United States: The 2017 Amendments To Kentucky's Business Entity Statutes

Kentucky did not see significant changes to its business entity laws in 2017, but it did see a series of changes that incrementally addressed existing ambiguities, provided additional clarity, and created additional capabilities. Specifically, one bill addressed a number of technical points across the range of business entity statutes,1 while a second bill effected amendments to the Kentucky Business Corporation Act to provide for public benefit corporations.2 This article will review these developments in the same order, concluding with a few observations as to other bills of interests. Both of these bills became effective on June 29, 2017.3

VENUE FOR UNINCORPORATED ENTITIES

Kentucky has long had a statute providing, inter alia, that a corporation is subject to venue in the county in which it maintains its registered office.4 There was not, however, similar clarity with respect to unincorporated business organizations. An argument could be made that the statute governing venue for corporations extended to LLCs and other business forms that are not incorporated,5 but the application is less than obvious. A new provision addresses that lacuna, providing that unincorporated business organizations required to maintain a registered agent and officer are subject to venue in the county in which the registered officer is maintained.6

Across all of the charging order statutes, parallel amendments have been made in order to address aspects of this often misunderstood remedy.7

The respective charging order statutes8 provide, in order to satisfy a judgment, that a charging order may be issued with respect to a member's or partner's interest in the LLC, partnership, etc. However, when one parses the statute, it becomes clear that "limited liability company," "partnership," etc. refers to a domestic organization, i.e., one organized in Kentucky.9 There then arises the question as to whether a Kentucky court may apply any of the charging order statutes to issue a charging order with respect to an interest in a partnership or LLC organized outside of Kentucky. If the answer to that question is "no," what then would be the remedy that a Kentucky court could issue with respect to an interest in a foreign partnership or LLC?

This question is exactly the problem addressed by the Heather Apartments decision.10 Andrew Grossman was the judgment-debtor to Fannie Mae.11 Grossman alleged he could not satisfy the judgment because his funds were invested in an LLC, and further argued that the only remedy Fannie Mae was entitled to vis-à-vis his interest in that LLC was a charging order.12 That LLC was organized in the Cook Islands.13 The Heather Apartments court determined that the "sole and exclusive remedy" language of the Minnesota LLC Act's charging order provision14 did not apply vis-à-vis a foreign (i.e., non-Minnesota) LLC.15

Finally, Grossman argues that Fannie Mae's only remedy is to obtain a charging order under Minn. Stat. § 322B.32 (2012). But this argument fails because that statute only applies to Minnesota limited liability companies. Chapter 322B defines a "limited liability company" as "a limited liability company, other than a foreign limited liability company, organized or governed by this chapter." Minn. Stat. § 322B.03, subd. 28 (2012). Because LSPG Shoreline was organized in, and is governed by, the laws of the Cook Islands, chapter 322B does not apply.16

Amendments made to Kentucky's various charging order statutes reject the Heather Apartments analysis and provide that a Kentucky court may issue a charging order with respect to the partnership or LLC interest in a foreign organized partnership or LLC.17 As such, it is clear that if the judgment-debtor is subject to the jurisdiction of a Kentucky court, irrespective of where the LLC or partnerships might be organized,18 a Kentucky court has the capacity to issue a charging order against the judgment-debtor's interest therein.19

The second change made across the various charging order statutes addresses the situation of a member's breach of the operating agreement or other conduct giving rise to a claim for monetary damages in favor of the partnership or LLC against the partner or member. On similar facts, certain courts have accepted the argument that the partner's or member's liability to the partnership or LLC may be satisfied only by means of a charging order. The addition made to the Kentucky statutes precludes that result. The problem here addressed is exemplified by Kaufman v. HLK, LLC.20 Therein, Kaufman defaulted on his obligation to make the capital contribution called for by the operating agreement.21 While Hawley, the other member, asserted that Kaufman was not a member, the court found that not to be the case.22 Rather, Kaufman was a member, and the LLC was entitled to offset his default against the amounts he would receive upon liquidation.23 A prior order had held that the charging order against Kaufman was the sole means by which a judgment on the default could be collected.24 Under this reasoning, the injured LLC was restricted in its recovery to the judgment-debtor's anticipated distributions from the LLC. In effect, the judgment was nonrecourse to the judgment-debtor's interest in the venture save and except to the extent that the LLC should ever make a distribution. If and to the extent distributions were not made, the LLC was deprived of any effective remedy. In addition, the LLC effectively became the financing vehicle for satisfaction of the judgment. To avoid this and similar results, an addition made across the charging order statutes makes clear that this is not the proper analysis and that to the extent a partner or member is the judgment-debtor of the venture, the venture may collect against all assets of the judgment-debtor, not only the stream of distributions from the venture.25

