February 1, 2005, 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:
Sec. 206. (1) A domestic or foreign limited liability company
may transact business under an assumed name or names other than its
name as set forth in its articles of organization or certificate of
authority, if not precluded from use of the assumed name or names
under section 204(2), by filing a certificate stating the true name
of the company and the assumed name or names under which business
is to be transacted.
(2)
The certificate of assumed name is effective, unless
Unless terminated by filing a certificate of termination or by the
dissolution or withdrawal of the company, a certificate of assumed
name is effective for a period expiring on December 31 of the fifth
full calendar year following the year in which the certificate of
assumed
name was is filed. The
company may extend the certificate
of
assumed name may be extended for additional consecutive
periods of 5 full calendar years each by filing a similar
certificate of assumed name not earlier than 90 days before the
expiration of the initial or any subsequent 5-year period.
(3) The administrator shall notify the company of the
impending expiration of the certificate of assumed name not later
than 90 days before the expiration of the initial or any subsequent
5-year period.
(4) Filing a certificate of assumed name under this section
does not create substantive rights to the use of a particular
assumed name.
(5)
The same name may be assumed by 2 Two or more limited
liability
companies or by 1 or more companies and 1 or more
corporations, limited partnerships, or other enterprises
participating together in a partnership or joint venture may use
the same assumed name. Each participating limited liability company
shall file a certificate of assumed name under this section.
(6) A limited liability company participating in a merger, or
any other entity participating in a merger under section 705a, may
transfer to the survivor the use of an assumed name for which a
certificate of assumed name is on file with the administrator prior
to the merger, if the transfer of the assumed name is noted in the
certificate
of merger as provided in section 703(1)(c) , or
705a(7)(c)
, or other applicable statute. The use of an assumed
name transferred under this subsection may continue for the
remaining effective period of the certificate of assumed name on
file
prior to before the merger and the survivor may terminate or
extend
the certificate in accordance with under subsection (2).
(7) A limited liability company surviving a merger may use as
an assumed name the name of a merging limited liability company, or
the name of any other entity participating in the merger under
section 705a, by filing a certificate of assumed name under
subsection (1) or by providing for the use of the assumed name in
the certificate of merger. The surviving limited liability company
may also file a certificate of assumed name under subsection (1) or
provide in the certificate of merger for the use of an assumed name
of
a merging entity not transferred pursuant to under
subsection
(6). A provision in the certificate of merger pursuant to this
subsection is treated as a new certificate of assumed name.
(8) A limited partnership converting to a limited liability
company under section 707 or a corporation converting to a limited
liability company under section 708 may transfer to that limited
liability company any unexpired certificate of assumed name that
the limited partnership or corporation had filed with the
administrator before the conversion by providing for the transfer
of the assumed name in the certificate of conversion under section
707 or 708. A certificate of assumed name transferred under this
subsection continues for the remainder of the original effective
period of the certificate of assumed name. After conversion, the
limited liability company may terminate or extend the certificate
under subsection (2).
(9) If a limited partnership converts to a limited liability
company under section 707 or a corporation converts to a limited
liability company under section 708, the limited liability company
may transact business in the name of the limited partnership or
corporation as an assumed name, or under any assumed name of the
limited partnership or corporation not transferred under subsection
(8), either by filing a new certificate of assumed name under
subsection (1) or by providing for the use of the assumed name in
the certificate of conversion. A provision in a certificate of
conversion for use of an assumed name described in this subsection
is treated as a new certificate of assumed name.
Sec. 502. (1) An operating agreement may establish and
allocate the voting rights of members and may provide that certain
members or groups of members have only limited or no voting rights.
If an operating agreement does not address voting rights, votes are
allocated as follows:
(a)
Prior to Before July 1,
1997, the members of a limited
liability company shall vote in proportion to their shares of
distributions of the company, as determined in accordance with
section 303.
