Bill Text: MN SF2063 | 2011-2012 | 87th Legislature | Introduced
Bill Title: Low-profit limited liability company (L3C) creation and operation authorization
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Introduced - Dead) 2012-02-23 - Referred to Judiciary and Public Safety [SF2063 Detail]
Download: Minnesota-2011-SF2063-Introduced.html
1.2relating to limited liability companies; providing for the creation and operation
1.3of low-profit limited liability companies;amending Minnesota Statutes 2010,
1.4sections 322B.03, by adding a subdivision; 322B.115, subdivision 1; 322B.12,
1.5subdivision 1; 322B.833, subdivision 1; 322B.843, subdivision 1; proposing
1.6coding for new law in Minnesota Statutes, chapter 322B.
1.7BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
1.8 Section 1. Minnesota Statutes 2010, section 322B.03, is amended by adding a
1.9subdivision to read:
1.10 Subd. 28a. Low-profit limited liability company; L3C. "Low-profit limited
1.11liability company" or "L3C" means a limited liability company organized under section
1.12322B.976.
1.13 Sec. 2. Minnesota Statutes 2010, section 322B.115, subdivision 1, is amended to read:
1.14 Subdivision 1. Required provisions. The articles of organization must contain:
1.15(1) the name of the limited liability company;
1.16(2) the address of the registered office of the limited liability company and the name
1.17of its registered agent, if any, at that address;
1.18(3) the name and address of each organizer;and
1.19(4) a statement of the period of existence for the limited liability company if different
1.20from the period set forth in section322B.20, subdivision 2 ; and
1.21(5) in the case of a low-profit limited liability company, a statement that it is formed
1.22for both a business and charitable purpose that requires its operation as a low-profit limited
1.23liability company in accordance with section 322B.976.
2.1 Sec. 3. Minnesota Statutes 2010, section 322B.12, subdivision 1, is amended to read:
2.2 Subdivision 1. Requirements and prohibitions. The limited liability company
2.3name must:
2.4(1) be in the English language or in any other language expressed in English letters
2.5or characters;
2.6(2) contain the words "limited liability company," ormust contain the abbreviation
2.7"LLC" or,:
2.8(i) in the case of an organization formed pursuant to chapter 319B, must meet the
2.9requirements of section319B.05 applicable to a limited liability company; or
2.10(ii) if organized as a low-profit limited liability company, contain the words
2.11"low-profit limited liability company" or "L3C";
2.12(3) not contain the word corporation or incorporated and must not contain the
2.13abbreviation of either or both of these words;
2.14(4) not contain a word or phrase that indicates or implies that it is organized for a
2.15purpose other than a legal business purpose; and
2.16(5) be distinguishable upon the records in the Office of the Secretary of State
2.17from the name of each domestic limited liability company, limited liability partnership,
2.18corporation, and limited partnership, whether profit or nonprofit, and each foreign limited
2.19liability company, limited liability partnership, corporation, and limited partnership on
2.20file, authorized or registered to do business in this state at the time of filing, whether profit
2.21or nonprofit, and each name the right to which is, at the time of organization, reserved as
2.22provided for in sections5.35 ,
302A.117 ,
317A.117 ,
321.0109 ,
322B.125 , or
333.001 to
2.23333.54
, unless there is filed with the articles of organization one of the following:
2.24(i) the written consent of the domestic limited liability company, limited liability
2.25partnership, corporation, or limited partnership or the foreign limited liability company,
2.26limited liability partnership, corporation, or limited partnership authorized or registered to
2.27do business in this state or the holder of a reserved name or a name filed by or registered
2.28with the secretary of state under sections333.001 to
333.54 having a name that is not
2.29distinguishable;
2.30(ii) a certified copy of a final decree of a court in this state establishing the prior right
2.31of the applicant to the use of the name in this state; or
2.32(iii) the applicant's affidavit that the domestic or foreign limited liability company,
2.33domestic or foreign corporation, or domestic or foreign limited partnership with the
2.34name that is not distinguishable has been organized, incorporated, or on file in this
2.35state for at least three years prior to the affidavit, if it is a domestic limited liability
2.36company, corporation, or limited partnership, or has been authorized or registered to
3.1do business in this state for at least three years prior to the affidavit, if it is a foreign
3.2limited liability company, corporation, or limited partnership, or that the holder of a name
3.3filed or registered with the secretary of state under sections333.001 to
333.54 filed
3.4or registered that name at least three years prior to the affidavit, that the domestic or
