4-32-103.

Name.

(a) The name of each limited liability company as set forth in its articles of organization must contain the words “Limited Liability Company” or “Limited Company” or the abbreviations “L.L.C.”, “L.C.”, “LLC”, or “LC”.

The word “Limited” may be abbreviated as “Ltd.” and the word “Company” may be abbreviated as “Co.”.

(b) A limited liability company name must be distinguishable upon the records of the Secretary of State from:

(1) The name of any limited liability company, limited partnership, or corporation existing under the laws of this state or authorized to transact business in this state;

or (2) Any name reserved under § 4-32-104.

(c) The provisions of subsection (b) of this section shall not apply if the applicant files with the Secretary of State a certified copy of a final decree of a court of competent jurisdiction establishing the prior right of the applicant to the use of the name in this state.

(d) The name of a limited liability company which performs professional service shall in addition contain the words “Professional Limited Liability Company” or “Professional Limited Company” or the abbreviations “P.L.L.C.”, “P.L.C.”, “PLLC”, “PLC”, and the words “Limited” and “Company” may be abbreviated as “Ltd.” or “Co.” and may not contain the name of any person who is not a member, except that the name of a former member or member of a predecessor organization may continue to be included in the name.

04-21-2021 14:17:01 ANS038 As Engrossed:

S4/21/21 SB601 2 4-32-104.

Reservation of name.

(a) The exclusive right to use a name may be reserved by:

(1) Any person intending to organize a limited liability company and to adopt that name;

(2) Any limited liability company or any foreign limited liability company registered in this state that intends to adopt that name;

(3) Any foreign limited liability company intending to register in this state and to adopt that name;

or (4) Any person intending to organize a foreign limited liability company and to have it registered in this state and to adopt that name.

(b) The reservation shall be made by filing with the Secretary of State an application, executed by the applicant, to reserve a specified name.

If the Secretary of State finds that the name is available for use by a domestic or foreign limited liability company, the Secretary of State shall reserve the name of the exclusive use of the applicant for a period of one hundred twenty (120) days from and after the date the application is filed with the Secretary of State.

(c) The holder of a reserved limited liability company name may renew the reservation for two (2) successive periods of one hundred twenty (120) days each from the date of the first renewal.

(d) The right to the exclusive use of a reserved name may be transferred to another person by filing with the Secretary of State a notice of the transfer, executed by the applicant for whom the name was reserved, and specifying the name to be transferred and the name and address of the transferee.

The transfer shall not extend the term during which the name is reserved.

4-32-105.

[Repealed.] 4-32-106.

Nature of business — Powers.

(a) A limited liability company may be organized under this chapter for any lawful purpose, including the performance of professional services and related activities.

If the purpose for which a limited liability company is organized or its activities make it subject to a special provision of law, the limited liability company shall also comply with that provision.

04-21-2021 14:17:01 ANS038 As Engrossed:

S4/21/21 SB601 (b) A limited liability company shall possess and may exercise all powers and privileges granted by this chapter or by any other law or by its operating agreement, together with any powers incidental thereto, so far as such powers and privileges are necessary or convenient to the conduct, promotion, or attainment of the business, purposes, or activities of the limited liability company.

8 4-32-107.

[Repealed.] 4-32-108.

Use of fictitious names.

(a) No limited liability company, domestic or foreign, shall conduct any business in this state under a fictitious name unless it first files with the Secretary of State a form supplied or approved by the Secretary of State giving the following information:

(1) The fictitious name under which business is being or will be conducted by the applicant limited liability company;

(2) A brief statement of the character of business to be conducted under the fictitious name;

and (3) The name of the limited liability company, the state of organization, and location, giving the city and street address, of the registered office in the state of the applicant limited liability company.

(b) Each such form shall be executed, without verification, in duplicate and filed with the Secretary of State.

The Secretary of State shall retain one (1) counterpart;

and the other counterpart, bearing the file marks of the Secretary of State, shall be returned to the limited liability company.

However, the Secretary of State shall not accept such filing if the proposed fictitious name is the same as, or confusingly similar to, the name of any domestic corporation, limited liability company, limited partnership, limited liability partnership or any other entity registered with the Secretary of State, or any foreign entity authorized to do business in the state or any name reserved or registered under §§ 4-27-402, 4-27-403, 4-32- 104, or 4-47-109.

(c) Copies of such filed forms, certified by the respective filing officers, shall be admitted in evidence where the question of filing may be material.

(d) If, after a filing under this section, the applicant limited 04-21-2021 14:17:01 ANS038 As Engrossed:

S4/21/21 SB601 liability company is dissolved, or, being a foreign limited liability company, surrenders or forfeits its rights to do business in Arkansas or, whether a domestic or foreign limited liability company, ceases to do business in Arkansas under the specified fictitious name, such limited liability company shall be obligated to file with the Secretary of State a cancellation of its privilege hereunder.

If such cancellation is not filed, the Secretary of State, upon satisfactory evidence, may cancel such privilege.

(e) If a limited liability company which has not filed under this section has heretofore or shall hereafter become a party to any contract, deed, conveyance, assignment, or instrument of encumbrance in which such limited liability company is referred to exclusively by a fictitious name, the obligations imposed upon the limited liability company under said instrument and the right sought to be conferred upon third parties thereunder may be enforced against it, but the rights accruing to the limited liability company under said instrument may not be enforced by the limited liability company in the courts of this state until it complies with this section and pays to the Treasurer of State a civil penalty of three hundred dollars ($300), and in any suit by a limited liability company upon an instrument which identified it exclusively by a fictitious name, the limited liability company shall be required to allege compliance with this section.

(f) Compliance with this section does not give a limited liability company an exclusive right to the use of the fictitious name, and the registration of a fictitious name under this section will not bar the use of the same name as the name of any domestic entity or any foreign entity authorized to do business in this state, but this chapter is not intended to bar any aggrieved party in such a situation from applying for equitable relief under principles of fair trade law.

4-32-109.

Registered name.

(a) A foreign limited liability company may register its name, if the name is distinguishable upon the records of the Secretary of State from the names of any limited liability company, limited partnership, partnership, or corporation existing under the laws of this state or authorized to transact business in this state.

