| SB 41 - Limited Liability Cos.- mbr. not entitled pmt. after dissociation |
First Reader Summary
A bill to amend Chapter 11 of Title 14 of the Official Code of
Georgia Annotated, known as the "Georgia Limited Liability
Company Act," so as to provide that effective for limited
liability companies formed on or after July 1, 1999, except as
otherwise provided in the articles of organization or a written
operating agreement, a member with respect to which an event of
dissociation occurs is not entitled to receive any payment by
reason of such event and will become an assignee as to such
limited liability company interest.
| Recorded Votes |
| Vote # |
SV99-35 |
PASSAGE |
2/04/99 |
| Senate |
Action |
House |
| 1/25/99 |
Read 1st time |
2/5/99 |
| 2/2/99 |
Favorably Reported |
2/24/99 |
| 2/3/99 |
Read 2nd Time |
2/8/99 |
| 2/4/99 |
Read 3rd Time |
3/15/99 |
| 2/4/99 |
Passed/Adopted |
3/15/99 |
| 4/12/99 |
Sent To Governor |
|
| 4/28/99 |
Signed by Governor |
|
| 396 |
Act/Veto Number |
|
SB 41 99 LC 10 2659
SENATE BILL 41
By: Senator Egan of the 40th
A BILL TO BE ENTITLED
AN ACT
1- 1 To amend Chapter 11 of Title 14 of the Official Code of
1- 2 Georgia Annotated, known as the "Georgia Limited Liability
1- 3 Company Act," so as to provide that effective for limited
1- 4 liability companies formed on or after July 1, 1999, except
1- 5 as otherwise provided in the articles of organization or a
1- 6 written operating agreement, a member with respect to which
1- 7 an event of dissociation occurs is not entitled to receive
1- 8 any payment by reason of such event and will become an
1- 9 assignee as to such limited liability company interest; to
1-10 change certain provisions relating to events of
1-11 dissociation; to provide for the events of dissociation for
1-12 limited liability companies formed on or after July 1, 1999;
1-13 to change the provisions relating to dissolution of limited
1-14 liability companies; to provide for the dissolution of
1-15 limited liability companies formed on or after July 1, 1999;
1-16 to provide for the winding up of a dissolved limited
1-17 liability company's affairs when there are no remaining
1-18 members or managers of the limited liability company; to
1-19 provide for related matters; to repeal conflicting laws; and
1-20 for other purposes.
1-21 BE IT ENACTED BY THE GENERAL ASSEMBLY OF GEORGIA:
1-22 SECTION 1.
1-23 Chapter 11 of Title 14 of the Official Code of Georgia
1-24 Annotated, known as the "Georgia Limited Liability Company
1-25 Act," is amended by striking in its entirety Code Section
1-26 14-11-405, relating to distributions upon event of
1-27 dissociation, and inserting in lieu thereof a new Code
1-28 Section 14-11-405 to read as follows:
1-29 "14-11-405.
1-30 (a) Effective for limited liability companies formed prior
1-31 to July 1, 1999, except Except as otherwise provided in
1-32 the articles of organization or a written operating
1-33 agreement, and subject to Code Section 14-11-407, a member
1-34 with respect to which an event of dissociation occurs
-1-
2- 1 (other than one of the events specified in paragraphs (1),
2- 2 (2), and (4) of subsection (a) of Code Section 14-11-601)
2- 3 is entitled to receive, within a reasonable time after the
2- 4 occurrence of the event, the fair value of the member's
2- 5 interest in the limited liability company as of the date
2- 6 of such occurrence, but only if such event does not result
2- 7 in dissolution of the limited liability company.
2- 8 (b) Effective for limited liability companies formed on or
2- 9 after July 1, 1999, except as otherwise provided in the
2-10 articles of organization or a written operating agreement,
2-11 a member with respect to which an event of dissociation
2-12 occurs is not entitled to receive any payment by reason of
2-13 such event and will become an assignee as to such limited
2-14 liability company interest."
2-15 SECTION 2.
