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OHIO ADOPTS THE SERIES LLC: Implementation of Ohio’s Revised Limited Liability Company Act is Coming

Client Alert

On January 7, 2021, Ohio adopted S.B. 276. The new legislation establishes the Ohio Revised Limited Liability Company Act (“ORLLCA”), which effectively replaces the current Ohio LLC Act. ORLLCA will be fully effective as of January 2022. While the new law contains numerous changes to the existing LLC landscape, below is an overview of some of the key differences under the ORLLCA.

Series LLCs

The ORLLCA now makes Ohio one of only 16 states that permit the formation of “series LLCs.” The significant advantages of series LLCs are their flexibility and simplicity. They allow a single entity to own multiple “series” of assets, each of which are shielded from liability. Real estate investors are prime users of series LLC’s. Rather than creating multiple companies to own investment property, each series within a single LLC isolates one property from the rest thereby adding protection for the investor.

Under the ORLLCA, an LLCs operating agreement may establish or provide for one or more designated series of assets that has one or more members and may include:

  • Separate rights, powers, obligations or duties with respect to specific property within each of the series;
  • Separate rights concerning profits and losses associated with each series; and
  • A separate purpose or investment objective for each series within the LLC.

Each series formation has a separate operating agreement and is authorized by the articles of organization. The articles of organization only require a simple statement that the LLC may have one or more series of assets.

Series LLCs also enjoy cost and tax advantages. Standard LLC formation requires registration fees for each LLC created. Series LLC registration fees are only charged for the master LLC, and each series created thereafter do not have an associated fee. There is also only one tax identification number (EIN), and all the series are listed on only one tax return. This cuts down on time for tax preparation. In addition, and subject to certain criteria, series LLCs have the potential to avoid Ohio’s commercial activity tax, which is imposed on taxable gross receipts in excess of $150,000.

Management Structure Flexibility

The ORLLCA provides more flexibility in LLC management structures. The current LLC Act requires an LLC to either be member-managed or manager-managed. Default rules in the current LLC Act provide baseline authority of either the member or manager to perform certain actions, which can be modified through an operating agreement. Under the ORLLCA, the distinction between member-managed and manager-managed LLC’s has been eliminated; a person’s ability to act as an agent of the LLC now comes from authorization outlined in the operating agreement, decisions of the members as provided for in the operating agreement, the filing of a “Statement of Authority” with the Secretary of State, or from the default rules contained in the ORLLCA. This new feature of the ORLLCA provides more flexibility for LLC management, allowing each LLC to use a management structure that works best for its unique needs.

Statutory Penalty

There will now be a penalty for not maintaining a statutory agent and/or up-to-date contact information with the Ohio Secretary of State. Under the existing LLC Act, there is no statutory penalty for an LLC that fails to maintain a statutory agent. Under the ORLLCA, the Secretary of State will be required to cancel an LLC that fails to maintain a statutory agent, though the LLC may be reinstated upon the appointment of a new agent and the payment of additional fees. This is particularly important as the cancellation of an LLC may open its members up to personal liability. Under the new ORLLCA regime, it is of paramount importance to appoint a statutory agent and maintain accurate contact information.

The ORLLCA represents a significant shift in the law as it pertains to limited liability companies in Ohio. As the implementation of the new law approaches, businesses operating as LLCs should examine their current operating agreement to make sure its provisions comply with the ORLLCA. To undertake such a review or examine how the series LLC may benefit your business, please contact your BMD attorney, or Blake Gerney at Brgerney@bmdllc.com, S. Matthew Harris at Msharris@bmdllc.com, or Kevin Burwell at Kdburwell@bmdllc.com.


Valley National Bank/Trulieve Loan: A Big Step Out of the Shadows

In a late December press release, Trulieve announced that it had secured a $71.5 million commercial bank loan. In addition to the amount of the loan, which may be the largest commercial bank loan to date to a cannabis company, the release prominently identified Valley Bank and featured both a quote from Valley’s Senior Vice President, John Myers, and a description of the Bank’s service platform and commitment to the cannabis industry.

The End of Non-Competes? The Impact It Will Have on the Healthcare Industry

On January 5, 2023, the Federal Trade Commission (“FTC”) announced a proposed rule that, if enacted, will ban employers from entering into non-compete clauses with workers (the “Rule”), and the Rule would void existing non-compete agreements. In their Notice, the FTC stated that if the Rule were to go into effect, they estimate the overall earnings of employees in the United States could increase by $250 billion to $296 billion per year. The Rule would also require employers to rescind non-competes that they had already entered into with their workers. For purposes of the Rule, the FTC has defined “worker” to also include any employees, interns, volunteers, and contractors.”

2022 Healthcare Recap and 2023 Healthcare Check-Up

As the country begins to return to a new “normal” following the COVID-19 pandemic, there are many healthcare rules changing on both the federal and state levels as a result. Thus, it is important for healthcare providers and their employers to be aware of these changing rules, and any implications they may have on their practice. Look back on healthcare in 2022 and find a checklist for 2023.

Direct Support Professional Retention Payments

On December 15, the Ohio Senate and House passed House Bill 45, which authorizes the Department of Developmental Disabilities (DODD), in conjunction with the county boards of developmental disabilities, to launch their initiative to issue retention payments to Direct Support Professionals (DSPs). These retention payments will be distributed quarterly to participating home and community-based waiver providers to address the workforce crisis in the direct provider sector. Governor DeWine needs to sign the Bill to begin the payments, but he is expected to do so by the end of 2022.

Real Estate Investors Position for 2023 Opportunities

Real estate investors weathered another year in a post-pandemic world, with the year closing with yet another interest rate increase coupled with both uncertainty and heightened interest carrying into 2023. Just last Wednesday, the Federal Reserve raised its benchmark interest rate 0.50 percentage points, shifting the target range to 4.25% to 4.50%. The new level is the highest the fed funds rate has been since December 2007 and marks the seventh rate hike this year. So what does this mean to investors, brokers, lenders, and others in the real estate world? Read a few perspectives below from stakeholders familiar with our BMD clients and the markets in which they do business.