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On January 1, 2013, a very different form of New Hampshire RSA 304-C, also referred to as the New Hampshire Limited Liability Companies Act (LLC Act), will go into effect making many changes to the LLC Act that will impact virtually all New Hampshire LLCs. The main objective of these revisions was to improve the usefulness of the LLC Act for small businesses, which constitute the vast majority of LLCs in New Hampshire. Several of the new and revised provisions of the new Act reflect this objective, including the following:
The new LLC Act contains many provisions intended to provide a default operating agreement for an LLC whose members did not adopt a written operating agreement. Although a written operating agreement is generally the best practice, the new LLC Act also clarifies that an operating agreement does not have to be in writing to be enforceable and may be written, oral or established by a course of dealing. The old LLC Act does not include clear fiduciary provisions. The new LLC Act provides that managers and members of an LLC having management authority are affirmatively subject to certain fiduciary obligations absent language to the contrary in an operating agreement. The old LLC Act was unclear as to whether the members had the authority to remove the manager absent provisions in an operating agreement addressing manager removal. The new LLC Act sets clear default provisions concerning the ability of the members to remove a manager absent such a provision in the LLC's operating agreement. The new LLC Act provides clear grounds for removal ("dissociation") of members and a judicial procedure for such removal including broad discretion as to how that removal may occur. The new LLC Act clarifies and reinforces the rights of the member in a single-member LLC such as expressly providing that a single-member LLC may have an enforceable operating agreement and that, unless the operating agreement provides otherwise, a single-member LLC will not be subject to automatic dissolution upon the bankruptcy of its sole member.
LLCs formed on or after January 1, 2013 will automatically be governed under the new LLC Act. LLCs formed prior to January 1, 2013 will not be subject to the new LLC Act until January 1, 2014, unless all of the members of those LLCs affirmatively elect in writing to be governed by the new LLC Act. Contact any member of Devine Millimet's Small Business Practice Group to discuss how the revisions to the LLC Act may affect your LLC or your clients.
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The Devine, Millimet & Branch Small Business Group offers this free E-Mail Alert service to provide information on recent developments in business law. If you have any questions about this e-mail, or if you know of anyone else who may be interested in receiving these alerts, please send us an email at smallbusiness@devinemillimet.com.
This is not a legal document nor is it intended to serve as legal advice or a legal opinion. Devine, Millimet & Branch, Professional Association makes no representations that this is a complete or final description or procedure that would ensure legal compliance and does not intend that the reader should rely on it as such.
© Copyright 2012 Devine Millimet & Branch, Professional Association
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