SENATE BILL NO. 1350
View Bill Status
View Bill Text
View Statement of Purpose / Fiscal Impact
Text to be added within a bill has been marked with Bold and
Underline. Text to be removed has been marked with
Strikethrough and Italic. How these codes are actually displayed will
vary based on the browser software you are using.
This sentence is marked with bold and underline to show added text.
This sentence is marked with strikethrough and italic, indicating
text to be removed.
S1350................................................by JUDICIARY AND RULES
LIMITED LIABILITY COMPANIES - Repeals, amends and adds to existing law to
enact the Idaho Uniform Limited Liability Company Act.
01/28 Senate intro - 1st rdg - to printing
01/29 Rpt prt - to Jud
02/12 Rpt out - rec d/p - to 2nd rdg
02/13 2nd rdg - to 3rd rdg
02/19 3rd rdg - PASSED - 32-0-3
AYES -- Andreason, Bair, Bastian, Bilyeu, Broadsword, Burkett,
Cameron, Coiner, Darrington, Davis, Fulcher, Gannon, Geddes, Goedde,
Hammond, Heinrich, Hill, Jorgenson, Kelly, Keough, Langhorst, Little,
Lodge, Malepeai(Sagness), McGee, McKague, Pearce, Richardson,
Schroeder, Siddoway, Stegner, Werk
NAYS -- None
Absent and excused -- Corder, McKenzie, Stennett
Floor Sponsor - Hill
Title apvd - to House
02/20 House intro - 1st rdg - to Jud
03/04 Rpt out - rec d/p - to 2nd rdg
03/05 2nd rdg - to 3rd rdg
03/11 3rd rdg - PASSED - 53-13-4
AYES -- Anderson, Bayer, Bedke, Bell, Bilbao, Black, Block, Bock,
Boe, Bolz, Brackett, Bradford, Chadderdon, Chavez, Chew, Clark,
Collins, Crane, Durst, Eskridge, Hagedorn, Hart, Henbest, Henderson,
Jaquet, Killen, King, Labrador, Lake, LeFavour, Luker, Mathews,
Nonini, Pasley-Stuart, Pence, Raybould, Ringo, Ruchti, Rusche,
Sayler, Schaefer, Shepherd(02), Shirley, Shively, Smith(30),
Smith(24), Stevenson, Thomas, Trail, Vander Woude, Wills, Wood(27),
Mr. Speaker
NAYS -- Andrus, Barrett, Bowers, Harwood, Kren, Loertscher, Marriott,
McGeachin, Nielsen, Patrick, Shepherd(08), Thayn, Wood(35)
Absent and excused -- Mortimer, Moyle, Roberts, Snodgrass
Floor Sponsor - Labrador
Title apvd - to Senate
03/12 To enrol
03/13 Rpt enrol - Pres signed - Sp signed
03/14 To Governor
03/18 Governor signed
Session Law Chapter 176
Effective: 07/01/08 Sections 1 through 4;
07/01/10 Section 5
]]]] LEGISLATURE OF THE STATE OF IDAHO ]]]]
Fifty-ninth Legislature Second Regular Session - 2008
IN THE SENATE
SENATE BILL NO. 1350
BY JUDICIARY AND RULES COMMITTEE
1 AN ACT
2 RELATING TO THE IDAHO UNIFORM LIMITED LIABILITY COMPANY ACT; AMENDING TITLE
3 30, IDAHO CODE, BY THE ADDITION OF A NEW CHAPTER 6, TITLE 30, IDAHO CODE,
4 TO PROVIDE A SHORT TITLE, TO DEFINE TERMS, TO PROVIDE FOR KNOWLEDGE AND
5 FOR NOTICE, TO PROVIDE FOR THE NATURE, PURPOSE AND DURATION OF LIMITED
6 LIABILITY COMPANIES, TO PROVIDE FOR POWERS, TO PROVIDE FOR GOVERNING LAW,
7 TO PROVIDE FOR SUPPLEMENTAL PRINCIPLES OF LAW, TO PROVIDE FOR NAMES, TO
8 PROVIDE FOR RESERVATION OF NAMES, TO PROVIDE FOR SCOPE, FUNCTION AND LIM-
9 ITATIONS OF OPERATING AGREEMENTS, TO PROVIDE FOR THE EFFECT OF OPERATING
10 AGREEMENTS ON LIMITED LIABILITY COMPANIES AND PERSONS BECOMING MEMBERS, TO
11 PROVIDE FOR A PREFORMATION AGREEMENT, TO PROVIDE FOR THE EFFECT OF OPERAT-
12 ING AGREEMENTS ON THIRD PARTIES AND TO RECORDS EFFECTIVE ON BEHALF OF LIM-
13 ITED LIABILITY COMPANIES, TO PROVIDE FOR THE DESIGNATED OFFICE AND REGIS-
14 TERED AGENT, TO PROVIDE FOR CHANGE OF DESIGNATED OFFICE, TO PROVIDE FOR
15 FORMATION OF LIMITED LIABILITY COMPANIES AND FOR CERTIFICATE OF ORGANIZA-
16 TION, TO PROVIDE FOR PROFESSIONAL COMPANIES, TO PROVIDE FOR AMENDMENT OR
17 RESTATEMENT OF CERTIFICATES OF ORGANIZATION, TO PROVIDE FOR SIGNING OF
18 RECORDS TO BE DELIVERED FOR FILING TO THE SECRETARY OF STATE, TO PROVIDE
19 FOR SIGNING AND FILING PURSUANT TO JUDICIAL ORDER, TO PROVIDE FOR DELIVERY
20 TO AND FILING OF RECORDS BY THE SECRETARY OF STATE AND FOR EFFECTIVE TIME
21 AND DATE, TO PROVIDE FOR CORRECTING FILED RECORDS, TO PROVIDE FOR LIABIL-
22 ITY FOR INACCURATE INFORMATION IN FILED RECORDS, TO PROVIDE FOR CERTIFI-
23 CATES OF EXISTENCE OR AUTHORIZATION, TO PROVIDE FOR ANNUAL REPORTS FOR THE
24 SECRETARY OF STATE, TO PROVIDE FOR FILING, SERVICE AND COPYING FEES, TO
25 PROVIDE FOR NO AGENCY POWER OF MEMBERS AS MEMBERS, TO PROVIDE FOR STATE-
26 MENTS OF AUTHORITY, TO PROVIDE FOR STATEMENTS OF DENIAL, TO PROVIDE FOR
27 LIABILITY OF MEMBERS AND MANAGERS, TO PROVIDE FOR BECOMING A MEMBER, TO
28 PROVIDE FOR FORMS OF CONTRIBUTION, TO PROVIDE FOR LIABILITY FOR CONTRIBU-
29 TIONS, TO PROVIDE FOR SHARING OF AND RIGHT TO DISTRIBUTIONS BEFORE DISSO-
30 LUTION, TO PROVIDE FOR LIMITATIONS ON DISTRIBUTIONS, TO PROVIDE FOR LIA-
31 BILITY FOR IMPROPER DISTRIBUTIONS, TO PROVIDE FOR MANAGEMENT OF LIMITED
32 LIABILITY COMPANIES, TO PROVIDE FOR INDEMNIFICATION AND INSURANCE, TO PRO-
33 VIDE FOR STANDARDS OF CONDUCT FOR MEMBERS AND MANAGERS, TO PROVIDE FOR
34 RIGHT OF MEMBERS, MANAGERS AND DISSOCIATED MEMBERS TO INFORMATION, TO PRO-
35 VIDE FOR NATURE OF TRANSFERABLE INTEREST, TO PROVIDE FOR TRANSFER OF
36 TRANSFERABLE INTEREST, TO PROVIDE FOR CHARGING ORDERS, TO PROVIDE FOR
37 POWER OF PERSONAL REPRESENTATIVE OF DECEASED MEMBER, TO PROVIDE FOR
38 MEMBER'S POWER TO DISSOCIATE AND FOR WRONGFUL DISSOCIATION, TO PROVIDE FOR
39 EVENTS CAUSING DISSOCIATION, TO PROVIDE FOR EFFECT OF PERSON'S DISSOCIA-
40 TION AS MEMBER, TO PROVIDE FOR EVENTS CAUSING DISSOLUTION, TO PROVIDE FOR
41 WINDING UP, TO PROVIDE FOR KNOWN CLAIMS AGAINST DISSOLVED LIMITED LIABIL-
42 ITY COMPANIES, TO PROVIDE FOR OTHER CLAIMS AGAINST DISSOLVED LIMITED LIA-
43 BILITY COMPANIES, TO PROVIDE GROUNDS FOR ADMINISTRATIVE DISSOLUTION AND
44 FOR PROCEDURE AND EFFECT, TO PROVIDE FOR REINSTATEMENT FOLLOWING ADMINIS-
45 TRATIVE DISSOLUTION, TO PROVIDE FOR APPEAL FROM REJECTION OF REINSTATE-
46 MENT, TO PROVIDE FOR DISTRIBUTION OF ASSETS IN WINDING UP LIMITED LIABIL-
2
1 ITY COMPANIES' ACTIVITIES, TO PROVIDE GOVERNING LAW FOR FOREIGN LIMITED
2 LIABILITY COMPANIES, TO PROVIDE APPLICATION FOR CERTIFICATE OF AUTHORITY
3 FOR FOREIGN LIMITED LIABILITY COMPANIES, TO PROVIDE ACTIVITIES NOT CONSTI-
4 TUTING TRANSACTING BUSINESS FOR FOREIGN LIMITED LIABILITY COMPANIES, TO
5 PROVIDE FOR FILING CERTIFICATES OF AUTHORITY BY FOREIGN LIMITED LIABILITY
6 COMPANIES, TO PROVIDE FOR NONCOMPLYING NAMES OF FOREIGN LIMITED LIABILITY
7 COMPANIES, TO PROVIDE FOR REVOCATION OF CERTIFICATE OF AUTHORITY OF FOR-
8 EIGN LIMITED LIABILITY COMPANIES, TO PROVIDE FOR CANCELLATION OF CERTIFI-
9 CATE OF AUTHORITY OF FOREIGN LIMITED LIABILITY COMPANIES, TO PROVIDE FOR
10 THE EFFECT OF FAILURE TO HAVE FOREIGN LIMITED LIABILITY CERTIFICATE OF
11 AUTHORITY, TO PROVIDE FOR ACTION BY THE ATTORNEY GENERAL, TO PROVIDE FOR
12 DIRECT ACTION BY MEMBERS, TO PROVIDE FOR DERIVATIVE ACTIONS, TO PROVIDE
13 FOR PROPER PLAINTIFF, TO PROVIDE FOR PLEADING, TO PROVIDE FOR SPECIAL LIT-
14 IGATION COMMITTEES, TO PROVIDE FOR PROCEEDS AND EXPENSES, TO PROVIDE FOR
15 APPLICABILITY OF THE IDAHO ENTITY TRANSACTIONS ACT, TO PROVIDE FOR
16 RESTRICTIONS ON APPROVAL OF MERGERS, CONVERSIONS AND DOMESTICATIONS, TO
17 PROVIDE FOR UNIFORMITY OF APPLICATION AND CONSTRUCTION, TO PROVIDE FOR
18 RELATION TO THE ELECTRONIC SIGNATURES IN GLOBAL AND NATIONAL COMMERCE ACT,
19 TO PROVIDE A SAVINGS CLAUSE, TO PROVIDE FOR THE APPLICATION TO EXISTING
20 RELATIONSHIPS; AMENDING SECTION 30-1-401, IDAHO CODE, TO PROVIDE CORRECT
21 CODE REFERENCES; AMENDING SECTION 63-3004A, IDAHO CODE, TO PROVIDE CORRECT
22 CODE REFERENCES; AMENDING SECTION 63-3622, IDAHO CODE, TO PROVIDE CORRECT
23 CODE REFERENCES; REPEALING CHAPTER 6, TITLE 53, IDAHO CODE, RELATING TO
24 THE IDAHO LIMITED LIABILITY COMPANY ACT; AND PROVIDING EFFECTIVE DATES.
25 Be It Enacted by the Legislature of the State of Idaho:
26 SECTION 1. That Title 30, Idaho Code, be, and the same is hereby amended
27 by the addition thereto of a NEW CHAPTER, to be known and designated as Chap-
28 ter 6, Title 30, Idaho Code, and to read as follows:
29 CHAPTER 6
30 IDAHO UNIFORM LIMITED LIABILITY COMPANY ACT
31 PART 1.
32 GENERAL PROVISIONS
33 30-6-101. SHORT TITLE. This chapter may be cited as the "Idaho Uniform
34 Limited Liability Company Act."
35 30-6-102. DEFINITIONS. In this chapter:
36 (1) "Allied professional services" means professional services which are
37 so related in substance that they are frequently offered in conjunction with
38 one another as parts of the same service package to the consumer.
39 (2) "Certificate of organization" means the certificate required by sec-
40 tion 30-6-201, Idaho Code. The term includes the certificate as amended or
41 restated.
42 (3) "Contribution" means any benefit provided by a person to a limited
43 liability company:
44 (a) In order to become a member upon formation of the company and in
45 accordance with an agreement between or among the persons that have agreed
46 to become the initial members of the company;
47 (b) In order to become a member after formation of the company and in
48 accordance with an agreement between the person and the company; or
49 (c) In the person's capacity as a member and in accordance with the oper-
50 ating agreement or an agreement between the member and the company.
3
1 (4) "Debtor in bankruptcy" means a person that is the subject of:
2 (a) An order for relief under Title 11 of the United States Code or a
3 successor statute of general application; or
4 (b) A comparable order under federal, state or foreign law governing
5 insolvency.
6 (5) "Designated office" means:
7 (a) The office that a limited liability company is required to designate
8 and maintain under section 30-6-113, Idaho Code; or
9 (b) The principal office of a foreign limited liability company.
10 (6) "Distribution," except as otherwise provided in section 30-6-405(7),
11 Idaho Code, means a transfer of money or other property from a limited liabil-
12 ity company to another person on account of a transferable interest.
13 (7) "Effective," with respect to a record required or permitted to be
14 delivered to the secretary of state for filing under this chapter, means
15 effective under section 30-6-205(3), Idaho Code.
16 (8) "Foreign limited liability company" means an unincorporated entity
17 formed under the law of a jurisdiction other than this state and denominated
18 by that law as a limited liability company.
19 (9) "Limited liability company," except in the phrase "foreign limited
20 liability company," means an entity formed under this chapter.
21 (10) "Manager" means a person that under the operating agreement of a
22 manager-managed limited liability company is responsible, alone or in concert
23 with others, for performing the management functions stated in section
24 30-6-407(3), Idaho Code.
25 (11) "Manager-managed limited liability company" means a limited liability
26 company that qualifies under section 30-6-407(1), Idaho Code.
27 (12) "Member" means a person that has become a member of a limited liabil-
28 ity company under section 30-6-401, Idaho Code, and has not dissociated under
29 section 30-6-602, Idaho Code.
30 (13) "Member-managed limited liability company" means a limited liability
31 company that is not a manager-managed limited liability company.
32 (14) "Membership" or "membership interest" means, for purposes of a pro-
33 fessional company formed under section 30-6-201A, Idaho Code, a member's
34 transferable interest, together with the member's governance rights under part
35 4 of this chapter.
