TITLE 12 CHAPTER 22. LIMITED LIABILITY COMPANIES

Transcription

1 TITLE 12 CHAPTER 22. LIMITED LIABILITY COMPANIES Table of Contents PART I. DEFINITIONS Definitions...3 PART II. FORMATION Purpose Powers Formation Articles of organization; initial report Name Reservation of name; transfer of reserved name Registered office and registered agent Annual report Conversion of state of organization Amendment of articles of organization Certificates of correction Retroactivity of company's existence; acquisition of immovable property prior to limited liability company's existence...17 PART III. MANAGEMENT AND MANAGEMENT RIGHTS OF MEMBERS Management by members Managers Election and removal of managers Duties of members and managers Limitation of liability and indemnification of members and managers Voting by managers Agency power of managers or members Company representation; state entities Voting rights of members Records and information Liability to third parties of members and managers Contributions to capital Liability for contribution Sharing of profits and losses...25 PART V. DISTRIBUTIONS Interim distributions Distributions upon withdrawal Distribution in kind Restrictions on making distributions Liability upon wrongful distribution...28 PART VI. ASSIGNMENT OF MEMBERSHIP INTERESTS Nature of membership interest Assignment of membership interest Rights of judgment creditor Right of assignee to become a member...29 PART VII. DISSOLUTION

2 1334. Dissolution Judicial dissolution Dissolution by affidavit Winding up Distribution of assets Claims against limited liability company in liquidation; peremption Articles of dissolution Certificate of dissolution; assets omitted from liquidation; post-dissolution proceedings Liability of members of dissolved limited liability companies...34 PART VIII. FOREIGN LIMITED LIABILITY COMPANIES Admission of foreign limited liability company Transactions not constituting transacting business Name of authorized foreign limited company Application for certificate of authority Issuance of certificate of authority Effect of certificate of authority Amended certificate of authority Certificate of correction by a foreign limited liability company Registered agent; registered office and principal business establishment; keeping of records by foreign limited liability company Annual report Withdrawal Termination of withdrawal proceedings Revocation or suspension of certificate of authority; limitation on authority to do business with the state Transacting business without authority Authority to investigate; penalty Penalties...45 PART IX. MERGER Merger or consolidation Agreement of merger or consolidation Approval of merger or consolidation Certificate of merger or consolidation Effects of merger or consolidation Merger or consolidation with foreign entity...51 PART X. MISCELLANEOUS Revocation and reinstatement of articles; limitation on authority to do business within the state Filing, service, and copying fees Derivative actions Applicability of provisions to foreign and interstate commerce Rules of construction Taxation Short title

3 PART I. DEFINITIONS Definitions A. As used in this Chapter, unless the context otherwise requires: (1) "Articles of organization" means documents filed under R.S. 12:1304 for the purpose of forming a limited liability company and those documents as amended or restated. (2) "Business" means any trade, occupation, profession, or other commercial activity, including but not limited to professions licensed by a state or other governmental agency whether or not engaged in for profit. (3) "Capital contribution" means anything of value that a person contributes to the limited liability company as a prerequisite for, or in connection with, membership, including cash, property, services rendered, or a promissory note or other binding obligation to contribute cash or property or to perform services. (4) "Constituent entity" means each limited liability company, partnership, partnership in commendam, limited partnership, or corporation which is party to an agreement of merger or consolidation pursuant to R.S. 12:1358. (5) "Corporation" means a corporation formed under the laws of this state or a foreign corporation as defined in R.S. 12:1301(6). (6) "Foreign corporation" means a corporation formed under the laws of any state other than this state or under the laws of any foreign country. (7) "Foreign limited liability company" means a limited liability company formed under the laws of any state other than this state. (8) "Foreign limited partnership" means a limited partnership formed under the laws of any state other than this state or under the laws of any foreign country. (9) "Foreign partnership" means a partnership formed under the laws of any state other than this state, or under the laws of any foreign country. (10) "Limited liability company" or "domestic limited liability company" means an entity that is an unincorporated association having one or more members that is organized and existing under this Chapter. No limited liability company organized under this Chapter shall be deemed, described as, or referred to as an incorporated entity, corporation, body corporate, body politic, joint stock company, or joint stock association. (11) "Limited partnership" means a partnership in commendam formed under the laws of this state or a foreign limited partnership as defined in R.S. 12:1301(8). (11.1) "Low-profit limited liability company" or "L3C" means a limited liability company organized for the purposes set forth in R.S. 12:1302(C). (12) "Manager" or "managers" means a person or persons designated by the members of a limited liability company to manage the limited liability company as provided in its articles of organization. (13) "Member" means a person with a membership interest in a limited liability company with the rights and obligations specified under this Chapter

