Tuesday, June 23, 2009

Changes to Iowa Limited Liability Corporation Act

As of January 1, 2009, all limited liability companies ("LLC") organized and incorporated in Iowa will be governed by a Revised Uniform LLC Act (Re-ULLCA). Iowa LLCs established before 2009 will continue to be governed by the old Iowa LLC Act (ILLCA) until January 1, 2011, which is the date when all LLCs--regardless of when formed--will be governed by the Re-ULLCA. In his article “Iowa’s Revised Uniform Limited Liability Company Act: Formation Issues” from the June, 2009 issue of The Iowa Lawyer, Matthew Dore does an excellent job of explaining the differences between the old ILLCA and the new Re-ULLCA, as well as setting forth some of the reasons for the changes.

Under the old ILLCA, to form an LLC one had to file “Articles of Organization” with the Secretary of State. Under Re-ULLCA, however, one files a “Certificate of Organization.” The change in terms, Dore explains, is to “signal that [a] publicly-filed record is not the LLC’S foundational document.” Rather, the Certificate of Organization simply states that an LLC exists. Under Re-ULLCA, it is the Operating Agreement that “establishes foundational accords for an LLC.” The only information needed in the new Certificate of Organization is the name of the LLC and the mailing addresses of the registered office and agent.

Another big difference is under the old ILLCA was that to form an LLC one must had to first file the Articles of Organization then have at least one member join the company. Under the new Re-ULLCA, an LLC exists once the Certificate of Organization has been filed regardless of the number (or lack thereof) of members. However, under the new Re-ULLCA, the LLC exists upon filing but it lacks the capacity to conduct any business other than admitting members.

The new LLC law will affect business and employers across Iowa so, for more information on the changes, I would encourage you to review Mr. Dore's article in this month's Iowa Lawyer.

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