Chapter 079
2011 -- H 5279 SUBSTITUTE A
Enacted 06/20/11
A N A C T
RELATING TO
CORPORATIONS, ASSOCIATIONS AND PARTNERSHIPS -- LOW PROFIT LIMITED LIABILITY
COMPANIES
Introduced By: Representatives Blazejewski, Keable, Newberry, Marcello, and
Petrarca
Date Introduced: February 08, 2011
It is enacted by the
General Assembly as follows:
SECTION 1. Sections 7-16-2, 7-16-9 and 7-16-49 of the
General Laws in Chapter 7-16
entitled "The Rhode Island Limited Liability Company
Act" are hereby amended to read as
follows:
7-16-2.
Definitions. -- As used in this chapter, unless
the context otherwise requires:
(1) "Articles of
organization" means documents filed under section 7-16-5 for the
purpose of forming a limited liability company.
(2) "Authorized
person" means a person, whether or not a member, who is authorized by
the articles of organization, by an operating agreement,
or otherwise, to act on behalf of a limited
liability company or foreign limited liability company as an
officer, manager or otherwise.
(3)
"Bankruptcy" means a proceeding under the United States Bankruptcy
Code or under
state insolvency or receivership law.
(4)
"Business" means any trade, occupation or other commercial activity
engaged in for
gain, profit or livelihood for which a corporation can be
organized under chapter 1.2 of this title.
(5) "Capital
contribution" means any cash, property, services rendered, or a promissory
note or other binding obligation to contribute cash or
property or to perform services which a
member contributes to a limited liability company in his or
her capacity as a member.
(6) "Capital
value" means the fair market value in each case as of the date contributed
of
a member's capital contributions, including a
contribution of services previously performed or a
contribution of a binding obligation to perform services, reduced
by distributions made to the
member.
(7) "Constituent
entity" means each limited liability company, limited partnership or
corporation which is a party to a plan of merger or
consolidation.
(8)
"Corporation" means a business corporation formed under chapter 1.2
of this title or
a foreign corporation.
(9) "Court"
includes every court and judge having jurisdiction in the case.
(10)
"Delivering/Delivered" means either physically transferring a paper
document to the
secretary of state or transferring a document to the secretary
of state by electronic transmission
through a medium provided and authorized by the secretary of
state.
(11) "Filing"
means delivered to the secretary of state in either paper format or electronic
transmission through a medium provided and authorized by the
secretary of state.
(12) "Foreign corporation" means a business corporation formed under
the laws of any
state other than this state or any foreign country.
(13) "Foreign
limited liability company" means a limited liability
company formed under
the laws of any state other than this state or any
foreign country.
(14) "Foreign
limited partnership" means a limited partnership formed under the laws of
any state other than this state or any foreign country.
(15) "Limited
liability company" or "domestic limited liability company" means
an
entity that is organized and existing under the laws of this
state pursuant to this chapter.
(16) "Limited
partnership" means a limited partnership formed under the laws of this
state or a foreign limited partnership.
(17)
"Manager" or "Managers" means a person or persons
designated by the members of
a limited liability company to manage the limited
liability company.
(18) "Member"
means a person with an ownership interest in a limited liability company
with the rights and obligations specified under this
chapter.
(19) "Membership
interest", "ownership interest" or "interest" means a
member's rights
in the limited liability company, collectively,
including the member's share of the profits and
losses of the limited liability company, the right to
receive distributions of the limited liability
company's assets, and any right to vote or participate in
management of the limited liability
company.
(20) "New
entity" means the entity into which constituent entities consolidate, as
identified in the articles of consolidation provided for in
section 7-16-62.
(21) "Operating
agreement" means any agreement, written or oral, of the members as to
the affairs of a limited liability company and the
conduct of its business. An operating agreement
also includes a document adopted by the sole member of a
limited liability company that has only
one member and may include as a party one or more
managers who are not members.
(22) "Person"
means a natural person, partnership, limited partnership, domestic or
foreign limited liability company, trust, estate,
corporation, nonbusiness corporation or other
association.
