LLC Act

 

This act shall be known and may be cited as the "New Jersey Limited Liability Company Act."

As used in this act unless the context otherwise requires:

"Bankruptcy" means an event that causes a person to become dissociated from a limited liability company as provided in section 24 of this act.

"Certificate of formation" means the certificate referred to in section 11 of this act, and the certificate as amended.

"Contribution" means any cash, property, services rendered or a promissory note or other obligation to contribute cash or property or to perform services, which a person contributes to a limited liability company in his capacity as a member; provided however, that services rendered and obligations to perform services are contributions only to the extent designated as contributions in the operating agreement.

"Foreign limited liability company" means a limited liability company formed under the laws of any state or under the laws of any foreign country or other foreign jurisdiction and denominated as such under the laws of such state or foreign country or other foreign jurisdiction.

"Limited liability company" and "domestic limited liability company" means a limited liability company formed under the laws of this State and having one or more members.

"Limited liability company interest" means a member's share of the profits and losses of a limited liability company and a member's right to receive distributions of the limited liability company's assets.

"Liquidating trustee" means a person carrying out the winding up of a limited liability company.

"Manager" means a person who is named as a manager of a limited liability company in, or designated as a manager of a limited liability company pursuant to, an operating agreement or similar instrument under which the limited liability company is formed.

"Member" means a person who has been admitted to a limited liability company as a member as provided in section 21 of this act or, in the case of a foreign limited liability company, in accordance with the laws of the state or foreign country or other foreign jurisdiction under which the foreign limited liability company is organized.

"Operating agreement" means a written agreement among the members, or in the case of a limited liability company with only one member, the declaration by that one member of the terms of the operating agreement which shall be deemed an agreement between the member and the limited liability company, as to the affairs of a limited liability company and the conduct of its business.

"Person" means a natural person, partnership (whether general or limited and whether domestic or foreign), limited liability company, foreign limited liability company, trust, estate, association, corporation, custodian, nominee or any other individual or entity in its own or any representative capacity.

"State" means the District of Columbia or the Commonwealth of Puerto Rico or any state, territory, possession, or other jurisdiction of the United States other than this State.

 42:2B-3. Name of limited liability company; restrictions

The name of each limited liability company as set forth in its certificate of formation:

a. Shall contain the words "Limited Liability Company" or the abbreviation "L.L.C.";

b. May contain the name of a member or manager;

c. Must be such as to distinguish it upon the records in the office of the Secretary of State from the name of any corporation, limited partnership, business trust or limited liability company reserved, registered, formed or organized under the laws of this State or qualified to do business or registered as a foreign corporation, foreign limited partnership or foreign limited liability company in this State; provided, however, that a limited liability company may register under any name which does not distinguish it upon the records in the office of the Secretary of State from the name of any domestic or foreign corporation, limited partnership, business trust or limited liability company reserved, registered, formed or organized under the laws of this State with the written consent of the other corporation, limited partnership, business trust or limited liability company, which written consent shall be filed with the Secretary of State; and

d. Shall not contain any word or phrase, or any abbreviation or derivative thereof, the use of which is prohibited or restricted by any other statute of this State, unless the restrictions have been complied with.

 42:2B-4. Use of alternative name; restrictions

a. No domestic limited liability company or foreign limited liability company which conducts activities in this State shall conduct any of those activities using an alternate name, including an abbreviation of its name or an acronym, unless:

(1) It also uses its actual name in the transaction of any of its activities in a manner that is not deceptive as to its actual identity; or

(2) It has first registered the alternate name as provided in subsection b. of this section.

b. Any limited liability company may adopt and use any alternate name, including any name which would be unavailable as the name of a domestic or foreign limited liability company because of the prohibitions of subsection c. of section 3, but not including any name not permitted as a limited liability company named by subsections a. or d. of section 3, by filing an original and a copy of a certificate of registration of alternate name with the Secretary of State executed on behalf of the limited liability company. The certificate shall set forth:


(1) The name, jurisdiction and date of establishment of the limited liability company;

(2) The alternate name;

(3) A brief statement of the character or nature of the particular activities to be conducted using the alternate name;

(4) That the limited liability company intends to use the alternate name in this State;

(5) That the limited liability company has not previously used the alternate name in this State in violation of this section or, if it has, the month and year in which it commenced the use.

c. The registration shall be effective for five years from the date of filing and may be renewed successively for additional five-year periods by filing an original and a copy of the certificate of renewal executed on behalf of the limited liability company any time within 90 days prior to, but not later than, the date of expiration of the registration. The certificate of renewal shall set forth the information required in paragraphs (1) through (4) of subsection b. of this section, the date of the certificate of registration then in effect and that the limited liability company is continuing to use the alternate name.

d. This section shall not:

(1) Grant to the registrant of an alternate name any right in the name as against any prior or subsequent use of the name, regardless of whether used as a trademark, trade name, business name or corporate name; or

(2) Interfere with the power of any court to enjoin the use of the name on the basis of the law of unfair competition or on any other basis except the identity or similarity of the alternate name to any corporate, limited partnership or limited liability company name.

e. A limited liability company which has used an alternate name in this State contrary to the provisions of this section shall, upon filing a certificate of registration of alternate name or an untimely certificate of renewal, pay to the Secretary of State the filing fee prescribed for the certificate plus an additional filing fee equal to the full amount of the regular filing fee multiplied by the number of years it has been using the alternate name in violation of this section. For the purpose of this subsection, any part of a year shall be considered a full year.

f. The failure of a limited liability company to file a certificate of registration or renewal of alternate name shall not impair the validity of any contract or act of the limited liability company and shall not prevent the limited liability company from defending any action or proceedings in any court of this State, but the limited liability company shall not maintain any action or proceeding in any court of this State arising out of a contract or act in which it used the alternate name until it has filed the applicable certificate.

g. (1) A limited liability company which files a certificate of registration of alternate name which contains a false statement or omission regarding the date it first used an alternate name in this State shall, if the false statement or omission reduces the amount of the additional fee it paid or should have paid as provided in subsection e. of this section, forfeit to the State a penalty of not less than $200 nor more than $500.

(2) A limited liability company which should have filed a certificate of registration or renewal of alternate name and fails to do so within 60 days after being notified of its obligation to do so by certified or registered mail by the Secretary of State, by any other governmental officer, or by any person aggrieved by its failure to do so, shall forfeit to the State a penalty of not less than $200 nor more than $500.

(3) A penalty imposed under this section shall be recovered with costs in an action brought by the Attorney General. The court may proceed on the action in a summary manner.

 42:2B-5. Reservation of exclusive right to use name

a. The exclusive right to the use of a name may be reserved by:

(1) Any person intending to organize a limited liability company under this act and to adopt that name;

(2) Any domestic limited liability company or any foreign limited liability company registered in this State which, in either case, proposes to change its name;

(3) Any foreign limited liability company intending to register in this State and adopt that name; and

(4) Any person intending to organize a foreign limited liability company and intending to have it register in this State and adopt that name.

b. The reservation of a specified name shall be made by filing with the Secretary of State an application, executed by the applicant, together with a duplicate copy, which may be either a signed or conformed copy, specifying the name to be reserved and the name and address of the applicant. If the Secretary of State finds that the name is available for use by a domestic or foreign limited liability company, he shall reserve the name for the exclusive use of the applicant for a period of 120 days. Once having so reserved a name, the same applicant may again reserve the same name for successive 120 day periods. The right to the exclusive use of a reserved name may be transferred to any other person by filing in the office of the Secretary of State a notice of the transfer, executed by the applicant for whom the name was reserved, together with a duplicate copy, which may be either a signed or conformed copy, specifying the name to be transferred and the name and address of the transferee. The reservation of a specified name may be cancelled by filing with the Secretary of State a notice of cancellation, executed by the applicant or transferee, together with a duplicate copy, which may be either a signed or conformed copy, specifying the name reservation to be cancelled and the name and address of the applicant or transferee. Any duplicate copy filed with the Secretary of State as required by this subsection shall be returned by the Secretary of State to the person who filed it or his representative with a notation thereon of the action taken with respect to the original copy thereof by the Secretary of State.