4 (14) "Membership interest" or "interest" means a member's rights in a 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. (15) "New entity" means the entity into which constituent entities consolidate, as identified in the agreement or certificate of consolidation provided for in R.S. 12:1360. (16) "Operating agreement" means any agreement, written or oral, of the members as to, or in the case of a limited liability company having a single member, any written agreement between the member and the company memorializing the affairs of a limited liability company and the conduct of its business. (17) "Partnership" means a partnership formed under the laws of this state or a foreign partnership as defined in R.S. 12:1301(9). (18) "Person" means a natural person, corporation, partnership, limited partnership, domestic or foreign limited liability company, joint venture, trust, estate, or association. (19) "State" means a state, territory, or possession of the United States, the District of Columbia, or the Commonwealth of Puerto Rico. (20) "Surviving entity" means the constituent entity surviving a merger, as identified in the agreement or certificate of merger provided for in R.S. 12:1360. B. Paragraphs A(2), (10), and (16) of this Section shall apply to all limited liability companies regardless of date of organization. PART II. FORMATION Purpose A. A limited liability company may be organized under this Chapter and may conduct business for any lawful purpose, unless a more limited purpose is stated in its articles of organization. A limited liability company shall not be formed for the purpose of insurance underwriting in all of its several forms. B. A limited liability company that is subject to regulation by another provision of state law may be formed under this Chapter if not prohibited by such other law. Such a limited liability company shall be subject to all limitations of such other law. C.(1) A limited liability company organized as a low-profit limited liability company shall set forth in its articles of organization a business purpose that satisfies and which limited liability company is at all times operated to satisfy each of the following requirements: (a) The entity significantly furthers the accomplishment of one or more charitable or educational purposes within the meaning of Section 170(c)(2)(B) of the Internal Revenue Code and would not have been formed but for the entity's relationship to the accomplishment of charitable or educational purposes. (b) No significant purpose of the entity is the production of income or the appreciation of property provided; however, the fact that an entity produces significant income or capital appreciation shall not, - 4 -

5 in the absence of other factors, be conclusive evidence of a significant purpose involving the production of income or the appreciation of property. (c) 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. (2) If a company that is organized pursuant to the requirements of Paragraph (1) of this Subsection 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, shall continue to exist as a limited liability company. The name of the company shall be changed to be in conformance with R.S. 12: Powers A. All limited liability companies, regardless of date of organization, shall have the powers, rights, and privileges provided for a corporation organized under the Business Corporation Law (R.S. 12:1 et seq.), and provided for a partnership organized under Title XI of Book III of the Louisiana Civil Code. B. Without limiting the grant of powers, rights, and privileges contained in Subsection A of this Section, every limited liability company shall have perpetual existence, unless a limited period of duration is stated in the articles of organization Formation A. One or more persons capable of contracting may form a limited liability company by filing the articles of organization and the initial report with the secretary of state. The articles of organization and initial report may be delivered to the secretary of state in advance for filing as of any specified date and, if specified upon such delivery, as of any given time on such date within thirty days after the date of delivery. B. If the secretary of state finds that the articles of organization and initial report are in compliance with the provisions of this Chapter and after all fees have been paid as required by law, the secretary of state shall record the articles of organization and initial report in his office, endorse on each the date, and if requested, the hour of filing thereof with him, and issue a certificate of organization which shall show the date and, if endorsed on the articles of organization, the hour of filing of the articles of organization with him. The certificate of organization shall be conclusive evidence of the fact that the limited liability company has been duly organized, except that in any proceeding brought by the state to annul, forfeit, or vacate a limited liability company's articles of organization, the certificate of organization shall be only prima facie evidence of due organization. C. Upon the issuance of the certificate of organization, the limited liability company shall be duly organized, and its separate existence shall begin as of the time of filing of the articles of organization with the secretary of state. However, if the articles were so filed within five days, exclusive of legal holidays, after acknowledgment thereof or execution thereof as an authentic act, the limited liability company shall be duly organized, and its separate existence shall begin, as of the time of such acknowledgment or execution

6 1305. Articles of organization; initial report A. The articles of organization shall be written in the English language and shall be executed by at least one person, who need not be a member or manager of the limited liability company. The articles of organization shall be acknowledged by the person or one of the persons who signed the articles of organization or may be executed by authentic act. B. The articles of organization shall set forth the following: (1) The name of the limited liability company. (2) The purposes for which the limited liability company is formed or that its purpose is to engage in any lawful activity for which limited liability companies may be formed under this Chapter. (3) Whether the company is a low-profit limited liability company. C. The articles of organization may set forth the following: (1) A statement of whether and to what extent there are limitations on the authority of members to bind the limited liability company or that such limitations are contained in a written operating agreement. (2) A statement of whether and to what extent the limited liability company will be managed by managers. (3) A statement regarding restrictions on the authority of managers or that such restrictions are contained in a written operating agreement. (4) The latest date, if any, on which the limited liability company is to dissolve. (5) A statement that persons dealing with the limited liability company may rely upon a certificate of one or more managers, members, or other certifying officials, whose names are included in the statement, to establish the membership of any member, the authenticity of any records of the limited liability company, or the authority of any person to act on behalf of the limited liability company, including but not limited to the authority to take the actions referred to in R.S. 12:1318(B), unless otherwise provided in the articles of organization. (6) Any other provision, not inconsistent with law, that the members elect to set forth in the articles of organization. D. It shall not be necessary to set forth in the articles of organization any of the powers enumerated in this Chapter. E. The initial report shall be signed by each person who signed the articles of organization, or by his agent duly authorized by a document attached to the report, and shall set forth the following: (1) The location and municipal address, if any, not a post office box only, of the limited liability company's registered office. (2) The full name and municipal address, if any, not a post office box only, of each of its registered agents. (3) A notarized affidavit of acknowledgment and acceptance signed by each of its registered agents

