Modifying provisions related to series limited liability companies.

Session of 2025
HOUSE BILL No. 2355
By Committee on Judiciary
Requested by Representative L. Williams on behalf of the Kansas Chamber
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AN ACT concerning limited liability companies; relating to series limited
liability companies; authorizing a limited liability company and any of
its series to elect to consolidate its operations as a single taxpayer and
elect to be treated as a single business for certain purposes; permitting
operating agreements to impose restrictions, duties and obligations on
members; specifying that wrongful transfer of property with intent to
hinder, delay or defraud creditors or to defraud shall be deemed void;
amending K.S.A. 17-76,143 and repealing the existing section.
Be it enacted by the Legislature of the State of Kansas:
Section 1. K.S.A. 17-76,143 is hereby amended to read as follows:
17-76,143. (a) An operating agreement may establish or provide for the
establishment of one or more designated series of members, managers,
limited liability company interests or assets. If an operating agreement so
provides for the establishment or formation of one or more series, then a
series may be formed by complying with this section. Any such series may
have separate rights, powers or duties with respect to specified property or
obligations of the limited liability company or profits and losses associated
with specified property or obligations, and to the extent provided in the
operating agreement, any such series may have a separate business
purpose or investment objective. A series is formed by the filing of a
certificate of designation in the office of the secretary of state. Other than
pursuant to K.S.A. 17-76,143a, and amendments thereto, a series may not
merge, convert, or consolidate pursuant to any section of the Kansas
revised limited liability company act, the business entity transactions act,
K.S.A. 17-78-101 et seq., and amendments thereto, or any other statute of
this state.
(b) Notice of the limitation on liabilities of a series as referenced in
subsection (c) shall be set forth in the articles of organization of the limited
liability company. Notice in articles of organization of the limitation on
liabilities of a series as referenced in subsection (c) shall be sufficient for
all purposes of this subsection whether or not the limited liability company
has formed any series when such notice is included in the articles of
organization, and there shall be no requirement that any specific series of
the limited liability company be referenced in such notice. The fact that
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articles of organization that contain the foregoing notice of the limitation
on liabilities of a series is on file in the office of the secretary of state shall
constitute notice of such limitation on liabilities of a series.
(c) Notwithstanding anything to the contrary set forth in the Kansas
revised limited liability company act or under other applicable law, in the
event that an operating agreement establishes or provides for the
establishment of one or more series, and if to the extent the records
maintained for any series account for the assets associated with such series
separately from the other assets of the limited liability company, or any
other series thereof, and if the operating agreement so provides, and if
notice of the limitation on liabilities of a series as referenced in this
subsection is set forth in the articles of organization of the limited liability
company and if the limited liability company has filed a certificate of
designation for each series which is to have limited liability under this
section, then the debts, liabilities, obligations and expenses incurred,
contracted for or otherwise existing with respect to such series shall be
enforceable against the assets of such series only, and not against the assets
of the limited liability company generally or any other series thereof, and,
unless otherwise provided in the operating agreement, none of the debts,
liabilities, obligations and expenses incurred, contracted for or otherwise
existing with respect to the limited liability company generally or any
other series thereof shall be enforceable against the assets of such series.
Neither the preceding sentences nor any provision pursuant thereto in an
operating agreement, articles of organization or certificate of designation
shall: Restrict a series or limited liability company on behalf of a series
from agreeing in the operating agreement or otherwise that any or all of
the debts, liabilities, obligations, and expenses incurred, contracted for, or
otherwise existing with respect to the limited liability company generally
or any other series thereof shall be enforceable against the assets of such
series; or restrict a limited liability company from agreeing in the
operating agreement or otherwise that any or all of the debts, liabilities,
obligations, and expenses incurred, contracted for, or otherwise existing
with respect to a series shall be enforceable against the assets of the
limited liability company generally. Assets associated with a series may be
held directly or indirectly, including in the name of such series, in the
name of the limited liability company, through a nominee or otherwise.
Records maintained for a series that reasonably identify its assets,
including by specific listing, category, type, quantity, computational, or
allocational formula or procedure, including a percentage or share of any
asset or assets, or by any other method where the identity of such assets is
objectively determinable, will be deemed to account for the assets
associated with such series separately from the other assets of the limited
liability company, or any other series thereof. As used in the Kansas
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revised limited liability company act, a reference to assets of a series
includes assets associated with such series, a reference to assets associated
with a series includes assets of such series, a reference to members or
managers of a series includes members or managers associated with such
series, and a reference to members or managers associated with a series
includes members or managers of such series. The following shall apply to
a series:
(1) A series may carry on any lawful business, purpose or activity,
whether or not for profit, with the exception of the business of granting
policies of insurance, assuming insurance risks, or banking as defined in
K.S.A. 9-702, and amendments thereto. Unless otherwise provided in an
operating agreement, a series shall have the power and capacity to, in its
own name, contract, hold title to assets, including real, personal, and
intangible property, grant liens and security interests, and sue and be sued
and otherwise conduct business and exercise the power of a limited
liability company under this article. The limited liability company and any
of its series may elect to consolidate its operations as a single taxpayer to
the extent required to file consolidated tax returns as permitted under
applicable law and elect to be treated as a single business for the purposes
of qualification or authorization to do business in this or any other state.
