UW-LaCrosse Small Business Development Center (SBDC) recently hosted a series of webinars focused on the upcoming changes to Wisconsin LLC Law. Attorneys Gregory Monday (Reinhart Boerner Van Deuren S.C.), Katelyn Doyle (Johns, Flaherty & Collins S.C.) and Anne Hlavacka, (also the UW-LaCrosse SBDC Center Director) presented valuable insights on how Wisconsin Statute, Chapter 183 is changing and its effects on small business owners.
Entrepreneurs have the chance to opt in early or opt out of these legislative changes which are effective January 1, 2023. Hlavacka addressed reasons why the law is changing and explained how to opt out by filing a Statement of Nonapplicability with WI Department of Financial Institutions (WDFI).
The attorneys also highlighted how specific areas are changing. Per the new statute, Articles of Organization no longer need to specify member- or manager-managed status and the concept of “apparent authority” has been eliminated. Owners can file with WDFI a Statement of Authority (and a statement of denial of authority) to specify who can or cannot bind the LLC.
Under the new law, the Operating Agreement includes any agreement (written, oral, implied, etc.) and does not require a written document. Katelyn Doyle advised it is still best practice to maintain a written agreement so all LLC members and employees have a clear understanding of how the business will work.
The new rules allow admission of “non-economic” members, meaning individuals can become a member of the LLC but they do not acquire any interest or make any contributions. The modified law also states LLCs electing to be treated as partnerships for tax purposes shall measure the value of contributions by partner capital accounts, rather than by initial contribution. Voting is also based on contributions.
Gregory Monday discussed fiduciary duties, explaining duty of good faith and fair dealing as well as duty of loyalty and duty of care. He demonstrated how an operating agreement can specify how theses duties are maintained by members.
Anne Hlavacka covered creditor rights, explaining that under the new law, the entire membership interest of a sole member may be transferred upon the foreclosure of a charging order lien and the dissociation of the person whose interest was foreclosed.
The participants found significant value in the single-member LLC and multi-member LLC scenarios presented. These scenarios demonstrated how the law could be applied in specific situations. The team ended the webinars by answering questions and clarifying details. They shared an article from the Wisconsin State Bar on navigating the new law. The webinar information is sure to help many LLC owners make the best decisions for their own companies concerning the new law.