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Ohio Modernizes and Improves its Laws Governing Limited Liability Companies

Client Alert
February 17, 2022

Effective Feb. 11, 2022, the Ohio Revised Limited Liability Company Act (“Revised Act”) now governs all limited liability companies formed under Ohio law. The law updates and replaces the existing LLC Act and has important implications for business owners in Ohio. Passage of the Revised Act makes Ohio one of only 16 states that permits the formation of “Series” LLCs. The legislation is intended to be one of the most progressive LLC acts in the country, but retains the terminology used in Ohio’s current LLC act. A summary of important changes is provided below.

Governance of Ohio LLCs

The Revised Act grants LLC members more control over conducting the LLC’s affairs. The Revised Act eliminates the distinction between member-managed and manager-managed LLCs and allows members of an LLC to organize their business as they see fit. The LLC’s governance structure may be set forth in the operating agreement or by decision of the members in accordance with the operating agreement. Under the Revised Act, LLCs may implement a structure similar to for-profit corporation governance, such as a board of directors.

‘Series’ LLCs Permitted in the Revised Act

The Revised Act makes asset protection simpler and more flexible for Ohio investors. The Revised Act reduces shared liability among multiple properties or assets because of its acceptance of Series LLCs. A Series LLC creates one “parent” LLC and several "children" sub-LLCs among which to split assets. Practically, if one of the sub-series LLCs gets sued, the assets held by the other children sub-LLCs and the parent LLC are shielded from any shared liability. While investors obtain the same asset protection that comes with using multiple, traditional LLCs, in a Series LLC model, only one parent LLC is opened. Assets owned by one Series are shielded from the risk of liability of others within the same Series LLC. 

Practically, a Series LLC structure is useful in a limited set of circumstances.  Real estate investors are primary users of Series LLCs because of the ease and applicability of Series LLCs to investment property portfolios. Rather than creating multiple companies to own investment property, each Series LLC adds inherent investment protection by isolating one property from the others.

Cancellation for Failure to Maintain Statutory Agent

The Revised Act also imposes statutory penalties on LLCs that fail to maintain (or fail to update) their statutory agent’s name and address. The Revised Act directs the Secretary of State to cancel an LLC’s registration, after providing the LLC with notice and a 30-day opportunity to cure. The Revised Act provides for the ability to reinstate a cancelled LLC by submitting the appropriate form and paying a fee.

Cost and Tax Benefits

The Revised Act has strong cost and tax benefits, too. For example, investors will pay fewer registration fees for multiple LLCs when using the Series LLC model. Additionally, only one federal employer identification number is needed for a Series LLC and each sub-series is listed on one singular tax return.

The incorporation of Series LLCs into state law represents a noteworthy change in the law pertaining to limited liability companies in Ohio. To ensure compliance with the Revised Act, to examine how the Series LLC may benefit your business, or for strategic planning for your business, contact Brandon Pauley, btpauley@bmdllc.com or 614-246-7510 or any member of the BMD Business Law team.

Ohio Revised Limited Liability Company Actllcsohiorevised actBrandon Pauley
Client Alert

Your Workplace Under Biden

November 9, 2020This is my favorite recurring post – Predictions of How a New Administration Will Affect Your Workplace. Four years ago, we accurately called the emasculation of the 2016 proposed FLSA Overtime Rules (the salary exemption threshold was set at $35,568 in 2019, rather than $47,476 as proposed), we forecasted a conservative shift of the NLRB and its results (a roll-back of employee rights, social media policy evaluations, and joint employer rules), and we nailed the likelihood of multiple conservative appointments to the United States Supreme Court and its long-term effects (although I completely failed to predict that my ND classmate Amy Coney Barrett would fill the final vacancy during the Trump administration). This time, the L+E Practice of BMD has decided to make it a group effort at predicting what will happen, what probably happen, and what might happen under President Biden. As always, please save this in your important files and pull it out four (or eight) years from now to judge our accuracy.Client Alert

HHS Provider Relief Funds Reporting Requirements: Important Updates Every Provider Should Know

November 4, 2020HHS continues to revise its reporting requirements for the use of the Provider Relief Funds. Providers with more than $10,000 in Provider Relief Fund payments must report on the use of the funds through December 31, 2020. The reporting window will begin on January 15, 2021 and providers must complete reporting obligations for FY 2020 by February 15, 2021 through a portal designed by HHS. However, providers that have unexpended funds as of December 31, 2020, will have an additional 6 months to use the remaining funds through June 30, 2021. These providers must submit a second and final report no later than July 31, 2021.Client Alert

Should I Apply for Phase 3 Funds? Important Considerations Every Provider Should Know

November 2, 2020On October 1, 2020, the Department of Health and Human Services (“HHS”) announced an additional $20 billion in new funding for providers through a Phase 3 distribution. Importantly, providers that previously received HHS Provider Relief Funds or already received payments of approximately 2% of annual revenue from patient care are eligible to apply. Eligible providers have until November 6, 2020 to apply for these Phase 3 Funds. However, the question from providers continues to be: Should I Apply for Phase 3 Funds?Client Alert

CISA Ransomware Practices

October 29, 2020On October 28, 2020, the United States Cybersecurity and Infrastructure Security Agency (CISA) issued an alert warning of imminent threats to US hospitals and healthcare providers. The specific threat involves RYUK Ransomware attacks. RYUK is a novel ransomware that goes undetected by commercial anti-virus/malware detection programs. Once deployed, RYUK encrypts all data and disables systems. In short, it cripples all functionality down to phone systems and automated doors. Healthcare providers should alert their employees to remain hyper-vigilant and report any suspicious activity seen in email or on networks. It has been reported healthcare providers in New York, Pennsylvania and Oregon have been targeted in the last 48 hours. If your organization encounters issues, BMD can assist in mobilizing a response team and has contacts with forensic IT firms that are familiar with RYUK. It is advisable to engage professionals with experience dealing with this specific threat.Client Alert

HHS Announces an Additional $20 Billion In Provider Relief Grants

October 5, 2020The U.S. Department of Health and Human Services (“HHS”) announced an additional $20 billion in new funding for providers on October 1, 2020. Eligible providers include those that have already received Provider Relief Fund payments as well as previously ineligible providers, such as those who began practicing in 2020, and an expanded group of behavioral health providers confronting the emergence of increased mental health and substance use issues exacerbated by the pandemic. The new Phase 3 General Distribution is designed to balance an equitable payment of 2% of annual revenue from patient care for all applicants plus an add-on payment to account for revenue losses and expenses attributable to COVID-19.
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