Such elections shall not affect the limitation of liability set forth in this
section except to the extent that the series have specifically accepted joint
liability by contract.
(2) Except as otherwise provided by the Kansas revised limited
liability company act, no member or manager of a series shall be obligated
personally for any debt, obligation or liability of such series, whether
arising in contract, tort or otherwise, solely by reason of being a member
or acting as manager of such series. Notwithstanding the preceding
sentence, under an operating agreement or under another agreement, a
member or manager may agree to be obligated personally for any or all of
the debts, obligations and liabilities of one or more series.
(3) An operating agreement may provide for classes or groups of
members or managers associated with a series having such relative rights,
powers and duties as the operating agreement may provide, and may make
provision for the future creation in the manner provided in the operating
agreement of additional classes or groups of members or managers
associated with such series having such relative rights, powers and duties
as may from time to time be established, including rights, powers and
duties senior to existing classes and groups of members or managers
associated with such series. An operating agreement may provide for the
taking of an action, including the amendment of the operating agreement,
without the vote, consent or approval of any member or manager or class
or group of members or managers, including an action to create under the
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provisions of the operating agreement a class or group of a series of
limited liability company interests that was not previously outstanding. An
operating agreement may provide that any member or class or group of
members associated with a series shall have no voting rights or ability to
otherwise participate in the management or governance of such series, but
any such member or class or group of members are owners of the series.
(4) An operating agreement may grant to all or certain identified
members or managers or a specified class or group of the members or
managers associated with a series the right to vote separately or with all or
any class or group of the members or managers associated with such
series, on any matter. V oting by members or managers associated with a
series may be on a per capita, number, financial interest, class, group or
any other basis.
(5) Unless otherwise provided in an operating agreement, the
management of a series shall be vested in the members associated with
such series in proportion to the then-current percentage or other interest of
members in the profits of such series owned by all of the members
associated with such series, the decision of members owning more than
50% of such percentage or other interest in the profits controlling, except
that if an operating agreement provides for the management of a series, in
whole or in part, by a manager or managers , the management of such
series, to the extent so provided, shall be vested in the manager or
managers who shall be chosen in the manner provided in the operating
agreement. The manager of a series shall also hold the offices and have the
responsibilities accorded to the manager as set forth in an operating
agreement. A series may have more than one manager. Subject to K.S.A.
17-76,105, and amendments thereto, a manager shall cease to be a
manager with respect to a series as provided in an operating agreement.
Except as otherwise provided in an operating agreement, any event under
the Kansas revised limited liability company act or in an operating
agreement that causes a manager to cease to be a manager with respect to a
series shall not, in itself, cause such manager to cease to be a manager of
the limited liability company or with respect to any other series thereof.
(6) Notwithstanding K.S.A. 17-76,109, and amendments thereto, but
subject to subsections (c)(7) and (c)(10), and unless otherwise provided in
an operating agreement, at the time a member of a series becomes entitled
to receive a distribution with respect to such series, the member has the
status of, and is entitled to all remedies available to, a creditor of such
series, with respect to the distribution. An operating agreement may
provide for the establishment of a record date with respect to allocations
and distributions with respect to a series.
(7) Notwithstanding K.S.A. 17-76,110(a), and amendments thereto, a
limited liability company may make a distribution with respect to a series.
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A limited liability company shall not make a distribution with respect to a
series to a member to the extent that at the time of the distribution, after
giving effect to the distribution, all liabilities of such series, other than
liabilities to members on account of their limited liability company
interests with respect to such series and liabilities for which the recourse of
creditors is limited to specified property of such series, exceed the fair
value of the assets associated with such series, except that the fair value of
property of such series that is subject to a liability for which the recourse
of creditors is limited shall be included in the assets associated with such
series only to the extent that the fair value of that property exceeds that
liability. For purposes of the immediately preceding sentence, the term
"distribution" shall not include amounts constituting reasonable
compensation for present or past services or reasonable payments made in
the ordinary course of business pursuant to a bona fide retirement plan or
other benefits program. A member who receives a distribution in violation
of this subsection, and who knew at the time of the distribution that the
distribution violated this subsection, shall be liable to the series for the
amount of the distribution. A member who receives a distribution in
violation of this subsection, and who did not know at the time of the
distribution that the distribution violated this subsection, shall not be liable
for the amount of the distribution. Subject to K.S.A. 17-76,110(c), and
amendments thereto, which shall apply to any distribution made with
respect to a series under this subsection, this subsection shall not affect any
obligation or liability of a member under an agreement or other applicable
law for the amount of a distribution.
(8) Unless otherwise provided in the operating agreement, a member
shall cease to be associated with a series and to have the power to exercise
any rights or powers of a member with respect to such series upon the
assignment of all of the member's limited liability company interest with
respect to such series. Except as otherwise provided in an operating
agreement, any event under the Kansas revised limited liability company
act or an operating agreement that causes a member to cease to be
associated with a series shall not, in itself, cause such member to cease to
be associated with any other series or terminate the continued membership
of a member in the limited liability company or cause the dissolution of
the series, regardless of whether such member was the last remaining
member associated with such series.
(9) Subject to K.S.A. 17-76,116, and amendments thereto, except to
the extent otherwise provided in the operating agreement, a series may be
dissolved and its affairs wound up without causing the dissolution of the
limited liability company. The dissolution of a series shall not affect the
limitation on liabilities of such series provided by this subsection (c). A
series is dissolved and its affairs shall be wound up upon the dissolution of
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the limited liability company under K.S.A. 17-76,116, and amendments
thereto, or otherwise upon the first to occur of the following:
(A) At the time specified in the operating agreement;
(B) upon the happening of events specified in the operating
agreement;
(C) unless otherwise provided in the operating agreement, upon the
vote, consent or approval of members associated with such series who own 2/3 or more of the then-current percentage or other interest in the profits of
such series of the limited liability company owned by all of the members
associated with such series; or
(D) the dissolution of such series under subsection (c)(11).
(10) Notwithstanding K.S.A. 17-76,118(a), and amendments thereto,
unless otherwise provided in the operating agreement, a manager
associated with a series who has not wrongfully dissolved such series or, if
none, the members associated with such series or a person consented to or
approved by the members associated with such series, in either case, by
members who own more than 50% of the then-current percentage or other
interest in the profits of such series owned by all of the members
associated with such series, may wind up the affairs of such series, but the
district court, upon cause shown, may wind up the affairs of a series upon
application of any member or manager associated with such series, or the
member's personal representative or assignee, and in connection therewith,
may appoint a liquidating trustee. The persons winding up the affairs of a
series may, in the name of the limited liability company and for and on
behalf of the limited liability company and such series, take all actions
with respect to such series as are permitted under K.S.A. 17-76,118(b), and
amendments thereto. The persons winding up the affairs of a series shall
provide for the claims and obligations of such series and distribute the
assets of such series as provided in K.S.A. 17-76,119, and amendments
thereto, which section shall apply to the winding up and distribution of
assets of a series. Actions taken in accordance with this subsection shall
not affect the liability of members and shall not impose liability on a
liquidating trustee.
(11) On application by or for a member or manager associated with a
series, the district court may decree dissolution of such series whenever it
is not reasonably practicable to carry on the business of such series in
conformity with an operating agreement.
(12) For all purposes of the laws of the state of Kansas, a series is an
association, regardless of the number of members or managers, if any, of
such series.
(d) In order to form a series of a limited liability company, a
certificate of designation must be filed in accordance with this subsection.
(1) (A) A certificate of designation shall set forth:
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(i) The name of the limited liability company; and
(ii) the name of the series.
(B) A certificate of designation may include any other matter that the
members of such series determine to include therein.
(C) A certificate of designation properly filed with the secretary of
state prior to July 1, 2020, shall be deemed to comply with the
requirements of this paragraph.
(2) A certificate of designation shall be executed in accordance with
K.S.A. 17-7908(b), and amendments thereto, and shall be filed in the
office of the secretary of state in accordance with K.S.A. 17-7910, and
amendments thereto. A certificate of designation is not an amendment to
the articles of organization of the limited liability company.
(3) A certificate of designation may be amended by filing a certificate
of amendment thereto in the office of the secretary of state.
(A) The certificate of amendment shall set forth:
(i) The name of the limited liability company;
(ii) the name of the series; and
(iii) the amendment to the certificate of designation.
(B) A certificate of designation properly filed with the secretary of
state prior to July 1, 2020, that changed a previously filed certificate of
designation shall be deemed to be a certificate of amendment thereto for
purposes of this paragraph.
(4) A manager of a series or, if there is no manager, then any member
of a series who becomes aware that any statement in a certificate of
designation filed with respect to such series was false when made, or that
any matter described therein has changed making the certificate of
designation false in any material respect, shall promptly amend the
certificate of designation.
