New Jersey's New Law Governing Limited Liability Companies
on March 3, 2014
On March 1, 2014, New Jersey’s law governing limited liability companies (LLCs) goes into effect. The new law makes significant changes that current LLC managers and members, as well as those considering creating a LLC, should be aware of.
Examples of a few changes made by the new law include:
- It applies the minority shareholder oppression laws to an LLC (previously the law was up in the air on whether oppression applies to LLCs). Examples of oppression may include the LLC’s failure to pay dividends when it can afford it, embezzlement and hiding financial information.
- After March 1st, a shareholder who wants out of the LLC, and wants to withdraw and be paid for his fair share of business, cannot do so. The resigning member relinquishes his/her voting rights, but retains an equity interest.
- A LLC’s Operating Agreement can be in writing, oral or even implied
- LLCs will have perpetual duration, rather than existing for a limited period of time
- An Operating Agreement can terminate or restrict a member or manager’s liability to the LLC and members for money damages, except in very limited situations
- An Operating Agreement may terminate or alter the indemnification and hold harmless provisions protecting managers and members against liability
The above list is a summary of some of the changes created by the new law. To learn more about the new law and how it impacts your LLC, contact the attorneys at Slater, Tenaglia, Fritz & Hunt to schedule a complimentary initial consultation. We can assist with creating new, or updating existing, operating agreements to comply with the new law and take advantage of the opportunities now available to LLCs in New Jersey.
For a free initial consultation with skilled corporate litigation lawyers, contact Slater, Tenaglia, Fritz & Hunt, P.A. We have been providing outstanding legal services for more than 35 years. We are conveniently located in New York and New Jersey. To schedule your appointment, please call us at (201) 820-6001 or (212) 692-0200. We can also be found on the Internet, Facebook, LinkedIn, Twitter, Google+ and Youtube. We also have a network of local counsel throughout the United States.