New Florida LLC Act – Another Reason for Non-Voting Interests

By:  Jim Hoctor

Just like a corporation, a limited liablity company can have non-voting interests.  Non-voting interests are often used in LLC’s formed for family investments or when interests are given or sold to employees of the LLC.  An important benefit of making these interests non-voting is that non-voting members don’t have “appraisal rights.”  Under the Florida LLC act, appraisal rights give a dissenting voting member the right to force a court action to determine the value of his or her interest and require the company to purchase the interest based on that value.  The new Florida limited liability company act has added the sale of all or substantially all of a LLC’s assets as an event that triggers appraisal rights.  Previously, the only transactions that triggered appraisal rights for members of a Florida LLC were a merger or a conversion.  Therefore, it is now even more important to consider using non-voting interests in Florida LLC’s. read more

Members Have More Approval Rights Under New Florida LLC Act

By:  Jim Hoctor

The new Florida LLC Act applies to all LLC’s formed in 2014.  As of January 1, 2015, it will apply to all Florida LLC’s.  Under the new Act, any action outside of the ordinary course of the LLC’s business and affairs has to be approved by the members even in a manager-managed LLC.  However, this can be changed by the operating agreement.  Most existing operating agreements do not deal with this.  Therefore, this is one of several changes under the new act that make it important to review and update your LLC’s operating agreement. read more

New Florida LLC Act – Foreclosure Still a Possibility on Interests in Single-Member LLC’s

By: Jim Hoctor

The Florida legislature has passed a bill that completely revises the Florida Limited Liability Company Act.  It is now awaiting the governor’s signature.  The new act keeps the provision added to the Florida Limited Liability Company Act last year as a result of the Olmstead case.  That provision allows a judgment creditor to foreclose on the interest of a member in a single-member LLC, but also specifically limits the remedy of a judgment creditor of a member of a multiple-member Florida LLC to a charging order.  Therefore, you should continue to consider using an LLC formed in Delaware (or any other state that limits a judgment creditor’s remedy to a charging order for both multiple-member and single-member LLC’s) for any single-member LLC that owns real estate or other valuable investment property.  On the other hand, a Florida LLC remains a good choice for a multi-member LLC that will own investment property. read more