(b) On and after July 1, 1997, except as otherwise provided in
subsection (2), each member of a limited liability company has 1
vote. For purposes of this subdivision, a membership interest held
by 2 or more persons, whether as fiduciaries, members of a
partnership, tenants in common, joint tenants, tenants by the
entirety, or otherwise, is treated as held by 1 member.
(2) If a limited liability company in existence before July 1,
1997 allocated votes on the basis of subsection (1)(a), the company
shall continue to allocate votes pursuant to subsection (1)(a)
until the allocation is changed by an operating agreement.
(3) If a membership interest that has voting rights is held by
2 or more persons, whether as fiduciaries, members of a
partnership, tenants in common, joint tenants, tenants by the
entirety, or otherwise, the voting of the interest shall be in
accordance with the instrument or order appointing them or creating
the relationship if a copy of that instrument or order is furnished
to the limited liability company. If an instrument or order is not
furnished to the limited liability company, 1 of the following
applies to the voting of that membership interest:
(a) If an operating agreement applies to the voting of the
membership interest, the vote shall be in accordance with that
operating agreement.
(b) If an operating agreement does not apply to the voting of
the membership interest and only 1 of the persons who hold the
membership interest votes, that person's vote determines the voting
of the membership interest.
(c) If an operating agreement does not apply to the voting of
the membership interest and 2 or more of the persons who hold the
membership interest vote, the vote of a majority determines the
voting of the membership interest, and if there is no majority, the
voting of the membership interest is divided among those voting.
(4) Only members of a limited liability company, and not its
managers, may authorize the following actions:
(a)
The dissolution of the limited liability company pursuant
to
under section 801(c).
(b)
Merger of the limited liability company pursuant to
under sections 701 through to
706.
(c) Conversion of a limited liability company to a corporation
under section 745 of the business corporation act, 1972 PA 284, MCL
450.1745.
(d)
(c) An amendment to the articles of organization.
(5) Unless authorized in advance by an operating agreement, a
transaction with the limited liability company or a transaction
connected with the conduct or winding up of the limited liability
company in which a manager of the limited liability company has a
direct or indirect interest or a manager's personal use of property
of the limited liability company may be authorized or ratified only
by a vote of the disinterested members entitled to vote. The
manager shall disclose all material facts regarding the transaction
and the manager's interest in the transaction or all material facts
about the manager's personal use of the limited liability company's
property before the members vote on that transaction or use.
(6) Unless otherwise provided in an operating agreement, the
sale, exchange, lease, or other transfer of all or substantially
all of the assets of a limited liability company, other than in the
ordinary course of business, may be authorized only by a vote of
the members entitled to vote.
(7) The articles of organization or an operating agreement may
provide for additional voting rights of members of the limited
liability company.
(8) Unless the vote of a greater percentage of the voting
interest of members is required by this act, the articles of
organization, or an operating agreement, a vote of a majority in
interest of the members entitled to vote is required to approve any
matter submitted for a vote by the members.
Sec. 707. (1) A domestic partnership or domestic limited
partnership may convert to a limited liability company in
accordance with this section.
(2) The partners must approve the terms and conditions of a
conversion
under this section shall be approved by the partners
and the initial operating agreement of the limited liability
company in the manner provided in the partnership agreement for
amendments to the partnership agreement or, if no provision for
amendments to the partnership agreement is made in the partnership
agreement, by all of the partners. If a conversion is approved by
less than all of the partners pursuant to the partnership
agreement, the conversion and the operating agreement may not
adversely affect the rights and obligations of a dissenting
partner.
(3) If a conversion under this section is approved, the
converting partnership or limited partnership shall file both of
the following:
(a) Articles of organization that comply with section 203 and
with section 903 if the limited liability company will render
professional services.
(b)
A certificate of conversion , stating the that contains
all of the following:
(i) The name of the partnership or limited partnership and the
date
it was formed. In the case of a limited partnership, the
certificate
of conversion shall include a statement that the
certificate
of limited partnership is canceled as of the effective
date
of the articles of organization.
