Ohio’s New LLC Law Takes Effect February 11, 2022. What You Need To Know.
In 1994, the Ohio Limited Liability Company Act was signed into law, paving the way for citizens to more easily form business entities. Before the existence of the limited liability company (LLC), Ohio citizens were forced to form corporations or other entities that required more formalities and oversight. The LLC changed that, allowing business owners to seamlessly organize themselves as an entity while enjoying the protection of limited liability. Except for occasional amendments to the statute, Ohio’s LLC law hasn’t changed much: until now.
On January 8, 2021, Governor Mike DeWine signed into law Senate Bill 276, the Ohio Revised Limited Liability Company Act. Ohio’s new LLC law keeps the core of the first law while adopting critical changes to better reflect the way people do business. Some of the new provisions of Ohio’s new LLC law are:
Establishing “series” limited liability companies. A series LLC is very similar to a corporation with subsidiary companies. Specifically, a series LLC allows a person to file articles of organization that explicitly allow for the separation of assets, membership interests, and operations into independent entities, known as “series.”
Defining fiduciary duties for LLC members and eliminating member-managed/manager-managed distinction. The LLC members’ fiduciary duty of care (not engaging in misconduct) and loyalty (not engaging in self-dealing) to the company and each other largely remain the same. The new Ohio LLC law drops the distinction of a manager-managed/member-managed LLC in favor of more simplified terms that better reflect how business owners organize their company.
Cutting off claims after LLC dissolution. Now, after an LLC dissolves, creditors will have a limited amount of time to bring claims against it. Under the new Ohio LLC law, creditors generally have 90 days to assert a claim against the dissolved LLC (within 90 days of the dissolved LLC rejects or otherwise refuses to pay the claim).
These are just a few of the highlights of Ohio’s new LLC law. The new law goes into effect February 11, 2022 and will be codified under Chapter 1706 of the Ohio Revised Code. You can read the text of Senate Bill 267 here.
