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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 - 2008IN 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