In June, 2013, Florida’s Revised Limited Liability Act was signed into law and goes into effect January 1, 2014. What used to be Florida Statute, Chapter 608 is being replaced in its entirety by Chapter 605 (the “New Act”). The New Act affects both transactional and litigation practices. This is the first of three articles in Legal Matters that will address the changes made by the New Act.

The purpose of Chapter 605 is to bring Florida’s LLC laws more in line with the Revised Uniform Limited Liability Company Act, address a few glitches in Chapter 608 and, in general, to ensure Florida remained competitive with other influential commercial states like Delaware. Changes have been made to the filing forms on the Florida Department of Corporations website, Sunbiz.org, and regardless of when the New Act impacts your LLC, the new forms must be put into use immediately. The following highlights from the New Act should be on your radar:

1. Deadlines. For any LLCs formed after January 1, 2014, the New Act will apply. For any LLCs formed prior thereto, not until January 1, 2015 will the provisions of the New Act trump the terms of their Operating Agreements. Current LLCs can opt to be governed by the New Act immediately, but it requires a unanimous vote.

2. No More Managing Members. Compare Sections 608.422 to 605.0407. On Sunbiz, when identifying the controlling parties, they are either called a Manager (“MGR”) or a Managing Member (“MGRM”). Florida LLCs have been reserving powers and duties in their Operating Agreements for their “Managing Members” to the exclusion of the other Members. For LLCs formed after January 1, 2014, the term MGRM cannot be used on Sunbiz. Effective January 1, 2015, any powers and duties given to the Managing Member will no longer be exclusive. That Member will be left with only the power to vote their percentage like the other Members. Unless there is public record to the contrary, all Members have the “statutory apparent authority” to bind the LLC. If that’s a problem, or if everyone wants the former Managing Member to have certain exclusive powers, one course of action could be to designate them the “Manager” and amend the LLC’s Articles of Organization to reflect that the Company is now a “Manager-Managed” LLC.

3. Statements of Authority. See Section 605.0302. To further clarify who may bind a limited liability company, the New Act permits filing with the Department of Corporations and recording in county public records “Statements of Authority.” These can specify the authority or limits thereto for Members, Managers, and Officers to do any of the following: (i) bind the LLC in general; (ii) transfer real property held in the name of the LLC; (iii) enter into transactions on behalf of the LLC; or (iv) execute particular types of instruments, such as mortgages. To be binding upon real estate, a certified copy of the Statement of Authority must be recorded in the public records of the county where the real estate is situated. While not mandatory, filing Statements of Authority in the counties where the LLC has real estate amounts to additional inexpensive asset protection. Statements of Authority are good for five (5) years, unless revoked by a Statement of Denial. Amended Statements of Authority will need to be filed to renew them before expiration.

4. Non-Waivable Provisions; Used to be 6; Now there are 17! Compare Sections 608.423 and 505.0105. While there are too many to get into, the take away should be that provisions in your Operating Agreement that Members thought trumped the Florida Statutes may no longer be enforceable. For example, Members may no longer be prohibited from withdrawing and dissociating themselves from an LLC. Once they leave, the LLC will not automatically wind down, and said Member will: (i) retain their right to distributions; (ii) will lose their right to vote; and (iii) will no longer have a duty to not compete. If they “Wrongfully Disassociate,” the New Act provides for damages to the LLC as a result thereof. Another non-waivable provision to keep in mind is the applicability of Florida law to the Florida LLC. Just because you say the LLC will be governed by Delaware law will not make it so.

We recommend scheduling a meeting with your corporate counsel to ensure there are no unenforceable items in your LLC Operating Agreement upon which you may mistakenly rely. A new Operating Agreement or at least an amendment addressing some of the bigger changes in the New Act may indeed be necessary. 2015 is not that far away.