(b) A foreign limited liability company registers its name by 04-21-2021 14:17:01 ANS038 As Engrossed:

S4/21/21 SB601 delivering it to the Secretary of State for filing an application:

(1) Setting forth its name, or its name with any addition required by § 4-32-103, the state or country and date of its formation, and a brief description of the nature of the business in which it is engaged;

and (2) Accompanied by a certificate of existence or a document of similar import from the state or country in which it was formed.

(c) The name is registered for the applicant's exclusive use upon the effective date of the application.

(d)(1) A foreign limited liability company whose registration is effective may renew the registration for successive years by delivering to the Secretary of State for filing a renewal application, which complies with the requirements of subsection (b) of this section, between October 1 and December 31 of the preceding year.

(2) The renewal application when filed renews the registration for the following calendar year.

(e)(1) A foreign limited liability company whose registration is effective may thereafter qualify as a foreign limited liability company under the registered name or consent in writing to the use of that name by a limited liability company thereafter incorporated under this chapter, or by another foreign limited liability company thereafter authorized to transact business in this state.

(2) The registration terminates when the domestic limited liability company is incorporated or the foreign limited liability company qualifies or consents to the qualification of another foreign limited liability company under the registered name.

Subchapter 2 — Formation 4-32-201.

Formation.

One (1) or more persons may form a limited liability company by signing or causing to be signed articles of organization and delivering the signed articles to the Secretary of State for filing.

The person or persons who sign the articles of organization causing the formation of a limited liability company need not be members of the limited liability company at the time of formation or after formation has occurred.

7 04-21-2021 14:17:01 ANS038 As Engrossed:

S4/21/21 SB601 4-32-202.

Articles of organization.

The articles of organization shall set forth:

(1) A name for the limited liability company that satisfies the requirements of § 4-32-103;

(2) The information required by § 4-20-105(a);

and (3) If management of the limited liability company is vested in a manager or managers, a statement to that effect.

9 4-32-203.

Amendment of articles of organization — Restatement.

(a) The articles of organization of a limited liability company may be amended by filing articles of amendment with the Secretary of State.

The articles of amendment shall set forth:

(1) The name of the limited liability company;

(2) The date the articles of organization were filed;

and (3) The amendment to the articles of organization.

(b) The articles of organization may be amended in any respects as may be desired, so long as the articles of organization as amended contain only provisions that may be lawfully contained in articles of organization at the time of making the amendment.

(c) Articles of organization may be restated at any time.

Restated articles of organization shall be filed with the Secretary of State and shall be specifically designated as such in the heading and shall state either in the heading or in an introductory paragraph the limited liability company's present name and, if it has been changed, all of its former names and the date of the filing of its articles of organization.

4-32-204.

Execution of documents.

(a) Unless otherwise provided in any other section of this chapter, any document required by this chapter to be filed with the Secretary of State shall be executed:

(1) By any manager if management of the limited liability company is vested in one (1) or more managers;

(2) By any member if management of the limited liability company is reserved to the members;

(3) If the limited liability company has not been formed, by the person or persons forming the limited liability company;

or 04-21-2021 14:17:01 ANS038 As Engrossed:

S4/21/21 SB601 (4) If the limited liability company is in the hands of a receiver, trustee, or other court-appointed fiduciary, by that fiduciary.

(b) The person executing the document shall sign it and state beneath or opposite his or her signature the person's name and the capacity in which he or she signs.

(c) The person executing the document may do so as an attorney-in- fact.

Powers of attorney relating to the execution of the document need not be provided to or filed with the Secretary of State.

4-32-205.

Filing with Secretary of State.

(a) The original signed copy, together with a duplicate copy that may be either a signed, photocopied, or conformed copy of the articles of organization or any other document required to be filed pursuant to this chapter, shall be delivered to the Secretary of State.

If the Secretary of State determines that the documents conform to the filing provisions of this chapter, the Secretary of State shall, when all required filing fees have been paid:

(1) Endorse on each signed original and duplicate copy the word “filed” and the date and time of the document's acceptance for filing;

(2) Retain the signed original in the Secretary of State's files;

and (3) Return the duplicate copy to the person who filed it or the person's representative.

(b) If at the time any documents are delivered for filing, the Secretary of State is unable to make the determination required for filing by subsection (a) of this section, the documents are deemed to have been filed at the time of delivery if the Secretary of State subsequently determines that:

(1) The documents as delivered conform to the filing provisions of this chapter;

or (2) The documents have been brought into conformance within twenty (20) days after notification of nonconformance is given by the Secretary of State to the person who delivered the documents for filing or the person's representative.

(c) If the filing and determination requirements of this chapter are not satisfied within the time prescribed in subdivision (b)(2) of this 04-21-2021 14:17:01 ANS038 As Engrossed:

S4/21/21 SB601 section, the documents shall not be filed.

3 4-32-206.

Effect of delivery or filing of articles of organization.

(a) Unless a delayed effective date is recited in the articles of organization, a limited liability company is formed when the articles of organization are delivered to the Secretary of State for filing, even if the Secretary of State is unable at the time of delivery to make the determination required for filing by § 4-32-1308.

If the articles of organization, as delivered to the Secretary of State, do not conform to the filing provisions of this chapter and are not brought into conformance within the time period prescribed by § 4-32-1308, the existence of the limited liability company terminates at the end of such time period.

(b) Each copy of the articles of organization stamped “filed” and marked with the filing date is conclusive evidence that all conditions precedent required to be performed by the organizers have been complied with and that the limited liability company has been legally organized and formed under this chapter.

Subchapter 3 — Relations of Members and Managers to Persons Dealing with the Limited Liability Company 4-32-301.

Agency power of members and managers.

(a) Except as provided in subsection (b) of this section, every member is an agent of the limited liability company for the purpose of its business or affairs, and the act of any member, including, but not limited to, the execution in the name of the limited liability company of any instrument, for apparently carrying on in the usual way the business or affairs of the limited liability company of which he or she is a member, binds the limited liability company, unless the member so acting has, in fact, no authority to act for the limited liability company in the particular matter, and the person with whom the member is dealing has knowledge of the fact that the member has no such authority.