DERIVATIVE ACTIONS

Technical amendments, each of a conforming nature without any change to the underlying law, have been made to the derivative action provisions of the Kentucky Uniform Limited Partnership Act (2006), the LLC Act, and the Kentucky Uniform Statutory Trust Act. The rules governing derivative actions26 have required that the plaintiff, acting on behalf of the business organization, through the pendency of the action remain an equity participant in the venture.27 In certain instances, this requirement has been expressly set forth in the statute.28 In other instances, it has been applied notwithstanding the absence of a statute to that effect.29 For the avoidance of doubt as to the existence of this requirement in the context of a limited partnership, LLC, and statutory trust, the continuous ownership requirement has been added to those statutes.30

DEFINITIONS

The definition of an "Entity" as utilizing the Kentucky Business Entity Filing Act31 has been expanded to include both the Limited Cooperative Association and the Unincorporated Nonprofit Association.32 Corresponding revisions have been made to the definition of a "Foreign entity."33 A new defined term has also been added for "Foreign Unincorporated Nonprofit Association."34 In parallel, a defined term for "Unincorporated Nonprofit Association" has been added.35 Additionally, the definition of "Registered office," was revised to make express that the registered office address must be a street address.36

UNINCORPORATED NONPROFIT ASSOCIATIONS

Three small additions have been made to the statute with respect to Unincorporated Nonprofit Associations.37 First, the $15.00 filing fee for the filing of the Certificate of Association is made express;38 this is the same fee that was previously set pursuant to the "any other filing" category.39 Second, with respect to the annual report filed by an Unincorporated Nonprofit Association, it must set forth the name and business address of each manager thereof.40

The revision to the Unincorporated Nonprofit Association Act proper is in the nature of a "belt and suspenders." The default rule is that the participants in an Unincorporated Nonprofit Association are jointly and severally liable for its debts and obligations.41 The Act provides that the association's members may enjoy limited liability by filing a certificate of association.42 Assuming no Certificate of Association is in place and that a judgment has been issued against the association, KRS § 273A.040 details when the judgment may and may not be enforced against a member's assets. The addition made to the statute makes express that KRS § 273A.040 is without application if the members enjoy limited liability consequent to the filing of a Certificate of Association.43

THE BUSINESS CORPORATION ACT

Two changes made to the Business Corporation Act both relate to advancement or indemnification. The first change deletes KRS § 271B.8-530(1)(a).44 This provision, which applied to advancement of expenses, previously required that the director furnish to the corporation a "written affirmation of his good faith belief that he has met the standard of conduct described in KRS 271B.8- 510."45 In that no director would ever state that they are not able to deliver the affirmation or otherwise submit that they have failed to satisfy the standard imposed by KRS § 271B.8-510, no benefit was achieved by requiring this written affirmation. For that reason, it is been deleted from statute.46

The second revision deals with the disinterested requirement with respect to approving either advancement or indemnification. Previously, with respect to any vote of the shareholders to either grant or deny indemnification or advancement, when that determination was made by the shareholders, shares controlled by the directors who were parties to the action, almost exclusively as defendants, could not be voted on that determination. In effect, with respect to the defendants, they are stripped, as shareholders, of voting rights with respect to both indemnification and advancement. There was no, however, parallel provision excluding from that vote the shares held by persons who are plaintiffs. Consider a corporation structured as follows:

Assume that Tony and Alex are the corporation's directors. Assume as well that Amy and Laura have initiated a derivative action charging Alex and Tony with breach of their fiduciary obligations to the corporation. Under the statute prior to this amendment, neither Alex nor Tony could vote their respective shareholdings either in favor or against advancement or indemnification. However, each of Amy and Laura, notwithstanding their position as plaintiffs in the action, could vote with respect to advancement or indemnification. Being a foregone conclusion they would vote against it, in effect they would outvote Sharon and advancement or indemnification would not be available. As amended, only Sharon, not being a party to the action, would be able to vote, and she would presumably be able to make a disinterested determination as to whether or not indemnification or advancement should be provided.47

