Author Archives: Florida Coastal School of Law

Florida legislature updates its LLC Act

The Florida legislature updated its LLC Act, the provisions of which become effective January 1, 2014. Anyone with ownership interests in an LLC is a “member” of the entity. The decision-maker (in the colloquial sense) is called the “manager.” LLCs formerly consisted of three types: manag_ing_-member, manager-managed, and member-managed. The Revised Act eliminated manag_ing_-member LLCs. Unless stated otherwise an LLCs is “member-managed.”

The Florida legislature also attempts to assure transparency among members of an LLC. For example, a member may not “unreasonably restrict” the LLC from maintaining or another member from accessing certain business records. Further, a member may not alter the required member materials or change specific duties in the winding up process. See Fla. Stat. §605.04091 for manager and member duties.

Leaving the LLC and The Liability That Follows

The updated Act grants all members the authority to leave an LLC (known as “dissolution”) by way of the LLC’s operating agreement (Fla. Stat. §605.0602) or what is now known as “wrongful” dissolution See Fla. Stat. §§ 605.0601; 605.0602. However, if a member causes a wrongful dissolution, that member may be liable to both the LLC and its members.” Fla. Stat. §§ 605.0105(3)(i); 605.0601(3).

The Act provides for Statements of Authority, which may give the public notice about who can enter in contracts on behalf of the LLC (“bind”). See Fla. Stat. §605.0302)

Indemnify and Reimbursement

If a member or manager is sued while acting in his/her capacity at the LLC then the LLC may pay the attorney fees. However, the indemnified must repay the LLC if the court finds him/her not entitled to indemnification. See Fla. Stat. § 605.0408. However, the LLC may neither reimburse nor indemnify a member or manager that acted in bad faith or violation of law, received undue distributions, or acted outside his/her capacity of the LLC (See Fla. Stat. § 605.0105(3)(q)). The Florida Revised LLC laws are comparable but do not mirror RULLCA.

Dino Perakis is a Florida Coastal School of Law student anticipating graduation May 2014, current law clerk for US Dist. Court of the Middle Dist. of Florida, Jacksonville, Florida , Judge Monte C. Richardson.

The Coastal Updates on Regulatory Affairs and Business (CURB) blog provides regulatory updates, including statutory amendments and regulations that implement statutes affecting business entities, and the law firms and accounting firms that represent them. Included as well are updates and interpretations relevant to the business of sports at both the collegiate and professional levels.