3.5foreign limited liability company, domestic or foreign corporation, or domestic or foreign
3.6limited partnership or holder has not during the three-year period before the affidavit filed
3.7any document with the secretary of state; that the applicant has mailed written notice
3.8to the domestic or foreign limited liability company, domestic or foreign corporation,
3.9or domestic or foreign limited partnership or the holder of a name filed or registered
3.10with the secretary of state under sections333.001 to
333.54 by certified mail, return
3.11receipt requested, properly addressed to the registered office of the domestic or foreign
3.12limited liability company or domestic or foreign corporation or in care of the agent of the
3.13domestic or foreign limited partnership, or the address of the holder of a name filed or
3.14registered with the secretary of state under sections333.001 to
333.54 , shown in the
3.15records of the secretary of state, stating that the applicant intends to use a name that is
3.16not distinguishable and the notice has been returned to the applicant as undeliverable to
3.17the addressee of the domestic or foreign limited liability company, domestic or foreign
3.18corporation, or domestic or foreign limited partnership or holder of a name filed or
3.19registered with the secretary of state under sections333.001 to
333.54 ; that the applicant,
3.20after diligent inquiry, has been unable to find any telephone listing for the domestic or
3.21foreign limited liability company, domestic or foreign corporation, or domestic or foreign
3.22limited partnership with the name that is not distinguishable in the county in which is
3.23located the registered office of the domestic or foreign limited liability company, domestic
3.24or foreign corporation, or domestic or foreign limited partnership shown in the records of
3.25the secretary of state or has been unable to find any telephone listing for the holder of a
3.26name filed or registered with the secretary of state under sections333.001 to
333.54
3.27in the county in which is located the address of the holder shown in the records of the
3.28secretary of state; and that the applicant has no knowledge that the domestic or foreign
3.29limited liability company, domestic or foreign corporation, or domestic or foreign limited
3.30partnership or holder of a name filed or registered with the secretary of state under sections
3.31333.001
to
333.54 is currently engaged in business in this state.
3.32 Sec. 4. Minnesota Statutes 2010, section 322B.833, subdivision 1, is amended to read:
3.33 Subdivision 1. When permitted. A court may grant any equitable relief it considers
3.34just and reasonable in the circumstances or may dissolve, wind up, and terminate a limited
3.35liability company:
4.1(1) in a supervised winding up and termination pursuant to section322B.83 ;
4.2(2) in an action by a member when it is established that:
4.3(i) the governors or the persons having the authority otherwise vested in the board
4.4of governors are deadlocked in the management of the affairs of the limited liability
4.5company and the members are unable to break the deadlock;
4.6(ii) the governors or those in control of the limited liability company have acted
4.7fraudulently, illegally, or in a manner unfairly prejudicial toward one or more members in
4.8their capacities as members or governors of any limited liability company, or as managers
4.9or employees of a closely held limited liability company;
4.10(iii) the members of the limited liability company are so divided in voting power
4.11that, for a period that includes the time when two consecutive regular meetings were held,
4.12they have failed to elect successors to governors whose terms have expired or would have
4.13expired upon the election and qualification of their successors;
4.14(iv) the limited liability company assets are being misapplied or wasted;or
4.15(v) an event of dissolution has occurred under section322B.80, subdivision 1 , clause
4.16(1), (4) or (5) but the limited liability company is not acting to wind up its affairs; or
4.17(vi) if the limited liability company is a low-profit limited liability company, it
4.18ceases to meet any of the requirements of section 322B.976, subdivision 1 or 2, and for
4.1960 or more days after it ceased to meet those requirements, failed to comply with section
4.20322B.976, subdivision 3;
4.21(3) in an action by a creditor when:
4.22(i) the claim of the creditor has been reduced to judgment and an execution on the
4.23judgment has been returned unsatisfied; or
4.24(ii) the limited liability company has admitted in writing that the claim of the creditor
4.25is due and owing and it is established that the limited liability company is unable to pay its
4.26debts in the ordinary course of business; or
4.27(4) in an action by the attorney general to dissolve the limited liability company in
4.28accordance with section322B.843 when it is established that a decree of termination
4.29is appropriate.
