burden of proving the good faith of the group making the determination and the reasonableness of the investigation. If the determination is made pursuant to subsection (3)(c), the plaintiff has the burden of proving that the determination was not made in good faith or that the investigation was not reasonable.
(3) A determination under subsection (1) may be made by any 1 of the following:
(a) By a majority vote of the disinterested managers or members having the authority to cause the company to sue in its own right, if the disinterested managers or members constitute a majority of those having the authority to cause the company to sue in its own right.
(b) By a majority vote of a committee consisting of 2 or more disinterested managers or members appointed by a majority vote of disinterested managers or members, whether or not the disinterested managers or members constitute a majority of those having the authority to cause the company to sue in its own right.
(c) By a panel of 1 or more disinterested persons appointed by the court upon motion by the company.
(4) For purposes of this section, "disinterested" means a person who is not a party to a derivative proceeding or a person who is a party if the limited liability company demonstrates that the claim asserted against the person is frivolous or insubstantial.
History:
1993, Act 23, Eff. June 1, 1993
2023 Michigan Compiled Laws › Chapter 450 - Corporations › Act 23 of 1993 - Michigan Limited Liability Company Act (450.4101 - 450.5200) › Article 5 - (450.4501...450.4515) › Section 450.4513 - Discontinued or Settled Derivative Proceeding; Court Approval Required; Notice; Expense.

450.4513 Discontinued or settled derivative proceeding; court approval required; notice; expense.
Sec. 513.
A derivative proceeding may not be discontinued or settled without the court's approval. If the court determines that a proposed discontinuance or settlement will substantially affect the interests of members of the limited liability company, the court shall direct that notice be given to the members affected. If notice is directed to be given to the affected members, the court may determine whether 1 or more of the parties to the action shall bear the expense of giving the notice, in the amount as the court determines and finds to be reasonable under the circumstances. The amount of expense shall be awarded as special costs of the action and is recoverable in the same manner as statutory taxable costs.
History:
1993, Act 23, Eff. June 1, 1993
2023 Michigan Compiled Laws › Chapter 450 - Corporations › Act 23 of 1993 - Michigan Limited Liability Company Act (450.4101 - 450.5200) › Article 5 - (450.4501...450.4515) › Section 450.4514 - Termination of Derivative Proceeding; Court Order.

450.4514 Termination of derivative proceeding; court order.
Sec. 514.
If a derivative proceeding is terminated, the court may order 1 of the following:
(a) The plaintiff to pay any of the defendants' reasonable expenses, including reasonable attorney fees, incurred in defending the proceeding if it finds that the proceeding was commenced or maintained in bad faith or without reasonable cause.
(b) The limited liability company to pay the plaintiff's reasonable expenses, including reasonable attorney fees, incurred in the proceeding if it finds that the proceeding has resulted in a substantial benefit to the company. The court shall direct the plaintiff to account to the company for any proceeds received by the plaintiff in excess of expenses awarded by the court, except that this provision does not apply to a judgment rendered for the benefit of an injured member only and limited to a recovery of the loss or damage sustained by that member.
History:
1993, Act 23, Eff. June 1, 1993 ;-- Am. 2010, Act 290, Imd. Eff. Dec. 16, 2010
2023 Michigan Compiled Laws › Chapter 450 - Corporations › Act 23 of 1993 - Michigan Limited Liability Company Act (450.4101 - 450.5200) › Article 5 - (450.4501...450.4515) › Section 450.4515 - Action in Circuit Court; Grounds; Order or Grant of Relief; “Willfully Unfair and Oppressive Conduct” Defined.

450.4515 Action in circuit court; grounds; order or grant of relief; “willfully unfair and oppressive conduct” defined.
Sec. 515.
(1) A member of a limited liability company may bring an action in the circuit court of the county in which the limited liability company's principal place of business or registered office is located to establish that acts of the managers or members in control of the limited liability company are illegal or fraudulent or constitute willfully unfair and oppressive conduct toward the limited liability company or the member. If the member establishes grounds for relief, the circuit court may issue an order or grant relief as it considers appropriate, including, but not limited to, an order providing for any of the following:
(a) The dissolution and liquidation of the assets and business of the limited liability company.
(b) The cancellation or alteration of a provision in the articles of organization or in an operating agreement.
(c) The direction, alteration, or prohibition of an act of the limited liability company or its members or managers.
(d) The purchase at fair value of the member's interest in the limited liability company, either by the company or by any members responsible for the wrongful acts.
(e) An award of damages to the limited liability company or to the member. An action seeking an award of damages must be commenced within 3 years after the cause of action under this section has accrued or within 2 years after the member discovers or reasonably should have discovered the cause of action under this section, whichever occurs first.
(2) As used in this section, "willfully unfair and oppressive conduct" means a continuing course of conduct or a significant action or series of actions that substantially interferes with the interests of the member as a member. Willfully unfair and oppressive conduct may include the termination of employment or limitations on employment benefits to the extent that the actions interfere with distributions or other member interests disproportionately as to the affected member. The term does not include conduct or actions that are permitted by the articles of organization, an operating agreement, another agreement to which the member is a party, or a consistently applied written company policy or procedure.
History:
Add. 1997, Act 52, Imd. Eff. July 1, 1997 ;-- Am. 2002, Act 686, Imd. Eff. Dec. 30, 2002 ;-- Am. 2010, Act 290, Imd. Eff. Dec. 16, 2010
2023 Michigan Compiled Laws › Chapter 450 - Corporations › Act 23 of 1993 - Michigan Limited Liability Company Act (450.4101 - 450.5200) › Article 6 - (450.4601...450.4604) › Section 450.4601 - Articles of Organization; Amendment.

450.4601 Articles of organization; amendment.
Sec. 601.
A limited liability company may amend its articles of organization if the amendment contains only provisions that might lawfully be contained in original articles of organization filed at the time the amendment is made.
History:
1993, Act 23, Eff. June 1, 1993
2023 Michigan Compiled Laws › Chapter 450 - Corporations › Act 23 of 1993 - Michigan Limited Liability Company Act (450.4101 - 450.5200) › Article 6 - (450.4601...450.4604) › Section 450.4602 - Articles of Organization; Conditions Requiring Amendment.

450.4602 Articles of organization; conditions requiring amendment.
Sec. 602.
A limited liability company shall amend its articles of organization if any of the following occur:
(a) A change in the name of the limited liability company.
(b) A change in the purposes of the limited liability company.
(c) A change to or from the management of the limited liability company by managers.
(d) A change in the maximum duration of the limited liability company.
(e) A statement in the articles of organization has become false or erroneous, except that a change in registered office or resident agent may be made as provided for in section 209.
History:
1993, Act 23, Eff. June 1, 1993