(b) If the articles of organization provide that management of the limited liability company is vested in a manager or managers:

(1) No member solely by reason of being a member is an agent of the limited liability company;

and 04-21-2021 14:17:01 ANS038 As Engrossed:

S4/21/21 SB601 (2) Every manager is an agent of the limited liability company for the purpose of its business or affairs, and the act of any manager, including, but not limited to, the execution in the name of the limited liability company of any instrument, for apparently carrying on in the usual way the business or affairs of the limited liability company of which he or she is a manager binds the limited liability company, unless the manager so acting has, in fact, no authority to act for the limited liability company in the particular matter, and the person with whom the manager is dealing has knowledge of the fact that the manager has no such authority.

(c) An act of a manager or a member which is not apparently for the carrying on in the usual way the business or affairs of the limited liability company does not bind the limited liability company unless authorized in accordance with an operating agreement, at the time of the transaction or at any other time.

(d) No act of a manager or member in contravention of a restriction on authority shall bind the limited liability company to persons having knowledge of the restriction.

4-32-302.

Admissions by members and managers.

(a) Except as provided in subsection (b) of this section, an admission or representation made by any member concerning the business or affairs of a limited liability company within the scope of his or her authority as provided for by this chapter is evidence against the limited liability company.

(b) If the articles of organization provide that management of the limited liability company is vested in a manager or managers:

(1) An admission or representation made by a manager concerning the business or affairs of a limited liability company within the scope of the manager's authority as provided for by this chapter is evidence against the limited liability company;

and (2) The admission or representation of any member, acting solely in the capacity of a member, shall not constitute evidence against the limited liability company.

4-32-303.

Limited liability company charged with knowledge of or notice to member or manager.

04-21-2021 14:17:01 ANS038 As Engrossed:

S4/21/21 SB601 (a) Except as provided in subsection (b) of this section, notice to any member of any matter relating to the business or affairs of the limited liability company, and the knowledge of the member acting in the particular matter, acquired while a member or known at the time of becoming a member, and the knowledge of any other member who reasonably could and should have communicated the knowledge to the acting member, operate as notice to or knowledge of the limited liability company, except in the case of a fraud on the limited liability company committed by or with the consent of that member.

(b) If the articles of organization provide that management of the limited liability company is vested in a manager or managers:

(1) Notice to any manager of any matter relating to the business or affairs of the limited liability company, and the knowledge of the manager acting in the particular matter, acquired while a manager or known at the time of becoming a manager, and the knowledge of any other manager who reasonably could and should have communicated the knowledge to the acting manager, operate as notice to or knowledge of the limited liability company, except in the case of a fraud on the limited liability company committed by or with the consent of that manager;

and (2) Notice to or knowledge of any member of a limited liability company while the member is acting solely in the capacity of a member is not notice to or knowledge of the limited liability company.

4-32-304.

Liability of members to third parties.

Except for the personal liability for acts or omissions of those providing professional service as set forth in § 4-32-308, a person who is a member, manager, agent, or employee of a limited liability company is not liable for a debt, obligation, or liability of the limited liability company, whether arising in contract, tort, or otherwise or for the acts or omissions of any other member, manager, agent, or employee of the limited liability company.

4-32-305.

Parties to actions.

A member of a limited liability company is not a proper party to a proceeding by or against a limited liability company, by reason of being a member of the limited liability company, except where the object of the 04-21-2021 14:17:01 ANS038 As Engrossed:

S4/21/21 SB601 proceeding is to enforce a member's right against or liability to the limited liability company or as otherwise provided in an operating agreement.

4 4-32-306.

Limited liability company may render professional service — Nonprofessional employees and agents — Members and managers need not be employees, etc.

No limited liability company organized under this chapter may render professional service within this state except through its members, employees of its members, managers, employees, and agents who are duly licensed or otherwise legally authorized to render those professional services.

However, this provision shall not be interpreted to preclude clerks, secretaries, bookkeepers, technicians, and other assistants who are not usually and ordinarily considered by custom and practice to be rendering professional service to the public for which a license or other legal authorization is required from acting as employees, managers, or agents of a professional limited liability company.

4-32-307.

Limited liability company may qualify as executor or administrator, or in other fiduciary capacity.

A limited liability company engaged in the practice of law, as a part of the practice of law, may act as an executor, trustee, or administrator of an estate, guardian for an infant, or in any other fiduciary capacity.

Any member, employee of a member, manager, employee, or agent of a limited liability company engaged in the practice of law who is duly licensed as an attorney in this state may perform necessary fiduciary responsibilities on behalf of the limited liability company.

4-32-308.

Professional relationship — Personal liability.

All individuals rendering professional service may be personally liable for any results of that individual's acts or omissions.

No member, employee of a member, manager, or employee of a limited liability company shall be personally liable for the acts or omission of any other member, employee of a member, manager, or employee of the limited liability company.

4-32-309.

Liability of limited liability company to third parties.

Notwithstanding the limitations on liability contained in this 04-21-2021 14:17:01 ANS038 As Engrossed:

S4/21/21 SB601 subchapter for members and managers, a limited liability company shall be liable to third parties for its valid obligations.

4 Subchapter 4 — Rights and Duties of Members and Managers 6 4-32-401.

Management.

(a) With respect to persons other than members, management of the affairs of the limited liability company shall be governed by § 4-32-301.

(b) Unless otherwise provided in an operating agreement, with respect to members, management of the affairs of the limited liability company shall be governed by § 4-32-301.

(c) Unless otherwise provided in an operating agreement, managers:

(1) Shall be designated, appointed, elected, removed, or replaced by a vote, approval, or consent of more than one-half (½) by number of the members;

(2) Need not be members of the limited liability company or natural persons;

and (3) Unless they are sooner removed or sooner resign, shall hold office until their successors shall have been elected and qualified.

4-32-402.

Duties of managers and members.

Unless otherwise provided in an operating agreement:

(1) A member or manager shall not be liable, responsible, or accountable in damages or otherwise to the limited liability company or to the members of the limited liability company for any action taken or failure to act on behalf of the limited liability company unless the act or omission constitutes gross negligence or willful misconduct;

(2) Every member and manager must account to the limited liability company and hold as trustee for it any profit or benefit derived by that person without the consent of more than one-half (½) by number of the disinterested managers or members, or other persons participating in the management of the business or affairs of the limited liability company, from any transaction connected with the conduct or winding up of the limited liability company or any use by the member or manager of its property, including, but not limited to, confidential or proprietary information of the limited liability company or other matters entrusted to the person as a 04-21-2021 14:17:01 ANS038 As Engrossed:

S4/21/21 SB601 result of his or her status as manager or member;

and (3) One who is a member of a limited liability company in which management is vested in managers under § 4-32-401 and who is not a manager shall have no duties to the limited liability company or to the other members solely by reason of acting in the capacity of a member.

