Florida’s Legislature has unanimously passed Senate Bill 1300 (the “Bill”) aimed at updating the state’s decades-old limited liability company (LLC) laws. The Bill will first take effect on January 1, 2014.
Florida’s LLC laws date back to 1982, when the state was the second in the nation, after Wyoming, to pass such laws. Since then, every state has passed a set of LLC laws, which has created a competitive environment among states seeking to attract new businesses within their borders. As Florida’s outdated LLC laws increasingly drove new businesses to other states, lawmakers, state officials, and the legal community sought to update Florida’s LLC laws to gain back that competitive advantage.
Notably, the Bill expands protections afforded to LLC members. While LLC laws generally emphasize the ability of parties to contract freely, Florida’s Bill increases the number of non-waivable provisions from the previous six to the current sixteen. These protective provisions include appraisal rights for LLC members, and the ability to form special litigation committees (SLC) in actions between members, managers, or the LLC. Like shareholders of a corporation who disagree with extraordinary actions taken by the corporation, LLC members now have the right to sell back their interest to an LLC at an appraised value. Further, LLCs may now form an SLC to determine the merits of an action brought forth by an LLC’s members against the managers or the LLC itself. This provision mirrors a corporation’s ability to form an SLC following a shareholder derivative action.