2023 -- S 0916

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LC001902

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     STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2023

____________

A N   A C T

RELATING TO CORPORATIONS -- THE RHODE ISLAND LIMITED -LIABILITY

COMPANY ACT

     Introduced By: Senator Dawn M. Euer

     Date Introduced: March 30, 2023

     Referred To: Senate Judiciary

     It is enacted by the General Assembly as follows:

     SECTION 1. Chapter 7-16 of the General Laws entitled "The Rhode Island Limited-

Liability Company Act" is hereby repealed in its entirety.

CHAPTER 7-16

The Rhode Island Limited-Liability Company Act

     7-16-1. Short title.

     This chapter shall be known and may be cited as the “Rhode Island Limited-Liability

Company Act”.

     7-16-2. Definitions.

     As used in this chapter, unless the context otherwise requires:

     (1) “Articles of organization” means documents filed under § 7-16-5 for the purpose of

forming a limited-liability company.

     (2) “Authorized person” means a person, whether or not a member, who or that is

authorized by the articles of organization, by an operating agreement, or otherwise, to act on behalf

of a limited-liability company or foreign limited-liability company as an officer, manager or

otherwise.

     (3) “Bankruptcy” means a proceeding under the United States Bankruptcy Code or under

state insolvency or receivership law.

     (4) “Business” means any trade, occupation or other commercial activity engaged in for

gain, profit or livelihood for which a corporation can be organized under chapter 1.2 of this title.

     (5) “Capital contribution” means any cash, property, services rendered, or a promissory

note or other binding obligation to contribute cash or property or to perform services that a member

contributes to a limited-liability company in his or her capacity as a member.

     (6) “Capital value” means the fair market value in each case as of the date contributed of a

member’s capital contributions, including a contribution of services previously performed or a

contribution of a binding obligation to perform services, reduced by distributions made to the

member.

     (7) “Constituent entity” means each limited-liability company, limited partnership or

corporation that is a party to a plan of merger or consolidation.

     (8) “Corporation” means a business corporation formed under chapter 1.2 of this title or a

foreign corporation.

     (9) “Court” includes every court and judge having jurisdiction in the case.

     (10) “Delivering/Delivered” means either physically transferring a paper document to the

secretary of state or transferring a document to the secretary of state by electronic transmission

through a medium provided and authorized by the secretary of state.

     (11) “Electronic transmission” means any form of communication, not directly involving

the physical transmission of paper, that creates a record that may be retained, retrieved, and

reviewed by a recipient thereof, and that may be directly reproduced in paper form by such a

recipient through an automated process.

     (12) “Filing” means delivered to the secretary of state in either paper format or electronic

transmission through a medium provided and authorized by the secretary of state.

     (13) “Foreign corporation” means a business corporation formed under the laws of any

state other than this state or any foreign country.

     (14) “Foreign limited-liability company” means a limited-liability company formed under

the laws of any state other than this state or any foreign country.

     (15) “Foreign limited partnership” means a limited partnership formed under the laws of

any state other than this state or any foreign country.

     (16) “Limited-liability company” or “domestic limited-liability company” means an entity

that is organized and existing under the laws of this state pursuant to this chapter.

     (17) “Limited partnership” means a limited partnership formed under the laws of this state

or a foreign limited partnership.

     (18) “L3C” or “low-profit limited-liability company” means a limited-liability company

that is organized and existing under the laws of this state under this chapter and that satisfies the

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requirements of § 7-16-76.

     (19) “Manager” or “Managers” means a person or persons designated by the members of

a limited-liability company to manage the limited-liability company.

     (20) “Member” means a person with an ownership interest in a limited-liability company

with the rights and obligations specified under this chapter.

     (21) “Membership interest”, “ownership interest” or “interest” means a member’s rights in

the limited-liability company, collectively, including the member’s share of the profits and losses

of the limited-liability company, the right to receive distributions of the limited-liability company’s

assets, and any right to vote or participate in management of the limited-liability company.

     (22) “New entity” means the entity into which constituent entities consolidate, as identified

in the articles of consolidation provided for in § 7-16-62.

     (23) “Operating agreement” means any agreement, written or oral, of the members as to

the affairs of a limited-liability company and the conduct of its business. An operating agreement

also includes a document adopted by the sole member of a limited-liability company that has only

one member and may include as a party one or more managers who are not members.

     (24) “Person” means a natural person, partnership, limited partnership, domestic or foreign

limited-liability company, trust, estate, corporation, non-business corporation or other association.

     (25) “Signature” or “Signed” or “Executed” means an original signature, facsimile, or an

electronically transmitted signature submitted through a medium provided and authorized by the

secretary of state.

     (26) “State” means a state, territory or possession of the United States, or the District of

Columbia.

     (27) “Surviving entity” means the constituent entity surviving a merger, as identified in the

articles of merger provided for in § 7-16-62.

     7-16-3. Purpose and duration.

     Every limited-liability company organized under this chapter has the purpose of engaging

in any lawful business, and has perpetual existence until dissolved as terminated in accordance with

this chapter, unless a more limited purpose or duration is set forth in the articles of organization.

     7-16-3.1. Professional services.

     A limited-liability company may render professional services, as defined in § 7-5.1-2, as

and to the extent permitted under law or rules and regulations of the applicable regulatory agency

or agencies, as defined in § 7-5.1-2. Each regulatory agency as so defined is authorized to adopt,

subject to applicable law, rules and regulations regarding a domestic and foreign limited-liability

company rendering professional services. The rules and regulations shall not be inconsistent with

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law or rules or regulations regarding the rendering of professional services through a professional

corporation.

     7-16-3.2. Liability in rendering professional services.

     (a) The liability of an individual authorized to practice a profession for his or her own

negligence, wrongful acts or misconduct, or that of any person under his or her direct supervision

and control, other than in an administrative capacity, shall not be affected by the individual’s

providing professional services in this state as a member or agent of a domestic or foreign limited-

liability company.

     (b) An individual authorized to practice a profession and who is a member of a domestic

or foreign limited-liability company rendering professional services in this state is not liable solely

by reason of being a member for any negligence, wrongful acts or misconduct of another member

or agent of the limited-liability company. A domestic or foreign limited-liability company

rendering professional services in the state is liable for the negligence, wrongful acts or misconduct

of its members and agents providing professional services through the limited-liability company

within the scope of their authority or apparent authority to act for the limited-liability company.

     (c) Notwithstanding any other provisions of this section, the personal liability of a member

in a limited-liability company engaged in the rendering of professional services shall not be less

than or greater than the personal liability of a shareholder of a professional corporation organized

under chapter 5.1 of this title engaged in the rendering of the same professional services.

     7-16-3.3. Insurance or financial responsibility of limited-liability company.

     (a) A limited-liability company that is to perform professional services, as defined in § 7-

5.1-2, shall carry, if reasonably available, liability insurance of a kind that is designed to cover the

kinds of negligence, wrongful acts or misconduct for which liability is limited by § 7-16-3.2. The

insurance shall be in the aggregate amount of fifty thousand dollars ($50,000) multiplied by the

number of professional employees of the limited-liability company as of the policy anniversary

date; provided, however, that in no case shall the coverage be less than one hundred thousand

dollars ($100,000) but in no event shall the necessary coverage exceed a maximum of five hundred

thousand dollars ($500,000); provided further, however, that any policy for insurance coverage

may include a deductible provision in any amount not to exceed twenty-five thousand dollars

($25,000) for each claim multiplied by the number of professional employees of the limited-

liability company as of the date of the issuance of the policy. The policy or policies of insurance

may be subject to any terms, conditions, exclusions and endorsements that are typically contained

in policies of this type.

     (b) If, in any proceeding, compliance by a limited-liability company with the requirements

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of subsection (a) of this section is disputed:

     (1) That issue shall be determined by the court; and

     (2) The burden of proof of compliance shall be on the person who claims the limitation of

liability in § 7-16-3.2.

     (c) If a limited-liability company is in compliance with the requirements of subsection (a)

of this section, the requirements of this section shall not be admissible or in any way be made

known to a jury in determining an issue of liability for or extent of the debt or obligation or damages

in question.

     (d) Insurance is reasonably available for the purpose of subsection (a) of this section if, at

the time that the coverage would apply to the negligence, wrongful acts or misconduct in question,

it was reasonably available to similar types of limited-liability companies through the admitted or

eligible surplus lines market.

     (e) A limited-liability company is considered to be in compliance with subsection (a) of

this section if the limited-liability company provides five hundred thousand dollars ($500,000) of

funds specifically designated and segregated for the satisfaction of judgments against the limited-

liability company based on the forms of negligence, wrongful acts and misconduct for which

liability is limited by § 7-16-3.2 by:

     (1) Deposit in trust or in bank escrow of cash, bank certificate of deposit or United States

Treasury obligations; or

     (2) A bank letter of credit or insurance company bonds.

     (f) To the extent that a limited-liability company maintains liability insurance or segregated

funds pursuant to the laws or regulations of another jurisdiction, the liability insurance or

segregated funds shall be deemed to satisfy this section if the amount of them is equal to or greater

than the amount specified in subsection (a) or subsection (e) of this section.

     7-16-4. Powers.