 42:2B-6. Registered office and registered agent of a limited liability company; service of process; duties and responsibilities

a. Each domestic and foreign limited liability company shall have and maintain in this State:

(1) A registered office, which may but need not be a place of its business in this State; and

(2) A registered agent for service of process on the limited liability company, which agent may be either an individual resident of this State whose business office is identical with the limited liability company's registered office, or a domestic corporation, or a foreign corporation authorized to do business in this State having a business office identical with such registered office, or the limited liability company itself.

b. (1) A registered agent may (with prior notice to the limited liability company for which it is the registered agent), change the address of the registered office of any domestic or foreign limited liability company for which the registered agent is registered agent to another address in this State by filing in the office of the Secretary of State a certificate, executed by the registered agent, setting forth the names of each limited liability company, and the address at which the registered agent has maintained the registered office for each limited liability company, and further certifying to the new address to which the registered office will be changed on a given day, and at which new address the registered agent will thereafter maintain the registered office for each limited liability company recited in the certificate. Upon the filing of such certificate, the Secretary of State shall furnish to the registered agent a certified copy of the same under his hand and seal of office, and thereafter, or until further change of address, as authorized by law, the registered office in this State of each limited liability company recited in the certificate shall be located at the new address of the registered agent thereof as given in the certificate.

(2) In the event of a change of name of any person acting as a registered agent of a limited liability company, the registered agent shall file in the office of the Secretary of State a certificate, executed by the registered agent, setting forth the new name of the registered agent, the name of the registered agent before it was changed, the name of each limited liability company represented by the registered agent, and the address at which the registered agent has maintained the registered office for each limited liability company. Upon the filing of the certificate, the Secretary of State shall furnish to the registered agent a certified copy of the certificate under his hand and seal of office.

(3) Filing a certificate under this section shall be deemed to be an amendment of the certificate of formation of each limited liability company affected thereby and no limited liability company shall be required to take any further action with respect thereto, to amend its certificate of formation under this act.

 42:2B-7. Resignation of a registered agent; procedures

a. The registered agent of a domestic limited liability company or a foreign limited liability company authorized to transact business in this State may resign by complying with the provisions of this section.

b. The registered agent of a foreign or domestic limited liability company may resign and appoint a successor registered agent by filing a certificate in the office of the Secretary of State, stating that it resigns and the name and address of the successor registered agent. There shall be attached to such certificate a statement executed by the affected limited liability company ratifying and approving such change of registered agent. Upon such filing, the successor registered agent shall become the registered agent of each limited liability company which has ratified and approved the substitution and the successor registered agent's address, as stated in such certificate, shall become the address of each limited liability company's registered office in this State. The Secretary of State shall furnish to the successor registered agent upon request a certified copy of the certificate of resignation. Filing of the certificate of resignation shall be deemed to be an amendment of the certificate of formation of the limited liability company affected thereby and the limited liability company shall not be required to take any further action with respect thereto, to amend its certificate of formation under this act.

c. The registered agent of a limited liability company may resign without appointing a successor registered agent by complying with the following provisions:

(1) The registered agent, or, in the case of a registered agent who is deceased or has been declared incompetent by a court of competent jurisdiction, his legal representative, shall serve a notice of resignation by certified mail, return receipt requested, upon the limited liability company at the address last known to the agent, and shall make an affidavit of such service. If service cannot be made, the affidavit shall so state, and shall state briefly why service cannot be made. The affidavit, together with a copy of notice of resignation, shall be filed in the office of the Secretary of State.

(2) The resignation shall become effective 30 days after filing the affidavit of service in the office of the Secretary of State or upon the designation by the limited liability company of a new registered agent pursuant to this act, whichever is earlier. If the limited liability company fails to designate a new registered agent within the 30 day period, the limited liability company shall thereafter be deemed to have no registered agent or registered office in this State, until the limited liability company files a certificate of change of address of registered office and registered agent indicating the new registered office and registered agent.

 42:2B-8. Powers and privileges of a limited liability company

a. A limited liability company may carry on any lawful business, purpose or activity.

b. A limited liability company shall possess and may exercise all the powers and privileges granted by this act or by any other law or by its operating agreement, together with any powers incidental thereto, so far as such powers and privileges are necessary or convenient to the conduct, promotion or attainment of the business, purposes or activities of the limited liability company.

42:2B-8.1. Filing of annual reports of domestic and foreign limited liability companies; penalties for failure to file for two consecutive years

a. Each domestic and foreign limited liability company shall file an annual report with the office of the Secretary of State, setting forth:

(1) the name and address of the limited liability company;

(2) the name and address of the registered agent of the limited liability company; and

(3) the name and addresses of the managing members or managers, as the case may be.

b. If no annual report is filed as required by this section for two consecutive years,

(1) the certificate of a domestic limited liability company shall be transferred to an inactive list maintained by the Secretary of State. A limited liability company on the inactive list shall remain a limited liability company and the limited liability of its members and managers shall not be affected by its transfer to this list. The name of a limited liability company on the inactive list shall, subject to any other rights that limited liability company may have to its name, be available for use by any other limited liability company, including a newly-formed limited liability company.

(2) the certificate of a foreign limited liability company may be revoked by the Secretary of State.

(3) if the certificate of a domestic limited liability company has been transferred to the inactive list or if the certificate of a foreign limited liability company has been revoked, the certificate shall be reinstated by proclamation of the Secretary of State upon payment of all fees due to the Secretary of State, consisting of a reinstatement filing fee, current annual report fee, all delinquent annual report fees, and a late filing fee. The reinstatement relates back to the date of transfer of the certificate of a domestic limited liability company to the inactive list or to the date of revocation of the certificate of a foreign limited liability company, as the case may be, and shall validate all actions taken in the interim. In the event that in the interim the name of the limited liability company has become unavailable, the Secretary of State shall reinstate the certificate upon, in the case of a domestic limited liability company, the filing of an amendment to its certificate of formation to change the name to an available name and in the case of a foreign limited liability company, the filing of an amended certificate of registration adopting an alternate name. The Secretary of State shall provide the forms necessary to effect annual report reinstatements.

 42:2B-9. Powers of members and managers of limited liability company

Except as otherwise provided in an operating agreement, a member or manager may lend money to, borrow money from, act as a surety, guarantor or endorser for, guarantee or assume one or more specific obligations of, provide collateral for, and transact other business with a limited liability company and, subject to other applicable law, has the same rights and obligations with respect to any such matter as a person who is not a member or manager.

 42:2B-10. Limited liability company's right to indemnify members or managers

Subject to such standards and restrictions, if any, as are set forth in its operating agreement, a limited liability company may, and shall have the power to, indemnify and hold harmless any member or manager or other person from and against any and all claims and demands whatsoever.

42:2B-11. Certificate of formation; contents

a. In order to form a limited liability company, one or more authorized persons must execute a certificate of formation. The certificate of formation shall be filed in the office of the Secretary of State and set forth:

(1) The name of the limited liability company;

(2) The address of the registered office and the name and address of the registered agent for service of process required to be maintained by section 6 of this act;

(3) (Deleted by amendment, P.L.1998, c. 79.)

(4) If the limited liability company is to have perpetual existence, regardless of whether the limited liability company is subject to any dissolution contingencies, then the word "perpetual" shall be stated; if the limited liability company is to have a specific date of dissolution, regardless of whether the limited liability company is subject to any dissolution contingencies, the latest date on which the limited liability company is to dissolve; and

(5) Any other matters the members determine to include therein.

b. A limited liability company is formed at the time of the filing of the initial certificate of formation in the office of the Secretary of State or at any later date or time specified in the certificate of formation if, in either case, there has been substantial compliance with the requirements of this section. A limited liability company formed under this act shall be a separate legal entity, the existence of which as a separate legal entity shall continue until cancellation of the limited liability company's certificate of formation.

 42:2B-12. Correcting erroneous certificates of formation; procedure

If any instrument filed with the Secretary of State under any provision of this act is an inaccurate record of the limited liability company action therein referred to, or was defectively or erroneously executed, the instrument may be corrected by filing with the Secretary of State a certificate of correction executed by an authorized person. The certificate of correction shall specify the inaccuracy or defect to be corrected and shall set forth the correction. The instrument so corrected shall be deemed to have been effective in its corrected form as of its original filing date except as to persons who actually relied in good faith upon the inaccurate portion of the certificate and who are adversely affected by the correction. As to these persons, the correction shall be effective as of the effective date of filing of the certificate of correction. Such filing shall only be made if the Secretary of State consents to the filing.