(ii) A statement specifying each assumed name of the converting
partnership transferred to the limited liability company under
section 206(8). The certificate may include a statement of the name
or assumed names of the converting partnership that are to be
treated as newly filed assumed names under section 206(9).
(iii) The effective date of the conversion if later than the
date the certificate of conversion is filed.
(4) If a partnership or limited partnership converts to a
limited
liability company under this section, the certificate of
limited
partnership is canceled as of the effective date of the
articles
of organization partnership agreement terminates on the
effective date of the conversion.
(5) If a conversion under this section takes effect, the
limited liability company is considered the same entity that
existed before the conversion and the conversion is not a
dissolution of the partnership. All property and rights of the
converting partnership or limited partnership remain vested in the
converted limited liability company. All liabilities of the
converting partnership or limited partnership continue as
liabilities of the converted limited liability company. An action
or proceeding pending against the converting partnership or limited
partnership may be continued as if the conversion under this
section had not occurred. The liability, if any, of a general
partner of the converting partnership or limited partnership for
acts
or omissions that occurred before a the conversion under
this
section is not affected by a the
conversion. under this
section.
Sec. 708. (1) A domestic limited liability company may convert
to a corporation under section 745 of the business corporation act,
1972 PA 284, MCL 450.1745. A domestic corporation may convert to a
limited liability company under this section.
(2) A domestic corporation converting to a limited liability
company shall prepare a plan of conversion that contains all of the
following:
(a) The name of the corporation, the name of the limited
liability company to which the corporation is converting, and the
street address of the limited liability company's principal place
of business.
(b) The designation and number of the corporation's
outstanding shares of each class and series, specifying the classes
and series entitled to vote, each class and series entitled to vote
as a class, and, if the number of shares is subject to change
before the effective date of the conversion, the manner in which
the change may occur.
(c) The manner and basis of converting the shares of the
corporation into membership interests or obligations of the limited
liability company, into cash or other consideration, or into any
combination of membership interests, obligations, cash, or other
consideration and any other terms and conditions of the conversion.
(d) A statement of whether managers or members will manage the
limited liability company.
(e) Any other provision that the board of directors of the
corporation considers necessary or desirable.
(3) For a conversion to occur, the board of directors of the
corporation must adopt a plan of conversion. If adopted, the board
of directors shall submit the plan of conversion for approval at a
meeting of the shareholders under the procedures applicable to a
merger under section 703a(2) of the business corporation act, 1972
PA 284, MCL 450.1703a, including, but not limited to, the
procedures pertaining to dissenters' rights under that act if any
shareholders have the right to dissent under section 762.
(4) If the conversion is approved, the corporation shall file
both of the following:
(a) Articles of organization that comply with section 203 and
with section 903 if the limited liability company will render
professional services.
(b) A certificate of conversion that contains all of the
following:
(i) The name of the corporation and the date it was
incorporated.
(ii) A statement that the plan of conversion was approved in
accordance with subsection (3).
(iii) A statement specifying each assumed name of the
corporation transferred to the limited liability company under
section 206(8). The certificate may include a statement of the name
or assumed names of the corporation that are to be treated as newly
filed assumed names of the limited liability company under section
206(9).
(iv) The effective date of the conversion if later than the
date the certificate of conversion is filed.
(5) If a conversion under this section takes effect, the
limited liability company is considered the same entity that
existed before the conversion and the conversion is not a
dissolution of the corporation. All property and rights of the
corporation remain vested in the limited liability company. All
liabilities of the corporation remain as liabilities of the limited
liability company. An action or proceeding pending against the
corporation may be continued as if the conversion under this
section had not occurred.
Enacting section 1. This amendatory act does not take effect
unless Senate Bill No. 114
of the 93rd Legislature is enacted into law.