September 30, 2003, Introduced by Senator CLARKE and referred to the Committee on Commerce and Labor.
A bill to amend 1993 PA 23, entitled
"Michigan limited liability company act,"
by amending sections 206, 502, and 707 (MCL 450.4206, 450.4502,
and 450.4707), section 206 as amended and section 707 as added by
1997 PA 52 and section 502 as amended by 2002 PA 686, and by
adding section 708.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
1 Sec. 206. (1) A domestic or foreign limited liability
2 company may transact business under an assumed name or names
3 other than its name as set forth in its articles of organization
4 or certificate of authority, if not precluded from use of the
5 assumed name or names under section 204(2), by filing a
6 certificate stating the true name of the company and the assumed
7 name or names under which business is to be transacted.
8 (2) The
certificate of assumed name is effective, unless
1 Unless terminated by filing a certificate of termination or by
2 the dissolution or withdrawal of the company, a certificate of
3 assumed name is effective for a period expiring on December 31 of
4 the fifth full calendar year following the year in which the
5 certificate of assumed
name was is filed. The company may
6 extend the certificate of
assumed name may be extended for
7 additional consecutive periods of 5 full calendar years each by
8 filing a similar certificate of assumed name not earlier than 90
9 days before the expiration of the initial or any subsequent
10 5-year period.
11 (3) The administrator shall notify the company of the
12 impending expiration of the certificate of assumed name not later
13 than 90 days before the expiration of the initial or any
14 subsequent 5-year period.
15 (4) Filing a certificate of assumed name under this section
16 does not create substantive rights to the use of a particular
17 assumed name.
18 (5) The same name
may be assumed by 2 Two or more limited
19 liability companies or by
1 or more companies and 1 or more
20 corporations, limited partnerships, or other enterprises
21 participating together in a partnership or joint venture may use
22 the same assumed name. Each participating limited liability
23 company shall file a certificate of assumed name under this
24 section.
25 (6) A limited liability company participating in a merger, or
26 any other entity participating in a merger under section 705a,
27 may transfer to the survivor the use of an assumed name for which
1 a certificate of assumed name is on file with the administrator
2 prior to the merger, if the transfer of the assumed name is noted
3 in the certificate of
merger as provided in section 703(1)(c) ,
4 or 705a(7)(c) , or
other applicable statute. The use of an
5 assumed name transferred under this subsection may continue for
6 the remaining effective period of the certificate of assumed name
7 on file prior to before
the merger and the survivor may
8 terminate or extend the
certificate in accordance with under
9 subsection (2).
10 (7) A limited liability company surviving a merger may use as
11 an assumed name the name of a merging limited liability company,
12 or the name of any other entity participating in the merger under
13 section 705a, by filing a certificate of assumed name under
14 subsection (1) or by providing for the use of the assumed name in
15 the certificate of merger. The surviving limited liability
16 company may also file a certificate of assumed name under
17 subsection (1) or provide in the certificate of merger for the
18 use of an assumed name of a merging entity not transferred
19 pursuant to under subsection (6). A provision in the
20 certificate of merger pursuant to this subsection is treated as a
21 new certificate of assumed name.
22 (8) A limited partnership converting to a limited liability
23 company under section 707 or a corporation converting to a
24 limited liability company under section 708 may transfer to that
25 limited liability company any unexpired certificate of assumed
26 name that the limited partnership or corporation had filed with
27 the administrator before the conversion by providing for the
1 transfer of the assumed name in the certificate of conversion
2 under section 707 or 708. A certificate of assumed name
3 transferred under this subsection continues for the remainder of
4 the original effective period of the certificate of assumed
5 name. After conversion, the limited liability company may
6 terminate or extend the certificate under subsection (2).
7 (9) If a limited partnership converts to a limited liability
8 company under section 707 or a corporation converts to a limited
9 liability company under section 708, the limited liability
10 company may transact business in the name of the limited
11 partnership or corporation as an assumed name, or under any
12 assumed name of the limited partnership or corporation not
13 transferred under subsection (8), either by filing a new
14 certificate of assumed name under subsection (1) or by providing
15 for the use of the assumed name in the certificate of
16 conversion. A provision in a certificate of conversion for use
17 of an assumed name described in this subsection is treated as a
18 new certificate of assumed name.
19 Sec. 502. (1) An operating agreement may establish and
20 allocate the voting rights of members and may provide that
21 certain members or groups of members have only limited or no
22 voting rights. If an operating agreement does not address voting
23 rights, votes are allocated as follows:
24 (a) Prior to Before
July 1, 1997, the members of a limited
25 liability company shall vote in proportion to their shares of
26 distributions of the company, as determined in accordance with
27 section 303.