36 (15) "Operating agreement" means the agreement, whether or not referred to
37 as an operating agreement and whether oral, in a record, implied, or in any
38 combination thereof, of all the members of a limited liability company,
39 including a sole member, concerning the matters described in section
40 30-6-110(1), Idaho Code. The term includes the agreement as amended or
41 restated.
42 (16) "Organizer" means a person that acts under section 30-6-201, Idaho
43 Code, to form a limited liability company.
44 (17) "Person" means an individual, corporation, business trust, estate,
45 trust, partnership, limited liability company, association, joint venture,
46 public corporation, government or governmental subdivision, agency, or instru-
47 mentality, or any other legal or commercial entity.
48 (18) "Principal office" means the principal executive office of a limited
49 liability company or foreign limited liability company, whether or not the
50 office is located in this state.
51 (19) "Professional company" means a limited liability company organized
52 under the provisions of this chapter for the sole and specific purpose of ren-
53 dering professional services, allied professional services, and services
54 ancillary to the professional services and which has as its members only: (a)
55 natural persons who themselves are duly licensed or otherwise legally autho-
4
1 rized to render one (1) or more of the same professional services as the pro-
2 fessional company; and/or (b) professional corporations, partnerships or lim-
3 ited liability companies, all of whose shareholders, partners or members are
4 duly licensed or otherwise legally authorized to render one (1) or more of the
5 same professional services as the professional company.
6 (20) "Professional service" means any type of service to the public which
7 can be rendered by a member of any profession within the purview of his pro-
8 fession. For the purpose of this chapter, the professions shall be held to
9 include the practices of architecture, chiropractic, dentistry, engineering,
10 landscape architecture, law, medicine, nursing, occupational therapy, optome-
11 try, physical therapy, podiatry, professional geology, psychology, certified
12 or licensed public accountancy, social work, surveying and veterinary medi-
13 cine, and no others.
14 (21) "Record" means information that is inscribed on a tangible medium or
15 that is stored in an electronic or other medium and is retrievable in
16 perceivable form.
17 (22) "Registered agent" means an agent for service of process in this
18 state in accordance with chapter 4, title 30, Idaho Code.
19 (23) "Sign" means, with the present intent to authenticate or adopt a
20 record:
21 (a) To execute or adopt a tangible symbol; or
22 (b) To attach to or logically associate with the record an electronic
23 symbol, sound or process.
24 (24) "State" means a state of the United States, the District of Columbia,
25 Puerto Rico, the United States Virgin Islands or any territory or insular pos-
26 session subject to the jurisdiction of the United States.
27 (25) "Transfer" includes an assignment, conveyance, deed, bill of sale,
28 lease, mortgage, security interest, encumbrance, gift and transfer by opera-
29 tion of law.
30 (26) "Transferable interest" means the right, as originally associated
31 with a person's capacity as a member, to receive distributions from a limited
32 liability company in accordance with the operating agreement, whether or not
33 the person remains a member or continues to own any part of the right.
34 (27) "Transferee" means a person to which all or part of a transferable
35 interest has been transferred, whether or not the transferor is a member.
36 30-6-103. KNOWLEDGE -- NOTICE. (1) A person knows a fact when the person:
37 (a) Has actual knowledge of it; or
38 (b) Is deemed to know it under subsection (4)(a) of this section or law
39 other than this chapter.
40 (2) A person has notice of a fact when the person:
41 (a) Has reason to know the fact from all of the facts known to the person
42 at the time in question; or
43 (b) Is deemed to have notice of the fact under subsection (4)(b) of this
44 section;
45 (3) A person notifies another of a fact by taking steps reasonably
46 required to inform the other person in ordinary course, whether or not the
47 other person knows the fact.
48 (4) A person that is not a member is deemed:
49 (a) To know of a limitation on authority to transfer real property as
50 provided in section 30-6-302(7), Idaho Code; and
51 (b) To have notice of a limited liability company's:
52 (i) Dissolution, ninety (90) days after a statement of dissolution
53 under section 30-6-702(2)(b)(i), Idaho Code, becomes effective;
54 (ii) Termination, ninety (90) days after a statement of termination
5
1 under section 30-6-702(2)(b)(vi), Idaho Code, becomes effective; and
2 (iii) Merger, conversion or domestication, ninety (90) days after
3 articles of merger, conversion or domestication under part 10 of this
4 chapter become effective.
5 30-6-104. NATURE, PURPOSE AND DURATION OF LIMITED LIABILITY COMPANY. (1)
6 A limited liability company is an entity distinct from its members.
7 (2) A limited liability company may have any lawful purpose.
8 (3) A limited liability company has perpetual duration.
9 (4) A limited liability company may have one (1) or more members.
10 30-6-105. POWERS. A limited liability company has the capacity to sue and
11 be sued in its own name and the power to do all things necessary or convenient
12 to carry on its activities including, in the case of a professional company
13 formed under this chapter, the power to render professional services.
14 30-6-106. GOVERNING LAW. The law of this state governs:
15 (1) The internal affairs of a limited liability company; and
16 (2) The liability of a member as member and a manager as manager for the
17 debts, obligations or other liabilities of a limited liability company.
18 30-6-107. SUPPLEMENTAL PRINCIPLES OF LAW. Unless displaced by particular
19 provisions of this chapter, the principles of law and equity supplement this
20 chapter.
21 30-6-108. NAME. (1) The name of a limited liability company must contain
22 the words "limited liability company" or "limited company" or the abbreviation
23 "L.L.C.," "LLC," "L.C.," or "LC." "Limited" may be abbreviated as "ltd." and
24 "company" may be abbreviated as "co." If the limited liability company is a
25 professional company, however, the name of the limited liability company must
26 contain the words "Professional Company" or the abbreviations "P.L.L.C." or
27 "PLLC."
28 (2) Unless authorized by subsection (3) of this section, the name of a
29 limited liability company must be distinguishable on the records of the secre-
30 tary of state from:
31 (a) The name of each person that is not an individual and that is incor-
32 porated, organized or authorized to transact business in this state;
33 (b) The limited liability company name stated in each certificate of
34 organization that contains the statement as provided in section
35 30-6-201(2)(c), Idaho Code, and that has not lapsed; and
36 (c) Each name reserved under section 30-6-109, Idaho Code, and sections
37 30-1-402 and 30-1-403, Idaho Code, sections 30-3-28 and 30-3-29, Idaho
38 Code, and section 53-2-109, Idaho Code.
39 (3) A limited liability company may apply to the secretary of state for
40 authorization to use a name that does not comply with subsection (2) of this
41 section. The secretary of state shall authorize use of the name applied for
42 if, as to each noncomplying name:
43 (a) The present user, registrant or owner of the noncomplying name con-
44 sents in a signed record to the use and submits an undertaking in a form
45 satisfactory to the secretary of state to change the noncomplying name to
46 a name that complies with subsection (2) of this section and is distin-
47 guishable in the records of the secretary of state from the name applied
48 for; or
49 (b) The applicant delivers to the secretary of state a certified copy of
50 the final judgment of a court establishing the applicant's right to use in
6
1 this state the name applied for.
2 (4) Subject to section 30-6-805, Idaho Code, this section applies to a
3 foreign limited liability company transacting business in this state which has
4 a certificate of authority to transact business in this state or which has
5 applied for a certificate of authority.
6 30-6-109. RESERVATION OF NAME. (1) A person may reserve the exclusive use
7 of the name of a limited liability company, including a fictitious or assumed
8 name for a foreign limited liability company whose name is not available, by
9 delivering an application to the secretary of state for filing. The applica-
10 tion must state the name and address of the applicant and the name proposed to
11 be reserved. If the secretary of state finds that the name applied for is
12 available, it must be reserved for the applicant's exclusive use for a four
13 (4) month period.
14 (2) The owner of a name reserved for a limited liability company may
15 transfer the reservation to another person by delivering to the secretary of
16 state for filing a signed notice of the transfer which states the name and
17 address of the transferee.
18 30-6-110. OPERATING AGREEMENT -- SCOPE, FUNCTION AND LIMITATIONS. (1)
19 Except as otherwise provided in subsections (2) and (3) of this section, the
20 operating agreement governs:
21 (a) Relations among the members as members and between the members and
22 the limited liability company;
23 (b) The rights and duties under this chapter of a person in the capacity
24 of manager;
25 (c) The activities of the company and the conduct of those activities;
26 and
27 (d) The means and conditions for amending the operating agreement.
28 (2) To the extent the operating agreement does not otherwise provide for
29 a matter described in subsection (1) of this section, this chapter governs the
30 matter.
31 (3) An operating agreement may not:
32 (a) Vary a limited liability company's capacity under section 30-6-105,
33 Idaho Code, to sue and be sued in its own name;
34 (b) Vary the law applicable under section 30-6-106, Idaho Code;
35 (c) Vary the power of the court under section 30-6-204, Idaho Code;
36 (d) Subject to subsections (4) through (7) of this section, eliminate the
37 duty of loyalty, the duty of care, or any other fiduciary duty;
38 (e) Subject to subsections (4) through (7) of this section, eliminate the
39 contractual obligation of good faith and fair dealing under section
40 30-6-409(4), Idaho Code;
41 (f) Unreasonably restrict the duties and rights stated in section
42 30-6-410, Idaho Code;
43 (g) Vary the power of a court to decree dissolution in the circumstances
44 specified in sections 30-6-701(1)(d) and (e), Idaho Code;
45 (h) Vary the requirement to wind up a limited liability company's busi-
46 ness as specified in sections 30-6-702(1) and (2)(a), Idaho Code;
47 (i) Unreasonably restrict the right of a member to maintain an action
48 under part 9 of this chapter;
49 (j) Restrict the right to approve a merger, conversion or domestication
50 under chapter 18, title 30, Idaho Code, to a member that will have per-
51 sonal liability with respect to a surviving, converted or domesticated
52 organization; or
53 (k) Except as otherwise provided in section 30-6-112(2), Idaho Code,
7
1 restrict the rights under this chapter of a person other than a member or
2 manager.
3 (4) If not manifestly unreasonable, the operating agreement may:
4 (a) Restrict or eliminate the duty:
5 (i) As required in sections 30-6-409(2)(a) and (7), Idaho Code, to
6 account to the limited liability company and to hold as trustee for
7 it any property, profit or benefit derived by the member in the con-
8 duct or winding up of the company's business, from a use by the mem-
9 ber of the company's property, or from the appropriation of a limited
10 liability company opportunity;
11 (ii) As required in sections 30-6-409(2)(b) and (7), Idaho Code, to
12 refrain from dealing with the company in the conduct or winding up of
13 the company's business as or on behalf of a party having an interest
14 adverse to the company; and
15 (iii) As required by sections 30-6-409(2)(c) and (7), Idaho Code, to
16 refrain from competing with the company in the conduct of the
17 company's business before the dissolution of the company;
18 (b) Identify specific types or categories of activities that do not vio-
19 late the duty of loyalty;
20 (c) Alter the duty of care, except to authorize intentional misconduct or
21 knowing violation of law;
22 (d) Alter any other fiduciary duty, including eliminating particular
23 aspects of that duty; and
24 (e) Prescribe the standards by which to measure the performance of the
25 contractual obligation of good faith and fair dealing under section
26 30-6-409(4), Idaho Code.
27 (5) The operating agreement may specify the method by which a specific
28 act or transaction that would otherwise violate the duty of loyalty may be
29 authorized or ratified by one (1) or more disinterested and independent per-
30 sons after full disclosure of all material facts.
31 (6) To the extent the operating agreement of a member-managed limited
32 liability company expressly relieves a member of a responsibility that the
33 member would otherwise have under this chapter and imposes the responsibility
34 on one (1) or more other members, the operating agreement may, to the benefit
35 of the member that the operating agreement relieves of the responsibility,
36 also eliminate or limit any fiduciary duty that would have pertained to the
37 responsibility.
38 (7) The operating agreement may alter or eliminate the indemnification
39 for a member or manager provided by section 30-6-408(1), Idaho Code, and may
40 eliminate or limit a member or manager's liability to the limited liability
41 company and members for money damages, except for:
42 (a) Breach of the duty of loyalty;
43 (b) A financial benefit received by the member or manager to which the
44 member or manager is not entitled;
45 (c) A breach of a duty under section 30-6-406, Idaho Code;
46 (d) Intentional infliction of harm on the company or a member; or
47 (e) An intentional violation of criminal law.
48 (8) The court shall decide any claim, under subsection (4)(a) of this
49 section, that a term of an operating agreement is manifestly unreasonable. The
50 court:
51 (a) Shall make its determination as of the time the challenged term
52 became part of the operating agreement and by considering only circum-
53 stances existing at that time; and
54 (b) May invalidate the term only if, in light of the purposes and activi-
55 ties of the limited liability company, it is readily apparent that:
8
1 (i) The objective of the term is unreasonable; or
2 (ii) The term is an unreasonable means to achieve the provision's
3 objective.
4 30-6-111. OPERATING AGREEMENT -- EFFECT ON LIMITED LIABILITY COMPANY AND
5 PERSONS BECOMING MEMBERS -- PREFORMATION AGREEMENT. (1) A limited liability
6 company is bound by and may enforce the operating agreement, whether or not
7 the company has itself manifested assent to the operating agreement.
8 (2) A person that becomes a member of a limited liability company is
9 deemed to assent to the operating agreement.
10 (3) Two (2) or more persons intending to become the initial members of a
11 limited liability company may make an agreement providing that upon the forma-
12 tion of the company the agreement will become the operating agreement. One (1)
13 person intending to become the initial member of a limited liability company
14 may assent to terms providing that upon the formation of the company the terms
15 will become the operating agreement.
16 30-6-112. OPERATING AGREEMENT -- EFFECT ON THIRD PARTIES AND RELATIONSHIP
17 TO RECORDS EFFECTIVE ON BEHALF OF LIMITED LIABILITY COMPANY. (1) An operating
18 agreement may specify that its amendment requires the approval of a person
19 that is not a party to the operating agreement or the satisfaction of a condi-
20 tion. An amendment is ineffective if its adoption does not include the
21 required approval or satisfy the specified condition.
22 (2) The obligations of a limited liability company and its members to a
23 person in the person's capacity as a transferee or dissociated member are gov-
24 erned by the operating agreement. Subject only to any court order issued under
25 section 30-6-503(2)(b), Idaho Code, to effectuate a charging order, an amend-
26 ment to the operating agreement made after a person becomes a transferee or
27 dissociated member is effective with regard to any debt, obligation or other
28 liability of the limited liability company or its members to the person in the
29 person's capacity as a transferee or dissociated member.
30 (3) If a record that has been delivered by a limited liability company to
31 the secretary of state for filing and has become effective under this chapter
32 contains a provision that would be ineffective under section 30-6-110(3),
33 Idaho Code, if contained in the operating agreement, the provision is likewise
34 ineffective in the record.
35 (4) Subject to subsection (3) of this section, if a record that has been
36 delivered by a limited liability company to the secretary of state for filing
37 and has become effective under this chapter conflicts with a provision of the
38 operating agreement:
39 (a) The operating agreement prevails as to members, dissociated members,
40 transferees and managers; and
41 (b) The record prevails as to other persons to the extent they reasonably
42 rely on the record.
