A bill has been introduced in the Indiana General Assembly to replace the Indiana Business Flexibility Act, Indiana's statute that governs limited liability companies (LLCs), with the Revised Uniform Limited Liability Company Act (RULLCA). Senate Bill 180 was introduced by Senator Vi Simpson (D-Ellettsville) on January 5. A similar bill may be introduced in the House by Representative Ralph Foley (R-Martinsvlle).
At the moment, it's not clear (at least to me) whether adopting the RULLCA in Indiana would be a good thing or a bad thing. Although uniformity among state laws can be beneficial, in our experience the Indiana Business Flexibility Act works very well. I understand that the Indiana Business Law Survey Commission, a group of experts who advise the General Assembly on business and commercial topics, already planned to review the LLC statute later this year. I think the best course of action would be for the General Assembly to give the Commission time to study the question and to determine the effect on Indiana businesses before making significant changes to the Indiana LLC statute.
About the RULLCA.
The RULLCA is one of the many "uniform laws" that are written and published by the National Conference of Commissioners on Uniform State Laws (NCCUSL). The name uniform "law" is a bit misleading because uniform laws are not really laws at all, and the NCCUSL has no legal authority to create laws. The NCCUSL is a nonprofit, unincorporated organization, and the uniform laws are a set of model statutes that are intended to promote uniformity among state laws, but they have no legal effect until they are adopted by state legislatures, one by one. In 1995, the NCCUSL adopted the Uniform Limited Liability Company Act, but it was not well received, and it was adopted by only a few states. In 2006, the NCCUSL adopted a new version, the RULLCA. In the meantime, the states have gone their own ways, with each having some sort of LLC statute. The statutes are all similar fundamentally, but they vary significantly in the details. A few states have adopted the RULLCA, but it is not yet clear how many will ultimately do so.
Many of the businesses that are our clients are limited liability companies, and we will keep close tabs on this bill, as well as others that are likely to affect either our business clients or our nonprofit clients, and keep you informed with other Indiana General Assembly Reports on this blog.
The Business Law Division of Smith Rayl Law Office, LLC provides practical advice to business and nonprofit organizations. If you would like to speak with us, please feel free to call our office in Fishers, Indiana for an appointment.
Michael Smith, Attorney at Law
Photo by Emily Angel, Legal Assistant
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