1 (b) On and after July 1, 1997, except as otherwise provided
2 in subsection (2), each member of a limited liability company has
3 1 vote. For purposes of this subdivision, a membership interest
4 held by 2 or more persons, whether as fiduciaries, members of a
5 partnership, tenants in common, joint tenants, tenants by the
6 entirety, or otherwise, is treated as held by 1 member.
7 (2) If a limited liability company in existence before July
8 1, 1997 allocated votes on the basis of subsection (1)(a), the
9 company shall continue to allocate votes pursuant to subsection
10 (1)(a) until the allocation is changed by an operating
11 agreement.
12 (3) If a membership interest that has voting rights is held
13 by 2 or more persons, whether as fiduciaries, members of a
14 partnership, tenants in common, joint tenants, tenants by the
15 entirety, or otherwise, the voting of the interest shall be in
16 accordance with the instrument or order appointing them or
17 creating the relationship if a copy of that instrument or order
18 is furnished to the limited liability company. If an instrument
19 or order is not furnished to the limited liability company, 1 of
20 the following applies to the voting of that membership interest:
21 (a) If an operating agreement applies to the voting of the
22 membership interest, the vote shall be in accordance with that
23 operating agreement.
24 (b) If an operating agreement does not apply to the voting of
25 the membership interest and only 1 of the persons who hold the
26 membership interest votes, that person's vote determines the
27 voting of the membership interest.
1 (c) If an operating agreement does not apply to the voting of
2 the membership interest and 2 or more of the persons who hold the
3 membership interest vote, the vote of a majority determines the
4 voting of the membership interest, and if there is no majority,
5 the voting of the membership interest is divided among those
6 voting.
7 (4) Only members of a limited liability company, and not its
8 managers, may authorize the following actions:
9 (a) The dissolution of the limited liability company
10 pursuant to under section 801(c).
11 (b) Merger of the
limited liability company pursuant to
12 under sections 701 through
to 706.
13 (c) Conversion of a limited liability company to a
14 corporation under section 745 of the business corporation act,
15 1972 PA 284, MCL 450.1745.
16 (d) (c) An
amendment to the articles of organization.
17 (5) Unless authorized in advance by an operating agreement, a
18 transaction with the limited liability company or a transaction
19 connected with the conduct or winding up of the limited liability
20 company in which a manager of the limited liability company has a
21 direct or indirect interest or a manager's personal use of
22 property of the limited liability company may be authorized or
23 ratified only by a vote of the disinterested members entitled to
24 vote. The manager shall disclose all material facts regarding
25 the transaction and the manager's interest in the transaction or
26 all material facts about the manager's personal use of the
27 limited liability company's property before the members vote on
1 that transaction or use.
2 (6) Unless otherwise provided in an operating agreement, the
3 sale, exchange, lease, or other transfer of all or substantially
4 all of the assets of a limited liability company, other than in
5 the ordinary course of business, may be authorized only by a vote
6 of the members entitled to vote.
7 (7) The articles of organization or an operating agreement
8 may provide for additional voting rights of members of the
9 limited liability company.
10 (8) Unless the vote of a greater percentage of the voting
11 interest of members is required by this act, the articles of
12 organization, or an operating agreement, a vote of a majority in
13 interest of the members entitled to vote is required to approve
14 any matter submitted for a vote by the members.
15 Sec. 707. (1) A domestic partnership or domestic limited
16 partnership may convert to a limited liability company in
17 accordance with this section.
18 (2) The partners must approve the terms and conditions of a
19 conversion under this
section shall be approved by the partners
20 and the initial operating agreement of the limited liability
21 company in the manner provided in the partnership agreement for
22 amendments to the partnership agreement or, if no provision for
23 amendments to the partnership agreement is made in the
24 partnership agreement, by all of the partners. If a conversion
25 is approved by less than all of the partners pursuant to the
26 partnership agreement, the conversion and the operating agreement
27 may not adversely affect the rights and obligations of a
1 dissenting partner.
2 (3) If a conversion under this section is approved, the
3 converting partnership or limited partnership shall file both of
4 the following:
5 (a) Articles of organization that comply with section 203 and
6 with section 903 if the limited liability company will render
7 professional services.
8 (b) A certificate of
conversion , stating the that contains
9 all of the following:
10 (i) The name of the partnership or limited partnership and
11 the date it was formed. In
the case of a limited partnership,
12 the certificate of
conversion shall include a statement that the
13 certificate of limited
partnership is canceled as of the
14 effective date of the
articles of organization.