43 30-6-113. DESIGNATED OFFICE AND REGISTERED AGENT. (1) A limited liability
44 company shall designate and continuously maintain in this state:
45 (a) An office, which need not be a place of its activity in this state;
46 and
47 (b) A registered agent.
48 (2) A foreign limited liability company that has a certificate of author-
49 ity under section 30-6-802, Idaho Code, shall designate and continuously main-
50 tain in this state a registered agent.
51 30-6-114. CHANGE OF DESIGNATED OFFICE. (1) A limited liability company or
9
1 foreign limited liability company may change its designated office by deliver-
2 ing to the secretary of state for filing a statement of change containing:
3 (a) The name of the company;
4 (b) The street and mailing addresses of its current designated office;
5 and
6 (c) If the current designated office is to be changed, the street and
7 mailing addresses of the new designated office.
8 (2) Subject to section 30-6-205(3), Idaho Code, a statement of change is
9 effective when filed by the secretary of state.
10 PART 2.
11 FORMATION -- CERTIFICATE OF ORGANIZATION
12 AND OTHER FILINGS
13 30-6-201. FORMATION OF LIMITED LIABILITY COMPANY -- CERTIFICATE OF ORGA-
14 NIZATION. (1) One (1) or more persons may act as organizers to form a limited
15 liability company by signing and delivering to the secretary of state for fil-
16 ing a certificate of organization.
17 (2) A certificate of organization must state:
18 (a) The name of the limited liability company, which must comply with
19 section 30-6-108, Idaho Code;
20 (b) The street and mailing addresses of the initial designated office and
21 the information required by section 30-405(1), Idaho Code;
22 (c) The name and mailing address of at least one (1) member or manager of
23 the limited liability company; and
24 (d) If the limited liability company is a professional company, a state-
25 ment to that effect and the principal profession or professions for which
26 members are duly licensed or otherwise legally authorized to render pro-
27 fessional services.
28 (3) Subject to section 30-6-112(3), Idaho Code, a certificate of organi-
29 zation may also contain statements as to matters other than those required by
30 subsection (2) of this section. However, a statement in a certificate of orga-
31 nization is not effective as a statement of authority as defined in section
32 30-6-302, Idaho Code. The secretary of state shall not accept operating agree-
33 ments for filing.
34 (4) The following rules apply to the filing of a certificate of organiza-
35 tion:
36 (a) A limited liability company is formed when the secretary of state has
37 filed the certificate of organization, unless the certificate states a
38 delayed effective date pursuant to section 30-6-205(3), Idaho Code.
39 (b) If the certificate states a delayed effective date, a limited liabil-
40 ity company is not formed if, before the certificate takes effect, a
41 statement of cancellation is signed and delivered to the secretary of
42 state for filing and the secretary of state files the certificate of can-
43 cellation.
44 (c) Subject to any delayed effective date and except in a proceeding by
45 this state to dissolve a limited liability company, the filing of the cer-
46 tificate of organization by the secretary of state is conclusive proof
47 that the organizer satisfied all conditions to the formation of a limited
48 liability company.
49 30-6-201A. PROFESSIONAL COMPANY. (1) Section 30-6-201, Idaho Code, shall
50 not be deemed to authorize a professional company to render allied profes-
51 sional services where the laws pertaining to specific professions or the codes
52 of ethics or professional responsibility of any of the professions involved in
10
1 such a proposed professional company prohibit such a combination of profes-
2 sional services.
3 (2) No professional company may render professional services in this
4 state except through its managers, members, employees and agents who are duly
5 licensed or otherwise legally authorized to render such professional services
6 within this state. The term "employee," as used in this section, does not
7 include clerks, secretaries, bookkeepers, technicians and other assistants who
8 are not usually and ordinarily considered by custom and practice to be render-
9 ing professional services to the public for which a license or other legal
10 authorization is required.
11 (3) Nothing contained in this section shall be interpreted to abolish,
12 repeal, modify, restrict or limit the law now in effect in this state applica-
13 ble to the professional relationship and liabilities between the person fur-
14 nishing the professional services and the person receiving such professional
15 services or to the standards for professional conduct. Notwithstanding section
16 30-6-304(1), Idaho Code, any manager, member, agent or employee of a profes-
17 sional company organized under this chapter shall remain personally and fully
18 liable and accountable for any negligent or wrongful acts or misconduct com-
19 mitted by him, or by any person under his direct supervision and control,
20 while rendering professional services on behalf of the professional company to
21 the person for whom such professional services were being rendered. The pro-
22 fessional company shall be liable up to the full value of its property for any
23 negligent or wrongful acts or misconduct committed by any of its managers,
24 members, agents or employees while they are engaged on behalf of the profes-
25 sional company in the rendering of professional services.
26 (4) The relationship of a person, whether as an individual, shareholder
27 of a professional corporation, partner of a partnership or member of a profes-
28 sional company, to a professional company organized under the provisions of
29 this chapter with which such person is associated, whether as manager, member
30 or employee, shall in no way modify or diminish the jurisdiction over him of
31 the governmental authority or state agency which licensed, certified or regis-
32 tered him for a particular profession.
33 (5) No professional company may offer membership to or accept as a member
34 anyone other than an individual who is duly licensed or otherwise legally
35 authorized to render the same specific professional services as those for
36 which the company was organized or professional corporations, partnerships or
37 limited liability companies, all of whose shareholders, partners or members
38 are duly licensed or otherwise legally authorized to render the same specific
39 professional services as those for which the professional company was orga-
40 nized. No member of a professional company shall enter into a voting trust
41 agreement or any other type of agreement vesting another person with the
42 authority to exercise the voting power of his membership.
43 (6) If any manager, member, agent or employee of a professional company
44 who has been rendering professional services within this state accepts employ-
45 ment that, pursuant to existing law, places restrictions or limitations upon
46 his continued rendering of such professional services, he shall cease to be a
47 member in such professional company in accordance with the provisions of sec-
48 tion 30-6-602(15), Idaho Code, and the remaining members of the professional
49 company shall take such action as is required to terminate such membership.
50 (7) No member of a professional company may sell or transfer his member-
51 ship in such professional company except to another individual, professional
52 corporation, partnership or limited liability company eligible to be a member
53 of such professional company and except pursuant to the provisions of section
54 30-6-502, Idaho Code.
55 (8) The provisions of this section shall not be considered as repealing,
11
1 modifying or restricting the applicable provisions of law regulating the sev-
2 eral professions except insofar as such laws conflict with this section.
3 30-6-202. AMENDMENT OR RESTATEMENT OF CERTIFICATE OF ORGANIZATION. (1) A
4 certificate of organization may be amended or restated at any time.
5 (2) To amend its certificate of organization, a limited liability company
6 must deliver to the secretary of state for filing an amendment stating:
7 (a) The name of the company;
8 (b) The date of filing of its certificate of organization; and
9 (c) The changes the amendment makes to the certificate as most recently
10 amended or restated.
11 (3) To restate its certificate of organization, a limited liability com-
12 pany must deliver to the secretary of state for filing a restatement, desig-
13 nated as such in its heading, stating:
14 (a) In the heading or in an introductory paragraph, the company's present
15 name and the date of the filing of the company's initial certificate of
16 organization;
17 (b) If the company's name has been changed at any time since the
18 company's formation, each of the company's former names; and
19 (c) The changes the restatement makes to the certificate as most recently
20 amended or restated.
21 (4) Subject to sections 30-6-112(3) and 30-6-205(3), Idaho Code, an
22 amendment to or restatement of a certificate of organization is effective when
23 filed by the secretary of state.
24 (5) If a member of a member-managed limited liability company, or a man-
25 ager of a manager-managed limited liability company, knows that any informa-
26 tion in a filed certificate of organization was inaccurate when the certifi-
27 cate was filed or has become inaccurate owing to changed circumstances, the
28 member or manager shall promptly:
29 (a) Cause the certificate to be amended; or
30 (b) If appropriate, deliver to the secretary of state for filing a state-
31 ment of change under section 30-6-114, Idaho Code, or section 30-408,
32 Idaho Code, or a statement of correction under section 30-6-206, Idaho
33 Code.
34 30-6-203. SIGNING OF RECORDS TO BE DELIVERED FOR FILING TO SECRETARY OF
35 STATE. (1) A record delivered to the secretary of state for filing pursuant to
36 this chapter must be signed as follows:
37 (a) Except as otherwise provided in paragraphs (b) through (d) of this
38 subsection, a record signed on behalf of a limited liability company must
39 be signed by a person authorized by the company.
40 (b) A limited liability company's initial certificate of organization
41 must be signed by at least one (1) person acting as an organizer.
42 (c) A record filed on behalf of a dissolved limited liability company
43 that has no members must be signed by the person winding up the company's
44 activities under section 30-6-702(3), Idaho Code, or a person appointed
45 under section 30-6-702(4), Idaho Code, to wind up those activities.
46 (d) A statement of cancellation under section 30-6-201(4)(b), Idaho Code,
47 must be signed by each organizer that signed the initial certificate of
48 organization, but a personal representative of a deceased or incompetent
49 organizer may sign in the place of the decedent or incompetent.
50 (e) A statement of denial by a person under section 30-6-303, Idaho Code,
51 must be signed by that person.
52 (f) Any other record must be signed by the person on whose behalf the
53 record is delivered to the secretary of state.
12
1 (2) Any record filed under this chapter may be signed by an agent.
2 (3) Any record filed under this chapter must be signed in a manner
3 acceptable to the secretary of state.
4 30-6-204. SIGNING AND FILING PURSUANT TO JUDICIAL ORDER. (1) If a person
5 required by this chapter to sign a record or deliver a record to the secretary
6 of state for filing under this chapter does not do so, any other person that
7 is aggrieved may petition the district court to order:
8 (a) The person to sign the record;
9 (b) The person to deliver the record to the secretary of state for fil-
10 ing; or
11 (c) The secretary of state to file the record unsigned.
12 (2) If a petitioner under subsection (1) of this section is not the lim-
13 ited liability company or foreign limited liability company to which the
14 record pertains, the petitioner shall make the company a party to the action.
15 30-6-205. DELIVERY TO AND FILING OF RECORDS BY SECRETARY OF STATE --
16 EFFECTIVE TIME AND DATE. (1) A record authorized or required to be delivered
17 to the secretary of state for filing under this chapter must be captioned to
18 describe the record's purpose, be in a medium permitted by the secretary of
19 state, and be delivered to the secretary of state. If the filing fees have
20 been paid, unless the secretary of state determines that a record does not
21 comply with the filing requirements of this chapter, the secretary of state
22 shall file the record and:
23 (a) For a statement of denial under section 30-6-303, Idaho Code, send a
24 copy of the filed statement and a receipt for the fees to the person on
25 whose behalf the statement was delivered for filing and to the limited
26 liability company; and
27 (b) For all other records, send a copy of the filed record and a receipt
28 for the fees to the person on whose behalf the record was filed.
29 (2) Upon request and payment of the requisite fee, the secretary of state
30 shall send to the requester a certified copy of a requested record.
31 (3) Except as otherwise provided in section 30-6-206, Idaho Code, a
32 record delivered to the secretary of state for filing under this chapter may
33 specify an effective time and a delayed effective date. Subject to sections
34 30-408, 30-6-201(4)(a) and 30-6-206, Idaho Code, a record filed by the secre-
35 tary of state is effective:
36 (a) If the record does not specify either an effective time or a delayed
37 effective date, on the date and at the time the record is filed as evi-
38 denced by the secretary of state's endorsement of the date and time on the
39 record;
40 (b) If the record specifies an effective time but not a delayed effective
41 date, on the date the record is filed at the time specified in the record;
42 (c) If the record specifies a delayed effective date but not an effective
43 time, at 12:01 a.m. on the earlier of:
44 (i) The specified date; or
45 (ii) The ninetieth day after the record is filed; or
46 (d) If the record specifies an effective time and a delayed effective
47 date, at the specified time on the earlier of:
48 (i) The specified date; or
49 (ii) The ninetieth day after the record is filed.
50 30-6-206. CORRECTING FILED RECORD. (1) A limited liability company or
51 foreign limited liability company may deliver to the secretary of state for
52 filing a statement of correction to correct a record previously delivered by
13
1 the company to the secretary of state and filed by the secretary of state, if
2 at the time of filing the record contained inaccurate information or was
3 defectively signed.
4 (2) A statement of correction under subsection (1) of this section may
5 not state a delayed effective date and must:
6 (a) Describe the record to be corrected, including its filing date, or
7 attach a copy of the record as filed;
8 (b) Specify the inaccurate information and the reason it is inaccurate or
9 the manner in which the signing was defective; and
10 (c) Correct the defective signature or inaccurate information.
11 (3) When filed by the secretary of state, a statement of correction under
12 subsection (1) of this section is effective retroactively as of the effective
13 date of the record the statement corrects, but the statement is effective when
14 filed:
15 (a) For the purposes of section 30-6-103(4), Idaho Code; and
16 (b) As to persons that previously relied on the uncorrected record and
17 would be adversely affected by the retroactive effect.
18 30-6-207. LIABILITY FOR INACCURATE INFORMATION IN FILED RECORD. (1) If a
19 record delivered to the secretary of state for filing under this chapter and
20 filed by the secretary of state contains inaccurate information, a person that
21 suffers a loss by reliance on the information may recover damages for the loss
22 from:
23 (a) A person that signed the record, or caused another to sign it on the
24 person's behalf, and knew the information to be inaccurate at the time the
25 record was signed; and
26 (b) Subject to subsection (2) of this section, a member of a member-
27 managed limited liability company or the manager of a manager-managed lim-
28 ited liability company, if:
29 (i) The record was delivered for filing on behalf of the company;
30 and
31 (ii) The member or manager had notice of the inaccuracy for a rea-
32 sonably sufficient time before the information was relied upon so
33 that, before the reliance, the member or manager reasonably could
34 have:
35 1. Effected an amendment under section 30-6-202, Idaho Code;
36 2. Filed a petition under section 30-6-204, Idaho Code; or
37 3. Delivered to the secretary of state for filing a statement
38 of change under section 30-6-114, Idaho Code, or section 30-408,
39 Idaho Code, or a statement of correction under section 30-6-206,
40 Idaho Code.
41 (2) To the extent that the operating agreement of a member-managed lim-
42 ited liability company expressly relieves a member of responsibility for main-
43 taining the accuracy of information contained in records delivered on behalf
44 of the company to the secretary of state for filing under this chapter and
45 imposes that responsibility on one (1) or more other members, the liability
46 stated in subsection (1)(b) of this section applies to those other members and
47 not to the member that the operating agreement relieves of the responsibility.
48 (3) An individual who signs a record authorized or required to be filed
49 under this chapter affirms under penalty of perjury that the information
50 stated in the record is accurate.