 42:2B-13. Amending certificates of formation; procedure

a. A certificate of formation is amended by filing a certificate of amendment thereto in the office of the Secretary of State. The certificate of amendment shall set forth:

(1) The name of the limited liability company; and

(2) The amendment to the certificate of formation.

b. A manager or, if there is no manager, any member who becomes aware that any statement in a certificate of formation was false when made, or that any matter described has changed making the certificate of formation false in any material respect, shall promptly amend the certificate of formation.

c. A certificate of formation may be amended at any time for any other proper purpose.

d. Unless a later effective date (which shall be a date certain not later than 30 days after the date of filing) is provided for in the certificate of amendment, a certificate of amendment shall be effective at the time of its filing with the Secretary of State.

 42:2B-14. Cancellation of a certificate of formation; procedure

a. A certificate of formation shall be canceled upon the dissolution and the completion of winding up of a limited liability company, or upon the filing of a certificate of merger or consolidation if the limited liability company is not the surviving or resulting entity in a merger or consolidation.

b. A certificate of cancellation shall be filed in the office of the Secretary of State to accomplish the cancellation of a certificate of formation upon the dissolution and the completion of winding up of a limited liability company and shall set forth:

(1) The name of the limited liability company;

(2) The date of filing of its certificate of formation;

(3) The reason for filing the certificate of cancellation;

(4) The future effective date or time (which shall be a date or time certain) of cancellation if it is not to be effective upon the filing of the certificate; and

(5) Any other information the person filing the certificate of cancellation determines.

42:2B-15. Authorization to sign any certificate or amendment

a. Each certificate required by this act to be filed in the office of the Secretary of State shall be executed by one or more authorized persons.

b. Unless otherwise provided in an operating agreement, any person may sign any certificate or amendment thereof or enter into an operating agreement or amendment thereof by an agent, including an attorney-in-fact. An authorization, including a power of attorney, to sign any certificate or amendment thereof or to enter into an operating agreement or amendment thereof need not be in writing, need not be sworn to, verified or acknowledged, and need not be filed in the office of the Secretary of State, but if in writing, must be retained by the limited liability company.

c. The execution of a certificate by an authorized person constitutes an oath or affirmation, under the penalties of perjury in the third degree, that, to the best of the authorized person's knowledge and belief, the facts stated therein are true.

 42:2B-16. Petition to direct the execution of the certificate; persons eligible

a. If a person required to execute a certificate required by this act fails or refuses to do so, any other person who is adversely affected by the failure or refusal may petition the Superior Court to direct the execution of the certificate. If the court finds that the execution of the certificate is proper and that any person so designated has failed or refused to execute the certificate, it shall order the Secretary of State to record an appropriate certificate.

b. If a person required to execute an operating agreement or amendment thereof fails or refuses to do so, any other person who is adversely affected by the failure or refusal may petition the Superior Court to direct the execution of the operating agreement or amendment thereof. If the court finds that the operating agreement or amendment thereof should be executed and that any person required to execute the operating agreement or amendment thereof has failed or refused to do so, it shall enter an order granting appropriate relief.

 42:2B-17. Filing of certificates of formation, amendment or cancellation with the Secretary of State

a. The original signed copy of the certificate of formation and of any certificates of amendment or cancellation (or of any judicial decree of amendment or cancellation), and of any certificate of merger or consolidation and of any restated certificate shall be delivered to the Secretary of State. A person who executes a certificate as an agent or fiduciary need not exhibit evidence of his authority as a prerequisite to filing. Any signature on any certificate authorized to be filed in the office of the Secretary of State under any provision of this act may be a facsimile. Unless the Secretary of State finds that any certificate does not conform to law, upon receipt of all filing fees required by law the Secretary of State shall:

(1) Certify that the certificate of formation, the certificate of amendment, the certificate of cancellation (or of any judicial decree of amendment or cancellation), the certificate of merger or consolidation or the restated certificate has been filed in his office by endorsing upon the original certificate the word "Filed," and the date and hour of the filing. This endorsement is conclusive of the date and time of its filing in the absence of actual fraud;

(2) File and index the endorsed certificate; and

(3) Prepare and return to the person who filed it or his representative a copy of the original signed instrument, similarly endorsed, and shall certify such copy as a true copy of the original signed instrument.

b. Upon the filing of a certificate of amendment (or judicial decree of amendment) or restated certificate in the office of the Secretary of State, or upon the future effective date or time of a certificate of amendment (or judicial decree thereof) or restated certificate, as provided for therein, the certificate of formation shall be amended or restated as set forth therein. Upon the filing of a certificate of cancellation (or a judicial decree thereof), or a certificate of merger or consolidation which acts as a certificate of cancellation, or upon the future effective date or time of a certificate of cancellation (or a judicial decree thereof) or of a certificate of merger or consolidation which acts as a certificate of cancellation, the certificate of formation is cancelled.

 42:2B-18. Effect of filing certificate of formation

A certificate of formation filed in the office of the Secretary of State is notice that the entity formed in connection with the filing of the certificate of formation is a limited liability company formed under the laws of this State and is notice of all other facts set forth therein which are required or permitted to be set forth in a certificate of formation by paragraphs (1) and (2) of subsection a. of section 11 of this act. If any provision of an operating agreement is inconsistent with the information contained in the certificate of formation of that limited liability company, as amended, on file with the office of the Secretary of State, the operating agreement shall be controlling except with respect to any third party who can show actual and reasonable reliance to the detriment of that third party, upon the information contained in the certificate of formation.

42:2B-19. Restated certificate of formation; contents; effective date

a. A limited liability company may, at any time, integrate into a single instrument all of the provisions of its certificate of formation which are then in effect and operative as a result of there having previously been filed in the office of the Secretary of State one or more certificates or other instruments pursuant to this act and it may at the same time also further amend its certificate of formation by adopting a restated certificate of formation.

b. If a restated certificate of formation merely restates and integrates but does not further amend the initial certificate of formation, as previously amended or supplemented by any instrument that was executed and filed pursuant to this act, it shall be specifically designated in its heading as a "Restated Certificate of Formation" together with such other words as the limited liability company may deem appropriate and shall be executed by an authorized person and filed as provided in section 17 of this act in the office of the Secretary of State. If a restated certificate restates and integrates and also further amends in any respect the certificate of formation, as previously amended or supplemented, it shall be specifically designated in its heading as an "Amended and Restated Certificate of Formation" together with such other words as the limited liability company may deem appropriate and shall be executed by at least one authorized person, and filed as provided in section 17 of this act in the office of the Secretary of State.

c. A restated certificate of formation shall state, either in its heading or in an introductory paragraph, the limited liability company's present name, and, if it has been changed, the name under which it was originally filed, and the future effective date (which shall be a date certain not more than 30 days after the date of filing) of the restated certificate if it is not to be effective upon the filing of the restated certificate. If a restated certificate only restates and integrates and does not further amend a limited liability company's certificate of formation and there is no discrepancy between the existing certificate of formation and the restated certificate, it shall state that fact as well.

d. Upon the filing of a restated certificate of formation with the Secretary of State, or upon the future effective date or time of a restated certificate of formation as provided for therein, the initial certificate of formation, as amended or supplemented, shall be superseded; the restated certificate of formation, including any further amendment or changes made thereby, shall be the certificate of formation of the limited liability company, but the original effective date of formation shall remain unchanged.

e. Any amendment or change effected in connection with the restatement and integration of the certificate of formation shall be subject to any other provision of this act, not inconsistent with this section, which would apply if a separate certificate of amendment were filed to effect such amendment or change.