Another change made to the Business Corporation Act relates to amendment of the bylaws. Prior to this amendment, the Business Corporation Act provided, in rejection of the "vested rights" doctrine,48 that the shareholders have no vested rights in the articles of incorporation.49 This affirmative declaration left open, however, the question as to whether there could exist any vested rights in bylaws. This revision of the Business Corporation Act makes express that there are no vested property rights in any provision of the bylaws,50 thereby eliminating the argument that there could exist vested rights in the bylaws because they were not specifically referenced in the statute in the same manner as were the articles of incorporation.51

Footnotes

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1 S.B. 235, 2017 Leg., Reg. Sess. (Ky. 2017). This proposal was submitted by Senator Morgan McGarvey as S.B. 235 on February 16, 2017..B. 235, KY. LEGIS., http://www.lrc.ky.gov/record/17RS/SB235.htm (last visited Nov. 30, 2017). The bill was assigned to the Senate Economic Development, Tourism, and Labor Committee, and was favorably reported therefrom on February 28th. Id. It passed the Senate on a unanimous vote on March 1st. Id. When presented on the floor by Senator McGarvey, Senate President Stivers asked if there were any questions.  Responding to the resulting silence, he chuckled and observed, "I didn't think so." Morgan McGarvey, Recap of the Legislative Week, MORGANMCGARVEY.COM (March 3, 2017), http://www.morganmcgarvey.com/news/2017/3/3/wvpwubclbvfab6dd0x6chcb9mtyt29. In the House it was assigned to the Small Business and Information Technology Committee, where it was heard on March 15th, and approved. S.B. 235, supra. The bill was approved, with a floor amendment, by the House on March 29th. Id. The Senate concurred. Id. On April 12, the bill became effective notwithstanding never having been signed by the governor. Id.

2 H.B. 35, 2017 Leg., Reg. Sess. (Ky. 2017). This legislation was introduced by Representative Jerry Miller as H.B. 235, the bill having been prefiled. HB 35, KY. LEGIS., http://www.lrc.ky.gov/record/17RS/HB35.htm (last visited Nov. 30, 2017). It was reported favorably on February 9, 2017 by the House State Government Committee, and passed out of the House on February 13th. Id. In the Senate, the bill was assigned to the Agriculture Committee, from which it was favorably reported on February 28th. Id. The bill came before the entire Senate on March 7th. Id. This legislation was signed by the governor on March 20, 2017. Id.

3 See Ky. Att'y Gen. Op. OAG 17-007 (Apr. 7, 2017).

4 See KY. REV. STAT. ANN. § 452.450 (West 1942); see also Kem Mfg. v. Ky. Gem Coal Co., 610 S.W.2d 913, 913 (Ky. Ct. App. 1980) ("[A] corporation may not defeat venue in an action brought in the court in which its registered agent is located."). For an admittedly dated review of venue in Kentucky, see William H. Fortune, Venue of Civil Actions in Kentucky, 60 KY. L.J. 497 (1972).

5 See KY. REV. STAT. ANN. § 446.010(11) (West 2017) (stating that the definition of "corporation" includes a "company, person, partnership, joint stock company, or association").

6 See Act of Apr. 12, 2017, ch. 193, § 1, 2017 Ky. Acts (codified at KY. REV. STAT. ANN. § 14A.4-060 (West 2017)). Note that this provision is not intended to be exclusive as to any other provision that would give rise to venue in any particular court. Rather, this statute only affirms that venue is appropriate in this particular county. See also KY. REV. STAT. ANN. § 452.450 (West 1952).

7 With respect to the charging order generally, see Thomas E. Rutledge & Sarah S. Wilson (now Reeves), An Examination of the Charging Order under Kentucky's LLC and Partnership Acts (Part I), 99 KY. L.J. ONLINE 85 (2011); Thomas E. Rutledge & Sarah S. Wilson, An Examination of the Charging Order under Kentucky's LLC and Partnership Acts (Part II), 99 KY. L.J. ONLINE 107 (2011).