51 30-6-208. CERTIFICATE OF EXISTENCE OR AUTHORIZATION. (1) The secretary of
52 state, upon request and payment of the requisite fee, shall furnish to any
53 person a certificate of existence for a limited liability company if the
14
1 records filed in the office of the secretary of state show that the company
2 has been formed under section 30-6-201, Idaho Code, and the secretary of state
3 has not filed a statement of termination pertaining to the company. A certifi-
4 cate of existence must state:
5 (a) The company's name;
6 (b) That the company was duly formed under the laws of this state and the
7 date of formation;
8 (c) Whether all fees due under this chapter or other law to the secretary
9 of state have been paid;
10 (d) Whether the company's most recent annual report required by section
11 30-6-209, Idaho Code, has been filed by the secretary of state;
12 (e) Whether the secretary of state has administratively dissolved the
13 company;
14 (f) Whether the company has delivered to the secretary of state for fil-
15 ing a statement of dissolution;
16 (g) That a statement of termination has not been filed by the secretary
17 of state; and
18 (h) Other facts of record in the office of the secretary of state which
19 are specified by the person requesting the certificate.
20 (2) The secretary of state, upon request and payment of the requisite
21 fee, shall furnish to any person a certificate of authorization for a foreign
22 limited liability company if the records filed in the office of the secretary
23 of state show that the secretary of state has filed a certificate of author-
24 ity, has not revoked the certificate of authority, and has not filed a notice
25 of cancellation. A certificate of authorization must state:
26 (a) The company's name and any alternate name adopted under section
27 30-6-805(1), Idaho Code, for use in this state;
28 (b) That the company is authorized to transact business in this state;
29 (c) Whether all fees due under this chapter or other law to the secretary
30 of state have been paid;
31 (d) Whether the company's most recent annual report required by section
32 30-6-209, Idaho Code, has been filed by the secretary of state;
33 (e) That the secretary of state has not revoked the company's certificate
34 of authority and has not filed a notice of cancellation; and
35 (f) Other facts of record in the office of the secretary of state which
36 are specified by the person requesting the certificate.
37 (3) Subject to any qualification stated in the certificate, a certificate
38 of existence or certificate of authorization issued by the secretary of state
39 is conclusive evidence that the limited liability company is in existence or
40 the foreign limited liability company is authorized to transact business in
41 this state.
42 30-6-209. ANNUAL REPORT FOR SECRETARY OF STATE. (1) Each year, a limited
43 liability company or a foreign limited liability company authorized to trans-
44 act business in this state shall deliver to the secretary of state for filing
45 a report that states:
46 (a) The name of the company;
47 (b) The information required by section 30-405(1), Idaho Code;
48 (c) The street and mailing addresses of the company's designated office;
49 (d) The street and mailing addresses of its principal office;
50 (e) The name and mailing address of at least one (1) member or manager;
51 and
52 (f) In the case of a foreign limited liability company, the state or
53 other jurisdiction under whose law the company is formed and any alternate
54 name adopted under section 30-6-805(1), Idaho Code.
15
1 (2) Information in an annual report under this section must be current as
2 of the date the report is delivered to the secretary of state for filing.
3 (3) The annual report of a limited liability company or foreign limited
4 liability company shall be delivered to the secretary of state each year
5 before the end of the month during which a limited liability company was ini-
6 tially organized, or a foreign limited liability company was initially autho-
7 rized to transact business. Beginning one (1) year after a limited liability
8 company is organized or a foreign limited liability company is authorized to
9 transact business, and each year thereafter, the annual report of the limited
10 liability company must be received in the office of the secretary of state not
11 later than the close of business on the final day of the applicable month. If
12 the secretary of state finds that such report conforms to the requirements of
13 this chapter, he shall file the same.
14 (4) If an annual report under this section does not contain the informa-
15 tion required in subsection (1) of this section, the secretary of state shall
16 promptly notify the reporting limited liability company or foreign limited
17 liability company and return the report to it for correction. If the report is
18 corrected to contain the information required in subsection (1) of this sec-
19 tion and delivered to the secretary of state within thirty (30) days after
20 the effective date of the notice, it is timely delivered.
21 (5) If an annual report under this section contains an address of a des-
22 ignated office or the name or address of a registered agent which differs from
23 the information shown in the records of the secretary of state immediately
24 before the annual report becomes effective, the differing information in the
25 annual report is considered a statement of change under section 30-6-114,
26 Idaho Code, or section 30-408, Idaho Code.
27 30-6-210. FILING, SERVICE AND COPYING FEES. (1) The secretary of state
28 shall collect the following fees for copying and certifying the copy of any
29 document filed under this chapter:
30 (a) Twenty-five cents (25¢) per page for copying; and
31 (b) Ten dollars ($10.00) for a certificate.
32 (2) The secretary of state shall charge and collect the following fees
33 when the documents described are delivered for filing:
34 (a) Certificate of organization ................................. $100.00
35 (b) Correction statement ........................................ $ 30.00
36 (c) Statement of cancellation ................................... $ 30.00
37 (d) Statement of authority ...................................... $ 30.00
38 (e) Statement of denial ......................................... $ 30.00
39 (f) Amendment of certificate of organization .................... $ 30.00
40 (g) Restatement of certificate of organization .................. $ 30.00
41 (h) Statement of dissolution .................................... no fee
42 PART 3.
43 RELATIONS OF MEMBERS AND MANAGERS
44 TO PERSONS DEALING WITH LIMITED LIABILITY COMPANY
45 30-6-301. NO AGENCY POWER OF MEMBER AS MEMBER. (1) A member is not an
46 agent of a limited liability company solely by reason of being a member.
47 (2) A person's status as a member does not prevent or restrict law other
48 than this chapter from imposing liability on a limited liability company
49 because of the person's conduct.
50 30-6-302. STATEMENT OF AUTHORITY. (1) A limited liability company may
51 deliver to the secretary of state for filing a statement of authority. The
16
1 statement:
2 (a) Must include the name of the company and the street and mailing
3 addresses of its designated office;
4 (b) With respect to any position that exists in or with respect to the
5 company, may state the authority, or limitations on the authority, of all
6 persons holding the position to:
7 (i) Execute an instrument transferring real property held in the
8 name of the company; or
9 (ii) Enter into other transactions on behalf of, or otherwise act
10 for or bind, the company; and
11 (c) May state the authority, or limitations on the authority, of a spe-
12 cific person to:
13 (i) Execute an instrument transferring real property held in the
14 name of the company; or
15 (ii) Enter into other transactions on behalf of, or otherwise act
16 for or bind, the company.
17 (2) To amend or cancel a statement of authority filed by the secretary of
18 state under section 30-6-205(1), Idaho Code, a limited liability company must
19 deliver to the secretary of state for filing an amendment or cancellation
20 stating:
21 (a) The name of the company;
22 (b) The street and mailing addresses of the company's designated office;
23 (c) The caption of the statement being amended or canceled and the date
24 the statement being affected became effective; and
25 (d) The contents of the amendment or a declaration that the statement
26 being affected is canceled.
27 (3) A statement of authority affects only the power of a person to bind a
28 limited liability company to persons that are not members.
29 (4) Subject to subsection (3) of this section and section 30-6-103(4),
30 Idaho Code, and except as otherwise provided in subsections (6), (7) and (8)
31 of this section, a limitation on the authority of a person or a position con-
32 tained in an effective statement of authority is not by itself evidence of
33 knowledge or notice of the limitation by any person.
34 (5) Subject to subsection (3) of this section, a grant of authority not
35 pertaining to transfers of real property and contained in an effective state-
36 ment of authority is conclusive in favor of a person that gives value in reli-
37 ance on the grant, except to the extent that when the person gives value:
38 (a) The person has knowledge to the contrary;
39 (b) The statement has been canceled or restrictively amended under sub-
40 section (2) of this section; or
41 (c) A limitation on the grant is contained in another statement of
42 authority that became effective after the statement containing the grant
43 became effective.
44 (6) Subject to subsection (3) of this section, an effective statement of
45 authority that grants authority to transfer real property held in the name of
46 the limited liability company and that is delivered by the limited liability
47 company to the secretary of state for filing is conclusive in favor of a per-
48 son that gives value in reliance on the grant without knowledge to the con-
49 trary, except to the extent that when the person gives value:
50 (a) The statement has been canceled or restrictively amended under sub-
51 section (2) of this section; or
52 (b) A limitation on the grant is contained in another statement of
53 authority that became effective after the statement containing the grant
54 became effective.
55 (7) Subject to subsection (3) of this section, if a statement containing
17
1 a limitation on the authority to transfer real property held in the name of a
2 limited liability company is filed with the secretary of state, all persons
3 are deemed to know of the limitation.
4 (8) Subject to subsection (9) of this section, an effective statement of
5 dissolution or termination is a cancellation of any filed statement of author-
6 ity for the purposes of subsection (6) of this section and is a limitation on
7 authority for the purposes of subsection (7) of this section.
8 (9) After a statement of dissolution becomes effective, a limited liabil-
9 ity company may deliver to the secretary of state for filing a statement of
10 authority that is designated as a postdissolution statement of authority. The
11 statement operates as provided in subsections (6) and (7) of this section.
12 (10) Unless earlier canceled, an effective statement of authority is can-
13 celed by operation of law five (5) years after the date on which the state-
14 ment, or its most recent amendment, becomes effective.
15 (11) An effective statement of denial operates as a restrictive amendment
16 under this section.
17 30-6-303. STATEMENT OF DENIAL. A person named in a filed statement of
18 authority granting that person authority may deliver to the secretary of state
19 for filing a statement of denial that:
20 (1) Provides the name of the limited liability company and the caption of
21 the statement of authority to which the statement of denial pertains; and
22 (2) Denies the grant of authority.
23 30-6-304. LIABILITY OF MEMBERS AND MANAGERS. (1) The debts, obligations
24 or other liabilities of a limited liability company, whether arising in con-
25 tract, tort or otherwise:
26 (a) Are solely the debts, obligations or other liabilities of the com-
27 pany; and
28 (b) Do not become the debts, obligations or other liabilities of a member
29 or manager solely by reason of the member acting as a member or manager
30 acting as a manager.
31 (2) The failure of a limited liability company to observe any particular
32 formalities relating to the exercise of its powers or management of its activ-
33 ities is not a ground for imposing liability on the members or managers for
34 the debts, obligations or other liabilities of the company.
35 PART 4.
36 RELATIONS OF MEMBERS TO EACH OTHER
37 AND TO LIMITED LIABILITY COMPANY
38 30-6-401. BECOMING A MEMBER. (1) If a limited liability company is to
39 have only one (1) member upon formation, the person becomes a member as agreed
40 by that person and the organizer of the company. That person and the organizer
41 may be, but need not be, different persons. If different, the organizer acts
42 on behalf of the initial member.
43 (2) If a limited liability company is to have more than one (1) member
44 upon formation, those persons become members as agreed by the persons before
45 the formation of the company. The organizer acts on behalf of the persons in
46 forming the company and may be, but need not be, one (1) of the persons.
47 (3) After formation of a limited liability company, a person becomes a
48 member:
49 (a) As provided in the operating agreement;
50 (b) As the result of a transaction effective under chapter 18, title 30,
51 Idaho Code;
18
1 (c) With the consent of all the members; or
2 (d) If, within ninety (90) consecutive days after the company ceases to
3 have any members:
4 (i) The last person to have been a member, or the legal representa-
5 tive of that person, designates a person to become a member; and
6 (ii) The designated person consents to become a member.
7 (4) A person may become a member without acquiring a transferable inter-
8 est and without making or being obligated to make a contribution to the lim-
9 ited liability company.
10 30-6-402. FORM OF CONTRIBUTION. A contribution may consist of tangible or
11 intangible property or other benefit to a limited liability company, including
12 money, services performed, promissory notes, other agreements to contribute
13 money or property, and contracts for services to be performed.
14 30-6-403. LIABILITY FOR CONTRIBUTIONS. (1) A person's obligation to make
15 a contribution to a limited liability company is not excused by the person's
16 death, disability, or other inability to perform personally. If a person does
17 not make a required contribution, the person or the person's estate is obli-
18 gated to contribute money equal to the value of the part of the contribution
19 which has not been made, at the option of the company.
20 (2) A creditor of a limited liability company which extends credit or
21 otherwise acts in reliance on an obligation described in subsection (1) of
22 this section may enforce the obligation.
23 30-6-404. SHARING OF AND RIGHT TO DISTRIBUTIONS BEFORE DISSOLUTION. (1)
24 Any distributions made by a limited liability company before its dissolution
25 and winding up must be in equal shares among members and dissociated members,
26 except to the extent necessary to comply with any transfer effective under
27 section 30-6-502, Idaho Code, and any charging order in effect under section
28 30-6-503, Idaho Code.
29 (2) A person has a right to a distribution before the dissolution and
30 winding up of a limited liability company only if the company decides to make
31 an interim distribution. A person's dissociation does not entitle the person
32 to a distribution.
33 (3) A person does not have a right to demand or receive a distribution
34 from a limited liability company in any form other than money. Except as
35 otherwise provided in section 30-6-708(3), Idaho Code, a limited liability
36 company may distribute an asset in kind if each part of the asset is fungible
37 with each other part and each person receives a percentage of the asset equal
38 in value to the person's share of distributions.
39 (4) If a member or transferee becomes entitled to receive a distribution,
40 the member or transferee is entitled to all remedies available to a creditor
41 of the limited liability company with respect to the distribution.
42 30-6-405. LIMITATIONS ON DISTRIBUTION. (1) A limited liability company
43 may not make a distribution if after the distribution:
44 (a) The company would not be able to pay its debts as they become due in
45 the ordinary course of the company's activities; or
46 (b) The company's total assets would be less than the sum of its total
47 liabilities plus the amount that would be needed, if the company were to
48 be dissolved, wound up and terminated at the time of the distribution, to
49 satisfy the preferential rights upon dissolution, winding up and termina-
50 tion of members whose preferential rights are superior to those of persons
51 receiving the distribution.
19
1 (2) A limited liability company may base a determination that a distribu-
2 tion is not prohibited under subsection (1) of this section on financial
3 statements prepared on the basis of accounting practices and principles that
4 are reasonable in the circumstances or on a fair valuation or other method
5 that is reasonable under the circumstances.
6 (3) Except as otherwise provided in subsection (6) of this section, the
7 effect of a distribution under subsection (1) of this section is measured:
8 (a) In the case of a distribution by purchase, redemption or other acqui-
9 sition of a transferable interest in the company, as of the date money or
10 other property is transferred or debt incurred by the company; and
11 (b) In all other cases, as of the date:
12 (i) The distribution is authorized, if the payment occurs within
13 one hundred twenty (120) days after that date; or
14 (ii) The payment is made, if the payment occurs more than one hun-
15 dred twenty (120) days after the distribution is authorized.
16 (4) A limited liability company's indebtedness to a member incurred by
17 reason of a distribution made in accordance with this section is at parity
18 with the company's indebtedness to its general, unsecured creditors.
19 (5) A limited liability company's indebtedness, including indebtedness
20 issued in connection with or as part of a distribution, is not a liability for
21 purposes of subsection (1) of this section if the terms of the indebtedness
22 provide that payment of principal and interest are made only to the extent
23 that a distribution could be made to members under this section.
24 (6) If indebtedness is issued as a distribution, each payment of princi-
25 pal or interest on the indebtedness is treated as a distribution, the effect
26 of which is measured on the date the payment is made.
27 (7) In subsection (1) of this section, "distribution" does not include
28 amounts constituting reasonable compensation for present or past services or
29 reasonable payments made in the ordinary course of business under a bona fide
30 retirement plan or other benefits program.