(23) "State"
means a state, territory or possession of the
(24) "Surviving
entity" means the constituent entity surviving a merger, as identified in
the articles of merger provided for in section 7-16-62.
(25)
"Signature" or "Signed" or "Executed" means an
original signature, facsimile, or an
electronically transmitted signature submitted through a medium
provided and authorized by the
secretary of state.
(26) "Electronic
transmission" means any form of communication, not directly involving
the physical transmission of paper, that creates a record
that may be retained, retrieved, and
reviewed by a recipient thereof, and that may be directly
reproduced in paper form by such a
recipient through an automated process.
(27)
“L3C” or “low-profit limited liability company” means a limited
liability company
that is organized and existing under the laws of this
state under this chapter and which satisfies
the requirements of section 7-16-76.
7-16-9.
Name -- Fictitious business names. -- (a) The name of each limited liability
company as set forth in its articles of organization:
(1) Shall end with
either the words "limited liability company" or the upper or lower
case
letters "l.l.c." with or
without punctuation, or, if organized as a low-profit limited liability
company, shall end with either the words “low-profit limited
liability company” or the
abbreviation “L3C” or “13c”;
(2) Shall be
distinguishable upon the records of the secretary of state from:
(i)
The name of any corporation, nonbusiness corporation
or other association, limited
partnership or domestic or foreign limited liability company
organized under the laws of, or
registered or qualified to do business in, this state; or
(ii) Any name which is
filed, reserved or registered under this title, subject to the
following:
(A) This provision
shall not apply if the applicant files with the secretary of state a
certified copy of a final decree of a court of competent
jurisdiction establishing the prior right of
the applicant to the use of the name in this state; and
(B) The name may be the
same as the name of a corporation, nonbusiness
corporation or
other association, the certificate of incorporation or organization
of which has been revoked by
the secretary of state as permitted by law, and the
revocation has not been withdrawn within one
year from the date of the revocation.
(b) (1) Any domestic or foreign limited liability company organized
under the laws of, or
registered or qualified to do business in, this state may
transact business in this state under a
fictitious name provided that it files a fictitious business
name statement in accordance with this
subsection.
(2) A fictitious
business name statement shall be filed with the secretary of state and
shall be executed by an authorized person of the domestic
limited liability company or by a
person with authority to do so under the laws of the state
or other jurisdiction of its organization
of the foreign limited liability company and shall set
forth:
(i)
The fictitious business name to be used; and
(ii) The name of the
applicant limited liability company, the state or
other jurisdiction in
which the limited liability company is organized and date
of the limited liability company's
organization.
(3) The fictitious
business name statement expires upon the filing of a statement of
abandonment of use of a fictitious business name registered in
accordance with this subsection or
upon the dissolution of the applicant domestic limited
liability company or the cancellation of
registration of the applicant foreign limited liability company.
(4) The statement of
abandonment of use of a fictitious business name under this
subsection shall be filed with the secretary of state, shall be
executed in the same manner and
provided in subdivision (2) above and shall set forth:
(i)
The fictitious business name being abandoned;
(ii) The date on which
the original fictitious business name statement being abandoned
was filed; and
(iii) The information
set forth in subdivision (2)(ii) of subsection (a).
(5) No domestic or
foreign limited liability company transacting business under a
fictitious business name contrary to the provisions of this
section, or its assignee, may maintain
any action upon or on account of any contract made, or
transaction had, in the fictitious business
name in any court of the state until a fictitious business
name statement has been filed in
accordance with this section.
(6) No limited
liability company may be permitted to transact business under a fictitious
business name pursuant to this section which is the same as
the name of any corporation, limited
partnership or domestic or foreign limited liability company
organized under the laws of, or
registered or qualified to do business in, this state or any
name which is filed, reserved or
registered under this title, subject to the following:
(i)
This provision does not apply if the applicant files with the secretary of
state a
certified copy of a final decree of a court of competent
jurisdiction establishing the prior right of
the applicant to the use of the name in this state; and
(ii) The name may be
the same as the name of a corporation, nonbusiness
corporation or
other association, the certificate of incorporation or
organization of which has been revoked by
the secretary of state as permitted by law and the
revocation has not been withdrawn within one
year from the date of revocation.