     Each limited-liability company has the power:

     (1) To sue, be sued, complain and defend in its name in all courts;

     (2) To transact its business, carry on its operations and have and exercise the powers

granted by this chapter in any state and in any foreign country;

     (3) To make contracts and guarantees, incur liabilities and borrow money, although not in

furtherance of the limited-liability company’s purposes;

     (4) To sell, lease, exchange, transfer, convey, mortgage, pledge and otherwise dispose of

all or any part of its property and assets although not in furtherance of the limited-liability

company’s purposes;

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     (5) To acquire by purchase or in any other manner, take, receive, own, hold, improve, use

and otherwise deal in and with any interest in real or personal property, wherever situated;

     (6) To issue notes, bonds and other obligations and secure any of them by mortgage or deed

of trust or security interest of any or all of its assets;

     (7) To purchase, take, receive, subscribe for or otherwise acquire, own, hold, vote, use,

employ, sell, mortgage, lend, pledge or otherwise dispose of and otherwise use and deal in and with

stock or other interests in and obligations of corporations, associations, general or limited

partnerships, domestic or foreign limited-liability companies, business trusts, and individuals or

direct or indirect obligations of the United States or of any other government, state, territory,

governmental district or municipality or of any of their instrumentalities;

     (8) To invest its surplus funds, lend money from time to time in any manner that is

appropriate to enable it to carry on the operations or fulfill the purposes set forth in its articles of

organization and take and hold real property and personal property as security for the payment of

the funds loaned or invested;

     (9) To elect or appoint agents and define their duties and fix their compensation;

     (10) To be a promoter, stockholder, partner, member, associate or agent of any corporation,

general or limited partnership, domestic or foreign limited-liability company, joint venture, trust or

other enterprise;

     (11) To indemnify and advance expenses to any member, manager, agent or employee, past

or present, to the same extent as a corporation formed under chapter 1.2 of this title may indemnify

any of its directors, officers, employees or agents and subject to the standards and restrictions, if

any, set forth in the articles of organization or operating agreement, and to purchase and maintain

insurance on behalf of any member, manager, agent or employee against any liability asserted

against him and incurred by the member, manager, agent or employee in that capacity or arising

out of the member’s, manager’s, agent’s or employee’s status, whether or not the limited-liability

company would have the power to indemnify under the provisions of this section, the articles of

organization or operating agreement;

     (12) To make and alter operating agreements, not inconsistent with its articles of

organization or with the laws of this state, for the administration and regulation of the business and

affairs of the limited-liability company;

     (13) To lend money and to use its credit to assist its employees;

     (14) To make donations for the public welfare or for charitable, scientific or educational

purposes;

     (15) To pay pensions and establish pension plans, pension trusts, profit sharing plans and

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other incentive and benefit plans for any or all of its agents and employees;

     (16) To provide insurance for its benefit on the life of any of its agents or employees or on

the life of any individual member for the purpose of acquiring at the member’s death the

membership interest owned by the member;

     (17) To cease its activities and dissolve; and

     (18) To do every other act not inconsistent with law that is appropriate to promote and to

attain its purposes.

     7-16-5. Formation.

     (a) One or more persons may form a limited-liability company by delivering or causing to

be delivered executed articles of organization for filing with the secretary of state.

     (b) When the secretary of state accepts the articles of organization for filing and issues the

certificate of organization, the limited-liability company is formed under the name and subject to

the conditions and provisions stated in its articles of organization.

     7-16-5.1. Conversion of certain entities to a limited-liability company.

     (a) As used in this section, the term “other entity” means a corporation, a business trust, or

association, a real estate investment trust, a common-law trust, a sole proprietorship or any other

unincorporated business, or entity including a partnership, whether general or limited, (including a

registered limited-liability partnership) or a foreign limited-liability company.

     (b) Any other entity may convert to a domestic limited-liability company by complying

with subsection (h) of this section and filing in the office of the secretary of state in accordance

with § 7-16-8 articles of organization that comply with § 7-16-6 and have been executed by one or

more authorized persons in accordance with § 7-16-7, accompanied by a certificate of conversion

to a limited-liability company duly executed by one or more persons authorized to act on behalf of

the other entity and one or more persons authorized to sign a certificate of conversion on behalf of

the limited-liability company.

     (c) The certificate of conversion to limited-liability company shall state:

     (1) The date on which and jurisdiction where the other entity was first created, formed, or

otherwise came into being and, if it has changed, its jurisdiction immediately prior to its conversion

to a domestic limited-liability company;

     (2) The name of the other entity immediately prior to the filing of the certificate of

conversion to limited-liability company;

     (3) The name of the limited-liability company as set forth in its articles of organization

filed in accordance with subsection (b) of this section; and

     (4) The future effective date or time (which is a date or time certain) of the conversion to

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a limited-liability company if it is not to be effective upon the filing of the certificate of conversion

to limited-liability company and the articles of organization.

     (d) Upon the filing in the office of the secretary of state of the certificate of conversion to

limited-liability company and the articles of organization or upon the future effective date or time

of the certificate of conversion to a limited-liability company and the articles of organization, the

other entity shall be converted into a domestic limited-liability company and the limited-liability

company shall thereafter be subject to all of the provisions of this chapter, except that,

notwithstanding § 7-16-5, the existence of the limited-liability company shall be deemed to have

commenced on the date the other entity commenced its existence in the jurisdiction in which the

other entity was first created, formed, or otherwise came into being.

     (e) The conversion of any other entity into a domestic limited-liability company shall not

be deemed to affect any obligations or liabilities of the other entity incurred prior to its conversion

to a domestic limited-liability company or the personal liability of any person incurred prior to the

conversion.

     (f) When any conversion shall have become effective under this section, for all purposes

of the laws of the state of Rhode Island, all of the rights, privileges, and powers of the other entity

that has converted, and all property, real, personal, and mixed, and all debts due to such other entity,

as well as all other things and causes of action belonging to the other entity, shall be vested in the

domestic limited-liability company and shall thereafter be the property of the domestic limited-

liability company as they were of the other entity that has converted, and the title to any real

property vested by deed or otherwise in the other entity shall not revert or be in any way impaired

by reason of this chapter, but all rights of creditors and all liens upon any property of such other

entity shall be preserved unimpaired, and all debts, liabilities, and duties of the other entity that has

converted shall thenceforth attach to the domestic limited-liability company and may be enforced

against it to the same extent as if those debts, liabilities, and duties had been incurred or contracted

by it.

     (g) Unless otherwise agreed, or as required under applicable non-Rhode Island law, the

converting other entity shall not be required to wind up its affairs or pay its liabilities and distribute

its assets, and the conversion shall not be deemed to constitute a dissolution of the other entity and

shall constitute a continuation of the existence of the converting other entity in the form of a

domestic limited-liability company.

     (h) Prior to filing a certificate of conversion to limited-liability company with the office of

the secretary of state, the conversion shall be approved in the manner provided for by the document,

instrument, agreement, or other writing, as the case may be, governing the internal affairs of the

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other entity and the conduct of its business or by applicable law, as appropriate, and a limited-

liability company agreement shall be approved by the same authorization required to approve the

conversion.

     (i) In connection with a conversion hereunder, rights or securities of or interests in the other

entity that is to be converted to a domestic limited-liability company may be exchanged for or

converted into cash, property, or rights or securities of or interests in such domestic limited-liability

company or, in addition to or in lieu thereof, may be exchanged for or converted into cash, property,

or rights or securities of or interests in another domestic limited-liability company or other entity

or may be cancelled.

     (j) The provisions of this section shall not be construed to limit the accomplishment of a

change in the law governing, or the domicile of, an other entity to the state of Rhode Island by any

other means provided for in a limited-liability company agreement or other agreement or as

otherwise permitted by law, including by the amendment of a limited-liability company agreement

or other agreement.

     7-16-5.2. Approval of conversion of a limited-liability company.

     (a) A domestic limited-liability company may convert to a corporation, a business trust, or

association, a real estate investment trust, a common law trust, a sole proprietorship, or any other

unincorporated business or entity including a partnership (whether general or limited, including a

registered limited-liability partnership), or a foreign limited-liability company upon the

authorization of the conversion in accordance with this section.

     (b) If the limited-liability company agreement specified the manner of authorizing a

conversion of the limited-liability company, the conversion shall be authorized as specified in the

limited-liability company agreement. If the limited-liability company agreement does not specify

the manner of authorizing a conversion of the limited-liability company and does not prohibit a

conversion of the limited-liability company, the conversion shall be authorized in the same manner

as is specified in the limited-liability company agreement for authorizing a merger or consolidation

that involves the limited-liability company as a constituent party to the merger or consolidation. If

the limited-liability company agreement does not specify the manner of authorizing a conversion

of the limited-liability company or a merger or consolidation that involves the limited-liability

company as a constituent party and does not prohibit a conversion of the limited-liability company,

the conversion shall be authorized by the approval by the members or, if there is more than one

class or group of members, then by each class or group of members, in either case, by members

who own more than fifty percent (50%) of the then-current percentage or other interest in the profits

of the domestic limited-liability company owned by all of the members or by the members in each

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class or group, as appropriate.