2-16 Said chapter is further amended by striking in its entirety
2-17 subsection (a) of Code Section 14-11-601, relating to events
2-18 of dissociation, and inserting in lieu thereof a new
2-19 subsection (a) to read as follows:
2-20 "(a) Effective for limited liability companies formed
2-21 prior to July 1, 1999, a A person ceases to be a member of
2-22 a limited liability company upon the occurrence of any of
2-23 the following events:
2-24 (1) The member withdraws by voluntary act from the
2-25 limited liability company as provided in subsection (c)
2-26 of this Code section;
2-27 (2) The member ceases to be a member of the limited
2-28 liability company as provided in paragraph (6) of Code
2-29 Section 14-11-502;
2-30 (3) The member is removed as a member:
2-31 (A) In accordance with the articles of organization or
2-32 a written operating agreement; or
2-33 (B) Subject to contrary provision in the articles of
2-34 organization or in a written operating agreement, when
2-35 the member assigns all of his or her limited liability
2-36 company interest, by an affirmative vote of a majority
2-37 in number of the members who have not assigned all of
2-38 their limited liability company interests;
2-39 (4) The member's entire interest in the limited
2-40 liability company is purchased or redeemed by the
2-41 limited liability company;
-2-
3- 1 (5) Subject to contrary provision in the articles of
3- 2 organization or a written operating agreement, or
3- 3 written consent of all other members at the time, the
3- 4 member (A) makes an assignment for the benefit of
3- 5 creditors; (B) files a voluntary petition in bankruptcy;
3- 6 (C) is adjudicated a bankrupt or insolvent; (D) files a
3- 7 petition or answer seeking for the member any
3- 8 reorganization, arrangement, composition, readjustment,
3- 9 liquidation, dissolution, or similar relief under any
3-10 statute, law, or regulation; (E) files an answer or
3-11 other pleading admitting or failing to contest the
3-12 material allegations of a petition filed against the
3-13 member in any proceeding of this nature; or (F) seeks,
3-14 consents to, or acquiesces in the appointment of a
3-15 trustee, receiver, or liquidator of the member or of all
3-16 or any substantial part of the member's properties;
3-17 (6) Subject to contrary provision in the articles of
3-18 organization or a written operating agreement, or
3-19 written consent of all other members at the time, if
3-20 within 120 days after the commencement of any proceeding
3-21 against the member seeking reorganization, arrangement,
3-22 composition, readjustment, liquidation, dissolution, or
3-23 similar relief under any statute, law, or regulation,
3-24 the proceeding has not been dismissed, or if within 90
3-25 days after the appointment without his or her consent or
3-26 acquiescence of a trustee, receiver, or liquidator of
3-27 the member or of all or any substantial part of his or
3-28 her properties, the appointment is not vacated or
3-29 stayed, or within 90 days after the expiration of any
3-30 stay, the appointment is not vacated; or
3-31 (7) Subject to contrary provision in the articles of
3-32 organization or a written operating agreement, or
3-33 written consent of all other members at the time, in the
3-34 case of a member who is an individual:
3-35 (A) On the date of his or her death; or
3-36 (B) On the date of the entry of an order by a court of
3-37 competent jurisdiction adjudicating the member
3-38 incompetent to manage his or her person or his or her
3-39 property."
3-40 SECTION 3.
3-41 Said chapter is further amended by adding between Code
3-42 Section 14-11-601 and 14-11-602 a new Code Section
3-43 14-11-601.1 to read as follows:
-3-
4- 1 "14-11-601.1
4- 2 (a) Effective for limited liability companies formed on or
4- 3 after July 1, 1999, a person ceases to be a member of a
4- 4 limited liability company upon the occurrence of any of
4- 5 the following events:
4- 6 (1) The member ceases to be a member of the limited
4- 7 liability company as provided in paragraph (6) of Code
4- 8 Section 14-11-502;
4- 9 (2) The member is removed as a member:
4-10 (A) In accordance with the articles of organization or
4-11 a written operating agreement; or
4-12 (B) Subject to contrary provision in the articles of
4-13 organization or in a written operating agreement, when
4-14 the member assigns all of his or her limited liability
4-15 company interest, by an affirmative vote of a majority
4-16 in number of the members who have not assigned all of
4-17 their limited liability company interests;
4-18 (3) The member's entire interest in the limited
4-19 liability company is purchased or redeemed by the
4-20 limited liability company;
4-21 (4) Subject to contrary provision in the articles of
4-22 organization or a written operating agreement, or
4-23 written consent of all other members at the time, the
4-24 member (A) makes an assignment for the benefit of
4-25 creditors; (B) files a voluntary petition in bankruptcy;
4-26 (C) is adjudicated a bankrupt or insolvent; (D) files a
4-27 petition or answer seeking for the member any
4-28 reorganization, arrangement, composition, readjustment,
4-29 liquidation, dissolution, or similar relief under any
4-30 statute, law, or regulation; (E) files an answer or
4-31 other pleading admitting or failing to contest the
4-32 material allegations of a petition filed against the
4-33 member in any proceeding of this nature; or (F) seeks,
4-34 consents to, or acquiesces in the appointment of a
4-35 trustee, receiver, or liquidator of the member or of all
4-36 or any substantial part of the member's properties;
4-37 (5) Subject to contrary provision in the articles of
4-38 organization or a written operating agreement, or
4-39 written consent of all other members at the time, if
4-40 within 120 days after the commencement of any proceeding
4-41 against the member seeking reorganization, arrangement,
4-42 composition, readjustment, liquidation, dissolution, or
-4-
5- 1 similar relief under any statute, law, or regulation,
5- 2 the proceeding has not been dismissed, or if within 90
5- 3 days after the appointment without his or her consent or
5- 4 acquiescence of a trustee, receiver, or liquidator of
5- 5 the member or of all or any substantial part of his or
5- 6 her properties, the appointment is not vacated or
5- 7 stayed, or within 90 days after the expiration of any
5- 8 stay, the appointment is not vacated; or
5- 9 (6) Subject to contrary provision in the articles of
5-10 organization or a written operating agreement, or
5-11 written consent of all other members at the time, in the
5-12 case of a member who is an individual:
5-13 (A) On the date of his or her death; or
5-14 (B) On the date of the entry of an order by a court of
5-15 competent jurisdiction adjudicating the member
5-16 incompetent to manage his or her person or his or her
5-17 property.
