Bulletin: OH2022001

Dear Associates:

Effective February 11, 2022, the new limited liability company chapter of the Ohio Revised Code (1706 et seq) will become law and regulate all current and future LLCs in Ohio. The former ORC chapter (1705 et seq) will be repealed and no longer effective. The new LLC chapter makes many changes, but the terminology from the original chapter does carry over. You will still be reviewing Articles of Organization and Operating Agreements (OA). And the naming conventions from the original are carried over and still applicable so we will still have names with limited, ltd and LTD. All OH LLCs now have a perpetual existence. The Ohio Secretary of State (SOS) will require the use of new forms beginning February 11, 2022, as well for any filings to establish, modify, convert, or dissolve any LLCs. 

Management of LLCs under the new chapter has also been amended. We no longer must choose between member managed or manager managed entities at original submission. The definition of manager in the new chapter is the person with authority as to day-to-day operations regardless of whether they are manager, officer, director or other. The new law provides for the option of filing with the SOS a Statement of Authority listing the person(s) with the power to act on behalf of the LLC. New ORC 1706.30 provides that a majority of Membership Interests controls the LLC, except for certain major issues when all members must consent such as amending the OA, filing Bankruptcy or insolvency actions and for acts outside the normal course of business for the LLC. 

Default terms for the OA and those terms that cannot be changed by the OA are set out in ORC 1706.08. The required contents of the Articles of Organization are within ORC 1706.16. The need for foreign LLCs to register with the SOS is governed by ORC 1706.512 and there are more activities that would not require such registration. In your review of the foreign LLCs authority and existence, you will probably not have as many OH SOS registrations to check for good standing and will instead rely upon the standing of the foreign LLC in their state of organization. SOS Good Standing Certificates from the OH SOS are effective for thirty (30) days from the date of issuance.  

The most significant change in the new chapter is the authorization to create and operate Series LLCs in Ohio. Series LLCs allow for assets and liabilities to be assigned to a subset of Members within the Mother LLC. The assets and liabilities of the Series LLC does not affect and is not affected by the operations of the other Series LLCs. In other words, a Mother LLC may have several Series LLCs operating as to separate assets and liabilities without any involvement or entanglement of other LLCs and without the need to create multiple separate LLCs. At present, not all states allow for Series LLCs and the Company position in Virtual Underwriter requires approval of a senior underwriter to insure any interest of a Series LLC. As we gain experience with Series LLCs in Ohio, we will revisit the approval process, but for now any requests to insure the interests of a Series LLC should be directed to Ohio senior underwriters Frank Long or Sean Harley for review and approval.

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