The Next Generation: The Revised Uniform Limited Liability Company Act

Daniel-KleinbergerThis is an excerpt from an article discussing the The Revised Uniform Limited Liability Company Act written by Daniel S. Kleinberger. For a discussion of Minnesota’s new LLC law, see the Minnesota Revised Uniform LLC Act.


On July 13th, 2006, the National Conference of Commissioners on Uniform State Laws (“NCCUSL” or “the Conference”) “approved and recommended for enactment in all the States” (1) the Revised Uniform Limited Liability Company Act (“Re-ULLCA’). This approval came ten years after the Conference approved the original Uniform Limited Liability Company Act (“ULLCA”) and ended a drafting process that had itself spanned three years. (2)

The new Act brings major innovations to the law of limited liability companies, and NCCUSL has begun actively seeking enactments around the country. This article seeks to introduce the new Act to business lawyers across the country, (3) by: (i) explaining why NCCUSL decided to draft a new LLC statute, reviewing the process through which the Conference produced and approved the new Act, and describing the Act’s basic architecture; (ii) highlighting the Act’s major innovations; and (iii) providing a roadmap through the Act’s intricate and all-important provisions concerning the operating agreement.



The new Act’s Prefatory Note contains the most succinct explanation for “Why a new LLC Act Now?”

   Eighteen years have passed since the IRS issued its gate-opening 
   Revenue Ruling 88-76, declaring that a Wyoming LLC would be taxed 
   as a partnership despite the entity's corporate-like liability 
   shield. More than eight years have passed since the IRS opened the 
   gate still further with the "check the box" regulations. It is an 
   opportune moment to identify the best elements of the myriad "first 
   generation" LLC statutes and to infuse those elements into a new, 
   "second generation" uniform act. (4)


The Drafting Committee for Re-ULLCA was chaired by David Walker, Dean of the Drake Law School, included eight other commissioners, and benefited from the active participation of 13 advisors appointed by the ABA. (5) In addition to the ABA Advisor, (6) the Committee had eight advisors from the Business Law Section, (7) three from the Real Property, Probate and Trust Law Section, (8) and one from the Section on Taxation. (9) The current chair of the PUBO Committee was one of the Business Law Section’s Advisors, (10) and the immediate past chair of that Committee was the ABA Advisor. (11)

As explained in March 2006 newsletter of the ABA Committee on Partnerships and Unincorporated Business Organizations:

   ABA advisors actually outnumbered NCCUSL commissioners on the 
   committee, and on most votes the committee's chair counted 
   commissioners and ABA advisors together as one group. On the rare 
   occasions when the committee seemed significantly divided, the 
   chair took a formal vote of commissioners (as NCCUSL procedures 
   require) but then also made note of a vote of the ABA advisors. (12)

The Drafting Committee also benefited from a scholarly perspective. As is usual, the co-reporters are law professors. In addition, the chair of the Committee is a law school dean, (13) one of the members is a dean emeritus, (14) and another is a law professor. (15) One of the ABA advisors is a business school professor, (16) and two others are law professors. (17) Several of the ABA advisors who are full-time practitioners have also published several articles on LLC law. (18) All and all, authors from the three leading LLC treatises were part of this working group. (19)

The drafting process spanned three years and included ten drafting committee meetings, (20) six drafts, (21) and consideration by the entire Conference at four consecutive annual meetings. Each committee meeting lasted two and a half days, and many key issues were debated, re-debated and re-debated. (22) The Act was on the annual meeting agenda in 2003 (concept discussion, based on drafting committee’s briefing memo); 2004 (partial first reading), 2005 (first reading), and 2006 (final reading). (23)


Re-ULLCAs architecture derives from and resembles that of RUPA, ULLCA, and ULPA (2001).

Article 1    contains     general provisions, including definitions; 
                          sections on a limited liability company's 
                          duration, purposes, powers, name, and agent 
                          for service of process; and three key provisions
                          concerning the operating agreement 
Article 2    provides     for the formation of limited liability companies 
                          and for the public filing of records 
                          pertaining to an LLC 
Article 3    governs      the relations of members and managers to 
                          third parties--i.e. with non-members dealing 
                          with or affected by the limited liability 
Article 4    states       the default rules for the members' relationship 
                          inter se and with the limited liability 
                          company and provides templates for 
                          member-management and manager-management 
Article 5    implements   the "pick your partner" principle, which is 
                          at the core of the law of unincorporated  
                          business organizations, and delimits the rights 
                          of transferees 
Article 6    states       the causes and consequences of a person's 
                          dissociation as a member of a limited 
                          liability company 
Article 7    delineates   the causes and consequences of the dissolu- 
                          tion of a limited liability company 
Article 8    governs      foreign limited liability companies 

Article 9    provides     for direct and derivative claims by members 
                          and for the establishment, conduct, and judicial 
                          review of special litigation committees 
Article 10   governs      organic transactions--mergers, conversions, 
                          and domestications 
Article 11   contains     miscellaneous provisions, including a section 
                          providing transition rules for pre-existing 
                          limited liability companies

The only significant nomenclature change from ULLCA is the use of “certificate of organization” rather than “articles of organization” to refer to the publicly filed document used to create a limited liability company. The change is intended “to signal that: (i) the certificate merely reflects the existence of an LLC (rather than being the locus for important governance rules); and (ii) this document is significantly different from articles of incorporation, which have a substantially greater power to affect inter se rules for the corporate entity and its owners.” (24)

This is an excerpt from The Next Generation: The Revised Uniform Limited Liability Company Act. Read the entire article.

About the Author

Attorney Daniel S. Kleinberger serves as an arbitrator, special counsel, expert witness, and consensual special magistrate. His experience includes Professor of Law at William Mitchell College of Law, Co-Reporter at the Uniform Law Commissioners, and author of numerous published works on business law. You may contact him at (651) 290-6387 or

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