5-18 (b) The articles of organization or a written operating
5-19 agreement may provide for other events the occurrence of
5-20 which result in a person ceasing to be a member of the
5-21 limited liability company."
5-22 SECTION 4.
5-23 Said chapter is further amended by striking in its entirety
5-24 Code Section 14-11-602, relating to dissolution, and
5-25 inserting in lieu thereof a new Code Section 14-11-602 to
5-26 read as follows:
5-27 "14-11-602.
5-28 (a) Effective for limited liability companies formed prior
5-29 to July 1, 1999, a A limited liability company is
5-30 dissolved and its affairs shall be wound up upon the first
5-31 to occur of the following:
5-32 (1) At the time specified in the articles of
5-33 organization or a written operating agreement;
5-34 (2) Upon the happening of events specified in the
5-35 articles of organization or a written operating
5-36 agreement;
5-37 (3) At a time approved by all the members;
5-38 (4) Subject to contrary provision in the articles of
5-39 organization or a written operating agreement, 90 days
5-40 after any event of dissociation with respect to any
-5-
6- 1 member (other than an event specified in paragraph (1)
6- 2 of subsection (a) of Code Section 14-11-601), unless
6- 3 within such 90 day period the limited liability company
6- 4 is continued by the written consent of all other members
6- 5 or as otherwise provided in the articles of organization
6- 6 or a written operating agreement; or
6- 7 (5) Entry of a decree of judicial dissolution under
6- 8 subsection (a) of Code Section 14-11-603.
6- 9 (b) Effective for limited liability companies formed on or
6-10 after July 1, 1999, a limited liability company is
6-11 dissolved and its affairs shall be wound up upon the first
6-12 to occur of the following:
6-13 (1) At the time specified in the articles of
6-14 organization or a written operating agreement;
6-15 (2) Upon the happening of events specified in the
6-16 articles of organization or a written operating
6-17 agreement;
6-18 (3) At a time approved by all the members;
6-19 (4) Subject to contrary provision in the articles of
6-20 organization or a written operating agreement, 90 days
6-21 after an event of dissociation with respect to the last
6-22 remaining member, unless otherwise provided in the
6-23 articles of organization or a written operating
6-24 agreement; or
6-25 (5) Entry of a decree of judicial dissolution under
6-26 subsection (a) of Code Section 14-11-603."
6-27 SECTION 5.
6-28 Said chapter is further amended by striking in its entirety
6-29 subsection (a) of Code Section 14-11-604, relating to
6-30 winding up a dissolved limited liability company's affairs,
6-31 and inserting in lieu thereof a new subsection (a) to read
6-32 as follows:
6-33 "14-11-604.
6-34 (a) Except as otherwise provided in the articles of
6-35 organization or a written operating agreement, upon
6-36 dissolution, the members or managers in whom management of
6-37 the limited liability company was vested prior to
6-38 dissolution may wind up a dissolved limited liability
6-39 company's affairs, or, if there are no such members or
6-40 managers at the time of or at any time after such
-6-
7- 1 dissolution, such persons as may be designated by the
7- 2 persons then entitled to receive a majority of all
7- 3 subsequent distributions, if any, from the limited
7- 4 liability company may wind up the limited liability
7- 5 company's affairs. For cause shown, the court may wind up
7- 6 a dissolved limited liability company's affairs on
7- 7 application of any member as to which an event of
7- 8 dissociation has not occurred, any such member's legal
7- 9 representative, or any such member's assignee, or if there
7-10 is no such member, legal representative, or assignee, on
7-11 application of any assignee of an interest in the limited
7-12 liability company."
7-13 SECTION 6.
7-14 All laws and parts of laws in conflict with this Act are
7-15 repealed.
-7-
Secretary of the Senate
Frank Eldridge, Jr., Secretary
Last Updated on 05/05/99
