Wisconsin’s New Limited Liability Company Statutes: Applicability and Formation
Robert P. Hameister | 08.17.22
This second article in Boardman Clark’s Wisconsin Uniform Limited Liability Company Law Series highlights certain changes to Subchapters I and II of Chapter 183 (the Wisconsin Uniform Limited Liability Company Law, which in this article will be referred to as the “New LLC Law”) that will be of interest to those doing business in Wisconsin. This article is an overview of the changes to those subsections and does not substitute reading the New LLC Law in its entirety.
Background
On April 15, 2022, Tony Evers signed Senate Bill 566/Act 258 into law (the “Act”), repealing and recreating Chapter 183 the Wisconsin Uniform Limited Liability Company Law, which governs limited liability companies (“LLC”). Among the Act’s various provisions, it generally adopts the Revised Uniform Limited Liability Company Act, subject to certain intentional differences. All statutory references are to Wisconsin Chapter 183, unless otherwise noted.
Applicability of New LLC Law
The New LLC Law’s provisions will apply to LLCs formed on or after January 1, 2023 (the “effective date”). However, any existing LLC has the option to opt in to the New LLC Law prior to the effective date by filing a statement of applicability with the Wisconsin Department of Financial Institutions (the “Department”). Any LLC opting in to the New LLC Law before the effective date should do so only after fully understanding its provisions, because the election is irrevocable upon filing. Alternatively, an existing LLC may opt to continue being subject to the prior law, Ch. 183, 2019 stats., in many material respects (the “opt-out”) by filing a statement of non-applicability with the Department prior to the effective date. Any existing Wisconsin LLC should review the New LLC Law as soon as possible to determine whether to make the opt-out election.
Formation of an LLC
Under the prior law, a Wisconsin LLC’s articles of organization must contain a fixed set of information, no more, no less. Under new Section 183.0201, the information that the articles of organization may contain is broadened. For example, the articles may include statements regarding the purpose of the LLC, which is not permitted under current law. Additionally, an LLC is no longer required to, but may, indicate in its articles whether management is vested in members or managers. If not included in its articles, whether the LLC is member-managed or manager-managed would be stated in the LLC’s operating agreement. This change would eliminate the need to amend an LLC’s articles of organization if the management style of the LLC is changed. The New LLC Law otherwise provides that an LLC is by default member-managed unless a written operating agreement (to be discussed in a future article) provides that the LLC is manager-managed.
If you have any questions on the Act or the items discussed in this article, please contact your usual Boardman Clark attorney or any member of our business practice group.
DISCLAIMER: The information provided is for general informational purposes only. This post is not updated to account for changes in the law and should not be considered tax or legal advice. This article is not intended to create an attorney-client relationship. You should consult with legal and/or financial advisors for legal and tax advice tailored to your specific circumstances.