7 (4) The names and municipal addresses, not a post office box only, of the first managers, if management of the limited liability company is vested in one or more managers, or the members, if management of the limited liability company is reserved to the members, and if, in either case, they have been selected when the articles of organization are filed with the secretary of state. If the initial managers, if management of the limited liability company is vested in one or more managers, or initial members, if management of the limited liability company is reserved to the members, are not named in the initial report, a supplementary report setting forth their names and addresses and signed by each person who signed the articles of organization shall be filed with the secretary of state as soon as they have been selected Name A. The name of each limited liability company as set forth in its articles of organization: (1)(a) Except for low-profit limited liability companies, shall contain the words "limited liability company", the abbreviation "L.L.C.", or the abbreviation "L.C.". (b) For low-profit limited liability companies, shall contain the words "low-profit limited liability company", the abbreviation "L3C", or the abbreviation "l3c". (2) Shall not contain any word or phrase which indicates or implies that it is organized for any purpose not lawful for a limited liability company or contrary to its articles of organization and shall not contain the phrase "doing business as" or the abbreviation "d/b/a". (3) Shall be distinguishable from the name of any corporation or other limited liability company organized under the laws of this state, any foreign corporation or limited liability company registered or qualified to do business in this state, any name which is reserved under R.S. 12:1307 or R.S. 12:23(G), or any trade name registered with the secretary of state, unless any of the following Paragraphs apply: (a) The corporation or other limited liability company is about to change its name, to cease doing business, or is being liquidated, or, if a foreign corporation or limited liability company, is about to withdraw from doing business in this state, and the written consent of the corporation or other limited liability company to the adoption of its name or a nondistinguishable name has been given and is filed with the articles of organization. (b) The corporation or other limited liability company has theretofore been authorized to do business in this state for more than two years and has never actively engaged in business in this state. The failure of a domestic or foreign corporation to file a Louisiana corporate franchise tax return for two consecutive years shall constitute prima facie evidence that it has not actively engaged in business in this state during such period. (c) The corporation or other limited liability company has failed to pay the taxes due by it to the state for the preceding five consecutive years. (d) The corporation, if it is a foreign corporation, has not been authorized to do business in the state and has not filed a Louisiana corporate franchise tax return for two consecutive years. (e) The charter of the corporation has been revoked by the secretary of state and that corporation has not filed a Louisiana corporate franchise tax return for two consecutive years

8 (f) The other corporation or limited liability company filed for dissolution or withdrawal prior to the preceding five years and has not received the tax clearances required for final dissolution or withdrawal. (4) Shall not imply that the company is an administrative agency of any parish or of this state or of the United States. B. Nothing in this Section shall abrogate or limit the law as to unfair competition or unfair practice in the use of trade names, nor derogate from principles of law or the statutes of this state, or of the United States, with respect to the right to acquire and protect trade names. C. The assumption of a name in violation of this Section shall not affect or vitiate the existence of the limited liability company, but any court having jurisdiction may, upon application of the state or of any person interested or affected, enjoin a limited liability company from doing business under a name assumed in violation of this Section, although its articles of organization may have been filed and recorded and a certificate of organization issued. D. No limited liability company shall include in its name any words which deceptively or falsely suggest a charitable or nonprofit nature. E. If the limited liability company seeking the issuance of a certificate of organization in this state includes in its name the word "engineer", "engineering", "surveyor", or "surveying", the secretary of state shall require, prior to the issuance of the certificate of organization, evidence satisfactory to him that written notice of such application for a certificate of organization has been delivered to the Louisiana Professional Engineering and Land Surveying Board in writing not less than ten days prior to the date of issuance of the certificate of organization. If the applicant limited liability company files with its application to the secretary of state a written waiver signed by the executive secretary or any officer of the Louisiana Professional Engineering and Land Surveying Board waiving the requirement of ten days written notice to said board, as set forth in the preceding sentence, the secretary of state shall be authorized to proceed immediately with the processing of such application. F. If a limited liability company seeking issuance of a certificate of organization in Louisiana includes in its name the words "bank", "banker", "banking", "savings", "safe deposit", "trust", "trustee", "building and loan", "homestead", or "credit union", the secretary of state shall require written approval from the commissioner of the office of financial institutions dated not less than ten days prior to the issuance of the certificate of organization Reservation of name; transfer of reserved name A. The exclusive right to use a specified name for a domestic or foreign limited liability company may be reserved by any of the following: (1) A person who intends to organize a domestic limited liability company under this Chapter. (2) A domestic limited liability company which proposes to change its name. (3) A foreign limited liability company which intends to apply for authority to do business in this state. (4) A foreign limited liability company authorized to do business in this state which proposes to change its name. B.(1) A person may reserve a specified name by filing a signed application with the secretary of state