 42:2B-20. Merger or consolidation of limited liability company; approval of members; certificate of merger or consolidation; contents; rights, privileges and powers of new limited liability company

a. As used in this section, "other business entity" means a corporation, or a business trust or association, a real estate investment trust, a common-law trust, or any other unincorporated business, including a partnership , and a foreign limited liability company, but excluding a domestic limited liability company.

b. (1) Pursuant to an agreement of merger or consolidation, a domestic limited liability company may merge or consolidate with or into one or more domestic limited liability companies or other business entities formed or organized under the laws of this State or any other state or the United States or any foreign country or other foreign jurisdiction, with such domestic limited liability company or other business entity as the agreement shall provide being the surviving or resulting domestic limited liability company or other business entity. Unless otherwise provided in the operating agreement, a merger or consolidation shall be approved by the members of each domestic limited liability company which is to merge or consolidate or, if there is more than one class or group of members, then by each class or group of members who under the provisions of the operating agreement are entitled to vote, in either case, by members who own more than 50 percent (unless a higher percentage is specified in the operating agreement) of the then current percentage or other interest in the profits of the domestic limited liability company owned by all of the members or by the members in each class or group, as appropriate. In connection with a merger or consolidation hereunder, rights or securities of, or interests in, a domestic limited liability company or other business entity which is a constituent party to the merger or consolidation may be exchanged for or converted into cash, property, rights or securities of, or interests in, the surviving or resulting domestic limited liability company or other business entity or, in addition to or in lieu thereof, may be exchanged for or converted into cash, property, rights or securities of, or interests in, a domestic limited liability company or other business entity which is not the surviving or resulting limited liability company or other business entity in the merger or consolidation. Notwithstanding prior approval, an agreement of merger or consolidation may be terminated or amended pursuant to a provision for such termination or amendment contained in the agreement of merger or consolidation.

(2) A domestic limited liability company may not merge or consolidate with an other business entity if authority for such merger or consolidation is not granted by the laws of the jurisdiction under which the other business entity is organized.

(3) With respect to the merger or consolidation of domestic limited liability companies, each domestic limited liability company shall comply with the provisions of this section and each other business entity shall comply with the applicable provisions of the laws of the jurisdiction under which it is organized.

c. If a domestic limited liability company merges or consolidates under this section, the domestic limited liability company or other business entity surviving or resulting in or from the merger or consolidation shall file a certificate of merger or consolidation in the office of the Secretary of State. The Secretary of State shall, upon filing, forward a copy of the certificate of merger or consolidation to the Director of the Division of Taxation. The certificate of merger or consolidation shall state:

(1) The name and jurisdiction of formation or organization of each of the domestic limited liability companies or other business entities which is to merge or consolidate;

(2) That an agreement of merger or consolidation has been approved and executed by each of the domestic limited liability companies or other business entities which is to merge or consolidate;

(3) The name of the surviving or resulting domestic limited liability company or other business entity;

(4) The future effective date or time (which shall be a date or time certain) of the merger or consolidation if it is not to be effective upon the filing of the certificate of merger or consolidation;

(5) That the agreement of merger or consolidation is on file at a place of business of the surviving or resulting domestic limited liability company or other business entity, and shall state the address thereof;

(6) That a copy of the agreement of merger or consolidation shall be furnished by the surviving or resulting domestic limited liability company or other business entity, on request and without cost, to any member of any domestic limited liability company or any person holding an interest in any other business entity which is to merge or consolidate; and

(7) If the surviving or resulting entity is not a domestic limited liability company, or a corporation or limited partnership organized under the laws of this State, a statement that such surviving or resulting other business entity agrees that it may be served with process in this State in any action, suit or proceeding for the enforcement of any obligation of any domestic limited liability company which is to merge or consolidate, irrevocably appointing the Secretary of State as its agent to accept service of process in any such action, suit or proceeding and specifying the address to which a copy of such process shall be mailed to it by the Secretary of State.

d. Unless a future effective date or time is provided in a certificate of merger or consolidation, in which event a merger or consolidation shall be effective at any such future effective date or time, a merger or consolidation shall be effective upon the filing in the office of the Secretary of State of a certificate of merger or consolidation.

e. A certificate of merger or consolidation shall act as a certificate of cancellation for a domestic limited liability company which is not the surviving or resulting entity in the merger or consolidation.

f. An agreement of merger or consolidation approved in accordance with subsection b. of this section may (1) effect any amendment to the operating agreement or (2) effect the adoption of a new operating agreement for a limited liability company if it is the surviving or resulting limited liability company in the merger or consolidation. Any amendment to an operating agreement or adoption of a new operating agreement made pursuant to this subsection shall be effective at the time or date of the merger or consolidation. The provisions of this subsection shall not be construed to limit the accomplishment of a merger or of any of the matters referred to herein by any other means provided for in an operating agreement or other agreement or as otherwise permitted by law, including that the operating agreement of any constituent limited liability company to the merger or consolidation (including a limited liability company formed for the purpose of consummating a merger or consolidation) shall be the operating agreement of the surviving or resulting limited liability company.

g. When any merger or consolidation becomes effective under this section, for all purposes of the laws of this State, all of the rights, privileges and powers of each of the domestic limited liability companies and other business entities that have merged or consolidated, and all property, real, personal and mixed, and all debts due to any of those domestic limited liability companies and other business entities, as well as all other things and causes of action belonging to each of those domestic limited liability companies and other business entities, shall be vested in the surviving or resulting domestic limited liability company or other business entity, and shall thereafter be the property of the surviving or resulting domestic limited liability company or other business entity as they were of each of the domestic limited liability companies and other business entities that have merged or consolidated, and the title to any real property vested by deed or otherwise, under the laws of this State, in any of those domestic limited liability companies and other business entities, shall not revert or be in any way impaired by reason of this act; but all rights of creditors and all liens upon any property of any of those domestic limited liability companies and other business entities shall be preserved unimpaired, and all debts, liabilities and duties of each of those domestic limited liability companies and other business entities that have merged or consolidated shall attach to the surviving or resulting domestic limited liability company or other business entity, and may be enforced against it to the same extent as if the debts, liabilities and duties had been incurred or contracted by it. Unless otherwise agreed, a merger or consolidation of a domestic limited liability company, including a domestic limited liability company which is not the surviving or resulting entity in the merger or consolidation, shall not require the domestic limited liability company to wind up its affairs under section 50 of this act or pay its liabilities and distribute its assets under section 51 of this act.

 

42:2B-21. Admission as member of limited liability company any person acquiring an interest in such company

a. In connection with the formation of a limited liability company, a person acquiring a limited liability company interest is admitted as a member of the limited liability company upon the later to occur of:


(1) The formation of the limited liability company; or

(2) The time provided in and upon compliance with the operating agreement or, if the operating agreement does not so provide, when the person's admission is reflected in the records of the limited liability company.

b. After the formation of a limited liability company, a person acquiring a limited liability company interest is admitted as a member of the limited liability company:

(1) In the case of a person acquiring a limited liability company interest directly from the limited liability company, at the time provided in and upon compliance with the operating agreement or, if the operating agreement does not so provide, upon the consent of all members and when the person's admission is reflected in the records of the limited liability company; or

(2) In the case of an assignee of a limited liability company interest, (a) as provided in section 46 of this act and (b) at the time provided in and upon compliance with the operating agreement or, if the operating agreement does not so provide, when the assignee's permitted admission is reflected in the records of the limited liability company.

c. A person may be admitted to a limited liability company as a member of the limited liability company and may receive a limited liability company interest in the limited liability company without making a contribution or being obligated to make a contribution to the limited liability company.

d. An operating agreement or another written agreement or writing:

(1) May provide that a person shall be admitted as a member of a limited liability company, or shall become an assignee of a limited liability company interest or other rights or powers of a member to the extent assigned, and shall become bound by the operating agreement (a) if the person (or a representative authorized by the person orally, in writing or by other action such as payment for a limited liability company interest) executes the operating agreement or any other writing evidencing the intent of the person to become a member or assignee, or (b) without such execution, if the person (or a representative authorized by the person orally, in writing or by other action such as payment for a limited liability company interest) complies with the conditions for becoming a member or assignee as set forth in the operating agreement or any other writing and requests (orally, in writing or by other action such as payment for a limited liability company interest) that the records of the limited liability company reflect such admission or assignment; and

(2) Shall not be unenforceable by reason of its not having been signed by a person being admitted as a member or becoming an assignee as provided in paragraph (1) of this subsection, or by reason of its having been signed by a representative as provided in this act.

 42:2B-22. Operating agreement to set forth classes or groups of members; rights, powers and duties granted to classes of members

a. An operating agreement may provide for classes or groups of members having such relative rights, powers and duties as the operating agreement may provide, and may make provision for the future creation in the manner provided in the operating agreement of additional classes or groups of members having such relative rights, powers and duties as may from time to time be established, including rights, powers and duties senior to existing classes and groups of members. An operating agreement may provide for the taking of an action, including the amendment of the operating agreement, without the vote or approval of any member or class or group of members, including an action to create under the provisions of the operating agreement a class or group of limited liability company interests that was not previously outstanding.

b. An operating agreement may grant to all or certain identified members or a specified class or group of the members the right to vote, separately or with all or any class or group of managers or members, on any matter. Voting by members may be on a per capita, number, financial interest, class, group or any other basis.

c. An operating agreement which grants a right to vote may set forth provisions relating to notice of the time, place or purpose of any meeting at which any matter is to be voted on by any manager or class or group of managers, waiver of any such notice, action by consent without a meeting, the establishment of a record date, quorum requirements, voting in person or by proxy, or any other matter with respect to the exercise of any such right to vote.

