The governors of California and New Jersey both signed new LLC statutes into law on September 21, 2012, and both states adopted the Revised Uniform Limited Liability Company Act (RULLCA), with some variations. RULLCA is a uniform law recommended by the National Conference of Commissioners on Uniform State Laws (NCCUSL). RULLCA has been slow to catch on, but its passage by California and New Jersey may encourage other states to seriously consider it.
RULLCA was released by NCCUSL in 2006. It was adopted by Idaho and Iowa in 2008, by Nebraska and Wyoming in 2010, and by Utah in 2011. RULLCA has been criticized by the late Professor Larry Ribstein, which I wrote about when Nebraska and Wyoming passed RULLCA, here. But passage by California and New Jersey, the first major commercial states to adopt RULLCA, should increase momentum for its adoption by other states.
California. As originally introduced in the California legislature, the bill for the new statute authorized series LLCs, although that is not a RULLCA provision. (A series LLC can partition its assets and members into multiple series. Each series can own its own assets, enter into contracts in its own name, and incur its own liabilities, separate from the assets and liabilities of the LLC or any other series.) A later amendment deleted that provision from the bill, and the final version made no provision for series LLCs.
New Jersey. The new statute clarifies that a New Jersey LLC “may have any lawful purpose, regardless of whether for profit.” It establishes the default duration of an LLC as perpetual, unless limited by the operating agreement. And although the current LLC Act only allows a written operating agreement to override the various statutory defaults of the LLC Act, the new statute allows the operating agreement to be oral, written, or implied.
In 2010 I opined that RULLCA’s prognosis for becoming widely adopted looked bleak. With California and New Jersey’s adoption, RULLCA’s future now looks brighter.