31 30-6-406. LIABILITY FOR IMPROPER DISTRIBUTIONS. (1) Except as otherwise
32 provided in subsection (2) of this section, if a member of a member-managed
33 limited liability company or manager of a manager-managed limited liability
34 company consents to a distribution made in violation of section 30-6-405,
35 Idaho Code, and in consenting to the distribution fails to comply with section
36 30-6-409, Idaho Code, the member or manager is personally liable to the com-
37 pany for the amount of the distribution that exceeds the amount that could
38 have been distributed without the violation of section 30-6-405, Idaho Code.
39 (2) To the extent the operating agreement of a member-managed limited
40 liability company expressly relieves a member of the authority and responsi-
41 bility to consent to distributions and imposes that authority and responsibil-
42 ity on one (1) or more other members, the liability stated in subsection (1)
43 of this section applies to the other members and not the member that the oper-
44 ating agreement relieves of authority and responsibility.
45 (3) A person that receives a distribution knowing that the distribution
46 to that person was made in violation of section 30-6-405, Idaho Code, is per-
47 sonally liable to the limited liability company but only to the extent that
48 the distribution received by the person exceeded the amount that could have
49 been properly paid under section 30-6-405, Idaho Code.
50 (4) A person against which an action is commenced because the person is
51 liable under subsection (1) of this section may:
52 (a) Implead any other person that is subject to liability under subsec-
53 tion (1) of this section and seek to compel contribution from the person;
54 and
20
1 (b) Implead any person that received a distribution in violation of sub-
2 section (3) of this section and seek to compel contribution from the per-
3 son in the amount the person received in violation of subsection (3) of
4 this section.
5 (5) An action under this section is barred if not commenced within two
6 (2) years after the distribution.
7 30-6-407. MANAGEMENT OF LIMITED LIABILITY COMPANY. (1) A limited liabil-
8 ity company is a member-managed limited liability company unless the operating
9 agreement:
10 (a) Expressly provides that:
11 (i) The company is or will be "manager-managed";
12 (ii) The company is or will be "managed by managers"; or
13 (iii) Management of the company is or will be "vested in managers";
14 or
15 (b) Includes words of similar import.
16 (2) In a member-managed limited liability company, as among the members,
17 the following rules apply:
18 (a) The management and conduct of the company are vested in the members.
19 (b) Each member has equal rights in the management and conduct of the
20 company's activities.
21 (c) A difference arising among members as to a matter in the ordinary
22 course of the activities of the company may be decided by a majority of
23 the members.
24 (d) An act outside the ordinary course of the activities of the company
25 may be undertaken only with the consent of all members.
26 (e) The operating agreement may be amended only with the consent of all
27 members.
28 (3) In a manager-managed limited liability company, as among the members
29 and the managers, the following rules apply:
30 (a) Except as otherwise expressly provided in this chapter, any matter
31 relating to the activities of the company is decided exclusively by the
32 managers.
33 (b) Each manager has equal rights in the management and conduct of the
34 activities of the company.
35 (c) A difference arising among managers as to a matter in the ordinary
36 course of the activities of the company may be decided by a majority of
37 the managers.
38 (d) The consent of all members is required to:
39 (i) Sell, lease, exchange or otherwise dispose of all, or substan-
40 tially all, of the company's property, with or without the good will,
41 outside the ordinary course of the company's activities;
42 (ii) Approve a merger, conversion or domestication under part 10 of
43 this chapter;
44 (iii) Undertake any other act outside the ordinary course of the
45 company's activities; and
46 (iv) Amend the operating agreement.
47 (e) A manager may be chosen at any time by the consent of a majority of
48 the members and remains a manager until a successor has been chosen,
49 unless the manager at an earlier time resigns, is removed, or dies, or, in
50 the case of a manager that is not an individual, terminates. A manager may
51 be removed at any time by the consent of a majority of the members without
52 notice or cause.
53 (f) A person need not be a member to be a manager, but the dissociation
54 of a member that is also a manager removes the person as a manager. If a
21
1 person that is both a manager and a member ceases to be a manager, that
2 cessation does not by itself dissociate the person as a member.
3 (g) A person's ceasing to be a manager does not discharge any debt, obli-
4 gation or other liability to the limited liability company or members
5 which the person incurred while a manager.
6 (4) An action requiring the consent of members under this chapter may be
7 taken without a meeting, and a member may appoint a proxy or other agent to
8 consent or otherwise act for the member by signing an appointing record, per-
9 sonally or by the member's agent.
10 (5) The dissolution of a limited liability company does not affect the
11 applicability of this section. However, a person that wrongfully causes dis-
12 solution of the company loses the right to participate in management as a mem-
13 ber and a manager.
14 (6) This chapter does not entitle a member to remuneration for services
15 performed for a member-managed limited liability company, except for reason-
16 able compensation for services rendered in winding up the activities of the
17 company.
18 30-6-408. INDEMNIFICATION AND INSURANCE. (1) A limited liability company
19 shall reimburse for any payment made and indemnify for any debt, obligation or
20 other liability incurred by a member of a member-managed company or the man-
21 ager of a manager-managed company in the course of the member's or manager's
22 activities on behalf of the company, if, in making the payment or incurring
23 the debt, obligation or other liability, the member or manager complied with
24 the duties stated in sections 30-6-405 and 30-6-409, Idaho Code.
25 (2) A limited liability company may purchase and maintain insurance on
26 behalf of a member or manager of the company against liability asserted
27 against or incurred by the member or manager in that capacity or arising from
28 that status even if, under section 30-6-110(7), Idaho Code, the operating
29 agreement could not eliminate or limit the person's liability to the company
30 for the conduct giving rise to the liability.
31 30-6-409. STANDARDS OF CONDUCT FOR MEMBERS AND MANAGERS. (1) A member of
32 a member-managed limited liability company owes to the company and, subject to
33 section 30-6-901(2), Idaho Code, the other members the fiduciary duties of
34 loyalty and care stated in subsections (2) and (3) of this section.
35 (2) The duty of loyalty of a member in a member-managed limited liability
36 company includes the duties:
37 (a) To account to the company and to hold as trustee for it any property,
38 profit or benefit derived by the member:
39 (i) In the conduct or winding up of the company's activities;
40 (ii) From a use by the member of the company's property; or
41 (iii) From the appropriation of a limited liability company opportu-
42 nity;
43 (b) To refrain from dealing with the company in the conduct or winding up
44 of the company's activities as or on behalf of a person having an interest
45 adverse to the company; and
46 (c) To refrain from competing with the company in the conduct of the
47 company's activities before the dissolution of the company.
48 (3) Subject to the business judgment rule, the duty of care of a member
49 of a member-managed limited liability company in the conduct and winding up of
50 the company's activities is to act with the care that a person in a like posi-
51 tion would reasonably exercise under similar circumstances and in a manner the
52 member reasonably believes to be in the best interests of the company. In dis-
53 charging this duty, a member may rely in good faith upon opinions, reports,
22
1 statements or other information provided by another person that the member
2 reasonably believes is a competent and reliable source for the information.
3 (4) A member in a member-managed limited liability company or a manager-
4 managed limited liability company shall discharge the duties under this chap-
5 ter or under the operating agreement and exercise any rights consistently with
6 the contractual obligation of good faith and fair dealing.
7 (5) It is a defense to a claim under subsection (2)(b) of this section
8 and any comparable claim in equity or at common law that the transaction was
9 fair to the limited liability company.
10 (6) All of the members of a member-managed limited liability company or a
11 manager-managed limited liability company may authorize or ratify, after full
12 disclosure of all material facts, a specific act or transaction that otherwise
13 would violate the duty of loyalty.
14 (7) In a manager-managed limited liability company, the following rules
15 apply:
16 (a) Subsections (1), (2), (3) and (5) of this section apply to the man-
17 ager or managers and not the members.
18 (b) The duty stated under subsection (2)(c) of this section continues
19 until winding up is completed.
20 (c) Subsection (4) of this section applies to the members and managers.
21 (d) Subsection (6) of this section applies only to the members.
22 (e) A member does not have any fiduciary duty to the company or to any
23 other member solely by reason of being a member.
24 30-6-410. RIGHT OF MEMBERS, MANAGERS AND DISSOCIATED MEMBERS TO INFORMA-
25 TION. (1) In a member-managed limited liability company, the following rules
26 apply:
27 (a) On reasonable notice, a member may inspect and copy during regular
28 business hours, at a reasonable location specified by the company, any
29 record maintained by the company regarding the company's activities,
30 financial condition and other circumstances, to the extent the information
31 is material to the member's rights and duties under the operating agree-
32 ment or this chapter.
33 (b) The company shall furnish to each member:
34 (i) Without demand, any information concerning the company's activ-
35 ities, financial condition and other circumstances which the company
36 knows and is material to the proper exercise of the member's rights
37 and duties under the operating agreement or this chapter, except to
38 the extent the company can establish that it reasonably believes the
39 member already knows the information; and
40 (ii) On demand, any other information concerning the company's
41 activities, financial condition and other circumstances, except to
42 the extent the demand or information demanded is unreasonable or
43 otherwise improper under the circumstances.
44 (c) The duty to furnish information under paragraph (b) of this subsec-
45 tion also applies to each member to the extent the member knows any of the
46 information described in paragraph (b) of this subsection.
47 (2) In a manager-managed limited liability company, the following rules
48 apply:
49 (a) The informational rights stated in subsection (1) of this section and
50 the duty stated in subsection (1)(c) of this section apply to the managers
51 and not the members.
52 (b) During regular business hours and at a reasonable location specified
53 by the company, a member may obtain from the company and inspect and copy
54 full information regarding the activities, financial condition and other
23
1 circumstances of the company as is just and reasonable if:
2 (i) The member seeks the information for a purpose material to the
3 member's interest as a member;
4 (ii) The member makes a demand in a record received by the company,
5 describing with reasonable particularity the information sought and
6 the purpose for seeking the information; and
7 (iii) The information sought is directly connected to the member's
8 purpose.
9 (c) Within ten (10) days after receiving a demand pursuant to paragraph
10 (b)(ii) of this subsection, the company shall in a record inform the mem-
11 ber that made the demand:
12 (i) Of the information that the company will provide in response to
13 the demand and when and where the company will provide the informa-
14 tion; and
15 (ii) If the company declines to provide any demanded information,
16 the company's reasons for declining.
17 (d) Whenever this chapter or an operating agreement provides for a member
18 to give or withhold consent to a matter, before the consent is given or
19 withheld, the company shall, without demand, provide the member with all
20 information that is known to the company and is material to the member's
21 decision.
22 (3) On ten (10) days' demand made in a record received by a limited lia-
23 bility company, a dissociated member may have access to information to which
24 the person was entitled while a member if the information pertains to the
25 period during which the person was a member, the person seeks the information
26 in good faith, and the person satisfies the requirements imposed on a member
27 by subsection (2)(b) of this section. The company shall respond to a demand
28 made pursuant to this subsection in the manner provided in subsection (2)(c)
29 of this section.
30 (4) A limited liability company may charge a person that makes a demand
31 under this section the reasonable costs of copying, limited to the costs of
32 labor and material.
33 (5) A member or dissociated member may exercise rights under this section
34 through an agent or, in the case of an individual under legal disability, a
35 legal representative. Any restriction or condition imposed by the operating
36 agreement or under subsection (7) of this section applies both to the agent or
37 legal representative and the member or dissociated member.
38 (6) The rights under this section do not extend to a person as trans-
39 feree.
40 (7) In addition to any restriction or condition stated in its operating
41 agreement, a limited liability company, as a matter within the ordinary course
42 of its activities, may impose reasonable restrictions and conditions on access
43 to and use of information to be furnished under this section, including desig-
44 nating information confidential and imposing nondisclosure and safeguarding
45 obligations on the recipient. In a dispute concerning the reasonableness of a
46 restriction under this subsection, the company has the burden of proving rea-
47 sonableness.
48 PART 5.
49 TRANSFERABLE INTERESTS AND RIGHTS
50 OF TRANSFEREES AND CREDITORS
51 30-6-501. NATURE OF TRANSFERABLE INTEREST. A transferable interest is
52 personal property.
24
1 30-6-502. TRANSFER OF TRANSFERABLE INTEREST. (1) A transfer, in whole or
2 in part, of a transferable interest:
3 (a) Is permissible, provided however, that the transfer of a transferable
4 interest in a professional company is not permissible absent compliance
5 with section 30-6-201A(7), Idaho Code;
6 (b) Does not by itself cause a member's dissociation or a dissolution and
7 winding up of the limited liability company's activities; and
8 (c) Subject to section 30-6-504, Idaho Code, does not entitle the trans-
9 feree to:
10 (i) Participate in the management or conduct of the company's
11 activities; or
12 (ii) Except as otherwise provided in subsection (3) of this section,
13 have access to records or other information concerning the company's
14 activities.
15 (2) A transferee has the right to receive, in accordance with the trans-
16 fer, distributions to which the transferor would otherwise be entitled.
17 (3) In a dissolution and winding up of a limited liability company, a
18 transferee is entitled to an account of the company's transactions only from
19 the date of dissolution.
20 (4) A transferable interest may be evidenced by a certificate of the
21 interest issued by the limited liability company in a record, and, subject to
22 this section, the interest represented by the certificate may be transferred
23 by a transfer of the certificate.
24 (5) A limited liability company need not give effect to a transferee's
25 rights under this section until the company has notice of the transfer.
26 (6) A transfer of a transferable interest in violation of a restriction
27 on transfer contained in the operating agreement is ineffective as to a person
28 having notice of the restriction at the time of transfer.
29 (7) Except as otherwise provided in section 30-6-602(4)(b), Idaho Code,
30 when a member transfers a transferable interest, the transferor retains the
31 rights of a member other than the interest in distributions transferred and
32 retains all duties and obligations of a member.
33 (8) When a member transfers a transferable interest to a person that
34 becomes a member with respect to the transferred interest, the transferee is
35 liable for the member's obligations under sections 30-6-403 and 30-6-406(3),
36 Idaho Code, known to the transferee when the transferee becomes a member.
37 30-6-503. CHARGING ORDER. (1) On application by a judgment creditor of a
38 member or transferee, a court may enter a charging order against the transfer-
39 able interest of the judgment debtor for the unsatisfied amount of the judg-
40 ment. A charging order constitutes a lien on a judgment debtor's transferable
41 interest and requires the limited liability company to pay over to the person
42 to which the charging order was issued any distribution that would otherwise
43 be paid to the judgment debtor.
44 (2) To the extent necessary to effectuate the collection of distributions
45 pursuant to a charging order in effect under subsection (1) of this section,
46 the court may:
47 (a) Appoint a receiver of the distributions subject to the charging
48 order, with the power to make all inquiries the judgment debtor might have
49 made; and
50 (b) Make all other orders necessary to give effect to the charging order.
51 (3) Upon a showing that distributions under a charging order will not pay
52 the judgment debt within a reasonable time, the court may foreclose the lien
53 and order the sale of the transferable interest. The purchaser at the foreclo-
54 sure sale only obtains the transferable interest, does not thereby become a
25
1 member, and is subject to section 30-6-502, Idaho Code.
2 (4) At any time before foreclosure under subsection (3) of this section,
3 the member or transferee whose transferable interest is subject to a charging
4 order under subsection (1) of this section may extinguish the charging order
5 by satisfying the judgment and filing a certified copy of the satisfaction
6 with the court that issued the charging order.