15 (ii) A statement specifying each assumed name of the
16 converting partnership transferred to the limited liability
17 company under section 206(8). The certificate may include a
18 statement of the name or assumed names of the converting
19 partnership that are to be treated as newly filed assumed names
20 under section 206(9).
21 (iii) The effective date of the conversion if later than the
22 date the certificate of conversion is filed.
23 (4) If a partnership or limited partnership converts to a
24 limited liability company
under this section, the certificate of
25 limited partnership is
canceled as of the effective date of the
26 articles of organization
partnership agreement terminates
on the
27 effective date of the conversion.
1 (5) If a conversion under this section takes effect, the
2 limited liability company is considered the same entity that
3 existed before the conversion and the conversion is not a
4 dissolution of the partnership. All property and rights of the
5 converting partnership or limited partnership remain vested in
6 the converted limited liability company. All liabilities of the
7 converting partnership or limited partnership continue as
8 liabilities of the converted limited liability company. An
9 action or proceeding pending against the converting partnership
10 or limited partnership may be continued as if the conversion
11 under this section had not occurred. The liability, if any, of a
12 general partner of the converting partnership or limited
13 partnership for acts or
omissions that occurred before a the
14 conversion under this
section is not affected by a the
15 conversion. under
this section.
16 Sec. 708. (1) A domestic limited liability company may
17 convert to a corporation under section 745 of the business
18 corporation act, 1972 PA 284, MCL 450.1745. A domestic
19 corporation may convert to a limited liability company under this
20 section.
21 (2) A domestic corporation converting to a limited liability
22 company shall prepare a plan of conversion that contains all of
23 the following:
24 (a) The name of the corporation, the name of the limited
25 liability company to which the corporation is converting, and the
26 street address of the limited liability company's principal place
27 of business.
1 (b) The designation and number of the corporation's
2 outstanding shares of each class and series, specifying the
3 classes and series entitled to vote, each class and series
4 entitled to vote as a class, and, if the number of shares is
5 subject to change before the effective date of the conversion,
6 the manner in which the change may occur.
7 (c) The manner and basis of converting the shares of the
8 corporation into membership interests or obligations of the
9 limited liability company, into cash or other consideration, or
10 into any combination of membership interests, obligations, cash,
11 or other consideration and any other terms and conditions of the
12 conversion.
13 (d) A statement of whether managers or members will manage
14 the limited liability company.
15 (e) Any other provision that the board of directors of the
16 corporation considers necessary or desirable.
17 (3) For a conversion to occur, the board of directors of the
18 corporation must adopt a plan of conversion. If adopted, the
19 board of directors shall submit the plan of conversion for
20 approval at a meeting of the shareholders under the procedures
21 applicable to a merger under section 703a(2) of the business
22 corporation act, 1972 PA 284, MCL 450.1703a, including, but not
23 limited to, the procedures pertaining to dissenters' rights under
24 that act if any shareholders have the right to dissent under
25 section 762.
26 (4) If the conversion is approved, the corporation shall file
27 both of the following:
1 (a) Articles of organization that comply with section 203 and
2 with section 903 if the limited liability company will render
3 professional services.
4 (b) A certificate of conversion that contains all of the
5 following:
6 (i) The name of the corporation and the date it was
7 incorporated.
8 (ii) A statement that the plan of conversion was approved in
9 accordance with subsection (3).
10 (iii) A statement specifying each assumed name of the
11 corporation transferred to the limited liability company under
12 section 206(8). The certificate may include a statement of the
13 name or assumed names of the corporation that are to be treated
14 as newly filed assumed names of the limited liability company
15 under section 206(9).
16 (iv) The effective date of the conversion if later than the
17 date the certificate of conversion is filed.
18 (5) If a conversion under this section takes effect, the
19 limited liability company is considered the same entity that
20 existed before the conversion and the conversion is not a
21 dissolution of the corporation. All property and rights of the
22 corporation remain vested in the limited liability company. All
23 liabilities of the corporation remain as liabilities of the
24 limited liability company. An action or proceeding pending
25 against the corporation may be continued as if the conversion
26 under this section had not occurred.
27 Enacting section 1. This amendatory act does not take
1 effect unless all of the following bills of the 92nd Legislature
2 are enacted into law:
3 (a) Senate Bill No. 746.
4
5 (b) Senate Bill No. 747. ________
6
7 (c) Senate Bill No. 748. ________
8