 

42:2B-23. Debts, obligations and liabilities of a limited liability company

Except as otherwise provided by this act, the debts, obligations and liabilities of a limited liability company, whether arising in contract, tort or otherwise, shall be solely the debts, obligations and liabilities of the limited liability company; and no member, manager, employee or agent of a limited liability company shall be obligated personally for any such debt, obligation or liability of the limited liability company, or for any debt, obligation or liability of any other member, manager, employee or agent of the limited liability company, by reason of being a member, or acting as a manager, employee or agent of the limited liability company.

 42:2B-24. End of membership in limited liability company; events

A member shall be dissociated from a limited liability company upon the occurrence of any of the following events:

a. Unless otherwise provided in an operating agreement, or with the written consent of all members,

(1) on the date the limited liability company receives notice of the member's resignation as a member, or on a later date specified by the member;

(2) an event agreed to in the operating agreement as causing the member's dissociation;

(3) a member:

(a) becomes a debtor in bankruptcy;

(b) executes an assignment for the benefit of creditors;

(c) seeks, consents to or acquiesces in the appointment of a trustee, receiver or liquidator of the member or of all or substantially all of that member's properties; or

(d) fails, within 90 days after the appointment, without the member's consent or acquiescence, of a trustee, receiver or liquidator of the member or of all or substantially all of that member's properties, to have the appointment vacated or stayed, or fails within 90 days after the expiration of a stay to have the appointment vacated; or

b. (1) the member's expulsion pursuant to the operating agreement;

(2) the member's expulsion by the unanimous vote of the other members if:

(a) it is unlawful to carry on the limited liability company with that member;

(b) there has been a transfer of all of that member's transferable interest in the limited liability company, other than a transfer for security purposes, or a court order charging the member's interest;

(c) within 90 days after the limited liability company notifies a corporate member that it will be expelled because it has filed a certificate of dissolution or the equivalent, its charter has been revoked, or its right to conduct business has been suspended by the jurisdiction of its incorporation, there is no revocation of the certificate of dissolution or no reinstatement of its charter or its right to conduct business; or

(d) a limited liability company or a partnership that is a member has been dissolved and its business is being wound up;

(3) on application by the limited liability company or another member, the member's expulsion by judicial determination because:

(a) the member engaged in wrongful conduct that adversely and materially affected the limited liability company's business;

(b) the member willfully or persistently committed a material breach of the operating agreement; or

(c) the member engaged in conduct relating to the limited liability company business which makes it not reasonably practicable to carry on the business with the member as a member of the limited liability company;

(4) in the case of a member who is an individual:

(a) the member's death;

(b) the appointment of a guardian or general conservator for the member; or

(c) a judicial determination that the member has become incapable of performing the member's duties under the operating agreement;

(5) in the case of a member that is a trust or is acting as a member by virtue of being a trustee of a trust, distribution of the trust's entire transferable interest in the limited liability company, but not merely by reason of the substitution of a successor trustee;

(6) in the case of a member that is an estate or is acting as a member by virtue of being a personal representative of an estate, distribution of the estate's entire transferable interest in the limited liability company, but not merely by reason of the substitution of a successor personal representative; or

(7) termination of a member who is not an individual, partnership, limited liability company, corporation, trust or estate. 

42:2B-24.1. Rights of dissociated member

Upon a member's dissociation, the dissociated member has, subject to section 39 of P.L.1993, c. 210 (C.42:2B-39), only the rights of an assignee of a member's limited liability interest.

 42:2B-25. Information available to each member of a limited liability company; information deemed confidential by the manager

a. Each member of a limited liability company has the right, subject to such reasonable standards (including standards governing what information and documents are to be furnished at what time and location and at whose expense) as may be set forth in an operating agreement or otherwise established by the manager or, if there is no manager, then by the members, to obtain from the limited liability company from time to time upon reasonable demand for any purpose reasonably related to the member's interest as a member of the limited liability company:

(1) True and full information regarding the status of the business and financial condition of the limited liability company;

(2) Promptly after becoming available, a copy of the limited liability company's federal, state and local income tax returns for each year;

(3) A current list of the name and last known business, residence or mailing address of each member and manager;

(4) A copy of any written operating agreement and certificate of formation and all amendments thereto, together with executed copies of any written powers of attorney pursuant to which the operating agreement and any certificate and all amendments thereto have been executed;

(5) True and full information regarding the amount of cash and a description and statement of the agreed value of any other property or services contributed by each member and which each member has agreed to contribute in the future, and the date on which each became a member; and

(6) Except as kept confidential pursuant to subsection c. of this section, other information regarding the affairs of the limited liability company as is just and reasonable.

b. Each manager shall have the right to examine all of the information described in this section for a purpose reasonably related to his position as a manager.

c. The manager of a limited liability company shall have the right to keep confidential from the members, for such period of time as the manager deems reasonable, any information which the manager reasonably believes to be in the nature of trade secrets or other information the disclosure of which the manager in good faith believes is not in the best interest of the limited liability company or could damage the limited liability company or its business or which the limited liability company is required by law or by agreement with a third party to keep confidential.

d. A limited liability company may maintain its records in other than a written form if such form is capable of conversion into written form within a reasonable time.

e. Any demand by a member under this section shall be in writing and shall state the purpose of the demand.

 42:2B-26. Penalties for failure of a member to comply with terms of operating agreement; limitations on personal liability

An operating agreement may provide that a member who fails to perform in accordance with, or to comply with the terms and conditions of, the operating agreement shall be subject to specified penalties or specified consequences, and at the time or upon the happening of events specified in the operating agreement, a member shall be subject to specified penalties or specified consequences. Unless otherwise provided in the operating agreement, a member shall not be personally liable for failure to perform in accordance with, or to comply with the terms and conditions of, the operating agreement or for any other reason unless such failure to perform or to comply or such other reason constitutes gross negligence or willful misconduct by the member. The operating agreement may, in any event, eliminate or limit the personal liability of the member for such failure to perform or to comply or for such other reason.

 

42:2B-27. Management of limited liability company vested in members

a. (1) Unless otherwise provided in an operating agreement, the management of a limited liability company shall be vested in its members in proportion to the then current percentage or other interest of members in the profits of the limited liability company owned by all of the members, the decision of members owning more than 50 percent of the then current percentage or other interest in the profits controlling; (2) provided, however, that if an operating agreement provides for the management, in whole or in part, of a limited liability company by one or more managers, the management of the limited liability company, to the extent so provided, shall be vested in the manager or managers who shall be chosen by the member or members in the manner provided in the operating agreement. The managers shall also hold the offices and have the responsibilities accorded to them by the members and set forth in an operating agreement. Subject to section 37 of this act, a manager shall cease to be a manager as provided in an operating agreement.

b. (1) If a limited liability company is managed by its members, unless otherwise provided in the operating agreement, each member shall have the authority to bind the limited liability company. In addition, unless otherwise provided in the operating agreement, or to the extent that a court of competent jurisdiction determines that the operating agreement is without effect in this regard, each member in a limited liability company managed by its members shall also have the authority to file for insolvency or reorganization under appropriate State or federal law, so long as that filing has the prior approval of members then owning more than 50 percent of the interests in the profits of the limited liability company.

(2) If the limited liability company is managed by a manager or managers, the managers shall, in addition to all other authority accorded by the operating agreement, have the authority to file for insolvency or reorganization under appropriate State or federal law, unless otherwise provided in the operating agreement, except to the extent a court of competent jurisdiction determines that the operating agreement is without effect in this regard.

 

42:2B-28. Manager may contribute to and share in profits and losses of limited liability company

A manager of a limited liability company may make contributions to the limited liability company and share in the profits and losses of, and in distributions from, the limited liability company as a member. A person who is both a manager and a member has the rights and powers, and is subject to the restrictions and liabilities, of a manager and, except as provided in an operating agreement, also has the rights and powers, and is subject to the restrictions and liabilities, of a member to the extent of his participation in the limited liability company as a member.

