Last summer, the Florida Legislature passed a new Limited Liability Company (LLC) act, Chapter 605 of the Florida Statutes. The new act takes effect this month for new LLCs, while existing LLCs have until Jan. 1, 2015, to adapt to the changes. The purpose of the law, says attorney Greg Marks, a partner in the Sarasota office of Shumaker, Loop & Kendrick, LLP, was to modernize and streamline the original statute from 1982—good timing, since LLCs have become “the business entity of choice,” says Marks, with more than 710,000 in the state, and new ones being formed at 10 times the rate of corporations.
Marks served on the committee that drafted the new act, and he says it boils down all rules and conditions to two management structures: manager-managed or member-managed. “Once you’re in one of those camps,” says Marks, “you have different voting rules, fiduciary duties, inspection rights and liability rules.” If an LLC’s operating agreement doesn’t cover a particular issue, then that issue automatically will default to the language of the law. It’s important to learn the new default rules and update your written agreements to override those rules if they are not in your LLC’s best interest.
To understand what the new act will mean for your LLC, Marks says it’s time to review your operating agreement. Some LLCs will choose to delay until the end of the year before adapting; for others, the new act provides planning opportunities and new liability protections that could be immediately beneficial. “There’s never one size fits all,” says Marks. “You have to look at all of the circumstances to see what works best.”
■ By Beau Denton