7 4-32-403.

Voting.

(a) Unless otherwise provided in an operating agreement or this chapter, and subject to subsection (b) of this section, the affirmative vote, approval or consent of more than one-half (½) by number of the members, if management of the limited liability company is vested in the members, or of the managers if the management of the limited liability company is vested in managers, shall be required to decide any matter connected with the business of the limited liability company.

(b) Unless otherwise provided in writing in an operating agreement, the affirmative vote, approval, or consent of all members shall be required to:

(1) Amend a written operating agreement;

or (2) Authorize a manager or member to do any act on behalf of the limited liability company that contravenes a written operating agreement, including any written provision thereof which expressly limits the purpose, business, or affairs of the limited liability company or the conduct thereof.

4-32-404.

Limitation of liability and indemnification of members and managers.

An operating agreement which is in writing may:

(1) Eliminate or limit the personal liability of a member or manager for monetary damages for breach of any duty provided for in § 4-32- 402;

and (2) Provide for indemnification of a member or manager for judgments, settlements, penalties, fines, or expenses incurred in a proceeding to which a person is a party because the person is or was a member or manager.

4-32-405.

Records and information.

(a) Unless otherwise provided in writing in an operating agreement, a 04-21-2021 14:17:01 ANS038 As Engrossed:

S4/21/21 SB601 limited liability company shall keep at its principal place of business the following:

(1) A current and a past list, setting forth the full name and last known mailing address of each member and manager, if any, set forth in alphabetical order;

(2) A copy of the articles of organization and all amendments thereto, together with executed copies of any powers of attorney pursuant to which the articles of amendment have been executed;

(3) Copies of the limited liability company's federal, state, and local income tax returns and financial statements, if any, for the three (3) most recent years or, if those returns and statements were not prepared for any reason, copies of the information and statements provided to, or which should have been provided to, the members to enable them to prepare their federal, state, and local tax returns for the period;

(4) Copies of any effective written operating agreements, and all amendments thereto, and copies of any written operating agreements no longer in effect;

and (5) Unless contained in writing in an operating agreement:

(A) A writing, if any, setting forth the amount of cash and a statement of the agreed value of other property or services contributed by each member and the times at which or events upon the happening of which any additional contributions are to be made by each member;

(B) A writing, if any, stating events upon the happening of which the limited liability company is to be dissolved and its affairs wound up;

and (C) Other writings, if any, prepared pursuant to a requirement in an operating agreement.

(b) Upon reasonable request, a member may, at the member's own expense, inspect and copy during ordinary business hours any limited liability company record, wherever the record is located.

(c) Members, if the management of the limited liability company is vested in the members, or managers, if management of the limited liability company is vested in managers, shall render, to the extent the circumstances render it just and reasonable, true and full information of all things affecting the members to any member and to the legal representative of any deceased member or of any member under legal disability.

04-21-2021 14:17:01 ANS038 As Engrossed:

S4/21/21 SB601 (d) Failure of the limited liability company to keep or maintain any of the records or information required pursuant to this section shall not be grounds for imposing liability on any member or manager for the debts and obligations of the limited liability company.

6 Subchapter 5 — Finance 8 4-32-501.

Contributions to capital.

A limited liability company interest may be issued in exchange for property, services rendered, or a promissory note or other obligation to contribute cash or property or to perform services.

4-32-502.

Liability for contributions.

(a) A promise by a member to contribute to the limited liability company is not enforceable unless set forth in a writing signed by the member.

(b) Unless otherwise provided in an operating agreement, a member is obligated to the limited liability company to perform any enforceable promise to contribute cash or property or to perform services, even if the member is unable to perform because of death, disability, or other reason.

(c) If a member does not make the required contribution of property or services, the member is obligated, at the option of the limited liability company, to contribute cash equal to that portion of value of the stated contribution that has not been made.

(d) Unless otherwise provided in an operating agreement, the obligation of a member to make a contribution may be compromised only with the unanimous consent of the members.

(e) Only a creditor of a limited liability company who extends credit in reliance on an obligation to contribute or otherwise acts in reliance on that obligation to contribute after the member signs a writing which reflects the obligation to contribute pursuant to subsection (d) of this section may enforce any obligation to contribute.

4-32-503.

Sharing of profits.

Unless otherwise provided in writing in an operating agreement, each member shall be repaid that member's contributions to capital and share 04-21-2021 14:17:01 ANS038 As Engrossed:

S4/21/21 SB601 equally in the profits and assets remaining after all liabilities, including those to members, are satisfied.

4 Subchapter 6 — Distributions and Withdrawal 6 4-32-601.

Sharing of interim distributions.

Except as otherwise provided in §§ 4-32-602 and 4-32-905, distributions of cash or other assets of a limited liability company shall be shared among the members and among classes of members in the manner provided in writing in an operating agreement.

If an operating agreement does not so provide in writing, each member shall share equally in any distribution.

A member is entitled to receive distributions described in this section from a limited liability company to the extent and at the times or upon the happening of the events specified in an operating agreement or at the times determined by the members or managers pursuant to § 4-32-403.

4-32-602.

Distributions on an event of dissociation.

Upon the occurrence of an event of dissociation under § 4-32-802 which does not cause dissolution, other than an event of dissociation described in § 4-32-802(a)(3)(B), a dissociating member is entitled to receive any distribution which the member was entitled to receive prior to the event of dissociation.

If an operating agreement does not provide the amount of or a method for determining the distribution to a dissociating member, the member shall receive within a reasonable time after dissociation the fair value of the member's interest in the limited liability company as of the date of dissociation based upon the member's right to share in distributions from the limited liability company.

4-32-603.

Distribution in kind.

