Parsonage Vandenack Williams LLC
Attorneys at Law Licensed in Nebraska, Iowa, Michigan,
South Dakota, Texas, Arizona, and Colorado

Changes to the Law Governing Your Nebraska Limited Liability Are Going Into Effect in 2013

On January 1, 2013, various changes go into effect for limited liability companies formed in
Nebraska. Depending upon when you formed your limited liability company, this new law may
significantly impact the legal relationships and risks of your company. While the new law
includes numerous changes, the following is a list of certain key changes that you should be
aware of:

1. Fiduciary Duties. The new law creates duties of loyalty and care owed by members
and/or managers to each other and to the company. This could result in unintended
personal liability for members or managers.

2. Voting. The new law allows all members to have an equal say in the management of
the company, regardless of the member's investment.

3. Distributions. The law provides that all distributions prior to dissolution must be made
in equal shares among members, regardless of the investment of each member. In
addition, solvency tests have been added that must be met prior to distributions being
made to members.

4. Transfer of Interests. The new law may allow a member, or even require a member,
to transfer the financial rights of his or her ownership interest in the company even if
such transfer is contrary to the company's operating agreement. Such a transfer could
result in a "split membership interest" whereby the transferring member would retain the
right to vote and the transferee member would have the financial interests related to the
interest.

5. Charging Orders. The new law provides that creditors of a member may obtain a
"charging order" that allows the creditor to obtain the member's financial rights to
distributions from the LLC. The member retains his or her right to vote, but loses all
financial rights.

6. Statement of Authority. The new law allows a company to file a Statement of
Authority with the Nebraska Secretary of State that specifies the authority given to
officers and managers of the company and which puts the world on notice of any
limitations of authority. This could be an important tool for passive investors to ensure
that third parties recognize the limitations placed upon the management of the
company.

Many of the provisions of the new law can be modified in your company's operating
agreement. We recommend that you have your company's operating agreement reviewed, as
well as your current policies and procedures regarding governing the company, to ensure that
your business will still accomplish your intentions under the new law.

A Tax Note: In addition, effective for 2013, an additional 3.8% Medicare tax on investment
income and other unearned income may apply to income from your LLC. If income from your
LLC would otherwise be subject to the new tax, there are various changes to your LLC's tax
elections and management structure that can be made before year-end to prevent the new tax
from applying to income you receive from your LLC.

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