9 (2) If the secretary of state finds that the name is available for use by a limited liability company, he shall reserve the name for the exclusive use of the applicant for sixty days or such shorter period as may be requested. (3) The secretary of state may, for good cause shown, extend the reservation for an additional period of not more than thirty days. Not more than two such extensions shall be granted. C. The exclusive right to use a reserved name may be transferred to another person by filing with the secretary of state a notice of the transfer that specifies the name and address of the transferee and is signed by the applicant for whom the name was reserved Registered office and registered agent A. Each limited liability company shall continuously maintain: (1) A registered office in this state. (2) At least one registered agent who shall be one of the following: (a) A citizen of the state who resides in this state. (b) A partnership or professional law corporation, which is authorized to practice law in this state, or a domestic corporation, domestic limited liability company, or foreign corporation authorized to transact business in this state, which is authorized by its articles or certificate of incorporation to act as the agent of a limited liability company for service of process and which has on file with the secretary of state a certificate setting forth the name of at least two individuals at its address in this state, each of whom is authorized to receive any process served upon it as such agent. Legal process and other notices or demands may be served on the limited liability company by service upon this agent and, if the agent is a partnership, upon any partner. B. The location and post office address of the original registered office and the full name and post office address of the original registered agent shall be stated in the initial report as provided in R.S. 12:1305(E). C.(1) After organization, a limited liability company may change its registered agent or registered office by filing for record with the secretary of state a statement authorizing the designation or change signed by a manager of the limited liability company, if management of the limited liability company is vested in one or more managers pursuant to R.S. 12:1312, or by at least one member, if management of the limited liability company is reserved to the members. Any change of registered agent shall be accompanied by a notarized affidavit of acknowledgment and acceptance signed by the new registered agent. (2) A limited liability company may change the address of its registered agent by filing for record with the secretary of state a statement of the change signed by a manager of the limited liability company, if management of the limited liability company is vested in one or more managers pursuant to R.S. 12:1312, or by at least one member, if management of the limited liability company is reserved to the members. (3) A change of a registered office or registered agent or address of the registered agent for a limited liability company under this Subsection shall be effective when the secretary of state accepts the statement for record

10 D.(1) A registered agent may change his address in this state by filing for record with the secretary of state a statement of the change signed by him or on his behalf. (2) The statement shall include the name of the limited liability company for which the change is effective and the new address of the registered agent. (3) If the old and new addresses of the registered agent are the same as the old and new addresses of the registered office of the limited liability company, the statement may include a change of address of the registered office if: (a) The registered agent notifies the limited liability company in writing. (b) The statement recites that the registered agent has done so. (4) The change of address of the registered agent or registered office is effective when the secretary of state accepts the statement for record. E.(1) A registered agent may resign but such resignation shall be effective only by providing written notice to the limited liability company and the secretary of state. If the registered agent resigns, or for any other reason the limited liability company ceases to maintain a registered agent, a successor agent shall be appointed pursuant to Paragraph (C)(1) of this Section and the successor agent's address shall be filed pursuant to Paragraph (C)(2) of this Section, within thirty days of the resignation or other event which terminated the tenure of the former agent. Upon compliance with the provisions of this Section, the successor agent shall be vested with the powers of the agent succeeded. (2) Repealed by Acts 2003, No. 367, 2. F. The designation of a registered office shall remain effective until a change is made therein and notice of the change is filed in the manner hereinabove provided. However, if no statement of change is filed within thirty days after the registered office has been vacated, the office of the secretary of state may thereafter be treated as the registered office by any person other than the limited liability company itself. The registered office shall be considered the domicile of the limited liability company for all purposes Annual report A. On or before the anniversary date of organization of each limited liability company, a manager of the company, if its management is vested in one or more managers, or a member of the company, if its management is reserved to the members, shall file an annual report each year with the secretary of state, signed in the name of the limited liability company by the manager, member, or agent stating the following: (1) The municipal address, which shall not be a post office box only, of its registered office. (2) The name and municipal address, which shall not be a post office box only, of each of its registered agents. (3) The name and municipal address, which shall not be a post office box only, of each manager, if management of the limited liability company is vested in one or more managers, or each member, if management of the limited liability company is reserved to the members. B. The provisions of this Section shall apply to any domestic limited liability company organized on or after July 7,