Unless otherwise provided in an operating agreement:

(1) A member, regardless of the nature of the member's contribution, has no right to demand and receive any distribution from the limited liability company in any form other than cash;

and (2) A member may not be compelled to accept from the limited liability company a distribution of any asset in kind to the extent that the percentage of the asset distributed to the member exceeds the percentage that 04-21-2021 14:17:01 ANS038 As Engrossed:

S4/21/21 SB601 the member would have shared in a cash distribution equal to the value of the property at the time of distribution.

4 4-32-604.

Right to distribution.

At the time a member becomes entitled to receive a distribution, the member has the status of and is entitled to all remedies available to a creditor of the limited liability company with respect to that distribution.

9 Subchapter 7 — Ownership and Transfer of Property 4-32-701.

Ownership of limited liability company property.

(a) Property transferred to or otherwise acquired by a limited liability company is property of the limited liability company and not of the members individually.

(b) Property may be acquired, held, and conveyed in the name of the limited liability company.

Any interest in real property may be acquired in the name of the limited liability company, and title to any interest so acquired shall vest in the limited liability company rather than in the members individually.

4-32-702.

Transfer of real property.

(a) If the articles of organization do not provide that management is vested in a manager or managers, then property of the limited liability company held in the name of the limited liability company may be transferred by an instrument of transfer executed by any member in the name of the limited liability company.

(b) Property of the limited liability company that is held in the name of one (1) or more members or managers with an indication in the instrument transferring the property to them of their capacity as members or managers of a limited liability company or of the existence of a limited liability company, if the name of the limited liability company is not indicated, may be transferred by an instrument of transfer executed by the persons in whose name title is held.

(c) Property transferred under subsections (a) and (b) of this section may be recovered by the limited liability company only if it proves that the person executing the instrument had no authority to do so, and the initial 04-21-2021 14:17:01 ANS038 As Engrossed:

S4/21/21 SB601 transferee had knowledge of the lack of authority unless the property has been transferred by the initial transferee or a person claiming through the initial transferee to a subsequent transferee who gives value without having notice that the person who executed the instrument of initial transfer lacked authority to bind the limited liability company.

(d) Property of the limited liability company held in the name of one (1) or more persons other than the limited liability company without an indication in the instrument transferring title to the property to them of their capacity as members or managers of a limited liability company or of the existence of a limited liability company may be transferred free of any claims of the limited liability company or the members by the persons in whose name title is held to a transferee who gives value without having notice that it is property of the limited liability company.

(e) If the articles of organization provide that management of the limited liability company is vested in a manager or managers:

(1) Title to property of the limited liability company that is held in the name of the limited liability company may be transferred by an instrument of transfer executed by any manager in the name of the limited liability company;

and (2) A member, solely by reason of being a member, shall not have authority to transfer property of the limited liability company.

4-32-703.

Nature of limited liability company interest.

A limited liability company interest is personal property.

4-32-704.

Assignment of interest.

(a) Unless otherwise provided in writing in an operating agreement:

(1) A limited liability company interest is assignable in whole or in part;

(2) An assignment entitles the assignee to receive, to the extent assigned, only the distributions to which the assignor would be entitled;

(3) An assignment of a limited liability company interest does not dissolve the limited liability company or entitle the assignee to participate in the management and affairs of the limited liability company or to become or exercise any rights of a member;

04-21-2021 14:17:01 ANS038 As Engrossed:

S4/21/21 SB601 (4) Until the assignee of a limited liability company interest becomes a member, the assignor continues to be a member and to have the power to exercise any rights of a member, subject to the member's right to remove the assignor pursuant to § 4-32-802(a)(3)(B);

(5) Until an assignee of a limited liability company interest becomes a member, the assignee has no liability, if any, as a member solely as a result of the assignment;

and (6) The assignor of a limited liability company interest is not released from his or her liability as a member solely as a result of the assignment.

(b) An operating agreement may provide that a member's limited liability company interest may be evidenced by a certificate of limited liability company interest issued by the limited liability company and may also provide for the assignment or transfer of any interest represented by the certificate.

4-32-705.

Rights of judgment creditor.

(a)(1) On application to a court of competent jurisdiction by any judgment creditor of a member, the court may charge the member's limited liability company interest with payment of the unsatisfied amount of judgment with interest.

(2) To the extent so charged, the judgment creditor has only the rights of an assignee of the member's limited liability company interest.

(3) This chapter does not deprive any member of the benefit of any exemption laws applicable to his or her limited liability company interest.

(b) Upon the filing of a charging application by a judgment creditor of a member under subdivision (a)(1) of this section and the recording of the charging application in the register of the Secretary of State as required under subsection (c) of this section, a temporary lien is created in favor of the judgment creditor against the member's membership interest in the limited liability company interest until a ruling by the court is entered on the record or the application is dismissed.

(c) The Secretary of State shall:

(1) Create a register within the Uniform Commercial Code lien filings for charging applications received under subsection (b) of this 04-21-2021 14:17:01 ANS038 As Engrossed:

S4/21/21 SB601 section;

and (2) Maintain the register so that the register can be searched in the same manner as the lien filings of the Uniform Commercial Code, § 4-1- 101 et seq.

6 4-32-706.

Right of assignee to become member.

(a) Unless otherwise provided in writing in an operating agreement, an assignee of a limited liability company interest may become a member only if the other members unanimously consent.

The consent of a member may be evidenced in any manner specified in writing in an operating agreement, but in the absence of specification, consent shall be evidenced by a written instrument dated and signed by the member.

(b) An assignee who becomes a member has to the extent assigned the rights and powers and is subject to the restrictions and liabilities of a member under the articles of organization, any operating agreement, and this chapter.

An assignee who becomes a member also is liable for any obligations of the assignor to make contributions under § 4-32-502.

However, the assignee is not obligated for liabilities of which the assignee had no knowledge at the time he or she became a member and which could not be ascertained from the written records of the limited liability company kept pursuant to § 4-32- 405.

(c) Whether or not an assignee of a limited liability company interest becomes a member, the assignor is not released from his or her liability, if any, to the limited liability company under § 4-32-502.

(d) Unless otherwise provided in writing in an operating agreement, a member who assigns his or her entire limited liability company interest ceases to be a member or to have the power to exercise any rights of a member when the assignee becomes a member with respect to the entire assigned interest.

4-32-707.

Powers of estate of deceased or incompetent member.