 42:2B-29. Operating agreement may establish classes or groups of managers; rights granted classes or groups of managers

a. An operating agreement may provide for classes or groups of managers having such relative rights, powers and duties as the operating agreement may provide, and may make provision for the future creation in the manner provided in the operating agreement of additional classes or groups of managers having such relative rights, powers and duties as may from time to time be established, including rights, powers and duties senior to existing classes and groups of managers. An operating agreement may provide for the taking of an action, including the amendment of the operating agreement, without the vote or approval of any manager or class or group of managers, including an action to create under the provisions of the operating agreement a class or group of limited liability company interests that was not previously outstanding.

b. An operating agreement may grant to all or certain identified managers or a specified class or group of the managers the right to vote, separately or with all or any class or group of managers or members, on any matter. Voting by managers may be on a per capita, number, financial interest, class, group or any other basis.

c. An operating agreement which grants a right to vote may set forth provisions relating to notice of the time, place or purpose of any meeting at which any matter is to be voted on by any manager or class or group of managers, waiver of any such notice, action by consent without a meeting, the establishment of a record date, quorum requirements, voting in person or by proxy, or any other matter with respect to the exercise of any such right to vote.

 42:2B-30. Penalties for failure of manager to comply with the terms of an operating agreement; limitations on personal liability

An operating agreement may provide that a manager who fails to perform in accordance with, or to comply with the terms and conditions of, the operating agreement shall be subject to specified penalties or specified consequences, and at the time or upon the happening of events specified in the operating agreement, a manager shall be subject to specified penalties or specified consequences. Unless otherwise provided in the operating agreement, a manager shall not be personally liable for failure to perform in accordance with, or to comply with the terms and conditions of, the operating agreement or for any other reason unless such failure to perform or to comply or such other reason constitutes gross negligence or willful misconduct by the manager. The operating agreement may, in any event, eliminate or limit the personal liability of the manager for such failure to perform or to comply or for such other reason.

42:2B-31. Good faith reliance of member or manager on records of the limited liability company and expert opinions

A member or manager of a limited liability company shall be fully protected in relying in good faith upon the records of the limited liability company and upon such information, opinions, reports or statements presented to the limited liability company by any of its other managers, members, officers, employees, or committees of the limited liability company, or by any other person, as to matters the member or manager reasonably believes are within such other person's professional or expert competence and who has been selected with reasonable care by or on behalf of the limited liability company, including information, opinions, reports or statements as to the value and amount of the assets, liabilities, profits or losses of the limited liability company or any other facts pertinent to the existence and amount of assets from which distributions to members might properly be paid. For purposes of this section, a member or manager who is the person responsible for the making of any records of a limited liability company may only rely on those records in good faith if that reliance is reasonable. 

42:2B-32. Form of contribution by a member of a limited liability company

The contribution of a member to a limited liability company may be in cash, property or services rendered, or a promissory note or other obligation to contribute cash or property or to perform services.

 42:2B-33. Member obligated to perform any promise to contribute cash or property or to perform services; compromise of obligation; penalties

a. Except as provided in an operating agreement, a member is obligated to a limited liability company to perform any promise to contribute cash or property or to perform services, even if he is unable to perform because of death, disability or any other reason. If a member does not make the required contribution of property or services, he is obligated at the option of the limited liability company to contribute cash equal to that portion of the agreed value (as stated in the records of the limited liability company) of the contribution that has not been made. The foregoing option shall be in addition to, and not in lieu of, any other rights, including the right to specific performance, that the limited liability company may have against such member under the operating agreement or applicable law.

b. Unless otherwise provided in an operating agreement, the obligation of a member to make a contribution or return money or other property paid or distributed in violation of this act may be compromised only by consent of all the members. Notwithstanding the compromise, a creditor of a limited liability company who extends credit, after the entering into of an operating agreement or an amendment thereto which, in either case, reflects the obligation, and before the amendment thereof to reflect the compromise, may enforce the original obligation to the extent that, in extending credit, the creditor reasonably relied on the obligation of a member to make a contribution or return. A conditional obligation of a member to make a contribution or return money or other property to a limited liability company may not be enforced unless the conditions of the obligation have been satisfied or waived as to or by such member. Conditional obligations include contributions payable upon a discretionary call of a limited liability company prior to the time the call occurs.

c. An operating agreement may provide that the limited liability company interest of any member who fails to make any contribution that he is obligated to make shall be subject to specified penalties for, or specified consequences of, such failure. Such penalty or consequence may take the form of reducing or eliminating the defaulting member's proportionate interest in a limited liability company, subordinating his limited liability company interest to that of nondefaulting members, a forced sale of his limited liability company interest, forfeiture of his limited liability company interest, the lending by other members of the amount necessary to meet his commitment, a fixing of the value of his limited liability company interest by appraisal or by formula and redemption or sale of his limited liability company interest at such value, or other penalty or consequence.

42:2B-34. Allocation of profits and losses among members

The profits and losses of a limited liability company shall be allocated among the members, and among classes or groups of members, in the manner provided in an operating agreement. If the operating agreement does not so provide, profits and losses shall be allocated on the basis of the agreed value (as stated in the records of the limited liability company) of the contributions made by each member to the extent they have been received by the limited liability company and have not been returned.

42:2B-35. Allocation of cash distributions among members

Distributions of cash or other assets of a limited liability company shall be allocated among the members, and among classes or groups of members, in the manner provided in an operating agreement. If the operating agreement does not so provide, distributions shall be made on the basis of the agreed value (as stated in the records of the limited liability company) of the contributions made by each member to the extent they have been received by the limited liability company and have not been returned.

 42:2B-36. Member entitled to distributions prior to his resignation or prior to dissolution of the limited liability company

Except as provided in this act, to the extent and at the times or upon the happening of the events specified in an operating agreement, a member is entitled to receive from a limited liability company distributions before his resignation from the limited liability company and before the dissolution and winding up thereof.

 42:2B-37. Resignation of a manager of a limited liability company; prohibition in operating agreement

A manager may resign as a manager of a limited liability company at the time or upon the happening of events specified in an operating agreement and in accordance with the operating agreement. An operating agreement may provide that a manager shall not have the right to resign as a manager of a limited liability company. Notwithstanding that an operating agreement provides that a manager does not have the right to resign as a manager of a limited liability company, a manager may resign as a manager of a limited liability company at any time by giving written notice to the member or members, as the case may be, and other managers. If the resignation of a manager violates an operating agreement, in addition to any remedies otherwise available under applicable law, a limited liability company may recover from the resigning manager damages for breach of the operating agreement and offset the damages against the amount otherwise distributable to the resigning manager.

42:2B-38. Resignation of a member of a limited liability company; procedures

A member may resign from a limited liability company at the time or upon the happening of events specified in an operating agreement and in accordance with the operating agreement. If an operating agreement does not specify the time or the events upon the happening of which a member may resign or a definite time for the dissolution and winding up of a limited liability company, a member may resign upon not less than 6 months' prior written notice to the limited liability company at its registered office as set forth in the certificate of formation filed in the office of the Secretary of State and to each member and manager at each member's and manager's address as set forth on the records of the limited liability company. Notwithstanding anything to the contrary set forth in this act, an operating agreement may provide that a member may not resign from a limited liability company or assign his limited liability company interest prior to the dissolution and winding up of the limited liability company.

 42:2B-39. Member entitled to receive distribution upon resignation

a. Except as provided in this act, upon resignation any resigning member from a limited liability company with at least one remaining member is entitled to receive any distribution to which he is entitled under an operating agreement and, if not otherwise provided or permitted in an operating agreement, he is entitled to receive, within a reasonable time after resignation, the fair value of his limited liability company interest as of the date of resignation , less all applicable valuation discounts, unless the operating agreement provides for another distribution formula. Upon resignation from a limited liability company of which that member had been the last member, unless the limited liability company continues as permitted pursuant to subsection d. of section 48 of P.L.1993, c. 210 (C.42:2B-48), the resigning member shall not be entitled to receive any distribution except pursuant to section 51 of P.L.1993, c. 210 (C.42:2B-51). If the limited liability company continues as permitted under subsection d. of section 48 of P.L.1993, c. 210 (C.42:2B-48), the resigning member shall be treated as, and have the rights of, a resigning member from a limited liability company with at least one remaining member. If the resignation of a member violates an operating agreement, in addition to any remedies otherwise available under applicable law, a limited liability company may recover from the resigning member damages for breach of the operating agreement and offset the damages against the amount otherwise distributable to the resigning member.

b. As used in subsection a. of this section, "all applicable valuation discounts" shall include discounts for lack of liquidity, relative size of holding, absence of any trading market and comparable factors.