11 Failure to file annual report; revocation and reinstatement of articles; limitation on authority to do business with the state A. The secretary of state shall revoke the articles of organization of a domestic limited liability company if it fails to file an annual report for three consecutive years according to the records of the secretary of state. B. At least thirty days prior to revoking the articles of organization pursuant to this Section, the secretary of state shall give notice to the affected limited liability company of his intent to revoke its articles of organization by directing notice of such intention to its last designated registered agent, as shown on the records of the secretary of state. Such notice shall be in writing and shall be sent to the registered agent by United States mail at the last known address of the agent. If there is no registered agent of record, the notice shall be directed to the limited liability company at its registered office. C.(1) The articles of organization shall be reinstated if each of the following is filed with the secretary of state within three years of the effective date of the revocation: (a) An application for reinstatement, signed and acknowledged by a member or manager. If a suit for liquidation or receivership of the limited liability company has been filed at the time at which such application is made, the application shall be accompanied by a document indicating the unanimous written consent to the reinstatement by all members or managers. The limited liability company shall certify the signatures of all managers or members on such document. (b) The current annual report of the limited liability company. (c) The fee for reinstatement proceedings authorized by R.S. 12:1364(A)(1). (2) Upon reinstatement pursuant to this Subsection, the secretary of state shall furnish a certificate of reinstatement to the limited liability company. The certificate of reinstatement and articles of organization shall be retroactive, and the articles of organization shall continue in existence as though the revocation had not occurred. D. Upon revocation of its articles of organization, the name of the limited liability company shall not be available to another entity as a limited liability name, corporate name, or trade name for a three-year period. If the name is available after the three years, the limited liability company may reinstate it by following the same procedures and by satisfying the same provisions and requirements as set forth in this Section. If the name is not available, an amendment changing the original name shall be filed as provided in R.S. 12:1309. E.(1) As used in this Subsection, the term "not in good standing" means that a limited liability company is delinquent in filing the annual report required by R.S. 12: (2) Each limited liability company which is not in good standing shall be prohibited from engaging in commercial business operations with the state or its boards, agencies, departments, or commissions. Any contract between the state or its boards, agencies, departments, or commissions and a limited liability company which is not in good standing may be declared null and void by the board, agency, department, commission, or the division of administration. F. Nothing contained in this Section shall be construed to prevent the state, through the office of the attorney general, from asserting a cause of action to revoke the articles of organization of a limited liability company on any of the following grounds:

12 (1) That the limited liability company was procured through fraud practiced upon the state. (2) That the limited liability company has continued to abuse authority conferred upon it. (3) That the limited liability company should not have been formed under this Chapter or has been so formed without substantial compliance with the requirements of this Chapter. G. Revocation of the articles of organization of a limited liability company pursuant to this Section shall not affect any cause of action against the limited liability company or the right to proceed against any property owned by the limited liability company. Such revocation shall also not prohibit a limited liability company from selling property belonging to the company in the same manner as if the revocation had not occurred Conversion of state of organization A. Unless prohibited by the laws of the other state, a domestic limited liability company may convert its state of organization from this state to any other state, and a foreign limited liability company may convert its state of organization from any other state to this state. B. Such conversion may be made by a limited liability company only pursuant to this Section and only after authorization by a majority of the members, or by such larger vote as the articles of organization or an operating agreement may require. C. The domestic or foreign limited liability company seeking conversion shall file with the secretary of state a written request for conversion of the state of organization. Such request shall contain all of the following: (1) The name of the limited liability company, which shall comply with the provisions of R.S. 12:1306. (2) The full name and municipal address of either each current manager of the limited liability company, if management of the limited liability company is vested in one or more managers, or of each of the current members, if management of the limited liability company is reserved to the members. (3) A statement, as appropriate, that the limited liability company is converting its state of organization from another named state to this state and is continuing its existence in and under the laws of this state, or is converting its state of organization from this state to another named state and is continuing its existence in and under the laws of such other named state. (4) A statement that a majority of the members, or such larger vote as the articles of organization or the operating agreement may require, has approved the conversion of the state of organization. (5) The manner and basis of converting the interests of the members of the limited liability company into the interests of the members in the converted limited liability company. (6) A statement that the limited liability company, in changing its state of organization, has complied with the laws and requirements of both the prior and new state of organization. (7) Any other provision, attachment, or exhibit, not inconsistent with law, that the members elect to set forth or include in the certificate of conversion. (8) If the limited liability company is converting its state of organization from another state to this state:

13 (a) The location and municipal street address, if any, of the limited liability company's registered office. An address consisting of a post office box alone is insufficient. (b) The location and municipal street address, if any, of each of the limited liability company's registered agents, together with a notarized affidavit of acknowledgment and acceptance signed by each such agent. An address consisting of a post office box alone is insufficient. D. The request for conversion may be delivered to the secretary of state for filing as of any specified date, and, if specified upon such delivery, as of any given time on such date, within thirty days after the date of delivery. E. If the secretary of state finds that the request for conversion is in compliance with the provisions of this Section, and after all fees have been paid as required by law, the secretary of state shall record in his office the request for conversion and any attachments or exhibits thereto, after endorsing thereon the date and, if requested, the hour of filing. Thereafter, the secretary of state shall either issue to the limited liability company a certificate of conversion, reciting that such limited liability company has complied with the requirements of this state for converting its state of organization, or advise the limited liability company with reasons why it has denied the request for conversion. F. Upon receipt of the certificate of conversion from the secretary of state, and after compliance as applicable with the laws of the other state: (1) A domestic limited liability company converting its state of organization from this state to another state shall be deemed to be organized solely under the laws of such other state and no longer under the laws of this state. The limited liability company shall continue to exist without interruption in its organizational form. All rights, title, interests, obligations, and liabilities of the limited liability company shall continue in the limited liability company without impairment, diminution, or termination. Any proceeding pending by or against the limited liability company or its members or managers, in their capacities as such, may be continued by or against the limited liability company without the need for substituting a new party to such proceeding as a result of any conversion of the state of organization as authorized in this Section. The limited liability company shall be deemed to have appointed the secretary of state in this state as its agent for service of process in any proceeding to enforce any liability or obligation against the limited liability company arising or existing prior to the effective time of the conversion of the state of organization. (2) A foreign limited liability company converting its state of organization from another state to this state shall be deemed to be organized solely under the laws of this state and no longer under the laws of such other state. The limited liability company shall continue to exist without interruption in its organizational form. All rights, title, interests, obligations, and liabilities of the limited liability company shall continue in the limited liability company without impairment, diminution, or termination. Any proceeding pending by or against the limited liability company or its members or managers, in their capacities as such, may be continued by or against the limited liability company without the need for substituting a new party to such proceeding as a result of a change of the state of organization authorized under this Section. The certificate of conversion issued by the secretary of state shall be conclusive evidence of the fact that the limited liability company has been duly organized under the laws of this state, except that in any proceeding brought by the state to annul, forfeit, or vacate a company's franchise, the certificate of conversion shall be only prima facie evidence of due organization. G. In addition to the other requirements of this Section, a domestic limited liability company converting its state of organization from this state to another state shall also file with the secretary of