     (c) Unless otherwise agreed, the conversion of a domestic limited-liability company to

another entity or business form pursuant to this section shall not require the limited-liability

company to wind up its affairs under § 7-16-45 or pay its liabilities and distribute its assets under

§ 7-16-46, and the conversion shall not constitute a dissolution of the limited-liability company.

When a limited-liability company has converted to another entity or business form pursuant to this

section, for all purposes of the laws of the state of Rhode Island, the other entity or business form

shall be deemed to be the same entity as the converting limited-liability company and conversion

shall constitute a continuation of the existence of the limited-liability company in the form of such

other entity or business form.

     (d) In connection with a conversion of a domestic limited-liability company to another

entity or business form pursuant to this section, rights or securities of or interests in the domestic

limited-liability company that is to be converted may be exchanged for or converted into cash,

property, rights, or securities of or interests in the entity or business form into which the domestic

limited-liability company is being converted or, in addition to or in lieu thereof, may be exchanged

for or converted into cash, property, rights, or securities of or interests in another entity or business

form or may be cancelled.

     (e) If a limited-liability company shall convert in accordance with this section to another

entity or business form organized, formed, or created under the laws of a jurisdiction other than the

state of Rhode Island or to a Rhode Island unincorporated “other entity”, a certificate of conversion

to non-Rhode Island entity shall be filed in the office of the secretary of state. The certificate of

conversion to non-Rhode Island entity shall state:

     (1) The name of the limited-liability company and, if it has been changed, the name under

which its certificate of formation was originally filed;

     (2) The date of filing of its original certificate of formation with the secretary of state;

     (3) The jurisdiction in which the entity or business form, to which the limited-liability

company shall be converted, is organized, formed, or created, and the name and type of such entity

or business form;

     (4) The future effective date or time (which shall be a date or time certain) of the conversion

if it is not to be effective upon the filing of the certificate of conversion to non-Rhode Island entity;

     (5) That the conversion has been approved in accordance with this section;

     (6) The agreement of the limited-liability company that it may be served with process in

the state of Rhode Island in any action, suit, or proceeding for enforcement of any obligation of the

limited-liability company arising while it was a limited-liability company of the state of Rhode

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Island, and that it irrevocably appoints the secretary of state as its agent to accept service of process

in any such action, suit, or proceeding.

     (f) Upon the filing in the office of the secretary of state of the certificate of conversion to

non-Rhode Island entity or upon the future effective date or time of the certificate of conversion to

non-Rhode Island entity and upon payment of all fees due by the limited-liability company, the

secretary of state shall certify that the limited-liability company has filed all documents and paid

all fees required by this chapter, and thereupon the limited-liability company shall cease to exist as

a limited-liability company of the state of Rhode Island. Such certificate of the secretary of state

shall be prima facie evidence of the conversion by the limited-liability company out of the state of

Rhode Island.

     (g) The conversion of a limited-liability company out of the state of Rhode Island in

accordance with this section and the resulting cessation of its existence as a limited-liability

company of the state of Rhode Island pursuant to a certificate of conversion to non-Rhode Island

entity shall not be deemed to affect any obligations or liabilities of the limited-liability company

incurred prior to such conversion or the personal liability of any person incurred prior to such

conversion, nor shall it be deemed to affect the choice of laws applicable to the limited-liability

company with respect to matters arising prior to such conversion.

     (h) When a limited-liability company has been converted to another entity or business form

pursuant to this section, the other entity or business form shall, for all purposes of the laws of the

state of Rhode Island, be deemed to be the same entity as the limited-liability company. When any

conversion shall have become effective under this section, for all purposes of the laws of the state

of Rhode Island, all of the rights, privileges, and powers of the limited-liability company that has

converted, and all property, real, personal, and mixed, and all such debts due to the limited-liability

company, as well as all other things and causes of action belonging to the limited-liability company,

shall remain vested in the other entity or business form to which the limited-liability company has

converted and shall be the property of the other entity or business form, and the title to any real

property vested by deed or otherwise in the limited-liability company shall not revert to the limited-

liability company or be in any way impaired by reason of this chapter; but all rights of creditors

and all liens upon any property of the limited-liability company shall be preserved unimpaired, and

all debts, liabilities, and duties of the limited-liability company that has converted shall remain

attached to the other entity or business form to which the limited-liability company has converted,

and may be enforced against it to the same extent as if said debts, liabilities, and duties had

originally been incurred or contracted by it in its capacity as the other entity or business form. The

rights, privileges, powers, and interests in property of the limited-liability company that has

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converted, as well as the debts, liabilities, and duties of the limited-liability company, shall not be

deemed, as a consequence of the conversion, to have been transferred to the other entity or business

form to which the limited-liability company has converted for any purpose of the laws of the state

of Rhode Island.

     7-16-5.3, 7-16-5.4. [Repealed.]

     7-16-6. Articles of organization.

     (a) The articles of organization shall set forth:

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

     (2) The name and address of its resident agent in this state;

     (3) A statement whether, under the articles of organization and any written operating

agreement made or intended to be made, the limited-liability company is intended to be:

     (i) Treated as a partnership,

     (ii) As a corporation, or

     (iii) Disregarded as an entity separate from its member for purposes of federal income

taxation;

     (4) The address of the principal office of the limited-liability company if it is determined

at the time of organization;

     (5) Any other provision, not inconsistent with law, that the members elect to set out in the

articles, including, but not limited to, any limitation of the purposes or duration for which the

limited-liability company is formed, and any other provision that may be included in an operating

agreement;

     (6) A statement of whether the limited-liability company is to be managed by its members

or by one or more managers, and if the limited-liability company has managers at the time of its

formation, the name and address of each manager;

     (7) The name and address of the person authorized to sign and who does sign the articles

of organization.

     (b) It is not necessary to set out in the articles of organization any of the powers enumerated

in this chapter.

     7-16-7. Execution of articles.

     (a) Articles required by this chapter to be filed with the secretary of state shall be executed

in the following manner:

     (1) Articles of organization must be signed by at least one person who need not be a

member of the limited-liability company and who is authorized to do so by the persons forming the

limited-liability company; and

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     (2) Articles of amendment, restated articles of organization, articles of merger or

consolidation and articles of dissolution must be signed by an authorized person.

     (b) An attorney-in-fact may sign for any authorized person. Powers of attorney need not be

sworn to, verified or acknowledged, and need not be filed with the secretary of state.

     (c) The execution of any articles under this chapter constitutes an affirmation that the facts

stated are true.

     7-16-8. Filing.

     (a) The secretary of state may not accept for filing any document under this chapter that

does not conform with law.

     (b) The secretary of state may not accept for filing any organizational document,

qualification, registration, change of resident agent report, service of process, notice, or other

document until all required filing and other fees have been paid to the secretary of state.

     (c) The secretary of state may not accept for filing any article of dissolution, cancellation

of registration, or article of merger until all required filing and other fees have been paid to the

secretary of state and all fees and taxes have been paid.

     (d) The secretary of state may not accept for filing the reinstatement of a limited-liability

company’s certificate of organization or registration until all required filing and other fees have

been paid to the secretary of state and all fees and taxes have been paid, as evidenced by an

appropriate certificate of good standing issued by the division of taxation.

     (e) The secretary of state may not accept for filing a certificate of conversion to a non-

Rhode Island entity until all required filing and other fees have been paid to the secretary of state

and all fees and taxes have been paid.

     (f) When the secretary of state accepts the articles of organization or a certificate of

registration or any other document filed under this chapter, the secretary of state shall:

     (1) Endorse on the document the date and time of its acceptance for filing;

     (2) Promptly file the document; and

     (3) Issue a certificate or other evidence that establishes:

     (i) That the document was accepted for filing by the secretary of state; and

     (ii) The date and time of the acceptance for filing.

     (g) The document becomes effective upon the issuance of the certificate or other evidence

or at any later date that is set forth within the document, not more than ninety (90) days after the

filing of such document.

     7-16-9. Name — Fictitious business names.

     (a) The name of each limited-liability company as set forth in its articles of organization:

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     (1) Shall end with either the words “limited-liability company” or the upper or lower case

letters “l.l.c.” with or without punctuation, or, if organized as a low-profit, limited-liability

company, shall end with either the words “low-profit, limited-liability company” or the

abbreviation “L3C” or “13c”;

     (2) Shall be distinguishable upon the records of the secretary of state from:

     (i) The name of any corporation, non-business corporation or other association, limited

partnership or domestic or foreign limited-liability company organized under the laws of, or

registered or qualified to do business in, this state; or

     (ii) Any name that is filed, reserved, or registered under this title, subject to the following:

     (A) This provision 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; and

     (B) The name may be the same as the name of a corporation, non-business corporation, or

other association, the certificate of incorporation or organization of which has been revoked by the

secretary of state as permitted by law, and the revocation has not been withdrawn within one year

from the date of the revocation.

     (C) Words or abbreviations that are required by statute to identify the particular type of

business entity shall be disregarded when determining if a name is distinguishable upon the records

of the secretary of state.

     (D) The secretary of state shall promulgate rules and regulations defining the term

“distinguishable upon the record” for the administration of this chapter.

     (b)(1) Any domestic or foreign limited-liability company organized under the laws of, or

registered or qualified to do business in, this state may transact business in this state under a

fictitious name provided that it files a fictitious business name statement in accordance with this

subsection.

     (2) A fictitious business name statement shall be filed with the secretary of state and shall

be executed by an authorized person of the domestic limited-liability company or by a person with

authority to do so under the laws of the state or other jurisdiction of the organization of the foreign

limited-liability company and shall set forth:

     (i) The fictitious business name to be used; and

     (ii) The name of the applicant limited-liability company, the state or other jurisdiction in

which the limited-liability company is organized and date of the limited-liability company’s

organization.

     (3) The fictitious business name statement expires upon the filing of a statement of

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abandonment of use of a fictitious business name registered in accordance with this subsection or

upon the dissolution of the applicant domestic limited-liability company or the cancellation of

registration of the applicant foreign limited-liability company.

     (4) The statement of abandonment of use of a fictitious business name under this subsection

shall be filed with the secretary of state, shall be executed in the same manner as provided in

subdivision (2) above, and shall set forth:

     (i) The fictitious business name being abandoned;

     (ii) The date on which the original fictitious business name statement being abandoned was

filed; and

     (iii) The information set forth in subsection (a)(2)(ii).

     (5) No domestic or foreign limited-liability company transacting business under a fictitious

business name contrary to the provisions of this section, or its assignee, may maintain any action

upon or on account of any contract made, or transaction had, in the fictitious business name in any

court of the state until a fictitious business name statement has been filed in accordance with this

section.

     (6) No limited-liability company may be permitted to transact business under a fictitious

business name pursuant to this section that is the same as the name of any corporation, limited

partnership or domestic or foreign limited-liability company organized under the laws of, or

registered or qualified to do business in, this state or any name that is filed, reserved, or registered

under this title, subject to the following:

     (i) This provision does 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; and

     (ii) The name may be the same as the name of a corporation, non-business corporation, or

other association, the certificate of incorporation or organization of which has been revoked by the

secretary of state as permitted by law and the revocation has not been withdrawn within one year

from the date of revocation.

     (iii) Words or abbreviations that are required by statute to identify the particular type of

business entity shall be disregarded when determining if a name is distinguishable upon the records

of the secretary of state.

     (iv) The secretary of state shall promulgate rules and regulations defining the term

“distinguishable upon the record” for the administration of this chapter.

     (7) A filing fee of fifty dollars ($50.00) shall be collected by the secretary of state for each

statement filed.

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     7-16-10. Reservation of name — Transfer of reserved name.

     (a) The exclusive right to use a specified name for a domestic or foreign limited-liability

company may be reserved by:

     (1) A person who intends to organize a domestic limited-liability company;

     (2) A domestic limited-liability company or foreign limited-liability company registered in

this state which, in either case, proposes to change its name;

     (3) A foreign limited-liability company that intends to register in this state; or

     (4) Any person intending to organize a foreign limited-liability company and intending to

have it registered in this state and adopt that name.

     (b) A person may reserve a specified name by filing a signed application with the secretary

of state and, if the secretary of state finds that the name is available, the secretary of state shall

reserve the name for one hundred twenty (120) days for the exclusive use of the applicant.

     (c) The exclusive right to use a reserved name may be transferred to another person by

filing with the secretary of state a notice of the transfer which specifies the name and address of the

transferee and is signed by the applicant for whom the name was reserved.

     7-16-11. Resident agent.

     (a) Each domestic or foreign registered limited-liability company shall have a resident

agent for service of process on the limited-liability company who shall be either:

     (1) An individual resident of this state; or

     (2) A corporation, limited partnership, or limited-liability company, and in each case either

domestic or one authorized to transact business in this state.

     (b)(1) A domestic or foreign registered limited-liability company may change its resident

agent or the address of its resident agent by filing with the secretary of state a statement signed by

any authorized person that authorizes the change.

     (2) A change of a resident agent or address of the resident agent for a domestic or foreign

registered limited-liability company under this subsection is effective when the secretary of state

accepts the statement for filing.

     (c)(1) A resident agent that changes address in the state shall file with the secretary of state

a statement of the change of address signed by the resident agent or on the resident agent’s behalf.

     (2) The statement shall include:

     (i) The name of the limited-liability company for which the change is effective;

     (ii) The old and new addresses of the resident agent; and

     (iii) The date on which the change is effective.

     (3) The change of address of the resident agent is effective when the secretary of state

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accepts the statement for filing.

     (d)(1) A resident agent may resign by filing with the secretary of state a counterpart or

photocopy of the signed resignation, together with a statement that the resignation has been

delivered or sent to the limited-liability company.

     (2) Unless a later time is specified in the resignation, it is effective thirty (30) days after it

is filed.

     (e) The secretary of state is appointed the agent of the domestic limited-liability company

for service of process if no resident agent has been appointed, if the resident agent’s authority has

been revoked, or if the resident agent cannot be found or served following the exercise of reasonable

diligence.

     7-16-12. Amendment and restatement of articles of organization.

     (a) The articles of organization shall be amended when:

     (1) There is a change in the name of the limited-liability company;

     (2) A company that did not previously have managers designates managers, or a company

that previously did have managers is to be managed by its members; or

     (3) There is a change in the manager of record.

     (b) The articles of organization may be amended at any time and in any respect that is

desired, as long as the articles of organization, as amended, contain only those provisions as are

lawful under this chapter.

     (c) The articles of organization may be restated at any time. Any restatement may include

additional amendments.

     7-16-13. Certificates of correction.

     (a) If any document filed with the secretary of state under this chapter contains any

typographical error, error of transcription or other technical error or has been defectively executed,

the document may be corrected by filing a certificate of correction.

     (b) A certificate of correction shall set forth:

     (1) The title of the document being corrected;

     (2) The name of each party to the document being corrected;

     (3) The date that the document being corrected was filed; and

     (4) The provision in the document as previously filed and as corrected and, if execution of

the document was defective, the manner in which it was defective.

     (c) A certificate of correction may not make any other change or amendment that would

not have complied in all respects with the requirements of this chapter at the time the document

being corrected was filed.

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     (d) A certificate of correction shall be executed in the same manner in which the document

being corrected was required to be executed.

     (e) A certificate of correction may not:

     (1) Change the effective date of the document being corrected; or

     (2) Affect any right or liability accrued or incurred before its filing, except that any right

or liability accrued or incurred by reason of the error or defect being corrected shall be extinguished

by the filing if the person having the right or liability has not detrimentally relied on the original

document.

     7-16-14. Management by members.

     Unless the articles of organization or a written operating agreement provide for

management by or under the authority of one or more managers in accordance with § 7-16-15, the

business and affairs of the limited-liability company shall be managed by the members. If

management is vested in the members:

     (1) The members are deemed to be managers for purposes of applying the provisions of

this chapter unless the context clearly requires otherwise; and

     (2) Each of the members has the power and authority and is subject to all duties and

liabilities of managers.

     7-16-15. Managers.

     (a) The articles of organization or a written operating agreement may deny, restrict or

enlarge the management rights and duties of any member or group or class of member and may

provide that the business and affairs of the limited-liability company shall be managed by or under

the authority of one or more managers who may, but need not be, members.

     (b) The articles of organization or written operating agreement may prescribe qualifications

for managers.

     (c) The number of managers may be specified in or fixed in accordance with the articles of

organization or written operating agreement.

     7-16-16. Election and removal of managers.

     Unless otherwise provided in the articles of organization or operating agreement:

     (1) Election of managers to fill initial positions or vacancies shall be by majority vote of

the members.

     (2) Any or all managers may be removed, with or without cause, by majority vote of the

members.

     7-16-17. Duties of managers.

     (a) A manager shall discharge his or her managerial duties in good faith, with the care that

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an ordinarily prudent person in a similar position would use under the circumstances, and in the

manner the manager reasonably believes to be in the best interests of the limited-liability company.

     (b) In discharging his or her duties, a manager is entitled to rely on information, opinions,

reports or statements, including financial statements and other financial data, if prepared or

presented by:

     (1) One or more employees of the limited-liability company who the manager reasonably

believes to be reliable and competent in the matters presented;

     (2) Legal counsel, public accountants or other persons as to matters the manager reasonably

believes are within the person’s professional or expert competence; or

     (3) A committee of managers of which the manager is not a member if the manager

reasonably believes the committee merits confidence.

     (c) A manager is not acting in good faith if the manager has knowledge concerning the

matter in question that makes reliance otherwise permitted by subsection (b) unwarranted.

     (d) A manager is not liable for any action taken as a manager, or any failure to take any

action, if the manager performed the duties of his or her office in compliance with this section.

     (e) Except as otherwise provided in the articles of organization or operating agreement,

every manager must account to the limited-liability company and hold as trustee for the limited-

liability company any profit or benefit he or she derived without the informed consent of the

members or a majority of the disinterested managers from any transaction connected with the

conduct or winding up of the limited-liability company or from any personal use by the manager

of the limited-liability company’s property.

     7-16-18. Limitation of liability of managers.

     (a) Subject to subsection (b), the articles of organization or operating agreement may

eliminate or limit the personal liability of a manager to the limited-liability company or to its

members for monetary damages for breach of any duty provided for in § 7-16-17.

     (b) No provision permitted under subsection (a) limits or eliminates the liability of a

manager for:

     (1) Breach of the manager’s duty of loyalty to the limited-liability company or its members;

     (2) Acts or omissions not in good faith or that involve intentional misconduct or a knowing

violation of law;

     (3) The liability imposed pursuant to the provisions of § 7-16-32; or

     (4) Any transaction from which the manager derived an improper personal benefit, unless

the transaction was with the informed consent of the members or a majority of the disinterested

managers. No provision eliminating or limiting the personal liability of a manager will be effective

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with respect to causes of action arising prior to the inclusion of the provision in the articles of

organization or operating agreement.

     7-16-19. Action by managers.

     If the business and affairs of the limited-liability company is managed by or under the

authority of more than one manager under § 7-16-15, except as otherwise provided in this chapter,

the articles of organization or operating agreement, the managers shall act by majority vote, with

each manager being entitled to one vote.

     7-16-20. Agency power of managers.

     (a) Every manager is an agent of the limited-liability company for the purpose of its

business and affairs, and the act of every manager, including the execution in the limited-liability

company’s name of any instrument for apparently carrying on in the usual way the business and

affairs of the limited-liability company that the manager manages, binds the limited-liability

company unless:

     (1) The act is in contravention of the articles of organization or this chapter, or

     (2) The manager acting otherwise lacks the authority to act for the limited-liability

company and the person with whom the manager is dealing has knowledge of the fact that the

manager has no authority.

     (b) Unless otherwise provided in the articles of organization, members of a limited-liability

company whose business and affairs is managed by or under the authority of one (1) or more

managers pursuant to § 7-16-15 are not agents of the limited-liability company and have no

authority to bind the limited-liability company unless they are also managers.

     7-16-21. Voting rights of members.

     (a) Unless otherwise provided in the articles of organization or operating agreement, the

members of a limited-liability company, to the extent their membership interests have not been

assigned, are entitled to vote in proportion to the capital value of the membership interests that have

not been assigned.

     (b) Unless otherwise provided in the articles of organization or operating agreement, the

affirmative vote of members entitled to vote, representing a majority of the capital values of all

membership interests that have not been assigned, are required to approve the following matters:

     (1) The dissolution and winding up of the limited-liability company;

     (2) The sale, exchange, lease, mortgage, pledge or other transfer of all or substantially all

of the assets of the limited-liability company;

     (3) The merger or consolidation of the limited-liability company with another person; and

     (4) A transaction involving an actual or potential conflict of interest between a manager

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and the limited-liability company;

     (5) An amendment to the articles of organization or operating agreement; and

     (6) Any restatement of the articles of organization that includes an additional amendment.

     (c) Any action required or permitted to be taken by the members or managers by this

chapter, the articles of organization or operating agreement may be taken without a meeting if all

the members entitled to vote or all the managers consent to it in writing.

     (d)(1) Except as otherwise provided in the articles of organization or operating agreement

and except for actions pursuant to subsections (b)(1), (2), and (3) of this section, any action required

or permitted to be taken by vote of the members may be taken without a meeting on the written

consent of less than all the members entitled to vote on it, if the members who consent would be

entitled to cast at least the minimum number of votes that would be required to take the action at a

meeting at which all members entitled to vote on it are present.

     (2) Prompt notice of the action shall be given to all members who would have been entitled

to vote on the action if the meeting were held.

     (e) Any action taken pursuant to this section has the same effect for all purposes as if the

action had been taken at a meeting of the members.

     (f) The articles of organization or operating agreement may provide for any other voting

rights of members.

     7-16-22. Records and information.

     (a) Each limited-liability company shall keep at its principal office the following:

     (1) A current list of the full name and last known business address of each member and

manager;

     (2) Copies of records that would enable a member to determine the capital values and the

relative voting rights of the members;

     (3) A copy of the articles of organization and any restatements of the articles and

amendments;

     (4) Executed copies of any powers of attorney pursuant to which any certificate has been

executed;

     (5) Copies of the limited-liability company’s federal, state and local income tax returns and

reports, if any, for the five most recent years;

     (6) A copy of any written operating agreement;

     (7) Any written records of proceedings of the members or managers; and

     (8) Copies of any financial statements of the limited-liability company for the five most

recent years.

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     (b) A member may:

     (1) At the member’s own expense, inspect and copy any limited-liability company records

required to be kept under this section upon reasonable request during ordinary business hours; and

     (2) Obtain from time to time, upon reasonable request, information regarding the state of

the business and financial condition of the limited-liability company.

     (c) The current list of names and addresses of the members shall be made available to the

secretary of state, the director of the department of business regulation, or the attorney general, as

applicable, within five (5) business days of receipt of a written request by the secretary, director,

or attorney general stating that the information is required in connection with an investigatory or

enforcement proceeding.

     7-16-23. Liability of members and managers.

     A member or manager of a limited-liability company is not liable for the obligations of the

limited-liability company solely by reason of being a member or manager.

     7-16-24. Contributions to capital.

     The contribution of a member to a limited-liability company must be a capital contribution.

     7-16-25. Liability for contribution.

     (a) A promise by a member to make a capital contribution to the limited-liability company

is not enforceable unless set out in a writing signed by the member.

     (b) Except as provided in the operating agreement, a member’s obligation to make his or

her capital contribution is not excused because of death, disability or other reason.

     (c) If a member does not make a capital contribution of property or services as and when

promised, the member is obligated, at the option of the limited-liability company, to contribute cash

equal to that portion of the value of the capital contribution that has not been made.

     (d)(1) Unless otherwise provided in the operating agreement, the obligation of a member

to make a capital contribution may be compromised only with the unanimous consent of the

members.

     (2) Notwithstanding the compromise, a creditor of a limited-liability company who extends

credit or otherwise acts in reliance on that obligation after the member signs a writing that reflects

the obligation and before the compromise may enforce the original obligation.

     7-16-26. Sharing of profits and losses.

     Unless otherwise provided in the articles of organization or the operating agreement, the

profits and losses of a limited-liability company shall be allocated to each member on the basis of

the member’s capital value.

     7-16-27. Sharing of distributions.

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     Unless otherwise provided in the articles of organization or operating agreement,

distributions of cash or other assets of a limited-liability company shall be allocated to each member

on the basis of the member’s capital value.

     7-16-28. Interim distributions.

     Except as provided in this chapter, a member is entitled to receive distributions from a

limited-liability company before the withdrawal of the member from the limited-liability company

and before the dissolution and winding up of the limited-liability company to the extent and at the

times or upon the happening of the events upon which the members unanimously agree or as

provided in the operating agreement.

     7-16-29. Distributions upon withdrawal.

     Upon the withdrawal of a member, except as otherwise provided in writing in an operating

agreement, the withdrawn member and his or her legal representatives, successors and assigns do

not have the right to receive any distribution by reason of the withdrawal but have only the rights

of an assignee to receive distributions as to the withdrawn member’s interest during any

continuation of the business of the limited-liability company and upon completion of winding up

less any damages recoverable against the withdrawn member if the event of withdrawal violated

the limited-liability company’s operating agreement.

     7-16-30. Distribution in kind.

     Except as provided in the operating agreement:

     (1) A member has no right to demand and receive any distribution from a limited-liability

company in any form other than cash; and

     (2) No member may be compelled to accept from a 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 of that asset which is equal to the percentage in which the member shares

distributions from the limited-liability company.

     7-16-31. Restrictions on making distributions.

     (a) No distribution may be made to a member if, after giving effect to the distribution:

     (1) The limited-liability company would not be able to pay its debts as they become due in

the usual course of business; or

     (2) The limited-liability company’s total assets would be less than the sum of its total

liabilities plus, unless the operating agreement provides otherwise, the amount that would be

needed, if the limited-liability company were to be dissolved at the time of the distribution, to

satisfy the preferential rights of other members upon dissolution that are superior to the rights of

the member receiving the distribution.

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     (b) The limited-liability company may base a determination that a distribution is not

prohibited under subsection (a) on:

     (1) Financial statements prepared on the basis of accounting practices and principles that

are reasonable under the circumstances; or

     (2) A fair valuation or other method that is reasonable under the circumstances.

     (c) The effect of a distribution under subsection (a) is measured as of:

     (1) The date the distribution is authorized if the payment occurs within one hundred and

twenty (120) days after the date of authorization; or

     (2) The date payment is made if it occurs more than one hundred and twenty (120) days

after the date of authorization.

     7-16-32. Liability upon wrongful distribution.

     (a) A member or manager who votes for or assents to a distribution in violation of the

operating agreement or of § 7-16-31 is personally liable to the limited-liability company for the

amount of the distribution that exceeds what could have been distributed without violating the

operating agreement or § 7-16-31.

     (b) Each member or manager held liable under subsection (a) for an unlawful distribution

is entitled to contribution:

     (1) From each other member or manager who could be held liable under subsection (a) for

the unlawful distribution; and

     (2) From each member for the amount the member received knowing that the distribution

was made in violation of the operating agreement or § 7-16-31.

     (c) A proceeding under this section is barred unless it is commenced within two (2) years

after the date on which the effect of the distribution is measured under § 7-16-31.