 42:2B-40. Member entitled to cash distribution; exceptions

Except as provided in an operating agreement, a member, regardless of the nature of his contribution, has no right to demand and receive any distribution from a limited liability company in any form other than cash. Except as provided in an operating agreement, a member may not be compelled to accept a distribution of any asset in kind from a limited liability company to the extent that the percentage of the asset distributed to him exceeds a percentage of that asset which is equal to the percentage in which he shares in distributions from the limited liability company.

42:2B-41. Member entitled to distribution is creditor of limited liability company

Subject to sections 42 and 51 of this act, and unless otherwise provided in an operating agreement, at the time a member becomes entitled to receive a distribution, he has the status of, and is entitled to all remedies available to, a creditor of a limited liability company with respect to the distribution. An operating agreement may provide for the establishment of a record date with respect to allocations and distributions by a limited liability company.

 42:2B-42. Distributions to members prohibited when liabilities of limited liability company exceed fair value of all assets; liability of members to limited liability company for improper distributions

a. A limited liability company shall not make a distribution to a member to the extent that at the time of the distribution, after giving effect to the distribution, all liabilities of the limited liability company, other than liabilities to members on account of their limited liability company interests and liabilities for which the recourse of creditors is limited to specified property of the limited liability company, exceed the fair value of the assets of the limited liability company, except that the fair value of property that is subject to a liability for which the recourse of creditors is limited shall be included in the assets of the limited liability company only to the extent that the fair value of that property exceeds that liability.

b. A member who receives a distribution in violation of subsection a. of this section, and who knew at the time of the distribution that the distribution violated subsection a. of this section, shall be liable to a limited liability company for the amount of the distribution. A member who receives a distribution in violation of subsection a. of this section, and who did not know at the time of the distribution that the distribution violated subsection a. of this section, shall not be liable for the amount of the distribution. Subject to subsection c. of this section, this subsection b. shall not affect any obligation or liability of a member under an operating agreement or other applicable law for the amount of a distribution.

c. Unless otherwise agreed, a member who receives a distribution from a limited liability company shall have no liability under this act or other applicable law for the amount of the distribution after the expiration of three years from the date of the distribution unless an action to recover the distribution from the member is commenced prior to the expiration of the three year period and an adjudication of liability against the member is made in the said action.

 

42:2B-43. A member's interest in a limited liability company is personal property; limits on such interest

A limited liability company interest is personal property. A member has no interest in specific limited liability company property.

42:2B-44. Assignability of limited liability company interest; rights assignable

a. A limited liability company interest is assignable in whole or in part except as provided in an operating agreement. The assignee of a member's limited liability company interest shall have no right to participate in the management of the business and affairs of a limited liability company except as provided in an operating agreement and upon:

(1) The approval of all of the non-assigning members of that interest, if any, of the limited liability company ; or

(2) Compliance with any procedure provided for in the operating agreement.

b. Unless otherwise provided in an operating agreement:

(1) An assignment entitles the assignee to receive the distribution or distributions, and to receive the allocation of income, gain, loss, deduction, or credit or similar item to which the assignor was entitled, to the extent assigned;

(2) A member ceases to be a member and to have the power to exercise any rights or powers of a member upon assignment of all of his limited liability company interest; and

(3) The pledge of, or granting of a security interest, lien or other encumbrance in or against, any or all of the limited liability company interest of a member shall not cause the member to cease to be a member, to become dissociated or to fail to have the power to exercise any rights or powers of a member.

c. An operating agreement may provide that a member's interest in a limited liability company may be evidenced by a certificate of limited liability company interest issued by the limited liability company.

d. Unless otherwise provided in an operating agreement and except to the extent assumed by agreement, until an assignee of a limited liability company interest becomes a member, the assignee shall have no liability as a member solely as a result of the assignment.

e. An assignee shall have no authority to seek or obtain a court order dissolving or liquidating a limited liability company.

 42:2B-45. Rights of judgment creditors

On application to a court of competent jurisdiction by any judgment creditor of a member, the court may charge the limited liability company interest of the member with payment of the unsatisfied amount of the judgment with interest. To the extent so charged, the judgment creditor has only the rights of an assignee of the limited liability company interest. An action by a court pursuant to this section does not deprive any member of the benefit of any exemption laws applicable to his limited liability company interest. A court order charging the limited liability company interest of a member pursuant to this section shall be the sole remedy of a judgment creditor, who shall have no right under P.L.1993, c. 210 (C.42:2B-1 et seq.) or any other State law to interfere with the management or force dissolution of a limited liability company or to seek an order of the court requiring a foreclosure sale of the limited liability company interest. Nothing in this section shall be construed to affect in any way the rights of a judgment creditor of a member under federal bankruptcy or reorganization laws.

 42:2B-46. Membership in limited liability company of an assignee; requirements

a. An assignee of a limited liability company interest may become a member as provided in an operating agreement and upon:

(1) The approval of all of the members of the limited liability company other than the member assigning his limited liability company interest; or

(2) Compliance with any procedure provided for in the operating agreement.

b. An assignee who has become a member has, to the extent assigned, the rights and powers, and is subject to the restrictions and liabilities, of a member under an operating agreement and this act. Notwithstanding the foregoing, unless otherwise provided in an operating agreement, an assignee who becomes a member is liable for the obligations of his assignor to make contributions as provided in section 33 of this act, but shall not be liable for the obligations of his assignor under section 37 or 38. However, the assignee is not obligated for liabilities, including the obligations of his assignor to make contributions as provided in section 33 of this act, unknown to the assignee at the time he became a member and which could not be ascertained from an operating agreement.

c. Whether or not an assignee of a limited liability company interest becomes a member, the assignor is not released from his liability to a limited liability company under sections 32 through 42 of this act.

d. In addition to subsection a. of this section, an assignee of a limited liability company interest may become a member of a limited liability company unless otherwise provided or expressly precluded by a provision of the operating agreement, upon that assignee's election when:

(1) there are no members of the limited liability company;

(2) that election is made within 90 days after the date on which the limited liability company no longer has at least one member; and

(3) the assignee either first became an assignee when there were no members of the limited liability company remaining in connection with the resignation or other dissociation of the last remaining member of the limited liability company or is an assignee of a member of the limited liability company when that member is the only member of the limited liability company.

If an assignee timely elects to become a member of the limited liability company as provided in this section, the certificate of formation shall remain valid and the limited liability company shall continue to have existence as though it has always had at least one member.

 42:2B-47. Exercise of a member's rights upon death or incompetence

If a member who is an individual dies or a court of competent jurisdiction adjudges him to be incompetent to manage his person or his property, the member's executor, administrator, guardian, conservator or other legal representative may exercise all of the member's rights for the purpose of settling his estate or administering his property, including any power under an operating agreement of an assignee to become a member and the power given to an assignee under subsection d. of section 46 of P.L.1993, c. 210 (C.42:2B-46). If a member is a corporation, trust or other entity and is dissolved or terminated, the powers of that member may, in addition to the powers given to an assignee under subsection d. of section 46 of P.L.1993, c. 210 (C.42:2B-46), be exercised by its legal representative or successor.

 42:2B-48. Dissolution of a limited liability company

A limited liability company is dissolved and its affairs shall be wound up upon the first to occur of the following:

a. Unless the certificate of formation specifies that the limited liability company is perpetual, at the time specified in an operating agreement, or 30 years from the date of the formation of the limited liability company if no specified time for dissolution and winding up, regardless of any dissolution contingencies, is set forth in the operating agreement;

b. Upon the happening of events specified in an operating agreement;

c. The written consent of all members, which includes written consent of the sole member of a limited liability company with only one member;

d. Ninety days after the date on which the limited liability company no longer has at least one member, unless at least one new member is admitted within that 90 day period; or

e. The entry of a decree of judicial dissolution under section 49 of this act.

 42:2B-49. Dissolution by decree

On application by or for a member or manager the Superior Court may decree dissolution of a limited liability company whenever it is not reasonably practicable to carry on the business in conformity with an operating agreement.