8 See KY. REV. STAT. ANN. § 275.260 (West 2017) (LLCs); KY. REV. STAT. ANN. § 362.285 (West 2017) (partnerships governed by the Kentucky Uniform Partnership Act); KY. REV. STAT. ANN. § 362.1-504 (West 2017) (general partnerships governed by the Kentucky Revised Uniform Partnership Act (2006)); KY. REV. STAT. ANN. § 272A.6-050 (West 2017) (limited cooperative associations); KY. REV. STAT. ANN. § 362.481 (West 2017) (limited partnerships governed by the Revised Uniform Limited Partnership Act); KY. REV. STAT. ANN. § 362.2-703 (West 2017) (limited partnerships governed by the Kentucky Uniform Limited Partnership Act (2006)); KY. REV. STAT. ANN. § 386A.6-060 (West 2017) (statutory trusts governed by the Kentucky Uniform Statutory Trust Act).

9 See, e.g., § 275.260(1) ("This section provides the exclusive remedy by which the judgment creditor of a member or the assignee of a member may satisfy a judgment out of the judgment debtor's limited liability company interest.") (emphasis added); KY. REV. STAT. ANN. § 275.015(12) (West 2017) (defining "limited liability company" as organized "under this chapter"); id. or KY. REV. STAT. ANN. § 275.015(9) (defining "foreign limited liability company").

10 See Fannie Mae v. Heather Apartments Ltd. P'ship., No. A13-0562, 2013 WL 6223564 (Minn. Ct. App., Dec. 2, 2013).

11 Id. at *2.

12 Id. at *15–16.

13 Id. at *16.

14 See MINN. STAT. § 322B.32 (1992).

15 Fannie Mae, 2013 WL 6223564, at *16.

16 Id. at *6; see also Arayos, LLC v. Ellis, Misc. Act. No. 15-0027-WS-M, 2016 WL 1642676 (S.D. Ala. April 25, 2016) ("More importantly, as noted supra, plaintiff's filings reflect that Lodge Entertainment is a Wyoming limited liability company, and that Jonesboro Investments is a Nevada limited liability company. Plaintiff has presented no argument explaining why it contends a provision of the Alabama Business and Nonprofit Entities Code would empower this Court to issue a charging order as to a judgment debtor's membership interest in Wyoming and Nevada limited liability companies, as part and parcel of the judgment creditor's efforts to enforce a judgment entered by a federal court in Maine. On its face, Alabama Code § 10A-5-6.05(a) does not appear to authorize issuance of charging orders relating to foreign limited liability companies.")

17 See KY. REV. STAT. ANN. § 275.260(8) (West 2017) (created by Act of Apr. 12, 2017, ch. 193, § 13, 2017 Ky Acts) (governing LLCs); KY. REV. STAT. ANN. § 362.285(9) (West 2017) (created by Act of Apr. 12, 2017, ch. 193, § 16, 2017 Ky Acts) (partnerships governed by the Kentucky Uniform Partnership Act); KY. REV. STAT. ANN. § 362.1-504(9) (West 2017) (created by Act of Apr. 12, 2017, ch. 193, § 18, 2017 Ky Acts) (general partnerships governed by the Kentucky Revised Uniform Partnership Act (2006)); KY. REV. STAT. ANN. § 272A.6-050(8) (West 2017) (created by Act of Apr. 12, 2017, ch. 193, § 9, 2017 Ky Acts) (limited cooperative associations); KY. REV. STAT. ANN. § 362.481(9) (West 2017) (created by Act of Apr. 12, 2017, ch. 193, § 17, 2017 Ky Acts) (limited partnerships governed by the Revised Uniform Limited Partnership Act); KY. REV. STAT. ANN. § 362.2-703(9) (West 2017) (created by Act of Apr. 12, 2017, ch. 193, § 19, 2017 Ky Acts) (limited partnerships governed by the Kentucky Uniform Limited Partnership Act (2006)); KY. REV. STAT. ANN. § 386A.6-060(8) (West 2017) (created by Act of Apr. 12, 2017, ch. 193, § 21 2017 Ky Acts) (statutory trusts governed by the Kentucky Uniform Statutory Trust Act); see also Mahalo Invs. III, LLC v. First Citizens Bank & Tr. Co., 769 S.E.2d 154, 158–59 (Ga. Ct. App. 2015) ("[I]t is only necessary for a court to have jurisdiction over the judgment debtor to have authority to enter charging orders against the judgment debtor's interest."); Vision Marketing Res., Inc. v. McMillin Grp., LLC, No. 10-2252-KHV, 2015 WL 4390071, at *4 (D. Kan. July 15, 2015) ("The Court need not have jurisdiction over the LLC entity itself in order to issue a charging order, when it has jurisdiction over the LLC member because the LLC has no right or direct interest affected by the charging order. Rather it is the judgment debtor's interest in and right to future distributions of the LLC that is being charged."). In German American Capital Corp. v. Morehouse, No. GJH-13-296, 2017 WL 3411941 (D. Md. Aug. 7, 2017), decided after the consideration and approval of this amendment, the court found that the charging order provisions of the Maryland LLC Act could be applied as to the defendant's interests in a Georgia organized LLC. In effect, this decision is consistent with the Kentucky statute, as amended. In contrast, in Peach REO, LLC v. Rice, No. 2:12-CV-02752-SHM, 2017 WL 2963511 (W.D. Tenn. July 11, 2017), the court, in considering charging orders sought against interests in LLCs organized in Tennessee, Mississippi, and Delaware, applied the laws of the jurisdiction of organization.

