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Dunn Lambert, LLC

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In New Jersey And New York call
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Dunn Lambert, LLC

Comprehensive Legal Services For Businesses

In New Jersey And New York call
201-957-0874

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  4.  » The New Jersey Revised Uniform Limited Liability Company Act (RULLCA)

The New Jersey Revised Uniform Limited Liability Company Act (RULLCA) becomes effective on March 1, 2014 for every New Jersey Limited Liability Company (LLC)

Members of a New Jersey LLC should adopt a written operating agreement in order to avoid unwanted application of the default provisions under RULLCA, such as:

  • All distributions (both regular distributions and liquidating distributions) must be in equal shares among members (per capita);
  • The vote required in order for members to take action is either a majority or unanimous vote, depending on the matter, with one vote per member (per capita);
  • Unless a written operating agreement provides otherwise, members of a member-managed LLC owe a duty of loyalty to the LLC and to the other members; and
  • A member may withdraw at any time and continue to be entitled to receive distributions as a dissociated member.

A written operating agreement may be adopted by the members to address the potentially unintended application of the default provisions. For example, the written operating agreement may:

  • Base distributions on the agreed value of each member’s membership interest or capital contribution to the LLC, instead of per capita;
  • Tailor the voting requirements for different matters to fit the members’ needs, including requiring votes based on members’ membership interest percentages and not per capita;
  • Eliminate or restrict a member’s duty of loyalty as needed; and
  • Tailor the terms and conditions under which a member may withdraw from the LLC and the consequences of withdrawal.