H 4902 Session 112 (1997-1998)
H 4902 General Bill, By Robinson, Boan and D. Smith
A BILL TO AMEND SECTION 33-44-801, CODE OF LAWS OF SOUTH CAROLINA, 1976,
RELATING TO EVENTS CAUSING DISSOLUTION AND WINDING UP OF A LIMITED LIABILITY
COMPANY'S BUSINESS, SO AS TO DELETE DISASSOCIATION OF A MEMBER AS A DISSOLVING
EVENT AND TO DELETE REFERENCE TO FUTURE DISTRIBUTIONS; TO AMEND SECTION
33-44-103, RELATING TO AN OPERATING AGREEMENT AMONG MEMBERS OF A LIMITED
LIABILITY COMPANY, SECTION 33-44-404, RELATING TO MANAGEMENT OF A LIMITED
LIABILITY COMPANY, SECTION 33-44-503, RELATING TO RIGHTS OF THE TRANSFEREE OF
AN INTEREST IN A LIMITED LIABILITY COMPANY, SECTION 33-44-603, RELATING TO THE
EFFECT OF THE DISASSOCIATION OF A MEMBER OF A LIMITED LIABILITY COMPANY, AND
SECTION 33-44-701, RELATING TO THE PURCHASE OF A DISTRIBUTIONAL INTEREST BY A
LIMITED LIABILITY COMPANY, ALL SO AS TO REFLECT THE DELETION OF DISASSOCIATION
OF A MEMBER OF A LIMITED LIABILITY COMPANY AS A DISSOLVING EVENT.
03/25/98 House Introduced and read first time HJ-76
03/25/98 House Referred to Committee on Judiciary HJ-76
04/29/98 House Committee report: Favorable Judiciary HJ-2
05/05/98 House Read second time HJ-19
05/06/98 House Read third time and sent to Senate HJ-9
05/07/98 Senate Introduced and read first time SJ-6
05/07/98 Senate Referred to Committee on Judiciary SJ-6
05/20/98 Senate Committee report: Favorable Judiciary SJ-29
05/26/98 Senate Read second time SJ-68
Indicates Matter Stricken
Indicates New Matter
COMMITTEE REPORT
May 20, 1998
H. 4902
Introduced by Reps. Robinson, Boan and D. Smith
S. Printed 5/20/98--S.
Read the first time May 7, 1998.
THE COMMITTEE ON JUDICIARY
To whom was referred a Bill (H. 4902), to amend Section
33-44-801, Code of Laws of South Carolina, 1976, relating to events
causing dissolution and winding up of a limited liability company's
business, etc., respectfully
REPORT:
That they have duly and carefully considered the same, and
recommend that the same do pass:
THOMAS L. MOORE, for Committee.
A BILL
TO AMEND SECTION 33-44-801, CODE OF LAWS OF SOUTH
CAROLINA, 1976, RELATING TO EVENTS CAUSING
DISSOLUTION AND WINDING UP OF A LIMITED LIABILITY
COMPANY'S BUSINESS, SO AS TO DELETE
DISASSOCIATION OF A MEMBER AS A DISSOLVING EVENT
AND TO DELETE REFERENCE TO FUTURE DISTRIBUTIONS;
TO AMEND SECTION 33-44-103, RELATING TO AN
OPERATING AGREEMENT AMONG MEMBERS OF A
LIMITED LIABILITY COMPANY, SECTION 33-44-404,
RELATING TO MANAGEMENT OF A LIMITED LIABILITY
COMPANY, SECTION 33-44-503, RELATING TO RIGHTS OF
THE TRANSFEREE OF AN INTEREST IN A LIMITED
LIABILITY COMPANY, SECTION 33-44-603, RELATING TO
THE EFFECT OF THE DISASSOCIATION OF A MEMBER OF A
LIMITED LIABILITY COMPANY, AND SECTION 33-44-701,
RELATING TO THE PURCHASE OF A DISTRIBUTIONAL
INTEREST BY A LIMITED LIABILITY COMPANY, ALL SO AS
TO REFLECT THE DELETION OF DISASSOCIATION OF A
MEMBER OF A LIMITED LIABILITY COMPANY AS A
DISSOLVING EVENT.
Be it enacted by the General Assembly of the State of South
Carolina:
SECTION 1. Section 33-44-801 of the 1976 Code is amended to
read:
"Section 33-44-801. (a) In this section, "future
distributions" means the total distributions that, as of the date
of dissociation, are reasonably estimated to be made to the remaining
members if the company were continued until the projected date of
its termination, reduced by the amount of distributions that would
have been made to the remaining members if the business of the
company were dissolved and wound up on the date of dissociation.
