Every year, up to seven times as many limited liability companies are being formed in Connecticut, compared with corporations.

However, the state’s rules regarding LLCs haven’t kept pace with the times—yet.

Under the national Uniform Limited Liability Company Act, states must adopt a set of rules providing consistency in the regulation, formation, and dissolution of limited liability companies.

This week the House and Senate overwhelmingly passed HB 5259, which updates the state’s Limited Liability Company Act consistent with the ULLCA.

It awaits Governor Dannel Malloy's signature.

Connecticut’s rules haven’t been updated since 1993, when LLCs were a new kind of business entity.

Since then, the law surrounding LLCs and the rights and obligations of LLC members has changed and advanced to a great degree, making the state’s law somewhat antiquated.

The ULLCA is more comprehensive, well-written, and modern than our current LLC act and represents a significant advancement in this area of law.

HB 5259 clarifies the rights and obligations of LLCs while adopting a more user-friendly format and language that is accessible to entrepreneurs.
Adopting the ULLCA through HB 5259 streamlines administration and in turn reduces costs and provides decisive, predictable consistency across jurisdictions.

HB 5259 clarifies the rights and obligations of LLC members while adopting a more user-friendly format and language that is accessible to entrepreneurs.

Similar to the present LLC act, the new act will operate as a set of default rules for LLCs formed without the aid of counsel and without a written operating agreement.

In addition, adoption of the bill will enable our courts to benefit from the experience of courts in other uniform jurisdictions.

HB 5259 is more comprehensive and provides a clearer set of default rules which will apply when a LLC does not have a written agreement.

The bill provides a centralized operating agreement provision, establishes clear default rules for the internal governance of an LLC, and changes the way in which a member or manager can bind an LLC based on his or her actions.

It also will keep Connecticut competitive in the area of business formations.

By adopting HB 5259, Connecticut state lawmakers send a message that we are promoting a pro-business climate.


For more information, contact CBIA’s Louise DiCocco (203.589.6515) | @LouiseDiCocco