If a member who is an individual dies or a court of competent jurisdiction adjudges the member to be incompetent to manage his or her person or property, the member's executor, administrator, guardian, conservator, or other legal representative shall have all of the rights of an assignee of the member's interest.

04-21-2021 14:17:01 ANS038 As Engrossed:

S4/21/21 SB601 2 Subchapter 8 — Admission and Withdrawal of Members 4 4-32-801.

Admission of members.

(a) Subject to subsection (b) of this section, a person may become a member in a limited liability company:

(1) In the case of a person acquiring a limited liability company interest directly from the limited liability company, upon compliance with an operating agreement or, if an operating agreement does not so provide in writing, upon the written consent of all members;

and (2) In the case of an assignee of a limited liability company interest, as provided in § 4-32-706.

(b) The effective time of admission of a member to a limited liability company shall be the later of:

(1) The date the limited liability company is formed;

or (2) The time provided in an operating agreement or, if no such time is provided therein, then when the person's admission is reflected in the records of the limited liability company.

4-32-802.

Events of dissociation.

(a) A person ceases to be a member of a limited liability company upon the occurrence of one (1) or more of the following events:

(1) The member withdraws by voluntary act from the limited liability company as provided in subsection (c) of this section;

(2) The member ceases to be a member of the limited liability company as provided in § 4-32-706;

(3) The member is removed as a member:

(A) In accordance with an operating agreement;

or (B) Unless otherwise provided in writing in an operating agreement, when the member assigns all of his or her interest in the limited liability company, by an affirmative vote of a majority of the members who have not assigned their interests;

(4) Unless otherwise provided in writing in an operating agreement or by the written consent of all members at the time, the member:

(A) Makes an assignment for the benefit of creditors;

(B) Files a voluntary petition in bankruptcy;

04-21-2021 14:17:01 ANS038 As Engrossed:

S4/21/21 SB601 (C) Is adjudicated a bankrupt or insolvent;

(D) Files a petition or answer seeking for the member any reorganization, arrangement, composition, readjustment, liquidation, dissolution, or similar relief under any statute, law, or rule;

(E) Files an answer or other pleading admitting or failing to contest the material allegations of a petition filed against the member in any proceeding of the nature described in subdivision (a)(4)(D) of this section;

or (F) Seeks, consents to, or acquiesces in the appointment of a trustee, receiver, or liquidator of the member or of all or any substantial part of the member's properties;

(5) Unless otherwise provided in writing in an operating agreement or by the written consent of all members at the time, if:

(A) Within one hundred twenty (120) days after the commencement of any proceeding against the member seeking reorganization, arrangement, composition, readjustment, liquidation, dissolution, or similar relief under any statute, law, or rule, the proceeding has not been dismissed;

or (B)(i) Within one hundred twenty (120) days after the appointment without his or her consent or acquiescence of a trustee, receiver, or liquidator of the member or of all or any substantial part of his or her properties, the appointment is not vacated or stayed;

or (ii) Within one hundred twenty (120) days after the expiration of any stay, the appointment is not vacated;

(6) Unless otherwise provided in writing in an operating agreement or by the written consent of all members at the time, in the case of a member who is an individual:

(i) The member's death;

or (ii) The entry of an order by a court of competent jurisdiction adjudicating the member incompetent to manage his or her person or estate;

(7) Unless otherwise provided in writing in an operating agreement or by the written consent of all members at the time, in the case of a member who is a trust or is acting as a member by virtue of being a trustee of a trust, the termination of the trust, but not merely the substitution of a new trustee;

04-21-2021 14:17:01 ANS038 As Engrossed:

S4/21/21 SB601 (8) Unless otherwise provided in writing in an operating agreement or by the written consent of all members at the time, in the case of a member that is a separate limited liability company, the dissolution and commencement of winding up of the separate limited liability company;

(9) Unless otherwise provided in writing in an operating agreement or by the written consent of all members at the time, in the case of a member that is a corporation, the filing of a certificate of its dissolution or the equivalent for the corporation or the revocation of its charter and the lapse of ninety (90) days after notice to the corporation of revocation without reinstatement of its charter;

or (10) Unless otherwise provided in writing in an operating agreement or by the written consent of all members at the time, in the case of an estate, the distribution by the fiduciary of the estate's entire interest in the limited liability company.

(b) The members may provide in writing in an operating agreement for other events, the occurrence of which shall result in a person's ceasing to be a member of the limited liability company.

(c) A member may withdraw from a limited liability company only at the time or upon the happening of an event specified in the articles of organization or an operating agreement.

Unless the articles of organization or an operating agreement provides otherwise, a member may not withdraw from a limited liability company prior to the dissolution and winding up of the limited liability company.

Subchapter 9 — Dissolution 4-32-901.

Dissolution.

A limited liability company is dissolved and its affairs shall be wound up upon the happening of the first to occur of the following:

(1) At the time or upon the occurrence of events specified in writing in the articles of organization or an operating agreement, but if no such time is set forth in either of the foregoing, then the limited liability company shall have a perpetual existence;

(2) The written consent of all members;

(3) At any time there are no members, provided that, unless otherwise provided in the articles of organization or an operating agreement, 04-21-2021 14:17:01 ANS038 As Engrossed:

S4/21/21 SB601 the limited liability company is not dissolved and is not required to be wound up if within ninety (90) days or such other period as is provided for in the articles of organization or an operating agreement after the occurrence of the event that terminated the continued membership of the last remaining member, the personal representative of the last remaining member agrees in writing to continue the limited liability company and to the admission of the personal representative of the member or its nominee or designee to the limited liability company as a member, effective as of the occurrence of the event that terminated the continued membership of the last remaining member;

and (4) The entry of a decree of judicial dissolution under § 4-32- 902.

4-32-902.

Judicial dissolution.

On application by or for a member, a circuit court may decree dissolution of a limited liability company whenever it is not reasonably practicable to carry on the business of the limited liability company in conformity with the operating agreement.

4-32-903.

Winding up.

Unless otherwise provided in writing in an operating agreement:

(1) The business or affairs of the limited liability company may be wound up:

(A) By the members or managers who have authority to manage the limited liability company prior to dissolution pursuant to § 4-32- 401;

or (B) If one (1) or more of such members or managers have engaged in wrongful conduct, or upon other cause shown, by a circuit court on application of any member or any member's legal representative or assignee.

