On Friday, April 15, 2022, Governor Tony Evers signed 2021 Act 258 into law, codifying the Business Entity Package that has been spearheaded for more than a decade by the State Bar of Wisconsin Business Law Section.
Among other things, the Act amends and restates Wisconsin’s limited liability company (LLC) statutes (Wis. Stat. chapter 183) to reflect the Revised Uniform Limited Liability Company Act (RULLCA) approved and recommended for enactment in all the states by the Uniform Law Commission (ULC).
The Act also amends and restates Wisconsin’s limited partnership (LP) statutes (Chapter 179) to reflect the Revised Uniform Limited Partnership Act (RULPA) approved and recommended for enactment in all the states by the ULC.
It also makes corresponding changes to Wisconsin’s partnership statutes (Chapter 178), business corporation statutes (Chapter 180), and nonstock corporation statutes (Chapter 181), in order to harmonize and coordinate provisions involving all of those types of entities.
The Changes Are A Vital Improvement
Current
Wis. Stat. chapter 183 was partially modeled after the Nov. 19, 1992, draft of the American Bar Association’s “Prototype Limited Liability Company Act.” That said, it was – and is – a relatively “home brewed” construct.
While there have been some modifications and periodic updates since its original enactment, current Chapter 183 essentially remains a “first-generation” limited liability company statute. With the passage of Act 258, Wisconsin will join 23 other states that have already adopted a version of the ULC’s “second-generation” LLC statute. See
the Uniform law Commission website for tracking information on progress of the statute in other states.
Current Wis. Stat. chapter 179 was based on the original Uniform Law promulgated by the ULC (f/k/a National Conference of Commissioners on Uniform State Laws) in 1976 (before the 1985 amendments to that Uniform Law). Act 258 adopts the most recent version of the Revised Uniform Limited Partnership Law, including the 2013 amendments.
The thrust of all of these changes is to reflect case law and during the intervening approximately 40 years.
Finally, the Act also makes certain changes to Wis. Stat. chapters 178, 180, and 181, to bring about uniformity among the five chapters governing the most prevalent business organizations, such as those relating to cross-species transactions as well as procedures for the Wisconsin Department of Financial Institutions.
Business Law Section Committee Reports
In addition to the Act, each of the Business Law Section committees produced a detailed report explaining the rationale for noneditorial variations from the original RULLCA and RULPA texts, and offering substantive comments regarding RULLCA, RULPA, and the proposed bill. However, know that these comments are intended only to supplement, and not repeat or displace, the ULC’s official comments to RULLCA and RULPA themselves.
As explained in their reports, each of the section’s committees generally followed the lead of the ULC in substantive matters, unless there were significant reasons relating to Wisconsin law and practice or otherwise, to vary from the Uniform Law. Not surprisingly then, the proposed bill includes the uniform law language in the large majority of circumstances, other than editorial changes made by the Legislative Reference Bureau in conforming the uniform law to Wisconsin’s drafting style.
You can view the committees’ reports via these links:
New Law Takes Effect Jan. 1, 2023
The changes in the Act will apply to LLCs and LPs formed as of Jan. 1, 2023. The Act will also apply on Jan. 1, 2023, to LLCs and LPs formed before that date, unless:
the LLC or LP elects to be governed
earlier by filing a
Statement of Applicability with the Wisconsin Department of Financial Institutions (DFI); or
the LLC or LP elects to continue being governed by the existing law applicable before enactment of the Act, by filing a Statement of Nonapplicability with the DFI
no later than Dec. 31, 2022.
Where to Find Out More
There will be much more to come in terms of educational information on 2021 Act 258 in the very near future. Look for upcoming articles in the June issue of
Wisconsin Lawyer™ magazine.
Also, you can sign up now for the one-hour CLE webinar from State Bar of Wisconsin PINNACLE©,
Wisconsin’s New Business Entity Law 2022. It discusses the changes to:
formulation, partnership, and operating agreements;
fiduciary duties of partners, members, and managers;
dissociation, dissolution, and winding up; and
mergers, conversions, and other business-structure transactions.
This webinar is available on select dates from April 26, 2022, through June 14, 2022. Members of the Business Law Section receive a $20 discount.
This article was originally published on the State Bar of Wisconsin’s
Business Law Blog. Visit the State Bar
sections or the
Business Law Section webpages to learn more about the benefits of section membership.