     7-16-33. Right to distribution.

     Unless otherwise provided in the operating agreement, 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 the distribution.

     7-16-34. Nature of membership interest.

     A membership interest is personal property. A member has no interest in specific limited-

liability company property.

     7-16-35. Assignment of membership interest.

     (a) Unless otherwise provided in the articles of organization or a written operating

agreement:

     (1) A membership interest is assignable in whole or in part;

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     (2) An assignment of a membership interest does not of itself dissolve a limited-liability

company or entitle the assignee to participate in the management and affairs of the limited-liability

company or to become a member or to exercise any rights or powers of a member;

     (3) An assignment entitles the assignee to receive, to the extent assigned, only the

distributions to which the assignor would be entitled; and

     (4) A member ceases to be a member and to have the power to exercise any rights or powers

of a member on assignment of all of the member’s membership interest.

     (b) Unless otherwise provided in the articles of organization or an operating agreement, the

pledge of or granting of a security interest, lien or other encumbrance in or against any or all of the

membership interest of a member is not deemed an assignment of a membership interest.

     (c) Unless otherwise provided in the articles of organization or an operating agreement and

except to the extent provided in a written agreement signed by an assignee, until an assignee of a

membership interest becomes a member, the assignee has no liability as a member solely as a result

of the assignment.

     7-16-36. Right of assignee to become a member.

     (a) Except as otherwise provided in a written operating agreement, an assignee of an

interest in a limited-liability company may become a member only if the other members

unanimously consent. The consent of a member may be evidenced in any manner specified in an

operating agreement, but in the absence of specification, consent is evidenced by a written

instrument, dated and signed by the member, or evidenced by a vote taken at a meeting of the

members called in accordance with the operating agreement and maintained with the records of the

limited-liability company.

     (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.

     (c) An assignee who becomes a member is liable for any obligations of the assignor to

make contributions and to return distributions under this chapter.

     (d) Whether or not an assignee of a membership interest becomes a member, the assignor

is not released from the assignor’s liability to the limited-liability company under § 7-16-25 and §

7-16-32.

     7-16-37. Rights of judgment creditor.

     On application to a court of competent jurisdiction by any judgment creditor of a member,

the court may charge the membership interest of the member with payment of the unsatisfied

amount of judgment with interest. To the extent charged, the judgment creditor has only the rights

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of an assignee of the membership interest. This chapter does not deprive any member of the benefit

of any exemption laws applicable to that member’s membership interest.

     7-16-38. Powers of estate of a member.

     (a) If a member who is an individual dies or a court of competent jurisdiction adjudges the

member to be incompetent to manage the member’s person or property, the member’s executor,

administrator, guardian, conservator or other legal representative may exercise all of the member’s

rights for the purpose of settling the estate or administering property, including any power under

the articles of organization or a written operating agreement permitting an assignee to become a

member.

     (b) If a member is a corporation, partnership, limited partnership, domestic or foreign

limited-liability company, trust, estate, association or other entity and is dissolved or terminated,

the powers of that member may be exercised by its legal representative or successor.

     7-16-39. 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 any time specified in the articles of organization;

     (2) An event specified in the articles of organization or a written operating agreement to

cause dissolution;

     (3) By action of members taken pursuant to § 7-16-21(b)(1);

     (4) On the written consent of a majority of the capital values of the remaining members

after the death, withdrawal, expulsion, bankruptcy, or dissolution of a member, or the occurrence

of any other event that terminates the continued membership of a member in the limited-liability

company, unless otherwise provided in the articles of organization or a written operating

agreement;

     (5) Unless otherwise provided in the articles of incorporation or a written operating

agreement, on the death, withdrawal, expulsion, bankruptcy or dissolution of the last remaining

member or any other event that terminates the continued membership of the last remaining member,

unless within ninety (90) days the successor(s) in interest of the last remaining member and any

assignees of the member’s interest and of any other member’s interest agree in writing to admit at

least one (1) member to continue the business of the limited-liability company; or

     (6) Entry of a decree of judicial dissolution under § 7-16-40.

     7-16-40. Judicial dissolution.

     On application by or on behalf of a member, the superior court may decree dissolution of

a limited-liability company whenever it is not reasonably practicable to carry on the business in

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conformity with the articles of organization or operating agreement.

     7-16-41. Revocation of certificate of organization or certificate of registration.

     (a) The certificate of organization or certificate of registration of a limited-liability

company may be revoked by the secretary of state under the conditions prescribed in this section

when it is established that:

     (1) The limited-liability company procured its articles of organization through fraud;

     (2) The limited-liability company has continued to exceed or abuse the authority conferred

upon it by law;

     (3) The limited-liability company has failed to file its annual report within the time required

by this chapter, or with respect to any limited-liability company in good company standing on the

records of the secretary of state on or after July 1, 2019, has failed to pay any required fees to the

secretary of state when they have become due and payable, or the secretary of state has received

notice from the division of taxation, in accordance with § 7-16-67.1, that the limited-liability

company has failed to pay any fees or taxes due this state;

     (4) The limited-liability company has failed for thirty (30) days to appoint and maintain a

resident agent in this state as required by this chapter;

     (5) The limited-liability company has failed, after change of its resident agent, to file in the

office of the secretary of state a statement of the change as required by this chapter;

     (6) The limited-liability company has failed to file in the office of the secretary of state any

amendment to its articles of organization or certificate of registration or any articles of dissolution,

cancellation of registration, merger, or consolidation as prescribed by this chapter; or

     (7) A misrepresentation has been made of any material matter in any application, report,

affidavit, or other document submitted by the limited-liability company pursuant to this chapter.

     (b) No certificate of organization or certificate of registration of a limited-liability company

shall be revoked by the secretary of state unless:

     (1) The secretary of state shall have given the limited-liability company notice thereof not

less than sixty (60) days prior to such revocation by regular mail addressed to the resident agent in

this state on file with the secretary of state’s office, which notice shall specify the basis for the

revocation; provided, however, that if a prior mailing addressed to the address of the resident agent

of the limited-liability company in this state currently on file with the secretary of state’s office has

been returned as undeliverable by the United States Postal Service for any reason, or if the

revocation notice is returned as undeliverable by the United States Postal Service for any reason,

the secretary of state shall give notice as follows:

     (i) To the limited-liability company, domestic or foreign, at its principal office of record as

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shown in its most recent annual report, and no further notice shall be required; or

     (ii) In the case of a limited-liability company that has not yet filed an annual report, then

to the domestic limited-liability company at the principal office in the articles of organization or to

the authorized person listed on the articles of organization, or to the foreign limited-liability

company at the office required to be maintained by the limited-liability company in its state of

organization, and no further notice shall be required; and

     (2) The limited-liability company fails prior to revocation to file the annual report, pay the

fees or taxes, file the required statement of change of resident agent, file the articles of amendment

or amendment to its registration or articles of dissolution, cancellation of registration, merger, or

consolidation, or correct the misrepresentation.

     7-16-42. Issuance of certificates of revocation.

     (a) Upon revoking any such certificate of organization or certificate of registration of the

limited-liability company, the secretary of state shall:

     (1) Issue a certificate of revocation in duplicate;

     (2) File one of the certificates in the secretary of state’s office;

     (3) Send to the limited-liability company by regular mail a certificate of revocation,

addressed to the resident agent of the limited-liability company in this state on file with the secretary

of state’s office; provided, however, that if a prior mailing addressed to the address of the resident

agent of the limited-liability company in this state currently on file with the secretary of state’s

office has been returned to the secretary of state as undeliverable by the United States Postal Service

for any reason, or if the revocation certificate is returned as undeliverable to the secretary of state’s

office by the United States Postal Service for any reason, the secretary of state shall give notice as

follows:

     (i) To the limited-liability company, domestic or foreign, at its principal office of record as

shown in its most recent annual report, and no further notice shall be required; or

     (ii) In the case of a limited-liability company that has not yet filed an annual report, then

to the domestic limited-liability company at the principal office in the articles of organization or to

the authorized person listed on the articles of organization, or to the foreign limited-liability

company at the office required to be maintained by the limited-liability company in its state of

organization, and no further notice shall be required.

     (b) Upon the issuance of the certificate of revocation, the authority of the limited-liability

company to transact business in this state ceases.

     7-16-43. Withdrawal of certificate of revocation.

     (a) Within twenty (20) years after issuing a certificate of revocation as provided in § 7-16-

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42, the secretary of state may withdraw the certificate of revocation and retroactively reinstate the

limited-liability company in good standing as if its certificate of organization or certificate of

registration had not been revoked except as subsequently provided:

     (1) On the filing by the limited-liability company of the documents it had previously failed

to file as set forth in subdivisions (3) — (6) of § 7-16-41(a);

     (2) On the payment by the limited-liability company of a penalty in the amount of fifty

dollars ($50.00) for each year or part of year that has elapsed since the issuance of the certificate

of revocation; and

     (3) Upon the filing by the limited-liability company of a certificate of good standing from

the Rhode Island division of taxation.