(7) A filing fee of
fifty dollars ($50.00) shall be collected by the secretary of state for
each statement filed.
7-16-49.
Registration of foreign limited liability company. --
(a) Before transacting
business in this state, a foreign limited liability company
shall register with the secretary of state.
(b) In order to
register, a foreign limited liability company shall submit to the secretary
of state, in duplicate, an application for registration
as a foreign limited liability company, signed
by a person with authority to do so under the laws of
the state or other jurisdiction of its
organization and setting forth:
(1) The name of the
foreign limited liability company and, if different, the name under
which it proposes to register and transact business in this
state;
(2) The state or other
jurisdiction in which the foreign limited liability company is
organized and date of the foreign limited liability company's
organization;
(3) The name and
address of the resident agent required by section 7-16-11;
(4) A statement that
the secretary of state is appointed the agent of the foreign limited
liability company for service of process if at any time there
is no resident agent or if the resident
agent cannot be found or served following the exercise of
reasonable diligence;
(5) The address of any
office required to be maintained in the state or other jurisdiction
of its organization by the laws of that state or
jurisdiction;
(6) A mailing address
for the foreign limited liability company;
(7) A statement of
whether the limited liability company is to be managed by its
members or by one or more managers, and if the limited
liability company has managers at the
time of its application, the name and address of each
manager; and
(8) Any additional
information that may be necessary or appropriate in order to enable
the secretary of state to determine whether the foreign
limited liability company is entitled to
transact business in this state.
(9) A statement
indicating whether the company has been duly organized in its state of
formation as a low-profit limited liability company.
SECTION 2. Chapter 7-16 of the General Laws entitled
"The Rhode Island Limited
Liability Company Act"
is hereby amended by adding thereto the following section:
7-16-76.
Low-profit limited liability company. – (a)
A low-profit limited liability
company shall at all times significantly further the
accomplishment of one or more charitable or
educational purposes within the meaning of Section 170(c)(2)(B)
of the Internal Revenue Code of
1986, 26 U.S.C. section 170(c)(2)(B),
or its successor, and would not have been formed but for
the entity’s relationship to the accomplishment of
charitable or educational purposes.
(b) A limited
liability company which intends to qualify as a low-profit limited liability
company pursuant to the provisions of section 7-16-76 shall
so indicate in its articles of
organization, shall organize under the provisions of section
7-16-6, and shall further state that:
(1) No significant
purpose of the entity is the production of income or the appreciation of
property; provided, however, that the fact that an entity
produces significant income or capital
appreciation shall not, in the absence of other factors, be
conclusive evidence of a significant
purpose involving the production of income or the
appreciation of property.
(2) No purpose of the
entity is to accomplish one or more political or legislative purposes
within the meaning of Section 170(c)(2)(D) of the Internal
Revenue Code of 1986, 26 U.S.C.
section 170(c)(2)(D), or its successor.
(c) If an entity that
met the requirements of section 7-16-76 at its formation at any time
ceases to satisfy any one of the requirements, it shall immediately
cease to be a low-profit limited
liability company, but by continuing to meet all the other
requirements of this chapter, will
continue to exist as a limited liability company. The name of the
entity must be changed to be in
conformance with section 7-16-9.
(d) Nothing in
section 7-16-76 shall prevent a limited liability company that is not
organized under it from electing a charitable or educational
purpose in whole or in part for doing
business under this chapter.
(e) Except as
otherwise provided in this subsection, all provisions of the
Limited Liability Act, Chapter 7-16 of this title,
applicable to domestic limited liability
companies are applicable to low-profit limited liability
companies.
SECTION 3. This
act shall take effect on July 1, 2012.
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LC00927/SUB A
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