Resources

Client Alerts, News Articles, Blog Posts, & Multimedia

Everything you need to know about BMD and the industry.

OHIO ADOPTS THE SERIES LLC: Implementation of Ohio’s Revised Limited Liability Company Act is Coming

Client Alert
February 24, 2021

On January 7, 2021, Ohio adopted S.B. 276. The new legislation establishes the Ohio Revised Limited Liability Company Act (“ORLLCA”), which effectively replaces the current Ohio LLC Act. ORLLCA will be fully effective as of January 2022. While the new law contains numerous changes to the existing LLC landscape, below is an overview of some of the key differences under the ORLLCA.

Series LLCs

The ORLLCA now makes Ohio one of only 16 states that permit the formation of “series LLCs.” The significant advantages of series LLCs are their flexibility and simplicity. They allow a single entity to own multiple “series” of assets, each of which are shielded from liability. Real estate investors are prime users of series LLC’s. Rather than creating multiple companies to own investment property, each series within a single LLC isolates one property from the rest thereby adding protection for the investor.

Under the ORLLCA, an LLCs operating agreement may establish or provide for one or more designated series of assets that has one or more members and may include:

  • Separate rights, powers, obligations or duties with respect to specific property within each of the series;
  • Separate rights concerning profits and losses associated with each series; and
  • A separate purpose or investment objective for each series within the LLC.

Each series formation has a separate operating agreement and is authorized by the articles of organization. The articles of organization only require a simple statement that the LLC may have one or more series of assets.

Series LLCs also enjoy cost and tax advantages. Standard LLC formation requires registration fees for each LLC created. Series LLC registration fees are only charged for the master LLC, and each series created thereafter do not have an associated fee. There is also only one tax identification number (EIN), and all the series are listed on only one tax return. This cuts down on time for tax preparation. In addition, and subject to certain criteria, series LLCs have the potential to avoid Ohio’s commercial activity tax, which is imposed on taxable gross receipts in excess of $150,000.

Management Structure Flexibility

The ORLLCA provides more flexibility in LLC management structures. The current LLC Act requires an LLC to either be member-managed or manager-managed. Default rules in the current LLC Act provide baseline authority of either the member or manager to perform certain actions, which can be modified through an operating agreement. Under the ORLLCA, the distinction between member-managed and manager-managed LLC’s has been eliminated; a person’s ability to act as an agent of the LLC now comes from authorization outlined in the operating agreement, decisions of the members as provided for in the operating agreement, the filing of a “Statement of Authority” with the Secretary of State, or from the default rules contained in the ORLLCA. This new feature of the ORLLCA provides more flexibility for LLC management, allowing each LLC to use a management structure that works best for its unique needs.

Statutory Penalty

There will now be a penalty for not maintaining a statutory agent and/or up-to-date contact information with the Ohio Secretary of State. Under the existing LLC Act, there is no statutory penalty for an LLC that fails to maintain a statutory agent. Under the ORLLCA, the Secretary of State will be required to cancel an LLC that fails to maintain a statutory agent, though the LLC may be reinstated upon the appointment of a new agent and the payment of additional fees. This is particularly important as the cancellation of an LLC may open its members up to personal liability. Under the new ORLLCA regime, it is of paramount importance to appoint a statutory agent and maintain accurate contact information.

The ORLLCA represents a significant shift in the law as it pertains to limited liability companies in Ohio. As the implementation of the new law approaches, businesses operating as LLCs should examine their current operating agreement to make sure its provisions comply with the ORLLCA. To undertake such a review or examine how the series LLC may benefit your business, please contact your BMD attorney, or Blake Gerney at Brgerney@bmdllc.com, S. Matthew Harris at Msharris@bmdllc.com, or Kevin Burwell at Kdburwell@bmdllc.com.

business and corporate lawMatthew HarrisBlake R. GerneyKevin BurwellOhio Revised Limited Liability Company ActORLLCA
Client Alert

Cleveland Manufacturer Violated OFAC Sanctions By Allowing Shipments To Iran - Know Your Customer and Know Their Customer

March 30, 2021UniControl, Inc., a Cleveland, Ohio manufacturer of process controls, airflow pressure switches, boiler controls and other instruments, agreed to pay the Office of Foreign Assets Control “OFAC,” the financial enforcement agency of the U.S. Treasury Department, $216,464 to settle its liabilities for violations of the Iran Sanctions Program. OFAC stated that “this enforcement action highlights the importance of identifying and assessing multiple warning signs that indicate a foreign trade partner may be re-exporting goods to a sanctioned jurisdiction.”Client Alert

Ohio Breach of Contract Statute of Limitations Shortened to 6 Years

March 29, 2021On March 16, 2021, Governor DeWine signed into law S.B. 13 which shortens Ohio’s statute of limitations for filing lawsuits based on breach of contract. A statute of limitation is the time period within which a party must file a lawsuit before its claim expires as a matter of law.Client Alert

Chinese Product Tariff Challenge Causes Flurry of Importer Lawsuits

March 26, 2021A lawsuit filed late in 2020 at the U.S. Court of International Trade (“CIT”) challenging the U.S. Trade Representative’s (USTR) implementation of Section 301 “List 3” and “List 4” duties on products from China, HMTX Industries LLC et al. v. United States (Court No. 20-00177), has resulted in the filing of thousands of additional lawsuits brought by other affected importers. There are now 3,700+ companies added to the list, including Ford, Home Depot, Target, Tesla, and Walgreens, along with many other smaller importers.Client Alert

America’s New COVID-19 Relief Package — Unpacked

March 23, 2021On March 11, 2021, President Biden signed the highly anticipated American Rescue Plan Act (the “Act”) into law, a $1.9 trillion COVID-19 relief bill aimed at addressing and resolving many of the lingering questions and concerns following the expiration of the Families First Coronavirus Response Act (“FFCRA”) on December 31, 2020.Client Alert

Vaccinating Against Design and Construction Risk: A COGENCE Alliance Momentum Recap

March 18, 2021Last month, COGENCE Alliance hosted a four-day conference, attended by owners, affiliates, construction managers, trades, engineers, and architects. David Scott presented and other BMD team members hosted breakout discussions on how to “vaccinate against design and construction risk.” Groups discussed new and developing risks, how to mitigate those risks, and qualities of those who best adjusted to the new and developing risks.
Older posts
Newer posts