Does my Operating Agreement Need Updates For Wisconsin’s Restated Limited Liability Company Law?

Jeff Storch | 11.11.24

Wisconsin’s LLC statutes were restated effective January 1, 2023. The restatement may not materially affect existing robust operating agreements, but it did introduce some new terms. If you are looking to amend or restate your LLC’s current operating agreement or are drafting a new one, following are changes to consider:

• The type of management no longer is required to be listed in articles of organization for new LLCs. Instead, the default for LLCs organized under the restated Act is an LLC is member-managed unless the operating agreement provides the company is manager managed.
• Definitions in an operating agreement should be reviewed to track the language of the restated statutes. For example: 
  • The defined term ​“written operating agreement” was introduced, with provisions addressing how a verbal or otherwise ​“unwritten” agreement can exist. When drafting new operating agreements, you may wish to affirmatively state that it is the LLC’s ​“written operating agreement”.
  • The term ​“principal office” has replaced ​“principal place of business”.
  • The statutes use the word ​“money”, so if you have used the word ​“cash” or other equivalent terms, you may want to change those to ​“money” throughout.
  • A new concept of ​“transferrable interest” was introduced to describe a person’s economic interest in the LLC, specifically the right to distributions. Such term could be added throughout where appropriate, in place of any original language describing economic rights (as opposed to membership rights like voting).
  • The default right on dissociation was changed from receiving ​“fair value” of the interest to more generally providing for redemption of the interest, unless the operating agreement changes the default.
  • The statutes regarding the books and records an LLC must keep have been reworked, applying to ​“company information”. There are some substantive differences from before. For example, now an LLC only has to keep at its office copies of the three most recent years of tax returns; before it was four years. (Though you may want to consider keeping all returns at least as long as your tax preparer recommends.)
• Dissolution and winding up provisions also were revised. The operating agreement may want to track the language of the restated statutes.
• The restated Act makes clear there are certain member and manager duties that cannot be completely waived by the operating agreement.
• The restated Act provides that a person can be bound by an operating agreement without actually signing it. Language related to this could be included in the operating agreement.
• The restated Act specifically allows for expulsion of members in certain limited situations. An operating agreement can provide others.

If you have any questions, please reach out to one of the attorneys in Boardman Clark’s Business Practice Group.

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