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Four Key Changes in Washington's New LLC Law

By Sandra B. Feldman, Publications Attorney for CT Corporation.

On January 1, 2016, the law governing Washington’s limited liability companies (LLCs) changed.  There are a number of differences between the new LLC law and the old one.  Here are four of the most significant changes:
 

1. Format of Operating Agreement:

New law - An operating agreement can be “oral, implied, in a record, or in any combination”.  
 
Old law - An operating agreement had to be in writing.
 

2. Setting Up the Management Structure:

New law - An LLC is member-managed unless the members provide for management by managers in their operating agreement.
 
Old law - An LLC had to set forth whether it would be member-managed or manager-managed in the certificate of formation.
 

3. Member Voting:

New law - Each member has one vote.  The vote of a majority of the members is necessary for approval of actions.
 
Old law – Member voting was based on the amount of contributions.  The vote of members contributing more than fifty percent of the agreed value of the contributions was necessary for member approval.
 
CT Observation: In both cases, this is the default voting rule.  The members can alter it in their operating agreement.
 

4. Nonprofit LLCs Authorized:

New law – Provides that an LLC can be formed for any lawful purpose “regardless of whether for profit”. 
 
Old law – Provided that an LLC could conduct any lawful business or activity without stating whether a nonprofit purpose was allowed.
 
There are other changes as well, and anyone owning, managing or advising Washington LLCs may wish to consult the new law to determine whether any actions are required or advisable.
 
For more information see the articles below or talk to us today.
 
 
 

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