7 (5) At any time before foreclosure under subsection (3) of this section,
8 a limited liability company or one (1) or more members whose transferable
9 interests are not subject to the charging order may pay to the judgment credi-
10 tor the full amount due under the judgment and thereby succeed to the rights
11 of the judgment creditor, including the charging order.
12 (6) This chapter does not deprive any member or transferee of the benefit
13 of any exemption laws applicable to the member's or transferee's transferable
14 interest.
15 (7) This section provides the exclusive remedy by which a person seeking
16 to enforce a judgment against a member or transferee may, in the capacity of
17 judgment creditor, satisfy the judgment from the judgment debtor's transfer-
18 able interest.
19 30-6-504. POWER OF PERSONAL REPRESENTATIVE OF DECEASED MEMBER. If a mem-
20 ber dies, the deceased member's personal representative or other legal repre-
21 sentative may exercise the rights of a transferee provided in section
22 30-6-502(3), Idaho Code, and, for the purposes of settling the estate, the
23 rights of a current member under section 30-6-410, Idaho Code.
24 PART 6.
25 MEMBER'S DISSOCIATION
26 30-6-601. MEMBER'S POWER TO DISSOCIATE -- WRONGFUL DISSOCIATION. (1) A
27 person has the power to dissociate as a member at any time, rightfully or
28 wrongfully, by withdrawing as a member by express will under section
29 30-6-602(1), Idaho Code.
30 (2) A person's dissociation from a limited liability company is wrongful
31 only if the dissociation:
32 (a) Is in breach of an express provision of the operating agreement; or
33 (b) Occurs before the termination of the company and:
34 (i) The person withdraws as a member by express will;
35 (ii) The person is expelled as a member by judicial order under sec-
36 tion 30-6-602(5), Idaho Code;
37 (iii) The person is dissociated under section 30-6-602(7)(a), Idaho
38 Code, by becoming a debtor in bankruptcy; or
39 (iv) In the case of a person that is not a trust other than a busi-
40 ness trust, an estate or an individual, the person is expelled or
41 otherwise dissociated as a member because it willfully dissolved or
42 terminated.
43 (3) A person that wrongfully dissociates as a member is liable to the
44 limited liability company and, subject to section 30-6-901, Idaho Code, to the
45 other members for damages caused by the dissociation. The liability is in
46 addition to any other debt, obligation or other liability of the member to the
47 company or the other members.
48 30-6-602. EVENTS CAUSING DISSOCIATION. A person is dissociated as a mem-
49 ber from a limited liability company when:
50 (1) The company has notice of the person's express will to withdraw as a
51 member, but, if the person specified a withdrawal date later than the date the
26
1 company had notice, on that later date;
2 (2) An event stated in the operating agreement as causing the person's
3 dissociation occurs;
4 (3) The person is expelled as a member pursuant to the operating agree-
5 ment;
6 (4) The person is expelled as a member by the unanimous consent of the
7 other members if:
8 (a) It is unlawful to carry on the company's activities with the person
9 as a member;
10 (b) There has been a transfer of all of the person's transferable inter-
11 est in the company, other than:
12 (i) A transfer for security purposes; or
13 (ii) A charging order in effect under section 30-6-503, Idaho Code,
14 which has not been foreclosed;
15 (c) The person is a corporation and, within ninety (90) days after the
16 company notifies the person that it will be expelled as a member because
17 the person has filed a certificate of dissolution or the equivalent, its
18 charter has been revoked, or its right to conduct business has been sus-
19 pended by the jurisdiction of its incorporation, the certificate of disso-
20 lution has not been revoked or its charter or right to conduct business
21 has not been reinstated; or
22 (d) The person is a limited liability company or partnership that has
23 been dissolved and whose business is being wound up;
24 (5) On application by the company, the person is expelled as a member by
25 judicial order because the person:
26 (a) Has engaged, or is engaging, in wrongful conduct that has adversely
27 and materially affected, or will adversely and materially affect, the
28 company's activities;
29 (b) Has willfully or persistently committed, or is willfully and
30 persistently committing, a material breach of the operating agreement or
31 the person's duties or obligations under section 30-6-409, Idaho Code; or
32 (c) Has engaged in, or is engaging, in conduct relating to the company's
33 activities which makes it not reasonably practicable to carry on the
34 activities with the person as a member;
35 (6) In the case of a person who is an individual:
36 (a) The person dies; or
37 (b) In a member-managed limited liability company:
38 (i) A guardian or general conservator for the person is appointed;
39 or
40 (ii) There is a judicial order that the person has otherwise become
41 incapable of performing the person's duties as a member under this
42 chapter or the operating agreement;
43 (7) In a member-managed limited liability company, the person:
44 (a) Becomes a debtor in bankruptcy;
45 (b) Executes an assignment for the benefit of creditors; or
46 (c) Seeks, consents to or acquiesces in the appointment of a trustee,
47 receiver or liquidator of the person or of all or substantially all of the
48 person's property;
49 (8) In the case of a person that is a trust or is acting as a member by
50 virtue of being a trustee of a trust, the trust's entire transferable interest
51 in the company is distributed;
52 (9) In the case of a person that is an estate or is acting as a member by
53 virtue of being a personal representative of an estate, the estate's entire
54 transferable interest in the company is distributed;
55 (10) In the case of a member that is not an individual, partnership, lim-
27
1 ited liability company, corporation, trust or estate, the termination of the
2 member;
3 (11) The company participates in a merger under chapter 18, title 30,
4 Idaho Code, if:
5 (a) The company is not the surviving entity; or
6 (b) Otherwise as a result of the merger, the person ceases to be a mem-
7 ber;
8 (12) The company participates in a conversion under chapter 18, title 30,
9 Idaho Code;
10 (13) The company participates in a domestication under chapter 18, title
11 30, Idaho Code, if, as a result of the domestication, the person ceases to be
12 a member;
13 (14) The company terminates; or
14 (15) In the case of a professional company, restrictions or limitations
15 are placed upon a member's ability to continue to render professional ser-
16 vices.
17 30-6-603. EFFECT OF PERSON'S DISSOCIATION AS MEMBER. (1) When a person is
18 dissociated as a member of a limited liability company:
19 (a) The person's right to participate as a member in the management and
20 conduct of the company's activities terminates;
21 (b) If the company is member-managed, the person's fiduciary duties as a
22 member end with regard to matters arising and events occurring after the
23 person's dissociation; and
24 (c) Subject to section 30-6-504, Idaho Code, and chapter 18, title 30,
25 Idaho Code, any transferable interest owned by the person immediately
26 before dissociation in the person's capacity as a member is owned by the
27 person solely as a transferee.
28 (2) A person's dissociation as a member of a limited liability company
29 does not of itself discharge the person from any debt, obligation or other
30 liability to the company or the other members which the person incurred while
31 a member.
32 PART 7.
33 DISSOLUTION AND WINDING UP
34 30-6-701. EVENTS CAUSING DISSOLUTION. (1) A limited liability company is
35 dissolved, and its activities must be wound up, upon the occurrence of any of
36 the following:
37 (a) An event or circumstance that the operating agreement states causes
38 dissolution;
39 (b) The consent of all the members;
40 (c) The passage of ninety (90) consecutive days during which the company
41 has no members;
42 (d) On application by a member, the entry by the district court of an
43 order dissolving the company on the grounds that:
44 (i) The conduct of all or substantially all of the company's activ-
45 ities is unlawful; or
46 (ii) It is not reasonably practicable to carry on the company's
47 activities in conformity with the certificate of organization and the
48 operating agreement; or
49 (e) On application by a member, the entry by the district court of an
50 order dissolving the company on the grounds that the managers or those
51 members in control of the company:
52 (i) Have acted, are acting, or will act in a manner that is illegal
28
1 or fraudulent; or
2 (ii) Have acted or are acting in a manner that is oppressive and
3 was, is, or will be directly harmful to the applicant.
4 (2) In a proceeding brought under subsection (1)(e) of this section, the
5 district court may order a remedy other than dissolution.
6 30-6-702. WINDING UP. (1) A dissolved limited liability company shall
7 wind up its activities, and the company continues after dissolution only for
8 the purpose of winding up.
9 (2) In winding up its activities, a limited liability company:
10 (a) Shall discharge the company's debts, obligations or other liabili-
11 ties, settle and close the company's activities, and marshal and distrib-
12 ute the assets of the company; and
13 (b) May:
14 (i) Deliver to the secretary of state for filing a statement of
15 dissolution stating the name of the company and that the company is
16 dissolved;
17 (ii) Preserve the company activities and property as a going concern
18 for a reasonable time;
19 (iii) Prosecute and defend actions and proceedings, whether civil,
20 criminal or administrative;
21 (iv) Transfer the company's property;
22 (v) Settle disputes by mediation or arbitration;
23 (vi) Deliver to the secretary of state for filing a statement of
24 termination stating the name of the company and that the company is
25 terminated; and
26 (vii) Perform other acts necessary or appropriate to the winding up.
27 (3) If a dissolved limited liability company has no members, the legal
28 representative of the last person to have been a member may wind up the activ-
29 ities of the company. If the person does so, the person has the powers of a
30 sole manager under section 30-6-407(3), Idaho Code, and is deemed to be a man-
31 ager for the purposes of section 30-6-304(1)(b), Idaho Code.
32 (4) If the legal representative under subsection (3) of this section
33 declines or fails to wind up the company's activities, a person may be
34 appointed to do so by the consent of transferees owning a majority of the
35 right to receive distributions as transferees at the time the consent is to be
36 effective. A person appointed under this subsection:
37 (a) Has the powers of a sole manager under section 30-6-407(3), Idaho
38 Code, and is deemed to be a manager for the purposes of section
39 30-6-304(1)(b), Idaho Code; and
40 (b) Shall promptly deliver to the secretary of state for filing an amend-
41 ment to the company's certificate of organization to:
42 (i) State that the company has no members;
43 (ii) State that the person has been appointed pursuant to this sub-
44 section to wind up the company; and
45 (iii) Provide the street and mailing addresses of the person.
46 (5) The district court may order judicial supervision of the winding up
47 of a dissolved limited liability company, including the appointment of a per-
48 son to wind up the company's activities:
49 (a) On application of a member, if the applicant establishes good cause;
50 (b) On the application of transferee, if:
51 (i) The company does not have any members;
52 (ii) The legal representative of the last person to have been a mem-
53 ber declines or fails to wind up the company's activities; and
54 (iii) Within a reasonable time following the dissolution a person has
29
1 not been appointed pursuant to subsection (3) of this section; or
2 (c) In connection with a proceeding under section 30-6-701(1)(d) or (e),
3 Idaho Code.
4 30-6-703. KNOWN CLAIMS AGAINST DISSOLVED LIMITED LIABILITY COMPANY. (1)
5 Except as otherwise provided in subsection (4) of this section, a dissolved
6 limited liability company may give notice of a known claim under subsection
7 (2) of this section, which has the effect as provided in subsection (3) of
8 this section.
9 (2) A dissolved limited liability company may in a record notify its
10 known claimants of the dissolution. The notice must:
11 (a) Specify the information required to be included in a claim;
12 (b) Provide a mailing address to which the claim is to be sent;
13 (c) State the deadline for receipt of the claim, which may not be less
14 than one hundred twenty (120) days after the date the notice is received
15 by the claimant; and
16 (d) State that the claim will be barred if not received by the deadline.
17 (3) A claim against a dissolved limited liability company is barred if
18 the requirements of subsection (2) of this section are met and:
19 (a) The claim is not received by the specified deadline; or
20 (b) If the claim is timely received but rejected by the company:
21 (i) The company causes the claimant to receive a notice in a record
22 stating that the claim is rejected and will be barred unless the
23 claimant commences an action against the company to enforce the claim
24 within ninety (90) days after the claimant receives the notice; and
25 (ii) The claimant does not commence the required action within the
26 ninety (90) days.
27 (4) This section does not apply to a claim based on an event occurring
28 after the effective date of dissolution or a liability that on that date is
29 contingent.
30 30-6-704. OTHER CLAIMS AGAINST DISSOLVED LIMITED LIABILITY COMPANY. (1) A
31 dissolved limited liability company may publish notice of its dissolution and
32 request persons having claims against the company to present them in accor-
33 dance with the notice.
34 (2) The notice authorized by subsection (1) of this section must:
35 (a) Be published at least once in a newspaper of general circulation in
36 the county in this state in which the dissolved limited liability
37 company's principal office is located or, if it has none in this state, in
38 the county in which the company's designated office is or was last
39 located;
40 (b) Describe the information required to be contained in a claim and pro-
41 vide a mailing address to which the claim is to be sent; and
42 (c) State that a claim against the company is barred unless an action to
43 enforce the claim is commenced within five (5) years after publication of
44 the notice.
45 (3) If a dissolved limited liability company publishes a notice in accor-
46 dance with subsection (2) of this section, unless the claimant commences an
47 action to enforce the claim against the company within five (5) years after
48 the publication date of the notice, the claim of each of the following claim-
49 ants is barred:
50 (a) A claimant that did not receive notice in a record under section
51 30-6-703, Idaho Code;
52 (b) A claimant whose claim was timely sent to the company but not acted
53 on; and
30
1 (c) A claimant whose claim is contingent at, or based on an event occur-
2 ring after, the effective date of dissolution.
3 (4) A claim not barred under this section may be enforced:
4 (a) Against a dissolved limited liability company, to the extent of its
5 undistributed assets; and
6 (b) If assets of the company have been distributed after dissolution,
7 against a member or transferee to the extent of that person's proportion-
8 ate share of the claim or of the assets distributed to the member or
9 transferee after dissolution, whichever is less, but a person's total lia-
10 bility for all claims under this paragraph does not exceed the total
11 amount of assets distributed to the person after dissolution.
12 30-6-705. GROUNDS FOR ADMINISTRATIVE DISSOLUTION, PROCEDURE AND EFFECT.
13 (1) The secretary of state may administratively dissolve a limited liability
14 company if:
15 (a) The limited liability company does not deliver its annual report to
16 the secretary of state by the date on which it is due;
17 (b) The limited liability company is without a registered agent for sixty
18 (60) days or more; or
19 (c) The secretary of state has credible information that the limited lia-
20 bility company has failed to notify the secretary of state within sixty
21 (60) days after the occurrence that its registered agent has been changed
22 or that its registered agent has resigned.
23 (2) If the secretary of state determines that one (1) or more grounds
24 exist under this section for dissolving a limited liability company, the sec-
25 retary of state shall give notice of the determination to the limited liabil-
26 ity company by first class mail addressed to its mailing address as indicated
27 on its most recent annual report or, if the limited liability company has not
28 yet filed an annual report, to its registered agent.
29 (3) If the limited liability company does not correct each ground for
30 dissolution or demonstrate to the reasonable satisfaction of the secretary of
31 state that each ground determined by the secretary of state does not exist
32 within sixty (60) days after receipt of the notice of determination, the sec-
33 retary of state shall administratively dissolve the limited liability company
34 by noting the fact of dissolution and the effective date thereof in his
35 records. The secretary of state shall give notice of the dissolution to the
36 limited liability company by first class mail addressed to its mailing address
37 as indicated on its most recent annual report or, if the limited liability
38 company has not yet filed an annual report, to its registered agent.