(2) The persons winding up the business or affairs of the limited liability company may, in the name of, and for and on behalf of, the limited liability company:

(A) Prosecute and defend suits;

(B) Settle and close the business of the limited liability company;

(C) Dispose of and transfer the property of the limited 04-21-2021 14:17:01 ANS038 As Engrossed:

S4/21/21 SB601 liability company;

(D) Discharge the liabilities of the limited liability company;

and (E) Distribute to the members any remaining assets of the limited liability company.

7 4-32-904.

Agency power of managers or members after dissolution.

(a) Except as provided in subsections (c)-(e) of this section, after dissolution of the limited liability company, each of the members having authority to wind up the limited liability company's business and affairs can bind the limited liability company:

(1) By any act appropriate for winding up the limited liability company's affairs or completing transactions unfinished at dissolution;

and (2) By any transaction that would have bound the limited liability company if it had not been dissolved, if the other party to the transaction does not have notice of the dissolution.

(b) The filing of the articles of dissolution shall be presumed to constitute notice of dissolution for purposes of subdivision (a)(2) of this section.

(c) An act of a member which is not binding on the limited liability company pursuant to subsection (a) of this section is binding if it is otherwise authorized by the limited liability company.

(d) An act of a member which would be binding under subsection (a) of this section or would be otherwise authorized but which is in contravention of a restriction on authority shall not bind the limited liability company to persons having knowledge of the restriction.

(e) If the articles of organization vest management of the limited liability company in managers, a manager shall have the authority of a member provided for in subsection (a) of this section, and no member shall have such authority if the member is acting solely in the capacity of a member.

4-32-905.

Distribution of assets.

Upon the winding up of a limited liability company, the assets shall be distributed as follows:

(1) Payment, or adequate provision for payment, shall be made to creditors, including, to the extent permitted by law, members who are 04-21-2021 14:17:01 ANS038 As Engrossed:

S4/21/21 SB601 creditors in satisfaction of liabilities of the limited liability company;

(2) Unless otherwise provided in writing in an operating agreement, to members or former members in satisfaction of liabilities for distributions under §§ 4-32-601 and 4-32-602;

and (3) Unless otherwise provided in writing in an operating agreement, to members and former members first for the return of their contribution and second in proportion to the members' respective rights to share in distributions from the limited liability company prior to dissolution.

4-32-906.

Articles of dissolution.

After the dissolution of the limited liability company pursuant to § 4- 32-901, the limited liability company may file articles of dissolution with the Secretary of State which set forth:

(1) The name of the limited liability company;

(2) The date of filing of its articles of organization and all amendments thereto;

(3) The reason for filing the articles of dissolution;

(4) The effective date, which shall be a date certain, of the articles of dissolution if they are not to be effective upon the filing;

and (5) Any other information the members or managers filing the certificate shall deem proper.

4-32-907.

Known claims against dissolved limited liability company.

(a) Upon dissolution, a limited liability company may dispose of the known claims against it by filing articles of dissolution pursuant to § 4-32- 906 and following the procedures described in this section.

(b) The limited liability company shall notify its known claimants in writing of the dissolution at any time after the effective date of dissolution.

The written notice must:

(1) Describe information that must be included in a claim;

(2) Provide a mailing address where a claim may be sent;

(3) State the deadline, which may not be less than one hundred twenty (120) days after the later of the date of the written notice or the filing of articles of dissolution pursuant to § 4-32-906, by which the limited liability company must receive the claim;

and 04-21-2021 14:17:01 ANS038 As Engrossed:

S4/21/21 SB601 (4) State that the claim will be barred if not received by the deadline.

(c) A claim against the limited liability company is barred:

(1) If a claimant who was given written notice under subsection (b) of this section does not deliver the claim to the limited liability company by the deadline;

or (2) If a claimant whose claim was rejected by the limited liability company does not commence a proceeding to enforce the claim within ninety (90) days after the date of the rejection notice or deemed rejection.

(d) For purposes of this section, “claim” does not include a contingent liability or a claim based on an event occurring after the effective date of dissolution.

(e) Provided, that any claim not responded to by the limited liability company within thirty (30) days after receipt shall be deemed to have been rejected.

4-32-908.

Unknown claims against dissolved limited liability company.

(a) A limited liability company may publish notice of its dissolution pursuant to this section which requests that persons with claims against the limited liability company present them in accordance with the notice.

(b) The notice must:

(1) Be published one (1) time in a newspaper of general circulation in the county where the limited liability company's principal office is located or in a newspaper of general circulation in Pulaski County if the company does not have a principal office in this state;

(2) Describe the information that must be included in a claim and provide a mailing address where the claim may be sent;

and (3) State that a claim against the limited liability company will be barred unless a proceeding to enforce the claim is commenced within the earlier of five (5) years after the publication of the notice or the expiration of the applicable period of limitations otherwise provided under law.

(c) If the limited liability company publishes a newspaper notice in accordance with subsection (b) of this section and files articles of dissolution pursuant to § 4-32-906, the claim of each of the following claimants is barred unless the claimant commences a proceeding to enforce the 04-21-2021 14:17:01 ANS038 As Engrossed:

S4/21/21 SB601 claim against the limited liability company within the earlier of the applicable period of limitations otherwise provided under law or five (5) years after the later of the publication date of the newspaper notice or the filing of the articles of dissolution:

(1) A claimant who did not receive written notice under § 4-32- 907;

or (2) A claimant whose claim is contingent or based on an event occurring after the effective date of dissolution.

(d) A claim may be enforced under this section:

(1) Against the limited liability company, to the extent of its undistributed assets;

or (2) If the assets have been distributed in liquidation, against a member of the limited liability company to the extent of his or her pro rata share of the claim or the assets of the limited liability company distributed to him or her in liquidation, whichever is less, but a member's total liability for all claims under this section may not exceed the total amount of assets distributed to him or her in liquidation.

Subchapter 10 — Foreign Limited Liability Companies 4-32-1001.

Law governing.

Subject to the Arkansas Constitution, the laws of the state or other jurisdiction under which a foreign limited liability company is organized shall govern its organization and internal affairs and the liability and authority of its managers and members.

A foreign limited liability company may not be denied registration by reason of any difference between those laws and the laws of this state.