4.30 Sec. 5. Minnesota Statutes 2010, section 322B.843, subdivision 1, is amended to read:
4.31 Subdivision 1. When permitted. A limited liability company may be involuntarily
4.32dissolved, wound up and terminated by a decree of a court in this state in an action filed by
4.33the attorney general when it is established that:
4.34(1) the articles of organization were procured through fraud;
5.1(2) the limited liability company was organized for a purpose not permitted by
5.2section322B.10 ;
5.3(3) the limited liability company failed to comply with the requirements of sections
5.4322B.10
to
322B.18 essential to organization under this chapter;
5.5(4) the limited liability company has flagrantly violated a provision of this chapter,
5.6or has violated a provision of this chapter more than once, or has violated more than
5.7one provision of this chapter;or
5.8(5) the limited liability company has acted, or failed to act, in a manner that
5.9constitutes surrender or abandonment of the limited liability company privileges or
5.10enterprise; or
5.11(6) if the limited liability company is a low-profit limited liability company, it ceases
5.12to meet any of the requirements of section 322B.976, subdivision 1 or 2, and for 60 or
5.13more days after it ceased to meet those requirements, failed to comply with section
5.14322B.976, subdivision 3.
5.15 Sec. 6. [322B.976] LOW-PROFIT LIMITED LIABILITY COMPANIES.
5.16 Subdivision 1. Required purposes. A low-profit limited liability company must
5.17significantly further the accomplishment of one or more charitable or educational purposes
5.18within the meaning of section 170(c)(2)(B) of the Internal Revenue Code of 1986, United
5.19States Code, title 26, section 170(c)(2)(B), as amended.
5.20 Subd. 2. Limitations on purposes. (a) A significant purpose of a low-profit limited
5.21liability company must not include the production of income or the appreciation of
5.22property. The fact that a company produces significant income or capital appreciation is
5.23not, in the absence of other factors, conclusive evidence of a significant purpose involving
5.24the production of income or the appreciation of property.
5.25(b) A purpose of a low-profit limited liability company must not include the
5.26accomplishment of one or more political or legislative purposes within the meaning of
5.27section 170(c)(2)(D) of the Internal Revenue Code of 1986, United States Code, title 26,
5.28section 170(c)(2)(D), as amended.
5.29 Subd. 3. Change of status. A low-profit limited liability company that no longer
5.30satisfies the requirements of this section continues to exist as a limited liability company
5.31provided that it:
5.32(1) promptly amends its articles of organization and name so that it is no longer
5.33identified as a low-profit limited liability company; and
5.34(2) continues to meet all other requirements of this chapter applicable to a limited
5.35liability company.
6.1 Subd. 4. No limitation on other limited liability companies. This section does not
6.2prevent a limited liability company that is not governed by this section from electing a
6.3charitable or educational purpose in whole or in part for doing business under this chapter.
1.3of low-profit limited liability companies;amending Minnesota Statutes 2010,
1.4sections 322B.03, by adding a subdivision; 322B.115, subdivision 1; 322B.12,
1.5subdivision 1; 322B.833, subdivision 1; 322B.843, subdivision 1; proposing
1.6coding for new law in Minnesota Statutes, chapter 322B.
1.7BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
1.8 Section 1. Minnesota Statutes 2010, section 322B.03, is amended by adding a
1.9subdivision to read:
1.10 Subd. 28a. Low-profit limited liability company; L3C. "Low-profit limited
1.11liability company" or "L3C" means a limited liability company organized under section
1.12322B.976.
1.13 Sec. 2. Minnesota Statutes 2010, section 322B.115, subdivision 1, is amended to read:
1.14 Subdivision 1. Required provisions. The articles of organization must contain:
1.15(1) the name of the limited liability company;
1.16(2) the address of the registered office of the limited liability company and the name
1.17of its registered agent, if any, at that address;
1.18(3) the name and address of each organizer;
1.19(4) a statement of the period of existence for the limited liability company if different
1.20from the period set forth in section
1.21(5) in the case of a low-profit limited liability company, a statement that it is formed
1.22for both a business and charitable purpose that requires its operation as a low-profit limited
1.23liability company in accordance with section 322B.976.
