Florida is Revising its LLC Statute
A specially-appointed committee by the Florida Bar, the LLC Drafting Task Force, is preparing to have its updated version of Florida’s Limited Liability Company Act ready for the 2011 or 2012 legislative session. The Task Force is currently comprised of members from the Florida Business Law, Tax Law, and Real Property, Probate and Trust Law Sections. McCabe Rabin attorney Mark Nichols, who is Vice-Chair of the Business Law Section’s Business Litigation Committee, serves on this Task Force.
The Task Force started with the Revised Uniform LLC Act and, over the course of the last year and a half, have reviewed every section in detail, determining the appropriate provisions to keep, those to delete, and those to revise in accordance with what the Task Force sees as good policy for Florida. Part of the idea of “good policy” in Florida consists of trying to keep this proposed LLC revision in line with the also recently-revised Limited Partnership and General Partnership acts.
The Revised Uniform LLC Act includes a proposed section that allows an LLC to form a Special Litigation Committee if named or made a party to a derivative proceeding. This type of committee is not currently required, and the Task Force has delegated this issue of whether to include it in Florida’s revised LLC Act to the Business Litigation Committee.
Perhaps the most divisive issue the Task Force will have to address is the issue of charging orders as to single and multi-member LLCs, in light of the Florida Supreme Court’s decision in Olmstead v. Federal Trade Commission. In Olmstead, the Florida Supreme Court ruled the language in Florida’s current LLC statute (specifically, Section 608.433(4), Florida Statutes) did not prescribe charging orders as the sole and exclusive remedy available to creditors. Accordingly, the debtor was required to surrender all right, title and interest in his Florida single-member LLC. The concern is that the rule can be interpreted to equally apply in the context of multi-members LLCs. In addressing this issue for the revised LLC Act, the Task Force must consider whether the best policy should be to allow for different treatment between single and multi-members LLCs. If so, Florida would be the first state to do so.