Forming a Low-Profit Limited Liability Company (L3C): Incorporation Requirements Kevin Frisch, Student American University Washington College of Law

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1 Last Updated: March 2013 Forming a Low-Profit Limited Liability Company (L3C): Incorporation Requirements Kevin Frisch, Student American University Washington College of Law The most common legal form of organization utilized by the social sector is the nonprofit corporation; however, for-profit corporations, limited liability companies (LLCs), joint ventures and various kinds of partnerships, including limited partnerships, are increasingly being used--typically to accommodate plans to earn revenues or access capital markets. Recently, a number of states have adopted low-profit limited liability (L3C) statutes to allow organizations to use a new legal for-profit structure to pursue an express social purpose. As of March 2013, L3C legislation has been adopted in the nine states outlined in the chart below. The Oglala Sioux Tribe and Crow Nation of Montana have also adopted L3C legislation. For the most up to date information on which states have passed L3C legislation, please see: and The following provides a high-level overview of the elements that each state requires for the incorporation of an L3C. These materials do not address registration for national, state, or local tax purposes. This information is for reference purposes only and should not replace counsel. A attains its separate legal status through the filing and approval of its articles of organization. This document is essentially a contract between the state and the corporation in which the state grants individual legal status to the corporation in exchange for the corporation s commitment to follow its rules. Some of the states represented below have not yet published forms for the organization of L3Cs. In these instances, forms for the organization of LLCs have been included to provide formatting guidance. For further

2 guidance on drafting pertinent documents, please see the following model Articles of Organization and Operation Agreement: 20-%20Vermont%20v2.pdf State & Date Illinois Since January 2010 Required Items for Articles of Organization Name of the and the address of its principal place of business Purpose for which the is organized Statement that the intends to qualify as a low-profit limited liability purpose of the is the Name and address of agent for service of process Names and street addresses of all initial members or managers, depending on management structure selected State Forms and Submission Information Form: 55.pdf (PDF) Secretary of State Department of Business Services Limited Liability Division 501 S. Second St., Rm. 351 Springfield, IL File Online: ganization/llc_instructions.html

3 Louisiana Since August 2010 Name and address of each organizer $500 filing fee Statement that the is a low-profit limited liability Statement of business purpose asserting that the entity significantly furthers the accomplishment of one or more charitable or educational purposes purpose of the is the Initial report, signed by all organizers of the, containing: Location and municipal address of the s registered office Name and municipal address of the s registered agents Notarized affidavit of acknowledgment and acceptance signed by each registered agent Selection of member-managed Forms: Articles of Organization - alowprofitlimitedliabilitycompany.pdf (PDF) Initial Report - anacorporationandlimitedliabilitycompany.pdf (PDF) Secretary of State Commercial Division P.O. Box Baton Rouge, LA Drop-Off: 8285 Archives Ave. Baton Rouge, LA File Online: OriginalFilings/tabid/1009/Default.aspx

4 Maine Since July 2011 or Names and street addresses of all initial members or managers, depending on management structure selected $75 filing fee Address of the s principal office Address of a place of business in the state or agent for service of process Statement that the is a low-profit limited liability Statement of business purpose asserting that the entity significantly furthers the accomplishment of one or more charitable or educational purposes purpose of the is the Names and street addresses of all initial members or managers, depending on management Form: (PDF) Secretary of State Division of Corporations, UCC and Commissions 101 State House Station Augusta, ME

5 Michigan Since January 2009 North Carolina Since August 2010 structure selected $175 filing fee Statement that the is a low-profit limited liability Statement of business purpose asserting that the entity significantly furthers the accomplishment of one or more charitable or educational purposes and would not have been formed except to accomplish those purposes purpose of the is the Street address of the s registered office in Michigan Agent for service of process $50 filing fee Name and address of each member or organizer executing the articles of organization Address of the s initial registered office Agent for service of process Form: (PDF) Michigan Department of Licensing and Regulatory Affairs Bureau of Commercial Services Corporation Division P.O. Box Lansing, MI Drop-Off: 2501 Woodlake Circle Okemos, MI File Online: Forms: &type=limitedliability%20 Department of the Secretary of State Corporations Division P.O. Box 29622

6 Rhode Island Since July 2012 A statement that the operation of the must meet the charitable purpose requirements of G.S. 57C-2-01(d) $125 filing fee Name and address of agent for service of process Selection of partnership, corporation, or disregarded entity tax treatment Address of principal office of Statement that the intends to qualify as a low-profit limited liability pursuant to the provisions of purpose of the is the Name and address of organizer $150 filing fee Raleigh, NC Form: (PDF) Office of the Secretary of State Corporations Division 148 W. River Street Providence, Rhode Island File Online: Utah Form:

7 Since March 2009 Vermont Since April 2008 Business purpose significantly furthering a charitable or educational purpose for which the is organized Statement that the is a low-profit limited liability Name and street address of each organizer who is not a member or manager Agent for service of process Names and street addresses of all initial members or managers, depending on management structure selected $70 processing fee Jurisdiction of organization Business purpose Address of principal office Agent for service of process Selection of L3C status Names and street addresses of all organizers $100 filing fee Utah Division of Corporations & Commercial Code P.O. Box Salt Lake City, Utah Drop-Off: Heber M. Wells Building 160 E 300 S, 1 st Floor Salt Lake City, Utah Overnight Mail: Utah Division of Corporations and Commercial Code 160 East 300 South 2 nd Floor (or 160 E Broadway) Salt Lake City, Utah Form: Vermont Secretary of State Corporations Division 128 State Street Montpelier, VT

8 Wyoming Since February 2009 Name and address of registered agent for service of process Mailing address of the Principal office address of the Business purpose committing the to significantly further the accomplishment of one of more charitable or educational purposes purpose of the is the Consent to appointment by registered agent $100 filing fee Form: Mail to/drop-off: Wyoming Secretary of State State Capitol Building, Room West 24 th Street Cheyenne, WY