New Jersey Enacts the Revised Uniform Limited Liability Company Act Corporate & Finance Alert (Lawrence A. Goldman) October 5, 2012 Governor Chris Christie signed into law the New Jersey Revised Uniform Limited Liability Company Act (the “Act”, P.L. 2012, c. 50, N.J.S.A. 42:2C-1 et seq.) on September 19, 2012. The Act will be effective 180 days following enactment (March 18, 2013). The Act is substantially in the form of the Revised Uniform Limited Liability Company Act which was promulgated by the National Conference of Commissioners of Uniform State Laws (“NCCUSL”) in July 2006. The Act supersedes the New Jersey Limited Liability Company Act which became effective on January 26, 1994 (the “Old Act”) and was subsequently amended several times. Prior to March 1, 2014, the Act governs New Jersey LLCs (i) formed on or after March 18, 2013, and (ii) electing in their operating agreement to be governed by the Act. From March 1, 2014, the Act governs all New Jersey LLCs.
All 50 states and the District of Columbia have statutes authorizing the formation of LLCs, although the statutes differ from state to state. As of today, six other states (California, Idaho, Utah, Wyoming, Nebraska and Iowa) and the District of Columbia have enacted a new limited liability company act modeled on RULLCA.
In promulgating RULLCA, NCCUSL recognized several significant developments since the adoption of the first generation LLC statutes in the early 1990s. Most importantly, first generation statutes were significantly influenced by then applicable federal income tax classification regulations which classified an unincorporated organization as a corporation if the organization more nearly resembled a corporation than a partnership. In addition, in many states new LLC filings began to exceed new corporation filings on an annual basis; manager-managed LLCs became a significant factor in non-publicly traded capital markets; and LLCs were increasingly used in mergers and acquisitions, business reorganizations and other business transactions.
Significant Features of the Revised LLC Act
The following is a summary of some of the significant changes made in the Act as compared to the Old Act: