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Legislative updates

House Bill 395, effective August 1, 2023, amends business entity laws to, among other things, require a contract for partnership filed for registry with the Secretary of State to be written in English; require certain documents to be acknowledged by the person signing or executed by authentic act; provide alternative supporting documents for a foreign corporation that changes its name, is a non survivor in a merger or consolidation or is dissolved and a foreign LLC that changes its name; and requires certain documents as satisfactory evidence that an LLC is entitled to use certain words in its name indicating professional status.

House Bill 515, effective August 1, 2022, amends the LLC law to provide (1) that if all members of an LLC die, the succession representative of the deceased member may petition the court for dissolution, windup, and liquidation of the LLC, (2) that upon the death of a member of a single-member LLC, the interest of the member is fully inheritable, (3) that unless otherwise provided in rule or contract, the member's properly appointed succession representative may exercise all of the deceased member's rights, and (4) that the full rights of membership transfer to the appointed succession representative upon a judgment of possession.

House Bill 973, effective August 1, 2022, provides that the owner of a corporate name reservation may terminate the reservation by delivering to the Secretary of State a signed notice of termination, that articles of merger or share exchange shall include the name of the surviving entity or names of the acquiring and acquired corporations, and that a corporate name shall not contain the phrase “doing business as” or any abbreviation thereof.

House Bill 830, effective August 1, 2022, provides that the Secretary of State may charge a $25 fee for transferring a reserved LLC name and terminating a reserved corporate or LLC name.

Senate Bill 33, effective October 16, 2020, revises the Business Corporation Act to (1) provide that unless the bylaws require otherwise, a board of directors may determine that a shareholders’ meeting may be held solely by means of remote communication, (2) to provide that the board of directors may change a corporation’s name without shareholder approval unless the articles of incorporation require approval, and (3) to provide that unless the articles of incorporation or law of a foreign subsidiary provide otherwise that a domestic parent corporation may merge a subsidiary into itself or another subsidiary, without approval of the shareholders of the parent corporation or board or shareholders of the subsidiary and that the articles of incorporation of the parent corporation may be amended only as provided by law.

Senate Bill 54, effective June 5, 2020, amends the corporation law regarding registered agents and the revocation of articles of incorporation and the indemnification of directors and officers of cooperatives.

Proclamation 37, dated March 26, 2020, orders the suspension of Subpart A of Part 7 of the Business Corporation Act to the extent it requires shareholder meetings to be noticed and held at a physical location in connection with meetings scheduled to be held or with record dates that fall within the declared Public Health Emergency.

Senate Bill 241, effective February 1, 2020, enacts the Small Business Protection Act. The Act states that the legislature’s intent is “to improve state rulemaking by creating procedures to analyze the availability of more flexible regulatory approaches for small businesses”. The Act, among other things, requires the Secretary of State to post information about proposed state rules that may affect small businesses on its website and to notify interested parties when the rule information is posted. The database is live and can be accessed here.

Case summaries

Suit by Dissolved LCC
Gucci 1 Field Services, LLC v. Glen Reeves C/W Gucci 1 Field Services, LLC, et al., No. 23-CA-73, et al., decided November 8, 2023. The Louisiana Court of Appeal affirmed the trial court’s ruling that a dissolved LLC had a right of action to pursue its claims. The Louisiana LLC law provides that upon the issuance of a certificate of dissolution an LLC’s existence ceases except for the purpose of an action brought by or against the LLC before it was dissolved. Here, the LLC brought its actions before it dissolved.

LLC – Authority of Manager
Payne v. Bolding, No. 21-C-702, decided February 24, 2022. The Louisiana Court of Appeal held that the sole manager of an LLC (Landry) had the authority to sign an uninsured motorist rejection form on behalf of the LLC. At one time the LLC had three managers. However, at the time the form was signed, Landry was the sole manager and had filed a document with the Secretary of State to remove the names of the former managers. Although the articles of organization at the time the form was signed still stated that decisions required a majority vote of three managers, the court noted that as the sole manager, Landry’s vote was the majority vote, and that if it accepted the argument that Landry lacked authority it would lead to the absurd result that all decisions made by Landry before he amended the articles of organization could possibly be considered null and void.

Sale of Membership Interest
Succession of Chisolm, No. 53,771, decided March 3, 2021. The Louisiana Court of Appeal held that the trial court erred in approving the sale of the membership interests in an LLC that was owned by the decedent and sold by the administrator of the succession utilizing the procedure available for the sale of stock. An ownership interest in an LLC is not stock and therefore the procedure for the sale of a moveable asset should have been used.

Charging Orders
Aok Property Investments, LLC v. Boudreaux, No. 20-C-237, decided December 9, 2020. The Louisiana Court of Appeal ruled that the charging order provision of Louisiana’s LLC law, which provides that a judgment creditor shall have only the rights of an assignee of the membership interest, applies to single member LLCs.

Inspection of Records
Bernard v. Louisiana Testing & Inspection, Inc., 19-575 (La. App. 3 Cir.), decided February 5, 2020. The Louisiana Court of Appeal held that the plaintiff was entitled to inspect a corporation’s financial records even though the trial court did not find his testimony credible where other testimony and evidence established that he was a shareholder and met the statutory requirements.

Other notices

June 19, 2020 — The Louisiana Secretary of State issued a warning alerting business owners to what it referred to as “fraudulent letters” being mailed to businesses regarding a 2020 Certificate of Status Request Form. The warning can be read on the Secretary of State’s website.

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