BizLawBuz …. The Power of Know

While the changes are mainly technical in nature, some are substantive and worth noting. Changes to the Michigan Limited Liability Company Act (”LLCA”) took effect on December 16, 2010.

The LLCA now:

• Enables corporations to easily convert into limited liability companies (”LLCs”) and vice versa. This represents one of the most important changes to the LLCA. Prior to the amendment, it was necessary to go through a formal merger of a corporation and an LLC to make the conversion. There are several reasons, such as tax implications and corporate governance, that may make it desirable to change the form of an existing business entity, and this process will make such a change much simpler.
• Clarifies how a person is admitted to an LLC as a member. Previously, the LLCA indicated that a person could only become a member of an LLC at the time of formation if the person signed the initial operating agreement, but LLCs are not required to have operating agreements. Now, a person will be admitted as a member if he or she signs an operating agreement, or if the person’s status as a member is reflected in the LLC’s records. Additionally, a person can be admitted by the other members in any other writing.
• Provides processes and guidelines for the approval of transactions with interested managers or agents (i.e., the transaction was fair, material facts of transaction were disclosed, and disinterested managers/members approved the transaction);
• Explicitly authorizes LLCs to provide broad indemnification of members, managers, and others, subject to some exceptions. The former LLCA seemed to some to only permit indemnification of managers, not members and agents.
• Explicitly authorizes LLCs to purchase errors and omissions (D&O) insurance for members, managers, and others. Like indemnification matters discussed above, the former LLCA was interpreted to prohibit LLCs from purchasing errors and omissions insurance on behalf of any person other than a manager.
• Limits the rights of an LLC member’s creditor. As a result of the amendments, a creditor cannot take the member’s membership interest in the LLC and either sell it or become a member itself; creditors receive only a charging order and the right to distributions that would be payable to the member. Under the prior version of the LLCA, creditors were attempting to go beyond attaching the economic rights of their debtors and attempting to participate in management of the LLC or sell the membership interest.
• Clarifies that members and managers of LLCs may be entities rather than natural persons.

For additional information regarding changes to the LLCA and how they affect your business, please contact an attorney at Wright Penning & Beamer.

Julie Pfitzenmaier

While cell phones and smart phones are a tremendous convenience, and, in some cases, a necessity, they come with an ever widening array of devices, capabilities, charges and service contracts. Ever try canceling a service contract early in order to take advantage of the latest-greatest plan offered by a competitor? While possible, the early termination fees are substantial. What happens, then, when members of our military are transferred or deployed overseas, to areas where their cell phones and smart phones are worthless? While most of us have probably never even thought of this, those who serve in our military have. Until now, their only choice was to continue to pay for service they couldn’t use for the unexpired term of the service contract, or pay the high, early termination fees charged by the service provider. At a minimum, service members facing transfer or deployment often found themselves having to deal with this trivial detail at a time when far more important matters needed to be attended to, and often from remote and obscure locations.

Early Christmas present from the Michigan legislature
This past December 9, 2010, the brave men and women of Michigan who serve in our nation’s armed forces received an early Christmas present from the Michigan legislature in the form of the “Military Personnel Wireless Contract Act.” The Act allows service members who are transferred or deployed overseas to terminate their wireless telecommunications service contracts without incurring early termination fees and penalties.

Key provisions of the Act are as follows:

1. The Act applies to active duty members of the US armed forces, the reserve, or the Michigan National Guard.
2. The Act applies in situations where the service member is transferred or deployed overseas, on active duty, for a period of 179 days or more, to an area where the service member’s existing wireless service provider does not offer facilities-based wireless service.
3. The Act allows the service member, or his or her spouse, to terminate the service contract, if: (i.) the service member is a party to the contract; (ii.) the contract was entered into on or after December 9, 2010; (iii.) the contract was entered into before the service member was transferred or deployed overseas; and (iv.) the contract does not involve service to a wireless telecommunications device installed in a motor vehicle.
4. Termination of the contract is effective upon the service member, or his or her spouse, providing the service provider with: (i.) written notice, sent by certified mail, stating the service member’s intention to terminate the contract; (ii.) a copy of the service member’s orders transferring or deploying him or her overseas; and (iii.) the service member returning to the service provider any equipment acquired from the service provider and not owned by the service member, within thirty (30) days of the notice.
5. The service member remains responsible for all fees up to the date of termination and the Act does not apply to prepaid wireless telecommunications services.
6. Upon the service member’s compliance with the Act, the service provider may not impose an early termination charge.
7. Service providers who disregard the Act face civil action by the state attorney general and fines up to $2,000 per violation. Money recovered by way of fines will go to the Michigan, Military Family Relief Fund.

The full text of the Act can be found in Michigan Compiled Laws, Sections 484.1901 to 1907

Duane L. Reynolds

There is good news in Michigan for those of us who are less-than-exemplary drivers! A new law gives drivers who are cited for moving violations a chance to keep the corresponding points off their driving records. If a driver who has committed a moving violation successfully completes a basic driver improvement course within 60 days after receiving a notice of eligibility from the secretary of state, no points will be posted to that individual’s driving record. Further, the state will not disclose any information relating to the violation to the driver’s insurance company.

The opportunity to attend a driver improvement course will not be made available, however, to just any hapless driver who gets a ticket.

Drivers will be ineligible for the course if any number of factors apply, including the following:

1. The driver is licensed as a commercial driver or was driving a commercial vehicle.
2. The violation is a criminal offense.
3. The driver is issued more than one ticket arising from the same incident.
4. The driver’s license is suspended as a result of the incident.
5. The driver previously completed a basic driver improvement course.
6. The driver is unlicensed or has a license that is is restricted or suspended.
7. The driver has three or more points on his or her driving record.

Changing driver behavior
The thinking behind the new law is that fines and increased insurance rates aren’t enough to change driver behavior. The hope is that, over time, the addition of the driver improvement course will change driver behavior, which in turn will result in measurably fewer collisions and moving violations.

May all your excursions be safe ones in this new year!

Lee Flaherty