39 (4) A limited liability company administratively dissolved continues its
40 legal existence but may not carry on any business except that necessary to
41 wind up and liquidate its business and affairs under sections 30-6-702 and
42 30-6-708, Idaho Code, and notify claimants under sections 30-6-703 and
43 30-6-704, Idaho Code.
44 (5) The administrative dissolution of a limited liability company does
45 not terminate the authority of its registered agent.
46 30-6-706. REINSTATEMENT FOLLOWING ADMINISTRATIVE DISSOLUTION. (1) A lim-
47 ited liability company that has been administratively dissolved may apply to
48 the secretary of state for reinstatement within ten (10) years after the
49 effective date of dissolution. The application must be delivered to the secre-
50 tary of state for filing and state:
51 (a) The name of the company and the effective date of its dissolution;
52 (b) That the grounds for dissolution have been eliminated; and
53 (c) That the company's name satisfies the requirements of section
31
1 30-6-108, Idaho Code.
2 (2) If the secretary of state determines that an application under sub-
3 section (1) of this section contains the required information and that the
4 information is correct, the secretary of state shall prepare a certificate of
5 reinstatement that states this determination, file the original of the certif-
6 icate of reinstatement, and mail a copy to the limited liability company.
7 (3) When a reinstatement becomes effective, it relates back to and takes
8 effect as of the effective date of the administrative dissolution and the lim-
9 ited liability company may resume its activities as if the dissolution had not
10 occurred.
11 30-6-707. APPEAL FROM REJECTION OF REINSTATEMENT. (1) If the secretary
12 of state denies a limited liability company's application for reinstatement
13 following administrative dissolution, the secretary of state shall mail the
14 company a copy of the notice that reinstatement has been denied.
15 (2) Within thirty (30) days after mailing of a notice of denial of rein-
16 statement under subsection (1) of this section, a limited liability company
17 may appeal from the denial by petitioning the district court of Ada county to
18 set aside the dissolution. The petition must be served on the secretary of
19 state and contain a copy of the secretary of state's notice of dissolution,
20 the company's application for reinstatement, and the secretary of state's
21 notice of denial.
22 (3) The district court may, if grounds exist, order the secretary of
23 state to reinstate a dissolved limited liability company or take other action
24 the court considers appropriate.
25 30-6-708. DISTRIBUTION OF ASSETS IN WINDING UP LIMITED LIABILITY
26 COMPANY'S ACTIVITIES. (1) In winding up its activities, a limited liability
27 company must apply its assets to discharge its obligations to creditors,
28 including members that are creditors.
29 (2) After a limited liability company complies with subsection (1) of
30 this section, any surplus must be distributed in the following order, subject
31 to any charging order in effect under section 30-6-503, Idaho Code:
32 (a) To each person owning a transferable interest that reflects contribu-
33 tions made by a member and not previously returned, an amount equal to the
34 value of the unreturned contributions; and
35 (b) In equal shares among members and dissociated members, except to the
36 extent necessary to comply with any transfer effective under section
37 30-6-502, Idaho Code.
38 (3) If a limited liability company does not have sufficient surplus to
39 comply with subsection (2)(a) of this section, any surplus must be distributed
40 among the owners of transferable interests in proportion to the value of their
41 respective unreturned contributions.
42 (4) All distributions made under subsections (2) and (3) of this section
43 must be paid in money.
44 PART 8.
45 FOREIGN LIMITED LIABILITY COMPANIES
46 30-6-801. GOVERNING LAW. (1) The law of the state or other jurisdiction
47 under which a foreign limited liability company is formed governs:
48 (a) The internal affairs of the company; and
49 (b) The liability of a member as member and a manager as manager for the
50 debts, obligations or other liabilities of the company; provided however,
51 that a foreign professional company rendering services in this state shall
32
1 be subject to the laws of this state and the code of ethics or profes-
2 sional responsibility which are applicable to the professions in which
3 such professional company is rendering services in this state.
4 (2) A foreign limited liability company may not be denied a certificate
5 of authority by reason of any difference between the law of the jurisdiction
6 under which the company is formed and the law of this state.
7 (3) A certificate of authority does not authorize a foreign limited lia-
8 bility company to engage in any business or exercise any power that a limited
9 liability company may not engage in or exercise in this state.
10 30-6-802. APPLICATION FOR CERTIFICATE OF AUTHORITY. (1) A foreign limited
11 liability company may apply for a certificate of authority to transact busi-
12 ness in this state by delivering an application to the secretary of state for
13 filing. The application must state:
14 (a) The name of the company and, if the name does not comply with section
15 30-6-108, Idaho Code, an alternate name adopted pursuant to section
16 30-6-805(1), Idaho Code;
17 (b) The name of the state or other jurisdiction under whose law the com-
18 pany is formed;
19 (c) The street and mailing addresses of the company's principal office
20 and, if the law of the jurisdiction under which the company is formed
21 requires the company to maintain an office in that jurisdiction, the
22 street and mailing addresses of the required office;
23 (d) The information required by section 30-405(1), Idaho Code; and
24 (e) The name and mailing address of at least one (1) member or manager.
25 (2) A foreign limited liability company shall deliver with a completed
26 application under subsection (1) of this section a certificate of existence or
27 a record of similar import signed by the secretary of state or other official
28 having custody of the company's publicly filed records in the state or other
29 jurisdiction under whose law the company is formed.
30 30-6-803. ACTIVITIES NOT CONSTITUTING TRANSACTING BUSINESS. (1) Activi-
31 ties of a foreign limited liability company which do not constitute transact-
32 ing business in this state within the meaning of this part include:
33 (a) Maintaining, defending or settling an action or proceeding;
34 (b) Carrying on any activity concerning its internal affairs, including
35 holding meetings of its members or managers;
36 (c) Maintaining accounts in financial institutions;
37 (d) Maintaining offices or agencies for the transfer, exchange and regis-
38 tration of the company's own securities or maintaining trustees or deposi-
39 tories with respect to those securities;
40 (e) Selling through independent contractors;
41 (f) Soliciting or obtaining orders, whether by mail or electronic means
42 or through employees or agents or otherwise, if the orders require accep-
43 tance outside this state before they become contracts;
44 (g) Creating or acquiring indebtedness, mortgages or security interests
45 in real or personal property;
46 (h) Securing or collecting debts or enforcing mortgages or other security
47 interests in property securing the debts and holding, protecting or main-
48 taining property so acquired;
49 (i) Conducting an isolated transaction that is completed within thirty
50 (30) days and is not in the course of similar transactions; and
51 (j) Transacting business in interstate commerce.
52 (2) For purposes of this part, the ownership in this state of income-
53 producing real property or tangible personal property, other than property
33
1 excluded under subsection (1) of this section, constitutes transacting busi-
2 ness in this state.
3 (3) This section does not apply in determining the contacts or activities
4 that may subject a foreign limited liability company to service of process,
5 taxation or regulation under law of this state other than this chapter.
6 30-6-804. FILING OF CERTIFICATE OF AUTHORITY. Unless the secretary of
7 state determines that an application for a certificate of authority does not
8 comply with the filing requirements of this chapter, the secretary of state,
9 upon payment of all filing fees, shall file the application of a foreign lim-
10 ited liability company, prepare, sign and file a certificate of authority to
11 transact business in this state, and send a copy of the filed certificate,
12 together with a receipt for the fees, to the company or its representative.
13 30-6-805. NONCOMPLYING NAME OF FOREIGN LIMITED LIABILITY COMPANY. (1) A
14 foreign limited liability company whose name does not comply with section
15 30-6-108, Idaho Code, may not obtain a certificate of authority until it
16 adopts, for the purpose of transacting business in this state, an alternate
17 name that complies with section 30-6-108, Idaho Code. A foreign limited lia-
18 bility company that adopts an alternate name under this subsection and obtains
19 a certificate of authority with the alternate name need not comply with chap-
20 ter 5, title 53, Idaho Code. After obtaining a certificate of authority with
21 an alternate name, a foreign limited liability company shall transact business
22 in this state under the alternate name unless the company is authorized under
23 chapter 5, title 53, Idaho Code, to transact business in this state under
24 another name.
25 (2) If a foreign limited liability company authorized to transact busi-
26 ness in this state changes its name to one that does not comply with section
27 30-6-108, Idaho Code, it may not thereafter transact business in this state
28 until it complies with subsection (1) of this section and obtains an amended
29 certificate of authority.
30 30-6-806. REVOCATION OF CERTIFICATE OF AUTHORITY. (1) A certificate of
31 authority of a foreign limited liability company to transact business in this
32 state may be revoked by the secretary of state in the manner provided in sub-
33 sections (2) and (3) of this section, if the company does not:
34 (a) Deliver its annual report by the date on which it is due as required
35 under section 30-6-209, Idaho Code;
36 (b) Appoint and maintain a registered agent; or
37 (c) Deliver for filing a statement of a change under section 30-408,
38 Idaho Code, within thirty (30) days after a change has occurred in the
39 name or address of the registered agent.
40 (2) To revoke a certificate of authority of a foreign limited liability
41 company, the secretary of state must mail a notice of revocation to the
42 company's registered agent, or if the company does not appoint and maintain a
43 proper registered agent, to the company's designated office. The notice must
44 state:
45 (a) The revocation's effective date, which must be at least sixty (60)
46 days after the date the secretary of state mails the notice; and
47 (b) The grounds for revocation under subsection (1) of this section.
48 (3) The authority of a foreign limited liability company to transact
49 business in this state ceases on the effective date of the notice of revoca-
50 tion unless before that date the company cures each ground for revocation
51 stated in the notice mailed under subsection (2) of this section.
34
1 30-6-807. CANCELLATION OF CERTIFICATE OF AUTHORITY. To cancel its certif-
2 icate of authority to transact business in this state, a foreign limited lia-
3 bility company must deliver to the secretary of state for filing a notice of
4 cancellation stating the name of the company and that the company desires to
5 cancel its certificate of authority. The certificate is canceled when the
6 notice becomes effective.
7 30-6-808. EFFECT OF FAILURE TO HAVE CERTIFICATE OF AUTHORITY. (1) A for-
8 eign limited liability company transacting business in this state may not
9 maintain an action or proceeding in this state unless it has a certificate of
10 authority to transact business in this state.
11 (2) The failure of a foreign limited liability company to have a certifi-
12 cate of authority to transact business in this state does not impair the
13 validity of a contract or act of the company or prevent the company from
14 defending an action or proceeding in this state.
15 (3) A member or manager of a foreign limited liability company is not
16 liable for the debts, obligations or other liabilities of the company solely
17 because the company transacted business in this state without a certificate of
18 authority.
19 30-6-809. ACTION BY ATTORNEY GENERAL. The attorney general may maintain
20 an action to enjoin a foreign limited liability company from transacting busi-
21 ness in this state in violation of this part.
22 PART 9.
23 ACTIONS BY MEMBERS
24 30-6-901. DIRECT ACTION BY MEMBER. (1) Subject to subsection (2) of this
25 section, a member may maintain a direct action against another member, a man-
26 ager or the limited liability company to enforce the member's rights and
27 otherwise protect the member's interests, including rights and interests under
28 the operating agreement or this chapter or arising independently of the mem-
29 bership relationship.
30 (2) A member maintaining a direct action under this section must plead
31 and prove an actual or threatened injury that is not solely the result of an
32 injury suffered or threatened to be suffered by the limited liability company.
33 30-6-902. DERIVATIVE ACTION. A member may maintain a derivative action to
34 enforce a right of a limited liability company if:
35 (1) The member first makes a demand on the other members in a member-
36 managed limited liability company, or the managers of a manager-managed lim-
37 ited liability company, requesting that they cause the company to bring an
38 action to enforce the right, and the managers or other members do not bring
39 the action within a reasonable time; or
40 (2) A demand under subsection (1) of this section would be futile.
41 30-6-903. PROPER PLAINTIFF. (1) Except as otherwise provided in subsec-
42 tion (2) of this section, a derivative action under section 30-6-902, Idaho
43 Code, may be maintained only by a person that is a member at the time the
44 action is commenced and remains a member while the action continues.
45 (2) If the sole plaintiff in a derivative action dies while the action is
46 pending, the court may permit another member of the limited liability company
47 to be substituted as plaintiff.
48 30-6-904. PLEADING. In a derivative action under section 30-6-902, Idaho
35
1 Code, the complaint must state with particularity:
2 (1) The date and content of plaintiff's demand and the response to the
3 demand by the managers or other members; or
4 (2) If a demand has not been made, the reasons a demand under section
5 30-6-902(1), Idaho Code, would be futile.
6 30-6-905. SPECIAL LITIGATION COMMITTEE. (1) If a limited liability com-
7 pany is named as or made a party in a derivative proceeding, the company may
8 appoint a special litigation committee to investigate the claims asserted in
9 the proceeding and determine whether pursuing the action is in the best inter-
10 ests of the company. If the company appoints a special litigation committee,
11 on motion by the committee made in the name of the company, except for good
12 cause shown, the district court shall stay discovery for the time reasonably
13 necessary to permit the committee to make its investigation. This subsection
14 does not prevent the court from enforcing a person's right to information
15 under section 30-6-410, Idaho Code, or, for good cause shown, granting
16 extraordinary relief in the form of a temporary restraining order or prelimi-
17 nary injunction.
18 (2) A special litigation committee may be composed of one (1) or more
19 disinterested and independent individuals, who may be members.
20 (3) A special litigation committee may be appointed:
21 (a) In a member-managed limited liability company:
22 (i) By the consent of a majority of the members not named as
23 defendants or plaintiffs in the proceeding; and
24 (ii) If all members are named as defendants or plaintiffs in the
25 proceeding, by a majority of the members named as defendants; or
26 (b) In a manager-managed limited liability company:
27 (i) By a majority of the managers not named as defendants or plain-
28 tiffs in the proceeding; and
29 (ii) If all managers are named as defendants or plaintiffs in the
30 proceeding, by a majority of the managers named as defendants.
31 (4) After appropriate investigation, a special litigation committee may
32 determine that it is in the best interests of the limited liability company
33 that the proceeding:
34 (a) Continue under the control of the plaintiff;
35 (b) Continue under the control of the committee;
36 (c) Be settled on terms approved by the committee; or
37 (d) Be dismissed.
38 (5) After making a determination under subsection (4) of this section, a
39 special litigation committee shall file with the court a statement of its
40 determination and its report supporting its determination, giving notice to
41 the plaintiff. The district court shall determine whether the members of the
42 committee were disinterested and independent and whether the committee con-
43 ducted its investigation and made its recommendation in good faith, indepen-
44 dently, and with reasonable care, with the committee having the burden of
45 proof. If the district court finds that the members of the committee were dis-
46 interested and independent and that the committee acted in good faith, inde-
47 pendently, and with reasonable care, the district court shall enforce the
48 determination of the committee. Otherwise, the district court shall dissolve
49 the stay of discovery entered under subsection (1) of this section and allow
50 the action to proceed under the direction of the plaintiff.
