House Bill

HB1020:

Amends the obligations of LLC's and their members

Sponsor

Bill Primary sponsors

Maddox

Cosponsors

Filed: 1/9/2023 1:53:05 PM

Original Title

Amends the obligations of LLC's and their members

Summary

What it does

This legislation amends Arkansas Code § 4-38-502(a), concerning the transfer of transferable interest under the Uniform Limited Liability Company Act, to provide that (1) transfers are permissible and do not by themselves cause a person's dissociation as a member or cause a dissolution, (2) subject to § 4-38-504, the transferee does not have the power to participate in the management of the company or have access to records, and (3) the member or transferee retains all rights, except for the transferred interest. It also amends Arkansas Code § 4-38-503, concerning charging orders and foreclosure sales, to provide that (1) on application by a judgment creditor of a member or transferee, a court may enter a charging order against the transferable interest of the judgment debtor, (2) the court may appoint a receiver and make other orders, (3) a member or transferee can extinguish the charging order by satisfying the judgment and filing a certified copy, (4) a limited liability company or one or more members may pay the judgment instead, and (5) if the sole member of a limited liability company is foreclosed, the purchaser obtains the entire interest, becomes a member, and the formerly charged member is dissociated. It also repeals Arkansas Code § 4-38-602(3), concerning expulsion if a charging order has not been foreclosed. Lastly, it amends Arkansas Code § 4

Options: In Committee (first chamber)

Status

In House Insurance & Commerce

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