As of January 1, 2015, the Florida Revised Limited Liability Company Act will become mandatory and applicable to all Florida LLCs, including those preexisting the Act’s effective date. The Act had already gone into effect on January 1 of this year for all subsequently formed or registered LLCs or those that voluntarily opted in.

Although there are many significant changes under the Revised Act which should be carefully reviewed with counsel, the following are a few of the most significant.

Non-waivable provisions. Most provisions of both the previous and Revised Act are default provisions—i.e. provisions that only come into play if an LLC has not provided otherwise in its governance documents. The Revised Act put into place 17 “non-waivable provisions,” which prohibit LLCs from including conflicting terms in their operating agreements. Among these provisions are prohibitions and limitations on the LLC’s ability to (i) limit liability and indemnify members and managers in certain cases, (ii) waive judicial dissolution, (iii) restrict a member from maintaining a derivative action or bringing a direct legal action against the LLC, another member, or any manager; (iv) unreasonably restrict rights and duties related to inspection of records, (v) vary the power of a member to dissociate, and (vi) vary the right of a member to approve a merger, interest exchange, or conversion.

Elimination of the “Managing Member” concept. Previously, LLCs had the ability to designate certain of its members as the “managing member(s),” with the other members being unable to bind the LLC as a manager. However, under the new Act, the concept of the managing member has gone away, and we are left with LLCs that must either be “member-managed” or “manager-managed.” Practically speaking, this does not change much, as an LLC is still permitted to designate one or more of its members as the manager(s). However, issues may arise if that position is not titled and described properly in the governing documents. Under the new Act, whenever it is unclear whether an LLC is member-managed or manager-managed, the default will be member-managed. Thus, if an LLC continues to use documents calling for “managing members,” without more, the LLC could be deemed to be member-managed such that all members, not just the managing-member, could bind the LLC.

New definitions of “sign” expressly permit manual, facsimile and electronic signatures. Although this is in line with existing Florida law on the topic of electronic signatures (see Electronic Signatures in Commercial Transactions), the change reiterates the importance of an LLC being clear in its documents about what does and does not constitute a signature. Furthermore, on an ongoing basis, LLC’s, as well as other business entities, and their principals should pay closer attention to what could be deemed a signature that was not intended as such.

As we approach full implementation of the Revised Act in only a few weeks, LLCs are well advised to have their governing documents, in particular, their operating agreements, reviewed by corporate counsel to ensure that the documents’ provisions and the LLC’s business operations comply with the new Act. Among other things, review of these documents is wise, not only to confirm that the non-waivable provisions are not being violated (whether in the operating agreement or in practice), but also that there are no “gaps” to be filled by new default provisions that are out of sync with members’ objectives.

For additional information, please contact Haley R. Ayure in our Tampa, Fl. (BMO Harris Plaza) office.

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