2.1 Sec. 3. Minnesota Statutes 2010, section 322B.12, subdivision 1, is amended to read:
2.2 Subdivision 1. Requirements and prohibitions. The limited liability company
2.3name must:
2.4(1) be in the English language or in any other language expressed in English letters
2.5or characters;
2.6(2) contain the words "limited liability company," or
2.7"LLC" or
2.8(i) in the case of an organization formed pursuant to chapter 319B, must meet the
2.9requirements of section
2.10(ii) if organized as a low-profit limited liability company, contain the words
2.11"low-profit limited liability company" or "L3C";
2.12(3) not contain the word corporation or incorporated and must not contain the
2.13abbreviation of either or both of these words;
2.14(4) not contain a word or phrase that indicates or implies that it is organized for a
2.15purpose other than a legal business purpose; and
2.16(5) be distinguishable upon the records in the Office of the Secretary of State
2.17from the name of each domestic limited liability company, limited liability partnership,
2.18corporation, and limited partnership, whether profit or nonprofit, and each foreign limited
2.19liability company, limited liability partnership, corporation, and limited partnership on
2.20file, authorized or registered to do business in this state at the time of filing, whether profit
2.21or nonprofit, and each name the right to which is, at the time of organization, reserved as
2.22provided for in sections
2.24(i) the written consent of the domestic limited liability company, limited liability
2.25partnership, corporation, or limited partnership or the foreign limited liability company,
2.26limited liability partnership, corporation, or limited partnership authorized or registered to
2.27do business in this state or the holder of a reserved name or a name filed by or registered
2.28with the secretary of state under sections
2.29distinguishable;
2.30(ii) a certified copy of a final decree of a court in this state establishing the prior right
2.31of the applicant to the use of the name in this state; or
2.32(iii) the applicant's affidavit that the domestic or foreign limited liability company,
2.33domestic or foreign corporation, or domestic or foreign limited partnership with the
2.34name that is not distinguishable has been organized, incorporated, or on file in this
2.35state for at least three years prior to the affidavit, if it is a domestic limited liability
2.36company, corporation, or limited partnership, or has been authorized or registered to
3.1do business in this state for at least three years prior to the affidavit, if it is a foreign
3.2limited liability company, corporation, or limited partnership, or that the holder of a name
3.3filed or registered with the secretary of state under sections
3.4or registered that name at least three years prior to the affidavit, that the domestic or
3.5foreign limited liability company, domestic or foreign corporation, or domestic or foreign
3.6limited partnership or holder has not during the three-year period before the affidavit filed
3.7any document with the secretary of state; that the applicant has mailed written notice
3.8to the domestic or foreign limited liability company, domestic or foreign corporation,
3.9or domestic or foreign limited partnership or the holder of a name filed or registered
3.10with the secretary of state under sections
3.11receipt requested, properly addressed to the registered office of the domestic or foreign
3.12limited liability company or domestic or foreign corporation or in care of the agent of the
3.13domestic or foreign limited partnership, or the address of the holder of a name filed or
3.14registered with the secretary of state under sections
3.15records of the secretary of state, stating that the applicant intends to use a name that is
3.16not distinguishable and the notice has been returned to the applicant as undeliverable to
3.17the addressee of the domestic or foreign limited liability company, domestic or foreign
3.18corporation, or domestic or foreign limited partnership or holder of a name filed or
3.19registered with the secretary of state under sections
3.20after diligent inquiry, has been unable to find any telephone listing for the domestic or
3.21foreign limited liability company, domestic or foreign corporation, or domestic or foreign
3.22limited partnership with the name that is not distinguishable in the county in which is
3.23located the registered office of the domestic or foreign limited liability company, domestic
3.24or foreign corporation, or domestic or foreign limited partnership shown in the records of
3.25the secretary of state or has been unable to find any telephone listing for the holder of a
3.26name filed or registered with the secretary of state under sections
3.28secretary of state; and that the applicant has no knowledge that the domestic or foreign
3.29limited liability company, domestic or foreign corporation, or domestic or foreign limited
3.30partnership or holder of a name filed or registered with the secretary of state under sections
3.32 Sec. 4. Minnesota Statutes 2010, section 322B.833, subdivision 1, is amended to read:
3.33 Subdivision 1. When permitted. A court may grant any equitable relief it considers
3.34just and reasonable in the circumstances or may dissolve, wind up, and terminate a limited