4-32-1002.

Registration.

Before transacting business in this state, a foreign limited liability company shall register with the Secretary of State by submitting to the Secretary of State an original signed copy of an application for registration as a foreign limited liability company executed by a person with authority to do so under the laws of the state or other jurisdiction of its formation.

The application shall set forth:

(1) The name of the foreign limited liability company and if the 04-21-2021 14:17:01 ANS038 As Engrossed:

S4/21/21 SB601 company's name is unavailable for use in this state, the name under which it proposes to transact business in this state;

(2) The state or other jurisdiction where formed and the date of its formation;

(3) The information required by § 4-20-105(a);

(4) A statement confirming that the foreign limited liability company has filed a statement appointing an agent for service of process under § 4-20-112 and may be served with process under § 4-20-113 if the foreign limited liability company fails to appoint or maintain a registered agent for service of process;

(5) The address of the office required to be maintained in the state or other jurisdiction of its formation by the laws of that state or jurisdiction or, if not so required, of the principal office of the foreign limited liability company;

and (6) A statement evidencing that the foreign limited liability company is a “foreign limited liability company” as defined in § 4-32-102(5).

4-32-1003.

Issuance of registration.

(a) If the Secretary of State finds that an application for registration conforms to the provisions of this chapter and all requisite fees have been paid, the Secretary of State shall:

(1) Endorse on each signed original and duplicate copy the word “filed” and the date and time of its acceptance for filing;

(2) Retain the signed original in the Secretary of State's files;

and (3) Return the duplicate copy to the person who filed it or the person's representative.

(b) If the Secretary of State is unable to make the determination required for filing by subsection (a) of this section at the time any documents are delivered for filing, the documents are deemed to have been filed at the time of delivery if the Secretary of State subsequently determines that:

(1) The documents as delivered conform to the filing provisions of this chapter;

or (2) Within twenty (20) days after notification of nonconformance is given by the Secretary of State to the person who delivered the documents 04-21-2021 14:17:01 ANS038 As Engrossed:

S4/21/21 SB601 for filing or the person's representative, the documents are brought into conformance.

(c) If the filing and determination requirements of this chapter are not satisfied within the time prescribed in subdivision (b)(2) of this section, the documents shall not be filed.

7 4-32-1004.

Name.

No certificate of registration shall be issued to a foreign limited liability company unless the name of the company satisfies the requirements of § 4-32-103.

If the name under which a foreign limited liability company is registered in the jurisdiction of its formation does not satisfy the requirements of § 4-32-103, to obtain or maintain a certificate of registration the foreign limited liability company may use a designated name that is available and which satisfies the requirements of § 4-32-103.

4-32-1005.

Amendments.

(a) The application for registration of a foreign limited liability company is amended by filing articles of amendment with the Secretary of State signed by a person with authority to do so under the laws of the state or other jurisdiction of its formation.

The articles of amendment shall set forth:

(1) The name of the foreign limited liability company;

(2) The date the original application for registration was filed;

and (3) The amendment to the application for registration.

(b) The application for registration may be amended in any way, provided that the application for registration as amended contains only provisions that may be lawfully contained in an application for registration at the time of the amendment.

4-32-1006.

Cancellation of registration.

(a) A foreign limited liability company authorized to transact business in this state may cancel its registration upon procuring from the Secretary of State a certificate of cancellation.

In order to procure a certificate, the foreign limited liability company shall deliver to the Secretary of State an application for cancellation, which shall set forth:

04-21-2021 14:17:01 ANS038 As Engrossed:

S4/21/21 SB601 (1) The name of the foreign limited liability company and the state or other jurisdiction under the laws of which it is formed;

(2) That the foreign limited liability company is not transacting business in this state;

(3) That the foreign limited liability company surrenders its certificate of registration to transact business in this state;

(4) That the foreign limited liability company revokes the authority of its registered agent for service of process in this state and consents that service of process in any action, suit, or proceeding based upon any cause of action arising in this state during the time the foreign limited liability company was authorized to transact business in this state may thereafter be made on the foreign limited liability company by service thereof upon the Secretary of State;

and (5) An address to which a person may mail a copy of any process against the foreign limited liability company.

(b) The application for cancellation shall be in the form and manner designated by the Secretary of State and shall be executed on behalf of the foreign limited liability company by a person with authority to do so under the laws of the state or other jurisdiction of its formation, or, if the foreign limited liability company is in the hands of a receiver, trustee, or other court-appointed fiduciary, by that fiduciary.

(c) A cancellation does not terminate the authority of the Secretary of State to accept service of process on the foreign limited liability company with respect to causes of action arising out of the doing of business in this state.

4-32-1007.

Transaction of business without registration.

(a) A foreign limited liability company transacting business in this state may not maintain an action, suit, or proceeding in a court of this state until it has registered in this state.

(b) The failure of a foreign limited liability company to register in this state does not:

(1) Impair the validity of any contract or act of the foreign limited liability company;

(2) Affect the right of any other party to the contract to maintain any action, suit, or proceeding on the contract;

or 04-21-2021 14:17:01 ANS038 As Engrossed:

S4/21/21 SB601 (3) Prevent the foreign limited liability company from defending any action, suit, or proceeding in any court of this state.

(c) A foreign limited liability company transacting business in this state without registration may be served with process under § 4-20-113 if the foreign limited liability company:

(1) Fails to appoint an agent for service of process under § 4- 20-112;

(2) No longer has an agent for service of process;

or (3) Has an agent for service of process that cannot with reasonable diligence be served.

(d) A foreign limited liability company which transacts business in this state without registration shall be liable to the state for the years or parts thereof during which it transacted business in this state without registration in an amount equal to all fees which would have been imposed by this chapter upon that foreign limited liability company had it duly registered and all penalties imposed by this chapter.

The Attorney General may bring proceedings to recover all amounts due this state under the provisions of this section.

(e) A foreign limited liability company which transacts business in this state without registration shall be subject to a civil penalty, payable to the state, not to exceed five thousand dollars ($5,000) for each twelve- month period or part thereof, beginning with the date it began transacting business in this state and ending on the date it becomes registered.

(f) The civil penalty set forth in subsection (e) of this section may be recovered in an action brought within a court by the Attorney General.