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Ohio Modernizes and Improves its Laws Governing Limited Liability Companies

Client Alert

Effective Feb. 11, 2022, the Ohio Revised Limited Liability Company Act (“Revised Act”) now governs all limited liability companies formed under Ohio law. The law updates and replaces the existing LLC Act and has important implications for business owners in Ohio. Passage of the Revised Act makes Ohio one of only 16 states that permits the formation of “Series” LLCs. The legislation is intended to be one of the most progressive LLC acts in the country, but retains the terminology used in Ohio’s current LLC act. A summary of important changes is provided below.

Governance of Ohio LLCs

The Revised Act grants LLC members more control over conducting the LLC’s affairs. The Revised Act eliminates the distinction between member-managed and manager-managed LLCs and allows members of an LLC to organize their business as they see fit. The LLC’s governance structure may be set forth in the operating agreement or by decision of the members in accordance with the operating agreement. Under the Revised Act, LLCs may implement a structure similar to for-profit corporation governance, such as a board of directors.

‘Series’ LLCs Permitted in the Revised Act

The Revised Act makes asset protection simpler and more flexible for Ohio investors. The Revised Act reduces shared liability among multiple properties or assets because of its acceptance of Series LLCs. A Series LLC creates one “parent” LLC and several "children" sub-LLCs among which to split assets. Practically, if one of the sub-series LLCs gets sued, the assets held by the other children sub-LLCs and the parent LLC are shielded from any shared liability. While investors obtain the same asset protection that comes with using multiple, traditional LLCs, in a Series LLC model, only one parent LLC is opened. Assets owned by one Series are shielded from the risk of liability of others within the same Series LLC. 

Practically, a Series LLC structure is useful in a limited set of circumstances.  Real estate investors are primary users of Series LLCs because of the ease and applicability of Series LLCs to investment property portfolios. Rather than creating multiple companies to own investment property, each Series LLC adds inherent investment protection by isolating one property from the others.

Cancellation for Failure to Maintain Statutory Agent

The Revised Act also imposes statutory penalties on LLCs that fail to maintain (or fail to update) their statutory agent’s name and address. The Revised Act directs the Secretary of State to cancel an LLC’s registration, after providing the LLC with notice and a 30-day opportunity to cure. The Revised Act provides for the ability to reinstate a cancelled LLC by submitting the appropriate form and paying a fee.

Cost and Tax Benefits

The Revised Act has strong cost and tax benefits, too. For example, investors will pay fewer registration fees for multiple LLCs when using the Series LLC model. Additionally, only one federal employer identification number is needed for a Series LLC and each sub-series is listed on one singular tax return.

The incorporation of Series LLCs into state law represents a noteworthy change in the law pertaining to limited liability companies in Ohio. To ensure compliance with the Revised Act, to examine how the Series LLC may benefit your business, or for strategic planning for your business, contact Brandon Pauley, btpauley@bmdllc.com or 614-246-7510 or any member of the BMD Business Law team.


“In for a Penny, in for a Pound” is No Longer the Case for Florida Lawyers

On April 1, 2024, newly adopted Rule 1.041 to the Florida Rules of Civil Procedures goes into effect which creates a procedure for an attorney to appear in a limited manner in civil proceedings.  Currently, when a Florida attorney appears in a civil proceeding, he or she is reasonable for handling all aspects of the case for their client.  This new rule authorizes an attorney to file a notice limiting the attorney’s appearance to particular proceedings or specified matters prior to any appearance before the court.  For example, an attorney can now appear for the limited purpose of filing and arguing a motion to dismiss.  Once the motion to dismiss is heard by the court, the attorney may file a notice of termination of limited appearance and will have no further obligations in the case.

Enhancing Privacy Protections for Substance Use Disorder Patient Records

On February 8, 2024, the U.S. Department of Health and Human Services (“HHS”) finalized updated rules to 42 CFR Part 2 (“Part 2”) for the protection of Substance Use Disorder (“SUD”) patient records. The updated rules reflect the requirement that the Part 2 rules be more closely aligned with the Health Insurance Portability and Accountability Act of 1996 (“HIPAA”) privacy, breach notification, and enforcement rules as mandated by the Coronavirus Aid, Relief, and Economic Security Act of 2020.

Columbus, Ohio Ordinance Prohibits Employers from Inquiries into an Applicant’s Salary History

Effective March 1, 2024, Columbus employers are prohibited from inquiring into an applicant’s salary history. Specifically, the ordinance provides that it is an unlawful discriminatory practice to:

The Ohio Chemical Dependency Professionals Board’s Latest Batch of Rules: What Providers Should Know

The Ohio Chemical Dependency Professionals Board has introduced new rules and amendments, covering various aspects such as CDCA certificate requirements, expanded services for LCDCs and CDCAs, remote supervision, and reciprocity application requirements. Notable changes include revised criteria for obtaining a CDCA certification, expanded services for LCDCs and CDCAs, and updated ethical obligations for licensees and certificate holders, including non-discrimination, confidentiality, and anti-sexual harassment measures.

Governor Mike DeWine and The Ohio State University Introduce the SOAR Study on Ohio Mental Illness

On January 19, Ohio Gov. Mike DeWine and The Ohio State University announced a new research initiative, the State of Ohio Adversity and Resilience (“SOAR”) study, which will investigate all factors influencing Ohio’s mental illness and addiction epidemic.