(b) A limited liability company is dissolved, and its business
must be wound up, upon the occurrence of any of the following
events:
(1) an event specified in the operating agreement;
(2) consent of the number or percentage of members specified in
the operating agreement;
(3) dissociation of a member who is also a manager or, if none,
a member of an at-will company, and dissociation of a member who
is also a manager or, if none, a member of a term company but only
if the dissociation was for a reason provided in Section 33-44-601(7)
through (11) and occurred before the expiration of the specified term,
but the company is not dissolved and required to be wound up by
reason of the dissociation if:
(i) within ninety days after the dissociation, the business of the
company is continued by the agreement of:
(a) the remaining members that would be entitled to receive a
majority of any distributions that would be made to them assuming
the business of the company were dissolved and wound up on the
date of the dissociation; and
(b) the remaining members that would be entitled to receive a
majority of any future distributions that would be made to them
assuming the business of the company were continued after the date
of the dissociation; or
(ii) the business of the company is continued under a right to
continue stated in the operating agreement;
(4) an event that makes it unlawful for all or substantially
all of the business of the company to be continued, but any
a cure of illegality within ninety days after notice to the
company of the event is effective retroactively to the date of the event
for purposes of this section;
(5)(4) on application by a member or a
dissociated member, upon entry of a judicial decree that:
(i)(a) the economic purpose of the company is
likely to be unreasonably frustrated;
(ii)(b) another member has engaged in conduct
relating to the company's business that makes it not reasonably
practicable to carry on the company's business with that member;
(iii)(c) it is not otherwise reasonably practicable
to carry on the company's business in conformity with the articles of
organization and the operating agreement;
(iv)(d) the company failed to purchase the
petitioner's distributional interest as required by Section 33-44-701;
or
(v)(e) the managers or members in control of
the company have acted, are acting, or will act in a manner that is
illegal, oppressive, fraudulent, or unfairly prejudicial to the
petitioner; or
(6)(5) on application by a transferee of a
member's interest, a judicial determination that it is equitable to wind
up the company's business:
(i)(a) after the expiration of the specified term,
if the company was for a specified term at the time the applicant
became a transferee by way of member dissociation,
transfer, or entry of a charging order that gave rise to the transfer; or
(ii)(b) at any time, if the company was
existed at will at the time the applicant became a transferee
by way of member dissociation, transfer, or entry of a
charging order that gave rise to the transfer."
SECTION 2. Section 33-44-103(b)(6) of the 1976 Code is
amended to read:
"(6) vary the requirement to wind up the limited liability
company's business in a case specified in Section
33-44-801(b)(4) (3) or (4) (b)(5);
or"
SECTION 3. Section 33-44-404(a)(2) and (b)(2) of the 1976 Code
is amended to read:
"(2) except as otherwise provided in subsection (c) or in
Section 33-44-801(b)(3)(i), any matter relating to the business of
the company may be decided by a majority of the members.
(2) except as otherwise provided in subsection (c) or in Section
33-44-801(b)(3)(i), any matter relating to the business of the
company may be exclusively decided by the manager or, if there is
more than one manager, by a majority of the managers; and".
SECTION 4. Section 33-44-503(e) of the 1976 Code is amended
to read:
"(e) A transferee who does not become a member is
entitled to shall:
(1) receive, in accordance with the transfer, distributions to
which the transferor would otherwise be entitled;
(2) receive, upon dissolution, and winding up of the limited
liability company's business:
(i) in accordance with the transfer, the net amount otherwise
distributable to the transferor;
(ii) a statement of account only from the date of the latest
statement of account agreed to by all the members;
(3) seek under Section 33-44-801(b)(6)(5) a
judicial determination that it is equitable to dissolve and wind up the
company's business."
SECTION 5. Section 33-44-603 of the 1976 Code is amended to
read:
"Section 33-44-603. (a) If under Section
33-44-801 Upon a member's dissociation from a
limited liability company results in a dissolution and winding up of
the company's business, Article 8 applies. If a member's dissociation
from the company does not result in a dissolution and winding up of
the company's business under Section 33-44-801:
(1) in an at-will company, the company must cause the dissociated
member's distributional interest to be purchased under Article 7;
and
(2) in a term company, if the company:
(i)(a) if the company dissolves and
winds up its business on or before the expiration of its specified term,
Article 8 applies to determine the dissociated member's rights to
distributions; and
(ii)(b) if the company does not dissolve
and wind up its business on or before the expiration of its specified
term, the company must cause the dissociated member's distributional
interest to be purchased under Article 7 on the date of the expiration
of the term specified at the time of the member's
dissociation.;
(b) Upon a member's dissociation from a limited liability
company:
(1)(3) the member's right to participate in the
management and conduct of the company's business terminates,
except as otherwise provided in Section 33-44-803, and the member
ceases to be a member and is treated the same as a transferee of a
member;
(2)(4) the member's duty of loyalty under Section
33-44-409(b)(3) terminates; and
(3)(5) the member's duty of loyalty under Section
33-44-409(b)(1) and (2) and duty of care under Section 33-44-409(c)
continue only with regard to matters arising and events occurring
before the member's dissociation, unless the member participates in
winding up the company's business pursuant to Section
33-44-803."
SECTION 6. Section 33-44-701(c) of the 1976 Code is amended
to read:
"(c) If the price and other terms of a purchase of a
distributional interest are fixed or are to be determined by the
operating agreement, the price and terms so fixed or
determined govern the purchase unless the purchaser defaults. If a
default occurs, the dissociated member is entitled to commence a
proceeding to have the company dissolved under pursuant
to Section 33-44-801(b)(5)(iv)(4)(d)."
SECTION 7. This act takes effect upon approval by the Governor.
-----XX----- |