14 state a certified copy of the certificate of organization or other official certificate obtained by it from the other state evidencing the company's organization under the laws of such state. Such certified copy shall be filed with the secretary of state not later than thirty days after issuance of the official certificate evidencing the company's organization under the laws of the other state Amendment of articles of organization A. The articles of organization shall be amended when any of the following occurs: (1) There is a change in the name of the limited liability company. (2) There is a false or erroneous statement in the articles of organization. (3) The members desire to make a change in any other statement in the articles of organization in order to accurately represent their agreement. (4) In accordance with R.S. 12:1302(C)(2), the company ceases to be a low-profit limited liability company. B. After an amendment has been adopted as provided by this Chapter, articles of amendment setting forth the amendment, the date, and manner of adoption thereof shall be executed in the limited liability company's name by a manager of the limited liability company, if management of the limited liability company is vested in one or more managers pursuant to R.S. 12:1312, or by at least one member of the limited liability company, if management of the limited liability company is reserved to the members. The articles of amendment shall be acknowledged by at least one of the persons who signed them or may be executed by authentic act. C. The articles of amendment shall be filed with the secretary of state. Articles of amendment may be delivered to the secretary of state for filing as of any specified date, and if specified upon such delivery, as of any given time on such date, within thirty days after the date of delivery. When all taxes, fees, and charges have been paid as required by law, the secretary of state shall record the articles of amendment in his office and endorse thereon the date and, if requested, the hour of the filing thereof with him. Thereupon, the amendment shall be effective as of the date and, if endorsed on the articles of amendment, the hour of filing. However, if the articles of amendment were so filed within five days, exclusive of legal holidays, after acknowledgment thereof or execution thereof as an authentic act, the amendment shall be effective as of the time of the acknowledgment or execution Certificates of correction A. If any instrument filed with the secretary of state under this Chapter contains an inaccurate record of the action therein referred to or has been defectively executed, the instrument may be corrected by the filing of a certificate of correction. B. A certificate of correction shall set forth the following: (1) The title of the instrument being corrected. (2) The name of each party to the instrument being corrected. (3) The date that the instrument being corrected was filed

15 (4) The provision in the instrument as previously filed and as corrected and, if execution of the instrument was defective, the manner in which it was defective. C. A certificate of correction shall not make any other change or amendment that would not have complied in all respects with the requirements of this Chapter at the time the instrument being corrected was filed. D. Repealed by Acts 1995, No. 847, 5, eff. June 27, E. A certificate of correction shall not: (1) Change the effective date of the instrument being corrected. (2) Affect any right or liability accrued or incurred before its filing, except that any right or liability accrued or incurred by reason of the error or defect being corrected shall be extinguished by the filing if the person having the right has not detrimentally relied on the original instrument. F. The certificate of correction shall be executed by a manager of the limited liability company, if management of the limited liability company is vested in one or more managers pursuant to R.S. 12:1312, or by at least one member, if management of the limited liability company is reserved to the members. The certificate of correction shall be acknowledged by at least one of the persons who signed it or may be in the form of an authentic act. The certificate of correction shall be filed with the secretary of state, who, after all taxes, fees, and charges have been paid as required by law, shall record the certificate of correction in his office and endorse thereon the date and, if requested, the hour of the filing thereof with him. G. A multiple original of the certificate of correction, or a copy certified by the secretary of state, shall be filed for record in each office of the recorder of conveyances, if any, in which the instrument corrected thereby was required to be filed by this Chapter. In the case of a certificate of correction to an agreement or certificate of merger or consolidation authorized under this Chapter, a copy of the certificate of correction shall, within twenty days after filing thereof with the secretary of state, be mailed to each member or former member of any party to the merger or consolidation whose property rights are affected by the correction made therein Retroactivity of company's existence; acquisition of immovable property prior to limited liability company's existence Whenever any immovable property is acquired by one or more persons acting in any capacity for and in the name of any limited liability company which has not been issued a certificate of organization as provided by law, and the limited liability company is subsequently issued a certificate of organization in accordance with the provisions of R.S. 12:1304, the limited liability company's existence shall be retroactive to the date of acquisition of an interest in such immovable property, but such retroactive effect shall be without prejudice to rights validly acquired by third persons in the interim between the date of acquisition and the date that the limited liability company was issued the certificate of organization