 42:2B-49.1. Notice to creditors

a. At any time after a limited liability company has been dissolved, the limited liability company, the liquidating trustee or a receiver appointed for the limited liability company may give notice requiring all creditors to present their claims in writing. The notice shall be published three times, once in each of three consecutive weeks, in a newspaper of general circulation in the county in which the registered office of the limited liability company is located and shall state that all persons who are creditors of the limited liability company shall present written proof of their claims to the limited liability company, the liquidating trustee or a receiver appointed for the limited liability company at a place and on or before a date named in the notice, which date shall not be less than six months after the date of the first publication.

b. On or before the date of the first publication of the notice as provided in subsection a. of this section, the limited liability company, the liquidating trustee or a receiver appointed for the limited liability company shall mail a copy of the notice to each known creditor of the limited liability company. The giving of this notice shall not constitute recognition that any person to whom that notice is directed is a creditor of the limited liability company other than for the purpose of receipt of notice hereunder.

c. Proof of the publication and mailing authorized by this section shall be made by an affidavit filed with the Division of Commercial Recording in the Department of the Treasury.

d. As used in this act, "creditor" means all persons to whom the limited liability company is indebted, and all other persons who have claims or rights against the limited liability company, whether liquidated or unliquidated, matured or unmatured, direct or indirect, absolute or contingent, secured or unsecured.

42:2B-49.2. Failure to file claim

Any creditor who does not file a claim as provided within the time limit specified in the notice given pursuant to section 1 of this act, and all those claiming through the creditor or under the claim, shall be forever barred from suing on the claim or otherwise realizing upon or enforcing it except, in the case of a creditor who shows good cause for not having previously filed a claim, to the extent the Superior Court may allow:

a. against the limited liability company to the extent of any undistributed assets; or

b. if the undistributed assets are not sufficient to satisfy a claim, against a member to the extent of the member's ratable part of the claim, out of the assets of the limited liability company distributed to the member in dissolution.

This section shall not apply to claims which are in litigation on the date of the first publication of the notice pursuant to section 1 of this act.

 42:2B-50. Winding up of the affairs of a limited liability company by members; powers retained by members

a. Unless otherwise provided in an operating agreement, a manager who has not wrongfully dissolved a limited liability company or, if there is no manager, the members or a person approved by the members or, if there is more than one class or group of members, then by each class or group of members, in either case, by members who own more than 50 percent of the then current percentage or other interest in the profits of the limited liability company owned by all of the members or by the members in each class or group, as appropriate, may wind up the limited liability company's affairs; but the Chancery Division, General Equity Part of Superior Court, upon cause shown, may wind up the limited liability company's affairs upon application of any member or manager, his legal representative or assignee, and in connection therewith, may appoint a liquidating trustee.

b. Upon dissolution of a limited liability company and until the filing of a certificate of cancellation as provided in section 14 of this act, the persons winding up the limited liability company's affairs may, in the name of, and for and on behalf of, the limited liability company, prosecute and defend suits, whether civil, criminal or administrative, gradually settle and close the limited liability company's business, dispose of and convey the limited liability company's property, discharge or make reasonable provision for the limited liability company's liabilities, and distribute to the members any remaining assets of the limited liability company, all without affecting the liability of members and managers and without imposing liability on a liquidating trustee.

42:2B-51. Distribution of assets upon winding up of a limited liability company

a. Upon the winding up of a limited liability company, the assets shall be distributed as follows:

(1) To creditors, including members and managers who are creditors, to the extent otherwise permitted by law, in satisfaction of liabilities of the limited liability company (whether by payment or the making of reasonable provision for payment thereof) other than liabilities for which reasonable provision for payment has been made and liabilities for distributions to members under sections 36 or 39 of this act;

(2) Unless otherwise provided in an operating agreement, to members and former members in satisfaction of liabilities for distributions under sections 36 or 39 of this act; and

(3) Unless otherwise provided in an operating agreement, to members first for the return of their contributions and second respecting their limited liability company interests, in the proportions in which the members share in distributions.

b. A limited liability company which has dissolved shall pay or make reasonable provision to pay all claims and obligations, including all contingent, conditional or unmatured claims and obligations, known to the limited liability company and all claims and obligations which are known to the limited liability company but for which the identity of the claimant is unknown. If there are sufficient assets, the claims and obligations shall be paid in full and any provision for payment made shall be made in full. If there are insufficient assets, the claims and obligations shall be paid or provided for according to their priority and, among claims and obligations of equal priority, ratably to the extent of assets available therefor. Unless otherwise provided in an operating agreement, any remaining assets shall be distributed as provided in this act. Any liquidating trustee winding up a limited liability company's affairs who has complied with this section shall not be personally liable to the claimants of the dissolved limited liability company by reason of the trustee's actions in winding up the limited liability company.

 

 42:2B-52. Laws governing a foreign limited liability company

The laws of the state, territory, possession, or other jurisdiction or country under which a foreign limited liability company is organized govern its organization and internal affairs and the liability of its members and managers and a foreign limited liability company may not be denied registration by reason of any differences between those laws and the laws of this State.

 

42:2B-53. Registration with the Secretary of State of all foreign limited liability companies; contents of application for registration

a. Before doing business in this State, a foreign limited liability company shall register with the Secretary of State. In order to register, a foreign limited liability company shall submit to the Secretary of State a copy executed by an authorized person of an application for registration as a foreign limited liability company, setting forth:

(1) The name of the foreign limited liability company and, if different, the name under which it proposes to register and do business in this State;

(2) The state, territory, possession or other jurisdiction or country where formed, the date of its formation and a statement from an authorized person that, as of the date of filing, the foreign limited liability company validly exists as a limited liability company or a registered limited liability partnership under the laws of the jurisdiction of its formation;

(3) The nature of the business or purposes to be conducted or promoted in this State;

(4) The address of the registered office and the name and address of the registered agent for service of process required to be maintained by section 6 of this act;

(5) A statement that the Secretary of State is appointed the agent of the foreign limited liability company for service of process; and

(6) The date on which the foreign limited liability company first did, or intends to do, business in this State.

b. A person shall not be deemed to be doing business in this State solely by reason of being a member or manager of a domestic limited liability company or a foreign limited liability company.

42:2B-54. Registration applications must be approved by the Secretary of State

a. If the Secretary of State finds that an application for registration from a foreign limited liability company conforms to law and all requisite fees have been paid, he shall:

(1) Certify that the application has been filed in his office by endorsing upon the original application the word "Filed," and the date and hour of the filing. This endorsement is conclusive of the date and time of its filing in the absence of actual fraud;

(2) File and index the endorsed application.

b. The duplicate of the application, similarly endorsed, shall be returned to the person who filed the application or his representative.

 42:2B-55. Correction of registration applications containing erroneous information

If any statement in the application for registration of a foreign limited liability company was false when made or any arrangements or other facts described have changed, making the application false in any respect, the foreign limited liability company shall promptly file in the office of the Secretary of State a certificate, executed by an authorized person, correcting the statement.

42:2B-56. Certificate of cancellation of a foreign limited liability company's registration

A foreign limited liability company may cancel its registration by filing in the office of the Secretary of State a certificate of cancellation, executed by an authorized person. A cancellation does not terminate the authority of the Secretary of State to accept service of process on the foreign limited liability company with respect to causes of action arising out of the doing of business in this State.

42:2B-57. Foreign limited liability company must be registered to bring suits; rights not affected by failure to file application of registration

a. A foreign limited liability company doing business in this State may not maintain any action, suit or proceeding in this State until it has registered in this State, and has paid to this State all fees and penalties for the years or parts thereof, during which it did business in this State without having registered.

b. The failure of a foreign limited liability company to register in this State does not impair:

(1) The validity of any contract or act of the foreign limited liability company;

(2) The right of any other party to the contract to maintain any action, suit or proceeding on the contract; or

(3) Prevent the foreign limited liability company from defending any action, suit or proceeding in any court of this State.

c. A member or a manager of a foreign limited liability company is not liable for the obligations of the foreign limited liability company solely by reason of the limited liability company's having done business in this State without registration.

d. Any foreign limited liability company doing business in this State without first having registered shall be fined and shall pay to the Secretary of State $200 for each year or part thereof during which the foreign limited liability company failed to register in this State. The penalty shall be recovered with costs in an action prosecuted by the Attorney General. The