     (b) If, as permitted by the provisions of this chapter or chapters 1.2, 6, 12, or 13 of this title,

another limited-liability company, business or nonprofit corporation, registered limited liability

partnership or a limited partnership, or in each case domestic or foreign, authorized and qualified

to transact business in this state, bears or has filed a fictitious business name statement as to or

reserved or registered a name that is the same as, the name of the limited-liability company with

respect to which the certificate of revocation is proposed to be withdrawn, then the secretary of

state shall condition the withdrawal of the certificate of revocation on the reinstated limited-liability

company’s amending its articles of organization or certificate of registration so as to designate a

name that is not the same as its former name.

     7-16-44. Appeal from revocation of certificate of organization.

     (a) Any limited-liability company aggrieved by the action of the secretary of state in

revoking its articles of organization may appeal from the revocation to the superior court by filing

with the clerk of the court a petition setting forth the action of the secretary of state.

     (b) The matter shall be tried de novo by the superior court, which shall either sustain the

action of the secretary of state or direct the secretary of state to take any action that the superior

court deems proper.

     (c) Appeals from all final orders and judgments entered by the superior court under this

section in review of action of the secretary of state may be taken as in other civil actions.

     7-16-45. Winding up.

     (a) Except as otherwise provided in the articles of organization or operating agreement, the

members who have not wrongfully dissolved a limited-liability company may wind up the limited-

liability company’s business and affairs.

     (b) On application by or on behalf of a member, the member’s legal representative or

assignee, the superior court may wind up the limited-liability company’s business and affairs.

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     7-16-46. Distribution of assets.

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

     (1) To creditors, including members who are creditors, to the extent permitted by law, in

satisfaction of liabilities of the limited-liability company other than liabilities for distributions to

members under § 7-16-28 or § 7-16-29;

     (2) Except as provided in the articles of organization or written operating agreement, to

members or former members in satisfaction of liabilities for distributions under § 7-16-28 or § 7-

16-29; and

     (3) Except as provided in the articles of organization or a written operating agreement, to

members and former members first to return their capital values and second in proportions in which

the members share in distributions.

     7-16-47. Articles of dissolution.

     Not later than thirty (30) days following the dissolution and winding up of the limited-

liability company for any cause other than that set forth in § 7-16-39(1), articles of dissolution shall

be filed in the office of the secretary of state and set forth:

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

     (2) The date of filing of the original articles of organization;

     (3) The date of filing of all amendments to the original articles of organization or the most

recent restatement, if any, and all subsequent amendments to the articles of organization;

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

     (5) The effective date, which shall be a date certain, of the dissolution; and

     (6) Any other information or provision, not inconsistent with law, that the members or

authorized person signing the articles of dissolution elect to set forth.

     7-16-48. Law governing foreign limited-liability companies.

     (a) Subject to the constitution of this state:

     (1) The laws of the state or other jurisdiction under which a foreign limited-liability

company is organized govern its organization and internal affairs and the liability of its members;

and

     (2) A foreign limited-liability company may not be denied registration by reason of any

difference between those laws and the laws of this state.

     (b) A foreign limited-liability company holding a valid registration in this state has no

greater rights and privileges than a domestic limited-liability company. The registration shall not

be deemed to authorize the foreign limited-liability company to exercise any of its powers or

conduct any business that a domestic limited-liability company is not permitted by law to exercise

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or conduct in this state.

     7-16-49. Registration of foreign limited-liability company.

     (a) Before transacting business in this state, a foreign limited-liability company shall

register with the secretary of state.

     (b) In order to register, a foreign limited-liability company shall submit to the secretary of

state, in duplicate, an application for registration as a foreign limited-liability company, signed by

a person with authority to do so under the laws of the state or other jurisdiction of its organization

and setting forth:

     (1) The name of the foreign limited-liability company and, if different, the name under

which it proposes to register and transact business in this state;

     (2) The state or other jurisdiction in which the foreign limited-liability company is

organized and date of the foreign limited-liability company’s organization;

     (3) The name and address of the resident agent required by § 7-16-11;

     (4) A statement that the secretary of state is appointed the agent of the foreign limited-

liability company for service of process if at any time there is no resident agent or if the resident

agent cannot be found or served following the exercise of reasonable diligence;

     (5) The address of any office required to be maintained in the state or other jurisdiction of

its organization by the laws of that state or jurisdiction;

     (6) A mailing address for the foreign limited-liability company;

     (7) A statement of whether the limited-liability company is to be managed by its members

or by one or more managers, and if the limited-liability company has managers at the time of its

application, the name and address of each manager;

     (8) Any additional information that may be necessary or appropriate in order to enable the

secretary of state to determine whether the foreign limited-liability company is entitled to transact

business in this state; and

     (9) A statement indicating whether the company has been duly organized in its state of

formation as a low-profit limited-liability company.

     7-16-50. Issuance of registration of foreign limited-liability company.

     If the secretary of state accepts the application for filing under § 7-16-8, the secretary of

state shall issue a certificate of registration to the foreign limited-liability company. Upon the

issuance of a certificate of registration by the secretary of state, the company is authorized to

transact business in this state, subject, however, to the right of this state to suspend or revoke the

authority as provided in this chapter.

     7-16-50.1. Service of process on foreign limited-liability company.

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     (a) The resident agent appointed by a foreign limited-liability company authorized to

transact business in this state is an agent of the limited-liability company upon whom any process,

notice, or demand required or permitted by law to be served upon the corporation may be served.

     (b) Whenever a foreign limited-liability company authorized to transact business in this

state fails to appoint or maintain a resident agent in this state; or whenever any resident agent cannot

with reasonable diligence be found at the registered office; or whenever the certificate of authority

of a foreign limited-liability company is suspended or revoked, the secretary of state is an agent of

the foreign limited-liability company upon whom any process, notice, or demand may be served.

Service on the secretary of state of any process, notice, or demand must be made by delivering to

and leaving with him or her, or with any clerk having charge of the corporation department of his

or her office, duplicate copies of the process, notice, or demand. In the event any process, notice,

or demand is served on the secretary of state, the secretary of state shall immediately forward one

of the copies by registered mail, addressed to the foreign limited-liability company at its principal

office if known to him or her, in the state or country under the laws of which it was organized. Any

service had in this manner on the secretary of state is returnable in not less than thirty (30) days.

     (c) Every foreign limited-liability company as a condition precedent to carrying on

business in this state must, and by so carrying on business in this state does, consent that any

process, including the process of garnishment, may be served upon the secretary of state in the

manner provided by this section, except that notice of the service must be given by the plaintiff or

his or her attorney in the manner as the court in which the action is commenced or pending orders

as affording the corporation reasonable opportunity to defend the action or to learn of the

garnishment. Notwithstanding the preceding requirements, however, once service has been made

on the secretary of state as provided, the court has the authority in the event of failure to comply

with the requirement of notice to the foreign limited-liability company to order notice that is

sufficient to apprise it of the pendency of the action against it, and additionally, may extend the

time for answering by the foreign limited-liability company.

     (d) The secretary of state shall keep a record of all processes, notices, and demands served

upon him or her under this section, and record in the record the time of the service and his or her

action on it. The secretary of state shall not be required to retain such information for a period

longer than five (5) years from receipt of the service of process.

     (e) Nothing contained in these provisions limits or affects the right to serve any process,

notice or demand, required or permitted by law to be served upon a foreign limited-liability

company in any manner now or subsequently permitted by law.

     7-16-51. Name registration by foreign limited-liability company.

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     A foreign limited-liability company may register with the secretary of state under any name

permitted under § 7-16-9, whether or not it is the name under which it is registered in its state or

other jurisdiction of organization.

     7-16-52. Amendments to registration of foreign limited-liability company.

     If any statement in the application for registration of a foreign limited-liability company

was inaccurate when made or a change has occurred, other than a change of mailing address or a

change of the name and/or address of the resident agent, the foreign limited-liability company shall

promptly file in the office of the secretary of state a certificate signed by a person with authority to

do so under the laws of the state or other jurisdiction of its organization correcting the inaccuracy

or indicating the change.

     7-16-52.1. Foreign application for transfer of authority.

     (a) A duly authorized foreign limited-liability company in the state of Rhode Island that

converts into any other form of foreign entity subject to the provisions of title 7 and the resulting

entity is required to file for authority to transact business in this state may apply for a transfer of

authority in the office of the secretary of state by filing:

     (1) An application of transfer of authority that has been executed and filed in accordance

with § 7-16-8;

     (2) An application for authority to transact business in the state of Rhode Island for the

resulting entity type; and

     (3) A certificate of legal existence or good standing issued by the proper officer of the state

or country under the laws of which the resulting entity has been formed.

     (b) The application for transfer of authority shall state:

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

     (2) The type of other entity into which it has been converted; and

     (3) The jurisdiction whose laws govern its internal affairs.

     (c) Upon the effective time and date of the application for transfer of authority, the authority

of the limited-liability company authorized to transact business under this chapter shall be

transferred without interruption to the other entity which shall thereafter hold such authority subject

to the provisions of the Rhode Island general laws which apply to that type of resulting entity.

     7-16-53. Cancellation of registration of foreign limited-liability company.