51 30-6-906. PROCEEDS AND EXPENSES. (1) Except as otherwise provided in sub-
52 section (2) of this section:
53 (a) Any proceeds or other benefits of a derivative action under section
36
1 30-6-902, Idaho Code, whether by judgment, compromise or settlement,
2 belong to the limited liability company and not to the plaintiff; and
3 (b) If the plaintiff receives any proceeds, the plaintiff shall remit
4 them immediately to the company.
5 (2) If a derivative action under section 30-6-902, Idaho Code, is suc-
6 cessful in whole or in part, the district court may award the plaintiff rea-
7 sonable expenses, including reasonable attorney's fees and costs, from the
8 recovery of the limited liability company.
9 PART 10.
10 MERGER, INTEREST EXCHANGE, CONVERSION AND DOMESTICATION
11 30-6-1001. APPLICABILITY OF IDAHO ENTITY TRANSACTIONS ACT. (1) Unless the
12 limited liability company is excluded therefrom by section 30-18-110, Idaho
13 Code, and except as provided in subsection (2) of this section, a merger,
14 interest exchange, conversion or domestication, in which a limited liability
15 company is a party is governed by the Idaho entity transactions act, chapter
16 18, title 30, Idaho Code.
17 (2) Section 30-6-1002, Idaho Code, applies to transactions in which a
18 limited liability company is a party under the Idaho entity transactions act,
19 chapter 18, title 30, Idaho Code.
20 30-6-1002. RESTRICTIONS ON APPROVAL OF MERGERS, INTEREST EXCHANGES,
21 CONVERSIONS AND DOMESTICATIONS. (1) If a member of a constituent, converting
22 or domesticating limited liability company will have personal liability with
23 respect to a surviving, converted or domesticated organization, approval or
24 amendment of a plan of merger, interest exchange, conversion or domestication
25 is ineffective without the consent of the member, unless:
26 (a) The company's operating agreement provides for approval of a merger,
27 interest exchange, conversion or domestication with the consent of fewer
28 than all the members; and
29 (b) The member has consented to the provision of the operating agreement.
30 (2) A member does not give the consent required by subsection (1) of this
31 section merely by consenting to a provision of the operating agreement that
32 permits the operating agreement to be amended with the consent of fewer than
33 all the members.
34 PART 11.
35 MISCELLANEOUS PROVISIONS
36 30-6-1101. UNIFORMITY OF APPLICATION AND CONSTRUCTION. In applying and
37 construing this chapter, consideration must be given to the need to promote
38 uniformity of the law with respect to its subject matter among states that
39 enact it.
40 30-6-1102. RELATION TO ELECTRONIC SIGNATURES IN GLOBAL AND NATIONAL COM-
41 MERCE ACT. To the extent this chapter modifies, limits and supersedes the fed-
42 eral electronic signatures in global and national commerce act, 15 U.S.C. sec-
43 tion 7001 et seq., this chapter does not modify, limit or supersede section
44 101(c) of that act, 15 U.S.C. section 7001(c), or authorize electronic deliv-
45 ery of any of the notices described in section 103(b) of that act, 15 U.S.C.
46 section 7003(b).
47 30-6-1103. SAVINGS CLAUSE. This chapter does not affect an action com-
48 menced, proceeding brought, or right accrued before this chapter takes effect.
37
1 30-6-1104. APPLICATION TO EXISTING RELATIONSHIPS. (1) Before July 1,
2 2010, this chapter governs only:
3 (a) A limited liability company formed on or after July 1, 2008; and
4 (b) Except as otherwise provided in subsection (3) of this section, a
5 limited liability company formed before July 1, 2008, which elects, in the
6 manner provided in its operating agreement or by law for amending the
7 operating agreement, to be subject to this chapter.
8 (2) Except as otherwise provided in subsection (3) of this section, on
9 and after July 1, 2010, this chapter governs all limited liability companies.
10 (3) For the purposes of applying this chapter to a limited liability com-
11 pany formed before July 1, 2008:
12 (a) The company's articles of organization are deemed to be the company's
13 certificate of organization; and
14 (b) For the purposes of applying section 30-6-102(10), Idaho Code, and
15 subject to section 30-6-112(4), Idaho Code, language in the company's
16 articles of organization designating the company's management structure
17 operates as if that language were in the operating agreement.
18 SECTION 2. That Section 30-1-401, Idaho Code, be, and the same is hereby
19 amended to read as follows:
20 30-1-401. CORPORATE NAME. (1) A corporate name:
21 (a) Must contain the word "corporation," "incorporated," "company," or
22 "limited," or the abbreviation "corp.," "inc.," "co.," or "ltd.," or words
23 or abbreviations of like import in another language; provided however,
24 that if the word "company" or its abbreviation is used it shall not be
25 immediately preceded by the word "and" or by an abbreviation of or symbol
26 representing the word "and";
27 (b) May not contain language falsely stating or implying government
28 affiliation or stating or implying that the corporation is organized for a
29 purpose other than that permitted by section 30-1-301, Idaho Code, and its
30 articles of incorporation.
31 (2) Except as authorized by subsections (3) and (4) of this section, a
32 corporate name must be distinguishable upon the records of the secretary of
33 state from:
34 (a) The corporate name of a corporation incorporated or authorized to
35 transact business in this state;
36 (b) A name reserved or registered under section 30-1-402 or 30-1-403,
37 Idaho Code, or reserved under section 53-2-109, Idaho Code, or as reserved
38 under section 30-6-109 or 53-603, Idaho Code, as appropriate pursuant to
39 section 30-6-1104, Idaho Code;
40 (c) The fictitious name adopted by a foreign corporation authorized to
41 transact business in this state because its real name is unavailable;
42 (d) The corporate name of a nonprofit corporation incorporated or autho-
43 rized to transact business in this state; and
44 (e) The name of any limited partnership, limited liability partnership or
45 limited liability company which is organized under the laws of this state
46 or registered to do business in this state.
47 (3) A corporation may apply to the secretary of state for authorization
48 to use a name that is not distinguishable on his records from one (1) or more
49 of the names described in subsection (2) of this section. The secretary of
50 state shall authorize use of the name applied for if:
51 (a) The other corporation, holder of a reserved or registered name, lim-
52 ited partnership, limited liability partnership or limited liability com-
53 pany consents to the use in writing and submits an undertaking in a form
38
1 satisfactory to the secretary of state to change its name to a name that
2 is distinguishable upon the records of the secretary of state from the
3 name of the applying corporation; or
4 (b) The applicant delivers to the secretary of state a certified copy of
5 the final judgment of a court of competent jurisdiction establishing the
6 applicant's right to use the name applied for in this state.
7 (4) A corporation may use the name, including the fictitious name, of
8 another domestic or foreign corporation or limited liability company that is
9 used in this state if the other corporation or limited liability company is
10 organized or authorized to transact business in this state and the proposed
11 user corporation:
12 (a) Has merged with the other corporation or limited liability company;
13 (b) Has been formed by reorganization of the other corporation or limited
14 liability company; or
15 (c) Has acquired all or substantially all of the assets, including the
16 name, of the other corporation or limited liability company.
17 (5) This chapter does not control the use of assumed business names, gov-
18 erned by "The Assumed Business Names Act of 1997," chapter 5, title 53, Idaho
19 Code.
20 (6) Nothing in this section shall abrogate or limit the law as to unfair
21 competition or unfair practice in the use of trade names, nor derogate from
22 the common law, the principles of equity, or the statutes of this state or of
23 the United States with respect to the right to acquire and protect trade
24 names.
25 (7) The assumption of a name in violation of this section shall not
26 affect or vitiate the corporate existence, but the courts of this state, hav-
27 ing equity jurisdiction, may, upon the application of the state, or of any
28 person, unincorporated association, or corporation interested or affected,
29 enjoin such corporation in violation from doing business under any name
30 assumed in violation of this section.
31 SECTION 3. That Section 63-3006A, Idaho Code, be, and the same is hereby
32 amended to read as follows:
33 63-3006A. LIMITED LIABILITY COMPANY -- CLASSIFICATION AND TAXATION. Not-
34 withstanding the provisions of section 63-3006, Idaho Code, for the purposes
35 of chapter 30, title 63, Idaho Code, a limited liability company as defined in
36 subsection (5) or (6) of section 53-601, Idaho Code, or as defined in section
37 30-6-102, Idaho Code, as appropriate pursuant to section 30-6-1104, Idaho
38 Code, shall be classified as a partnership, corporation, unincorporated asso-
39 ciation or otherwise pursuant to the provisions of the internal revenue code.
40 A limited liability company that is classified as a partnership pursuant to
41 the internal revenue code shall be treated as a partnership for purposes of
42 chapter 30, title 63, Idaho Code. A limited liability company that is classi-
43 fied other than a partnership pursuant to the internal revenue code shall be
44 treated for purposes of chapter 30, title 63, Idaho Code, in accordance with
45 its classification.
46 SECTION 4. That Section 63-3622K, Idaho Code, be, and the same is hereby
47 amended to read as follows:
48 63-3622K. OCCASIONAL SALES. (a) There are exempted from the taxes imposed
49 by this chapter occasional sales of tangible personal property.
50 (b) As used in this section, the term "occasional sale" means:
51 (1) A sale of property not held or used by a person in the course of an
39
1 activity for which he is required to hold a seller's permit, provided such
2 sale is not one (1) of a series of sales sufficient in number or of such a
3 nature as to constitute the seller a "retailer" under section 63-3610(c),
4 Idaho Code. The definition of "occasional sales" provided in this subsec-
5 tion does not apply to use tax in regard to tangible personal property
6 used to improve real property when such property is obtained, directly or
7 indirectly, from a person in the business of making like or similar
8 improvements to real property.
9 (2) Any transfer of all or substantially all of the property held or used
10 by a person in a business requiring a seller's permit when, after such
11 transfer, the real or ultimate ownership of such property is substantially
12 similar to that which existed before such transfer. For the purpose of
13 this section, stockholders, bondholders, partners, or other persons hold-
14 ing an interest in a corporation or other entity are regarded as having a
15 "real or ultimate ownership" of the property of such corporation or other
16 entity.
17 (3) A transfer of capital assets to or by a business when the transfer is
18 accomplished through an adjustment of the beneficial interest of the busi-
19 ness and the transferor has paid sales or use taxes pursuant to section
20 63-3619 or 63-3621, Idaho Code, on the capital assets, incidental to:
21 (i) A division of joint venture, partnership, or limited liability
22 company assets among the members or partners in exchange for a pro-
23 portional reduction of the transferee's interest in the joint ven-
24 ture, partnership, or limited liability company. For the purposes of
25 this section, the term "limited liability company" means a business
26 organization as defined in chapter 6, title 53, Idaho Code, or as
27 defined in section 30-6-102, Idaho Code, as appropriate pursuant to
28 section 30-6-1104, Idaho Code;
29 (ii) The formation of a partnership, joint venture, or limited lia-
30 bility company by the transfer of assets to the partnership, joint
31 venture, or limited liability company or transfers to a partnership,
32 joint venture, or limited liability company in exchange for propor-
33 tionate interests in the partnership, joint venture, or limited lia-
34 bility company;
35 (iii) The formation of a corporation by the owners of a business and
36 the transfer of their business assets to the corporation in exchange
37 for stock in proportion to assets contributed;
38 (iv) The transfer of assets of shareholders in the formation or dis-
39 solution of a corporation;
40 (v) The transfer of capital assets by a corporation to its stock-
41 holders in exchange for surrender of capital stock;
42 (vi) The transfer of assets from a parent corporation to a subsid-
43 iary corporation which is owned at least eighty percent (80%) by the
44 parent corporation, which transfer is solely in exchange for stock or
45 securities of the subsidiary corporation;
46 (vii) The transfer of assets from a subsidiary corporation which is
47 owned at least eighty percent (80%) by the parent corporation to a
48 parent corporation or another subsidiary which is owned at least
49 eighty percent (80%) by the parent corporation, which transfer is
50 solely in exchange for stock or securities of the parent corporation
51 or the subsidiary which received the assets.
52 (4) The sale, lease or rental of a capital asset in substantially the
53 same form as acquired by the transferor and on which the initial transfer-
54 or has paid sales or use taxes pursuant to section 63-3619 or 63-3621,
55 Idaho Code, when the owners of all of the outstanding stock, equity or
40
1 interest of the transferor are the same as the transferee or are members
2 of the same family within the second degree of consanguinity or affinity.
3 (5) The sale of substantially all of the operating assets of a business
4 or of a separate division, branch, or identifiable segment to a buyer who
5 continues operation of the business. For the purpose of this subsection, a
6 "separate division, branch, or identifiable segment" shall be deemed to
7 exist if, prior to its sale, the income and expense attributable to such
8 "separate division, branch, or identifiable segment" could be separately
9 ascertained from the books of accounts and records.
10 (6) Sales by persons who are not defined as "retailers" in section
11 63-3610, Idaho Code.
12 (7) Sales of animals by any 4-H club or FFA club held in conjunction with
13 a fair or the western Idaho spring lamb sale.
14 (8) The sale or purchase of tangible personal property at home yard
15 sales; provided however, that no more than two (2) such home yard sales
16 per individual calendar year shall be exempt.
17 (c) As used in this section, the term "occasional sale," when applied to
18 the sale of a motor vehicle, means only:
19 (1) Sales of motor vehicles between members of a family related within
20 the second degree of consanguinity, unless a sales or use tax was not
21 imposed on the sale of that motor vehicle at the time of purchase, in
22 which situation the sale is taxable.
23 (2) Sales of motor vehicles that fall within the scope of the transac-
24 tions detailed in subsection (b)(2) through (b)(5) of this section.
25 (d) The exemption provided by subsection (b)(1), (b)(4), (b)(6) or (b)(8)
26 of this section shall not apply to the sale, purchase or use of aircraft, as
27 defined in section 21-201, Idaho Code, nor shall it apply to the sale, pur-
28 chase or use of boats or vessels, as defined in section 67-7003, Idaho Code,
29 nor shall it apply to the sale, purchase or use of snowmobiles, recreational
30 vehicles or off-highway motorbikes, as defined in section 63-3622HH, Idaho
31 Code.
32 SECTION 5. That Chapter 6, Title 53, Idaho Code, be, and the same is
33 hereby repealed.
34 SECTION 6. Sections 1, 2, 3 and 4 of this act shall be in full force and
35 effect on and after July 1, 2008. Section 5 of this act shall be in full force
36 and effect on and after July 1, 2010.
STATEMENT OF PURPOSE
RS 17534
The purpose of the Idaho Uniform Limited Liability Company
Act ("IULLCA") is to provide Idaho with modern, updated
legislation governing the formation and operation of limited
liability companies (LLCs). An LLC is a single business
entity which provides limited liability protection for its
members, as well as providing all the owners of the business
with federal partnership taxation. IULLCA will replace, but
retain the essential characteristics of, the existing Idaho
Limited Liability Company Act.
IULLCA was adopted by the National Conference of
Commissioners on Uniform State Laws in 2006, and is endorsed
by the American Bar Association Real Property, Probate and
Trust Law Sections.
FISCAL NOTE
There will be no impact on the state's general fund.
Contact
Name: Rex Blackburn, Uniform Law Commissioner
Phone: 208-890-5593
Dale G. Higer, Uniform Law Commissioner
Phone: 208-345-1432
STATEMENT OF PURPOSE/FISCAL NOTE S 1350