The New Jersey Revised Limited Liability Act, enacted September 19, 2012 and codified at N.J.S.A. 42:2C-1,et seq., takes effect March 18, 2013 for all New Jersey LLCs formed after that date and any existing LLCs that elect to be subject to the Revised Act by amendment to the LLC's operating agreement. The Revised Act will apply to all New Jersey LLCs beginning April 1, 2014 regardless of election. Important changes include:
- Form of Operation Agreement: Permits operating agreements to be oral, written or implied.
- Perpetual duration: Eliminates the default for the LLC having a limited life, and instead provides for perpetual duration, like corporations.
- Statement of Authority: Confirms that a "member is not an agent of a limited liability company solely by reason of being a member," and permits the LLC to file a "statement of authority" with the NJ Office of Commercial Recording authorizing certain individuals or entities to bind the LLC.
- Fiduciary Duty of Care & Loyalty: Unlike the current Act, the Revised Act expressly provides for a fiduciary duty of care and loyalty upon members of a member-managed LLC, or upon managers if a manager-managed LLC. It also allows for the operating agreement to eliminate or restrict certain aspects of these duties so long as the result is not "manifestly unreasonable."
- Indemnification: Requires an LLC to indemnify and hold harmless any member or manager against debts and liabilities incurred in the course of activities on behalf of the LLC, but permits the operating agreement to limit or eliminate these indemnification obligations.
- Voting Rights of Members: Provides for members to have equal voting rights regardless of each member's ownership interest in the LLC, and that a majority vote of members shall be controlling for ordinary matters. Equal voting rights can be altered by provision of the operating agreement calling for some other method, such as based on ownership interest percentage.
- Limitation on Distributions: Prohibits generally the LLC from making distributions to a member if the LLC's liabilities exceed the fair value of its assets after giving effect to the distributions, and provides that distributions are made to members on a per capita basis, unless otherwise agreed.
- Resignation Rights: Provides that a resigning LLC member is no longer entitled to receive the fair value of the member's LLC interest as of the resignation date, but rather the resigning member disassociates himself as a member and will have only rights as an economic interest holder - i.e., retain an equity interest but forfeit voting rights.
- Remedies for Deadlock or Member Oppression: Provides for certain remedies for minority members similar to the NJ Business Corporation Act, including the right to seek dissolution by the Superior Court on grounds that the controlling members have acted in an oppressive or harmful manner, and permits more flexible means for resolving deadlock by appointment of a custodian.