New Statutory Rules for Wisconsin LLCs Effective 1/1/23
Wisconsin recently adopted a new version of its LLC Act (Chapter 183 of the Wisconsin Statutes). The new LLC Act is a full redraft of the prior statute and more closely tracks the Revised Uniform Limited Liability Company Act (RULLCA) and the other states that have based their LLC statutes off of the RULLCA. The new LLC Act will automatically become effective for all Wisconsin LLCs as of January 1, 2023, unless a pre-existing LLC affirmatively opts out of the new law prior to the end of 2022.
While there are some important differences between the new LLC Act and the prior statute, for the most part those changes will not have a material impact on existing LLCs with well drafted operating agreements. This conclusion is driven by the fact that the new LLC Act contains a provision stating that any provisions in an operating agreement that were valid under the prior LLC Act will continue to be valid and respected with respect to the LLC even after the new LLC Act becomes effective.
Some key changes reflected in the new LLC Act include the following:
- Clarifies the fiduciary duties that apply in an LLC context and which of those duties can be modified or waived.
- Adds flexibility to include optional provisions in the articles of organization and eliminates the requirement to specify in the articles of organization if the company is member managed or manager managed.
- Removes the default provision that all members of member managed LLC are agents of the LLC and adds an ability to file statements of authority to publicly confirm agency authority.
- Clarifies the process for creditors of members of an LLC to obtain charging orders (and potentially foreclose on the LLC interest).
- Creates a new right to seek a judicial order to expel a member from an LLC for wrongful conduct that adversely and materially affects the LLC’s activities and affairs or for repeated breaches of an operating agreement.
If you have questions or concerns regarding the new LLC Act or any of the changes from the prior LLC Act, please reach out to your Quarles & Brady attorney who would be happy to discuss these changes with you in more detail and help you make an informed decision on whether or not to opt out of the new LLC Act.
- Ryan Van Den Elzen: (414) 277-5455 / email@example.com