The New Jersey Revised Uniform Limited Liability Company Act, also known as the RULLCA, is a statute that governs limited liability companies (LLCs) in New Jersey. In particular, the RULLCA governs the formation and maintaining of LLCs in the state of New Jersey. LLC owners can benefit from having a formal agreement that outlines the rights and obligations of members and managers to protect their business interests. Such contracts may include a partnership agreement, an operating agreement, or a shareholder agreement. If you are an LLC owner in New Jersey, you need to understand how the New Jersey Revised Uniform Limited Liability Company Act can affect you and your company. Consider speaking with a knowledgeable attorney to discuss the impact of the RULLCA on your LLC company. Reach out to our attorneys at The Law Office of Jonathan Fleisher, Esq. for a free consultation. Call 732.360.6409.
What Is the New Jersey Revised Uniform Limited Liability Company Act?
The RULLCA was enacted on March 18, 2013. The enactment of the New Jersey Revised Uniform Limited Liability Company Act was the most significant change to state laws governing limited liability companies.
The RULLCA, which is codified at N.J.S.A. Title 42 Chapter 2C, applies to all LLCs formed after March 18, 2013. The revised act included provisions proposed by the National Conference of Commissioners on Uniform State Laws in 2006. The state law governs limited liability companies in New Jersey, the duties and rights of members, the manner in which LLCs are operated, and how profits are distributed, among other things.
Forming a Limited Liability Company Under RULLCA
The New Jersey Revised Uniform Limited Liability Company Act includes the following requirements for forming LLCs in New Jersey:
- Owners of LLCs must use the Application for Reservation of Name provided by the New Jersey Division of Revenue to reserve a business name.
- An LLC cannot be formed if it uses a name already used by another company registered in the State of New Jersey.
- The owner of an LLC can use a name already in use if they have written consent from the authorized representative of the business whose name is used.
- An LLC can use the name of another company if the name is listed as “inactive.” If the inactive company becomes active again, it will have to register a new name if another company takes its name during its inactivity.
- The name of an LLC must contain the words “LLC” or “Limited Liability Company.”
- A person who has authority to form the LLC must submit a Certification of Formation to the New Jersey Department of Revenue. The Certificate is the main formation document for LLCs in New Jersey. The date the Certificate is filed is considered the formation date of the LLC.
- LLC owners must elect their registered agent when completing the company’s Certificate of Formation. New Jersey law requires every business formed in the state to have registered agents.
- LLCs must file annual reports under the RULLCA. By failing to file an annual report or pay taxes, an LLC may be placed on the list of inactive LLCs. Such reports must contain the name of the company, the name of the registered agent, and certain other information.
If you need assistance with forming an LLC, consider speaking with our attorneys at The Law Office of Jonathan Fleisher, Esq. to ensure that your limited liability company in New Jersey meets the requirements under the RULLCA.
RULLCA Provisions That Affect New Jersey LLCs
The New Jersey Revised Uniform Limited Liability Company Act also contains a variety of provisions that may affect limited liability companies formed or operating in the State of New Jersey. These provisions include:
- Perpetual duration. Limited liability companies formed after March 18, 2013, are presumed to have perpetual duration. Under the previous act, LLCs were set to terminate 30 years from the date of the formation unless otherwise specified in the company’s Certificate of Formation.
- Operating agreements. Unlike the previous LLC law in New Jersey, the RULLCA does not require operating agreements to be written to be valid and effective. Under the RULLCA, operating agreements are effective even if they are oral or implied.
- Member voting rights. Under the RULLCA, all members of an LLC have equal voting rights regardless of their ownership interest in the company. Ordinary matters must be decided by a majority of the members.
- Management. In New Jersey, LLCs can be either manager- or member-managed. If there is no operating agreement, an LLC is automatically deemed member-managed, which means members will make all management decisions.
- Profits/losses allocations. Under the New Jersey Revised Uniform Limited Liability Company Act, all profits and losses of an LLC must be allocated among members on a per capita basis.
- Member rights upon withdrawal. When someone withdraws as a member of an LLC, the member’s management and voting rights will automatically terminate upon withdrawal, while the right to receive distributions will not automatically cease.
- Fiduciary duties. Under the RULLCA, LLC managers owe certain fiduciary duties to members, including a duty of care and a duty of loyalty. However, an operating agreement may restrict or even eliminate certain duties as long as doing so is not unreasonable under the circumstances.
- Member indemnifications. The RULLCA requires LLCs to indemnify and hold harmless company managers, members, agents, and employees under certain circumstances. However, an LLC may be allowed to modify or eliminate some or all of the indemnification obligations in an operating agreement.
- Oppression. The RULLCA provides legal remedies for members who become victims of oppression. Thus, if a member is oppressed by an LLC manager or another member, they may pursue legal remedies. If a member or manager oppressed another member or acted illegally or fraudulently, the court might have authority to dissolve the LLC, appoint a custodian, or order the sale of membership interests, among other remedies.