In 2021, Ohio overhauled its limited liability law, which was by most accounts out of date and not in line with other states across the nation that had already passed statutes reflecting the provisions of The Uniform LLC Act of 2006 and 2011. Currently, most of Ohio’s active business entities are LLCs and they continue to be preferred by business owners and the attorneys forming them. This change was overdue in Ohio and now provides a more progressive approach to the organization, management, and control of limited liability companies. The new statute passed in 2021, is effective as of February 11, 2022, and so, as of that date, all Ohio limited liability companies will be governed by the new statute. So the big question is, how does this effect you?
If you are planning on setting up an LLC in 2022, it must be formed in compliance with the new statute and the LLC’s operational documents must also comport to the requirements of the new law. The Ohio Secretary of State will have new forms available on its website that must be used to form LLCs after the February 11th effective date.
If you already have an LLC, whether it is a sole member or multi member LLC, controlling documents for that LLC should be reviewed and most likely will have to be updated to reflect provisions of the new statute. In particular if the LLC is a multiple member LLC, then the management authority of the LLC and the members’ duties to the LLC should be reviewed and updated appropriately to reflect the new statutory requirements and allowances. Generally, the new law allows for greater flexibility in management structure. A major change in the law is that it allows for series LLCs to be formed and used in Ohio. These were not previously allowed under the prior Ohio LLC statute and may provide benefit for some businesses wanting to allow for, in a single operating agreement, a form of subsidiary ownership among a subset of its members, within the “parent” LLC. The new LLC law also provides a release for an LLC to cut off claims and thus its liability after the company dissolves.
The attorneys at Thomas Law Group are available to assist you in reviewing your current LLC documents and discuss any changes that may need to be made pursuant to new laws.