     A foreign limited-liability company may cancel its registration by filing with the secretary

of state a certificate of cancellation signed by a person with authority to do so under the laws of the

state or other jurisdiction of its organization, or, if the foreign limited-liability company is under

the supervision of a receiver or trustee, by the receiver or trustee on behalf of the foreign limited-

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liability company. In filing a certificate of cancellation, the foreign limited-liability company

revokes the authority of its resident agent to accept service of process 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

subsequently be made on the foreign limited-liability company by service on the secretary of state.

The certificate of cancellation must include the post office address to which the secretary of state

may mail a copy of any process against the foreign limited-liability company that is served on the

secretary of state.

     7-16-54. Transaction of business by foreign limited-liability company without

registration.

     (a) A foreign limited-liability company transacting business in this state may not maintain

any action, suit, or proceeding in any 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 impair

the validity of any contract or act of the foreign limited-liability company or 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, by transacting business in this state without

registration, appoints the secretary of state as its agent for service of process as to claims for relief

or causes of action arising out of the transaction of business in this state.

     (d) A member of a foreign limited-liability company is not liable for the debts and

obligations of the limited-liability company solely by reason of the company’s having transacted

business in this state without a valid certificate of registration.

     (e) Without excluding other activities that may not constitute transacting business in this

state, a foreign limited-liability company is not considered to be transacting business in this state,

for the purposes of this chapter, by reason of carrying on in this state any one or more of the

following activities:

     (1) Maintaining or defending any action or suit or any administrative or arbitration

proceeding or effecting its settlement or the settlement of claims or disputes;

     (2) Holding meetings of its members or carrying on any other activities concerning its

internal affairs;

     (3) Maintaining bank accounts;

     (4) Maintaining offices or agencies for the transfer, exchange and registration of the foreign

limited-liability company’s own securities or maintaining trustees or depositories with respect to

those securities;

     (5) Effecting sales through independent contractors;

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     (6) Soliciting or obtaining orders, whether by mail or through employees or agents or

otherwise, where the orders require acceptance outside this state before becoming binding

contracts;

     (7) Creating as borrower or lender or acquiring evidences of debt, mortgages, security

interests or liens on real or personal property;

     (8) Securing or collecting debts or enforcing any rights in property securing the debts;

     (9) Transacting any business in interstate commerce;

     (10) Conducting an isolated transaction completed within a period of thirty (30) days and

not in the course of a number of repeated transactions of like nature;

     (11) Acting as a general partner of a limited partnership that has filed a certificate of

limited-partnership as provided in § 7-13-8 or has registered with the secretary of state as provided

in § 7-13-49; and

     (12) Acting as a member of a limited-liability company or of a foreign limited-liability

company that has registered with the secretary of state as provided in § 7-16-49.

     7-16-55. Action to restrain foreign limited-liability company.

     The attorney general of this state may maintain an action in the superior court to restrain

any foreign limited-liability company or any of its agents from transacting any business in this state

in violation of this chapter or if the limited-liability company has failed to comply with any section

of this chapter applicable to it or if the limited-liability company has secured a certificate of the

secretary of state under § 7-16-50 on the basis of an inaccurate statement.

     7-16-56. Right of member to bring derivative action.

     A member may bring an action on behalf of the limited-liability company to recover a

judgment in its favor if all of the following conditions are met:

     (1) The member does not have the authority to cause the limited-liability company to sue

in its own right under the provisions of an operating agreement;

     (2) The members or managers with this authority have wrongfully refused to bring the

action or, after adequate time to consider the demand, have failed to respond to the demand or if an

effort to cause those members or managers to bring the action is not likely to succeed;

     (3) The plaintiff:

     (i) Is a member of the limited-liability company at the time of bringing the action; and

     (ii) Was a member of the limited-liability company at the time of the transaction

complained of, or the plaintiff’s status as a member of the limited-liability company subsequently

devolved to the plaintiff pursuant to the terms of the operating agreement from a person who was

a member at that time; and

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     (4) The plaintiff fairly and adequately represents the interests of the members in enforcing

the right of the limited-liability company.

     7-16-57. Pleading in derivative action.

     In a derivative action, the complaint shall set forth with particularity the effort of the

plaintiff to secure initiation of the action by the managers or the members who would otherwise

have the authority to cause the limited-liability company to sue in its own right or why such effort

was not likely to succeed.

     7-16-58. Expenses in derivative action.

     (a) If a derivative action is successful, in whole or in part, or if anything is received by the

plaintiff as a result of a judgment, compromise or settlement of an action or claim, the court may

award the plaintiff reasonable expenses, including legal fees, and shall direct him or her to remit to

the limited-liability company the remainder of those proceeds received by him or her.

     (b) In any action subsequently instituted on behalf of any limited-liability company by a

member or members of the company, the court having jurisdiction, upon final judgment and a

finding that the action was brought without reasonable cause, may require the plaintiff or plaintiffs

to pay to the parties named as defendants the reasonable expenses, including legal fees, incurred

by them in the defense of the action.

     7-16-59. Merger or consolidation.

     Any provision of chapters 1.2 and 13 of this title to the contrary notwithstanding:

     (1) Any one or more domestic or foreign limited-liability companies may merge or

consolidate with or into any one or more domestic or foreign limited-liability companies, limited

partnerships or corporations; and

     (2) Any one or more limited partnerships or corporations may merge or consolidate with

or into any one or more domestic or foreign limited-liability companies.

     7-16-60. Plan of merger or consolidation.

     (a) Each constituent entity shall enter into a written plan of merger or consolidation, which

shall be approved by each domestic constituent entity in accordance with § 7-16-61.

     (b) The plan of merger or consolidation shall set forth:

     (1) The name of each limited-liability company, corporation and limited partnership that is

a constituent entity in the merger or consolidation and the name of the surviving entity into which

each other constituent entity proposes to merge or the new entity into which each constituent entity

proposes to consolidate;

     (2) The terms and conditions of the proposed merger or consolidation;

     (3) The manner and basis of converting the interests in each limited-liability company, the

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shares of stock or other interests in each corporation and the interests in each limited partnership

that is a constituent entity in the merger or consolidation, other than those, in the case of a merger,

held by the surviving entity into interests, shares, or other securities or obligations of the surviving

entity or the new entity, or of any other limited-liability company, corporation, limited partnership,

or other entity, or, in whole or in part, into cash or other property;

     (4) In the case of a merger where the surviving entity is domestic, any amendments to the

articles of organization of a limited-liability company, articles of incorporation of a corporation or

certificate of limited partnership of a limited partnership of the surviving entity that are to be

effected by the merger, or that no changes are desired;

     (5) In the case of a consolidation where the new entity is domestic, all of the statements

required to be set forth in articles of organization of any new entity that is a limited-liability

company, articles of incorporation of any new entity that is a corporation, or certificate of limited

partnership of any new entity that is a limited partnership; and

     (6) Any other provisions relating to the proposed merger or consolidation that are deemed

necessary or desirable.

     7-16-61. Approval of merger or consolidation.

     (a) A proposed plan of merger or consolidation complying with the requirements of § 7-

16-60 shall be approved by the domestic constituent entities in the manner provided by this section:

     (1) A limited-liability company party to a proposed merger or consolidation shall have the

plan of merger or consolidation authorized and approved in the manner and by the vote required

by § 7-16-21;

     (2) A domestic corporation party to a proposed merger or consolidation shall have the plan

of merger or consolidation authorized and approved in the manner and by the vote required by the

laws of this state for mergers of corporations with other corporations;

     (3) A domestic limited partnership party to a proposed merger or consolidation shall have

the plan of merger or consolidation, unless otherwise provided in the limited partnership agreement,

authorized and approved in the manner and by the vote required by the laws of this state for mergers

or consolidations of a domestic limited partnership with other limited partnerships or other business

entities.

     (b) After a merger or consolidation is authorized, unless the plan of merger or consolidation

provides otherwise, and at any time before articles of merger or consolidation are filed under § 7-

16-62, the plan of merger or consolidation may be abandoned, subject to any contractual rights, in

accordance with the procedure set forth in the plan of merger or consolidation or, if none is set

forth, as follows:

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     (1) By the unanimous consent of the members of each limited-liability company that is a

constituent entity, unless the operating agreement of the limited-liability company provides

otherwise;

     (2) By the vote of the board of directors of any corporation that is a constituent entity;

     (3) By the approval of all general partners and all limited partners of any limited partnership

that is a constituent entity unless the limited partnership agreement provides otherwise.

     7-16-62. Articles of merger or consolidation.

     (a) After a plan of merger or consolidation is approved by all domestic constituent entities

as provided in § 7-16-61, the surviving entity or the new entity shall deliver in duplicate to the

secretary of state for filing articles of merger or consolidation duly executed by each constituent

entity setting forth:

     (1) The identity of each constituent entity by name, type and state or other jurisdiction

under whose laws it is organized or formed;

     (2) The plan of merger or consolidation;

     (3) The effective date of the merger or consolidation if later than the date of filing of the

articles of merger or consolidation;

     (4) The identity of the surviving entity or the new entity by name, type and state or other

jurisdiction under whose laws it is organized or formed; and

     (5) A statement that the plan of merger was authorized and approved by each constituent

entity.

     (b) A merger or consolidation takes effect on the later of the effective date of the filing of