16 PART III. MANAGEMENT AND MANAGEMENT RIGHTS OF MEMBERS Management by members Except as otherwise provided in the articles of organization, the business of the limited liability company shall be managed by the members, subject to any provision in a written operating agreement restricting or enlarging the management rights and duties of any member or group or class of members Managers A. The articles of organization may provide that the business of the limited liability company shall be managed by or under the authority of one or more managers who may, but need not, be members. B. The articles of organization or an operating agreement may prescribe qualifications for managers. C. The number of managers shall be specified in or fixed in accordance with the articles of organization or an operating agreement. D. If a manager is listed in the articles of organization, an amendment thereto, or a supplemental report, a municipal address, which shall not be a post office box only, shall be indicated for each such manager Election and removal of managers If management is vested in one or more managers pursuant to R.S. 12:1312, then, unless otherwise provided in the articles of organization or an operating agreement: (1) Election of managers to fill initial positions or vacancies shall be by plurality vote of the members. (2) Any or all managers may be removed by a vote of a majority of the members, with or without cause, at a meeting called expressly for that purpose Duties of members and managers A. Subject to the provisions of R.S. 12:1315, a member, if management is reserved to the members, or manager, if management is vested in one or more managers pursuant to R.S. 12:1312: (1) Shall be deemed to stand in a fiduciary relationship to the limited liability company and its members and shall discharge his duties in good faith, with the diligence, care, judgment, and skill which an ordinary prudent person in a like position would exercise under similar circumstances. Nothing contained in this Section shall derogate from any indemnification authorized by R.S. 12:1315. (2) In discharging his duties, shall be fully protected in relying in good faith upon the records of the limited liability company and upon such information, opinions, reports, or statements presented to the

17 limited liability company, the members, managers, or any committee thereof by any of the limited liability company's members, managers, employees, or by any committee of the members or managers, or by any legal counsel, appraiser, engineer, including a petroleum reservoir engineer, or independent or certified public accountant selected with reasonable care by the members, managers, any committee thereof, any agent having the authority to make such selection, or by any other person as to matters the member, if management is reserved to the members, or manager, if management is vested in one or more managers pursuant to R.S. 12:1312, reasonably believes are within such other person's professional or expert competence and which person is selected with reasonable care by the members, managers, any committee thereof, or any agent having the authority to make such selection. (3) Is not protected by Paragraph (2) of this Subsection if he has knowledge concerning the matter in question that makes reliance otherwise permitted by Paragraph (2) of this Subsection unwarranted. (4) Shall not be liable for any action taken on behalf of the limited liability company or any failure to take any action if he performed the duties of his office in compliance with this Section. (5) Shall account to the limited liability company and hold as trustee for it any profit or benefit derived by him, without the informed consent of a majority of the uninterested members in accordance with R.S. 12:1318(C), from any transaction connected with the conduct or winding up of the limited liability company or from any personal use by him of its property unless he proves under strict judicial scrutiny the fairness of the transaction to the limited liability company. B. Notwithstanding the provisions of Subsection A of this Section, a member or manager shall not be personally liable to the limited liability company or the members thereof for monetary damages unless the member or manager acted in a grossly negligent manner as defined in Subsection C of this Section, or engaged in conduct which demonstrates a greater disregard of the duty of care than gross negligence, including but not limited to intentional tortious conduct or intentional breach of his duty of loyalty. C. As used in this Section, "gross negligence" shall be defined as a reckless disregard of or a carelessness amounting to indifference to the best interests of the limited liability company or the members thereof. D. A member or manager who makes a business judgment in good faith fulfills the duty of diligence, care, judgment, and skill under Subsection A of this Section if the member or manager: (1) Does not have a conflict of interest with respect to the subject of the business judgment. (2) Is informed with respect to the subject of the business judgment to the extent the member or manager reasonably believes to be appropriate under the circumstances. (3) Rationally believes that the business judgment is in the best interests of the limited liability company and its members. E. A person alleging a breach of the duty of diligence, care, judgment, and skill owed by a member or manager under Subsection A has the burden of proving the alleged breach of duty, including the inapplicability of the provisions as to the fulfillment of the duty under Paragraph A(2) and Subsection D, and, in a damage action, the burden of proving that the breach was the legal cause of damage suffered by the limited liability company