18 Where an LLC interest is located is a subject of debate. See, e.g., JPMorgan Chase Bank N.A. v. McClure, 393 P.3d 955, 958–59 (Colo. 2017).

19 Whether, as to a non-Kentucky entity, the judgment and the charging order must be domesticated in the entity's jurisdiction of organization in order to bind the foreign entity is a question governed by other law. See also McClure, 393 P.3d at 961–62, aff'g 395 P.3d 1123 (Colo. App. 2015).

20 No. 59797, 2013 WL 5230797 (Nev. Sept. 12, 2013).

21 Id. at *1.

22 Id.

23 See id. ("Kaufman's failure to make his initial contribution only creates a liability to the LLC for the amount owed, while the remaining assets of the LLC should be divided based on the members' percentage interest in the LLC as stated in the operating agreement.").

24 Id. at *2.

25 See KY. REV. STAT. ANN. § 275.260(7) (West 2017) (created by Act of Apr. 12, 2017, ch. 193, § 13, 2017 Ky Acts) (governing LLCs) ("This section does not apply to the enforcement of a judgment by a limited liability company against a member of that company."); KY. REV. STAT. ANN. § 362.285(8) (West 2017) (created by Act of Apr. 12, 2017, ch. 193, § 16, 2017 Ky. Acts) (partnerships governed by the Kentucky Uniform Partnership Act); KY. REV. STAT. ANN. § 362.1-504(8) (West 2017) (created by Act of Apr. 12, 2017, ch. 193, § 18, 2017 Ky. Acts) (general partnerships governed by the Kentucky Revised Uniform Partnership Act (2006)); KY. REV. STAT. ANN. § 272A.6-050(7) (West 2017) (created by Act of Apr. 12, 2017, ch. 193, § 9, 2017 Ky. Acts) (limited cooperative associations); KY. REV. STAT. ANN. § 362.481(8) (West 2017) (created by Act of Apr. 12, 2017, ch. 193, § 17, 2017 Ky. Acts) (limited partnerships governed by the Revised Uniform Limited Partnership Act); KY. REV. STAT. ANN. § 362.2-703(8) (West 2017) (created by Act of Apr. 12, 2017, ch. 193, § 9, 2017 Ky. Acts) (limited partnerships governed by the Kentucky Uniform Limited Partnership Act (2006)); KY. REV. STAT. ANN. § 386A.6-060(7) (West 2017) (created by Act of Apr. 12, 2017, ch. 193, § 21, 2017 Ky. Acts) (statutory trusts by the Kentucky Uniform Statutory Trust Act). While decided after S.B. 235 was submitted to the 2017 General Assembly, this amendment is consistent with the ruling made in Gillet v. ZUPT, LLC, 523 S.W.3d 749 (Tex. Ct. App. 2017). Therein, the LLC held a judgment against a member consequent to his breach of fiduciary duties. Id. at 753. The judgment-debtor asserted the judgment could be enforced only via a charging order. Id. at 757. This notion was rejected: "But that reasoning for preventing foreclosure of a member's interest does not apply in a situation such as that before us, where the judgment creditor seeking turnover of the membership interest is the very same limited liability company from which the membership interest derives." Id. at 757; see also id. at 758 ("[T]he reasoning behind requiring a charging order as the exclusive remedy is inapposite when the judgment creditor seeking the membership interest is the entity from which the membership interest derives.").