(5) A certificate of designation may be amended at any time for any
other proper purpose.
(6) Unless otherwise provided in the Kansas revised limited liability
company act or unless a later effective date or time, which shall be a date
or time certain, is provided for in the certificate of amendment, a
certificate of amendment shall be effective at the time of its filing with the
secretary of state.
(7) A certificate of designation shall be canceled upon the
cancellation of the articles of organization of the limited liability company
named in the certificate of designation, or upon the filing of a certificate of
cancellation of the certificate of designation, or upon the future effective
date or time of a certificate of cancellation of the certificate of designation,
or as provided in K.S.A. 17-76,139(d), and amendments thereto, or upon
the filing of a certificate of merger or consolidation if the series is not the
surviving or resulting series in a merger or consolidation or upon the future
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effective date or time of a certificate of merger or consolidation if the
series is not the surviving or resulting series in a merger or consolidation.
A certificate of cancellation of the certificate of designation may be filed at
any time, and shall be filed, in the office of the secretary of state to
accomplish the cancellation of a certificate of designation upon the
dissolution of a series for which a certificate of designation was filed and
completion of the winding up of such series.
(A) A certificate of cancellation of the certificate of designation shall
set forth:
(i) The name of the limited liability company;
(ii) the name of the series;
(iii) the future effective date or time, which shall be a date or time
certain, of cancellation if it is not to be effective upon the filing of the
certificate of cancellation; and
(iv) any other information the person filing the certificate of
cancellation of the certificate of designation determines.
(B) A certificate of designation properly filed with the secretary of
state prior to July 1, 2020, that dissolved a series shall be deemed to be a
certificate of cancellation thereto for purposes of this paragraph.
(8) A certificate of cancellation of the certificate of designation that is
filed in the office of the secretary of state prior to the dissolution or the
completion of winding up of a series may be corrected as an erroneously
executed certificate of cancellation of the certificate of designation by
filing with the office of the secretary of state a certificate of correction of
such certificate of cancellation of the certificate of designation in
accordance with K.S.A. 17-7912, and amendments thereto.
(9) The secretary of state shall not issue a certificate of good standing
with respect to a series if the certificate of designation is canceled or the
limited liability company has ceased to be in good standing.
(e) The name of each series as set forth in its certificate of
designation:
(1) Shall include the name of the limited liability company, including
any word, abbreviation or designation required by K.S.A. 17-7920, and
amendments thereto;
(2) may contain the name of a member or manager;
(3) must comply with the requirements of K.S.A. 17-7918, and
amendments thereto, to the same extent as a covered entity; and
(4) may contain any word permitted by K.S.A. 17-7920, and
amendments thereto, and may not contain any word prohibited to be
included in the name of a limited liability company under Kansas law.
(f) If a foreign limited liability company that is registered to do
business in this state in accordance with K.S.A. 17-7931, and amendments
thereto, is governed by an operating agreement that establishes or provides
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for the establishment of a series of members, managers, limited liability
company interests or assets having separate rights, powers or duties with
respect to specified property or obligations of the foreign limited liability
company or profits and losses associated with specified property or
obligations, that fact shall be so stated on the application for registration as
a foreign limited liability company. In addition, the foreign limited liability
company shall state on such application whether the debts, liabilities and
obligations incurred, contracted for or otherwise existing with respect to a
particular series, if any, are enforceable against the assets of such series
only, and not against the assets of the foreign limited liability company
generally or any other series thereof, and whether any of the debts,
liabilities, obligations and expenses incurred, contracted for or otherwise
existing with respect to the foreign limited liability company generally or
any other series thereof shall be enforceable against the assets of such
series.
(g) An operating agreement may impose restrictions, duties and
obligations on members of the limited liability company or any series
thereof as a manner of internal governance, including, without limitation,
those with regard to:
(1) Choice of law, forum selection or consent to personal
jurisdiction;
(2) capital contributions;
(3) restrictions on, or terms and conditions of, the transfer of
membership interests;
(4) restrictive covenants, including noncompetition, nonsolicitation
and confidentiality provisions;
(5) fiduciary duties; and
(6) restrictions, duties or obligations to or for the benefit of the
limited liability company, other series thereof or their affiliates.
(h) The wrongful transfer of property from a series to another series
or the limited liability company as a whole with intent to hinder, delay or
defraud creditors of their just and lawful debts or damages, or to defraud
shall be subject to K.S.A. 33-102, and amendments thereto.
Sec. 2. K.S.A. 17-76,143 is hereby repealed.
Sec. 3. This act shall take effect and be in force from and after its
publication in the statute book.
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