18 1315. Limitation of liability and indemnification of members and managers A. Subject to Subsection B of this Section, the articles of organization or a written operating agreement may: (1) Eliminate or limit the personal liability of a member or members, if management is reserved to the members, or a manager or managers, if management is vested in one or more managers pursuant to R.S. 12:1312, for monetary damages for breach of any duty provided for in R.S. 12:1314. (2) Provide for indemnification of a member or members, or a manager or managers, for judgments, settlements, penalties, fines, or expenses incurred because he is or was a member or manager. B. No provision permitted under Subsection A shall limit or eliminate the liability of a member or manager for the amount of a financial benefit received by a member or manager to which he is not entitled or for an intentional violation of a criminal law Voting by managers Except as otherwise provided in the articles of organization or an operating agreement, if the limited liability company has more than one manager, each manager shall be entitled to a single vote on all matters properly brought before the managers, and all decisions of the managers shall be made by majority vote of the managers Agency power of managers or members A. Each member, if management is reserved to the members, or manager, if management is vested in one or more managers pursuant to R.S. 12:1312, is a mandatary of the limited liability company for all matters in the ordinary course of its business other than the alienation, lease, or encumbrance of its immovables, unless such mandate is restricted or enlarged in the articles of organization or unless such member or manager lacks the authority to act for the limited liability company and the person with whom he is dealing has knowledge of the fact that he lacks such authority. B. Persons dealing with a member, if management is reserved to the members, or manager, if management is vested in one or more managers pursuant to R.S. 12:1312, of the limited liability company shall be deemed to have knowledge of restrictions on the authority of such a member or manager contained in a written operating agreement if the articles of organization of the limited liability company contain a statement that such restrictions exist. C. Persons dealing with a limited liability company may rely upon a certificate of any person named in the statement provided for in R.S. 12:1305(C)(5), or, if no such person or persons are so named, upon a certificate of one or more managers or members, to establish the membership of any member, the authenticity of any records of the limited liability company, or the authority of any person to act on behalf of the limited liability company, including but not limited to the authority to take actions referred to in R.S. 12:1318(B)

19 Company representation; state entities Any representative of a limited liability company having five or fewer members shall have the consent of a majority interest of the members and evidence of such consent by authentic act in order to represent the company interest to any state agency, board, or commission or to represent the company interest at any hearing or proceeding held by any state agency, board, or commission Voting rights of members A. Unless otherwise provided in the articles of organization or a written operating agreement, each member of a limited liability company shall be entitled to cast a single vote on all matters properly brought before the members, and all decisions of the members shall be made by majority vote of the members. B. Unless otherwise provided in the articles of organization or a written operating agreement, a majority vote of the members shall be required to approve the following matters, whether or not management is vested in one or more managers pursuant to R.S. 12:1312: (1) The dissolution and winding up of the limited liability company. (2) The sale, exchange, lease, mortgage, pledge, or other transfer of all or substantially all of the assets of the limited liability company. (3) The merger or consolidation of the limited liability company. (4) The incurrence of indebtedness by the limited liability company other than in the ordinary course of its business. (5) The alienation, lease, or encumbrance of any immovables of the limited liability company. (6) An amendment to the articles of organization or an operating agreement. C. No contract or transaction between a limited liability company and one or more of its members, if management is reserved to the members, or managers, if management is vested in one or more managers pursuant to R.S. 12:1312, or a person in which such a member or manager has a financial interest, shall be void or voidable solely for this reason, solely because the interested member or manager was present at or participated in the meeting which authorized the contract or transaction, or solely because his or their votes were counted for such purpose, if the material facts as to his interest and to the contract or transaction was disclosed or known to the members and the contract or transaction was approved by a majority vote of the members without counting the vote of the interested member, or if the contract or transaction was fair to the limited liability company as of the time it was authorized, approved, or ratified by the members. Interested members may be counted in determining the presence of a quorum at a meeting which authorized the contract or transaction. D. The articles of organization or a written operating agreement may provide for any other voting rights of members not inconsistent with Subsection C of this Section

20 1319. Records and information A. Each limited liability company shall keep at its registered office the following: (1) A current list of the full name and last known business address of each member and manager, if management is vested in one or more managers pursuant to R.S. 12:1312. (2) Copies of records which would enable a member to determine the relative voting rights of the members. (3) A copy of the articles of organization, together with any amendments thereto. (4) Copies of the limited liability company's federal and state income tax returns and reports, if any, for the three most recent years. (5) A copy of any operating agreement which is in writing. (6) Copies of any financial statements of the limited liability company for the three most recent years. B. Unless otherwise provided in the articles of organization or an operating agreement, a member may do any of the following: (1) At the member's own expense, inspect and copy any limited liability company record upon reasonable request during ordinary business hours. (2) Obtain from time to time upon reasonable demand the following: (a) True and complete information regarding the state of the business and financial condition of the limited liability company. (b) Promptly after becoming available, a copy of the limited liability company's federal and state income tax returns for each year. (c) Other information regarding the affairs of the limited liability company as is just and reasonable. (3) Demand a formal accounting of the limited liability company's affairs whenever circumstances render it just and reasonable. C. Failure of the limited liability company to keep or maintain any of the records or information required pursuant to this Section shall not be grounds for imposing liability on any person for the debts and obligations of the limited liability company. D. Except as otherwise provided in the articles of organization or an operating agreement, a limited liability company and its members, managers, and agents may recognize and treat a person registered on its records as a member, as such for all purposes, and as the person exclusively entitled to have and to exercise all rights and privileges incident to the ownership of such membership interests. Rights under this Section shall not be affected by any actual or constructive notice which the limited liability company or any of its managers, members, or agents may have to the contrary Liability to third parties of members and managers A. The liability of members, managers, employees, or agents, as such, of a limited liability company organized and existing under this Chapter shall at all times be determined solely and exclusively by the provisions of this Chapter