3.35liability company:
4.1(1) in a supervised winding up and termination pursuant to section
4.2(2) in an action by a member when it is established that:
4.3(i) the governors or the persons having the authority otherwise vested in the board
4.4of governors are deadlocked in the management of the affairs of the limited liability
4.5company and the members are unable to break the deadlock;
4.6(ii) the governors or those in control of the limited liability company have acted
4.7fraudulently, illegally, or in a manner unfairly prejudicial toward one or more members in
4.8their capacities as members or governors of any limited liability company, or as managers
4.9or employees of a closely held limited liability company;
4.10(iii) the members of the limited liability company are so divided in voting power
4.11that, for a period that includes the time when two consecutive regular meetings were held,
4.12they have failed to elect successors to governors whose terms have expired or would have
4.13expired upon the election and qualification of their successors;
4.14(iv) the limited liability company assets are being misapplied or wasted;
4.15(v) an event of dissolution has occurred under section
4.16(1), (4) or (5) but the limited liability company is not acting to wind up its affairs; or
4.17(vi) if the limited liability company is a low-profit limited liability company, it
4.18ceases to meet any of the requirements of section 322B.976, subdivision 1 or 2, and for
4.1960 or more days after it ceased to meet those requirements, failed to comply with section
4.20322B.976, subdivision 3;
4.21(3) in an action by a creditor when:
4.22(i) the claim of the creditor has been reduced to judgment and an execution on the
4.23judgment has been returned unsatisfied; or
4.24(ii) the limited liability company has admitted in writing that the claim of the creditor
4.25is due and owing and it is established that the limited liability company is unable to pay its
4.26debts in the ordinary course of business; or
4.27(4) in an action by the attorney general to dissolve the limited liability company in
4.28accordance with section
4.29is appropriate.
4.30 Sec. 5. Minnesota Statutes 2010, section 322B.843, subdivision 1, is amended to read:
4.31 Subdivision 1. When permitted. A limited liability company may be involuntarily
4.32dissolved, wound up and terminated by a decree of a court in this state in an action filed by
4.33the attorney general when it is established that:
4.34(1) the articles of organization were procured through fraud;
5.1(2) the limited liability company was organized for a purpose not permitted by
5.2section
5.3(3) the limited liability company failed to comply with the requirements of sections
5.5(4) the limited liability company has flagrantly violated a provision of this chapter,
5.6or has violated a provision of this chapter more than once, or has violated more than
5.7one provision of this chapter;
5.8(5) the limited liability company has acted, or failed to act, in a manner that
5.9constitutes surrender or abandonment of the limited liability company privileges or
5.10enterprise; or
5.11(6) if the limited liability company is a low-profit limited liability company, it ceases
5.12to meet any of the requirements of section 322B.976, subdivision 1 or 2, and for 60 or
5.13more days after it ceased to meet those requirements, failed to comply with section
5.14322B.976, subdivision 3.
5.15 Sec. 6. [322B.976] LOW-PROFIT LIMITED LIABILITY COMPANIES.
5.16 Subdivision 1. Required purposes. A low-profit limited liability company must
5.17significantly further the accomplishment of one or more charitable or educational purposes
5.18within the meaning of section 170(c)(2)(B) of the Internal Revenue Code of 1986, United
5.19States Code, title 26, section 170(c)(2)(B), as amended.
5.20 Subd. 2. Limitations on purposes. (a) A significant purpose of a low-profit limited
5.21liability company must not include the production of income or the appreciation of
5.22property. The fact that a company produces significant income or capital appreciation is
5.23not, in the absence of other factors, conclusive evidence of a significant purpose involving
5.24the production of income or the appreciation of property.
5.25(b) A purpose of a low-profit limited liability company must not include the
5.26accomplishment of one or more political or legislative purposes within the meaning of
5.27section 170(c)(2)(D) of the Internal Revenue Code of 1986, United States Code, title 26,
5.28section 170(c)(2)(D), as amended.
5.29 Subd. 3. Change of status. A low-profit limited liability company that no longer
5.30satisfies the requirements of this section continues to exist as a limited liability company
5.31provided that it:
5.32(1) promptly amends its articles of organization and name so that it is no longer
5.33identified as a low-profit limited liability company; and
5.34(2) continues to meet all other requirements of this chapter applicable to a limited
5.35liability company.
6.1 Subd. 4. No limitation on other limited liability companies. This section does not
6.2prevent a limited liability company that is not governed by this section from electing a
6.3charitable or educational purpose in whole or in part for doing business under this chapter.