26 See generally Thomas E. Rutledge, Who Will Watch the Watchers?: Derivative Actions in Nonprofit Corporations, 103 KY. L.J. ONLINE 31 (2015).

27 See, e.g., Bacigalupo v. Kohlhapp, 240 S.W.3d 155, 156 (Ky. Ct. App. 2007); see also Pagtakhan-So v. Cueto, No. 16-5320, 2016 WL 617429, at *5 n.6 (E.D. Ky. Feb. 16, 2016) ("It is undisputed that only Pagtakhan-So was a Trustee of the Foundation at the time that the Complaint and Amended Complaint were filed. Michigan law only allowed derivative claims by current shareholders and members at the time the Amended Complaint was filed. M.C.L. § 450.2491 (repealed 2015). None of the plaintiffs are currently Trustees of the Foundation and none of the current  Trustees have moved to intervene. There is no evidence on which this Court could conclude that these plaintiffs "fairly and adequately represent" other similarly-situated Trustees in pursuing the rights of the Foundation.").

28 See, e.g., KY. REV. STAT. ANN. § 271B.7-400(1) (West 2017); KY. REV. STAT. ANN. § 272A.13-020(1)(b) (West 2012). For derivative actions in federal court, FED. R. CIV. P. 23.1 will apply to provide this rule. See FED. R. CIV. P. 23.1(1) ("The derivative action may not be maintained if it appears that the plaintiff does not fairly and adequately represent the interests of shareholders or members who are similarly situated in enforcing the rights of the corporation or association."); see also DEBORAH A. DEMOTT, SHAREHOLDER DERIVATIVE ACTIONS – LAW AND PRACTICE § 4.3(1) (2016–17) ("[M]ost federal courts have applied the contemporaneous ownership requirement in Rule 23.1 when it conflicted with the applicable state law.") (citation omitted).

29 See, e.g., Fenley v. Kamp Kaintuck, Inc., No. 2010-CA-001926-MR, 2011 WL 5443440, at *3 (Ky. Ct. App. Nov. 10, 2011).

30 See KY. REV. STAT. ANN. § 275.260 (West 2017) (amended by Act of Apr. 12, 2017, ch. 193, § 15, 2017 Ky. Acts); KY. REV. STAT. ANN. § 362.2-933 (West 2017) (amended by Act of Apr. 12, 2017, ch. 193, § 19, 2017 Ky Acts); KY. REV. STAT. ANN. § 386A.6-110(5) (West 2017) (created by Act of Apr. 12, 2017, ch. 193, § 27, 2017 Ky. Acts); see also Watkins v. Stock Yards Bank & Tr. Co., No. 2011-CA-000228-MR, 2012 WL 2470692 (Ky. Ct. App. June 29, 2012); Davis v. Comed, Inc., 619 F.3d 585, 593-94 (6th Cir. 1980); Aztec Oil & Gas, Inc. v. Fisher, 152 F. Supp. 3d 832, 857–58 (S.D. Tex. Jan 21, 2016); Schwartz v. Coyle, No. 2011-CA-002335-MR, 2013 Ky. App. Unpub. LEXIS 310, at *12–13 (Ky. Ct. App. Apr. 19, 2013); Avon Tape, Inc. v. Shuman, No. 04-0068 BLS, 2006 WL 933395, at *6–7 (Mass. Super. Ct. Mar. 22, 2006).

31 See generally Kentucky Business Entity Filing Act, KY. REV. STAT. ANN. §§ 14A.1-010–14A.9-090 (West 2011); Thomas E. Rutledge and Laura K. Tzanetos, The Kentucky Business Entity Filing Act: The Next Step Forward in the Rationalization of Business Entity Law, 38 N. KY. L. REV. 423 (2011).

32 See KY. REV. STAT. ANN. § 14A.1-070(7) (West 2017) (amended by Act of Apr. 12, 2017, ch. 193, § 3, 2017 Ky. Acts).

33 See id. § 14A.1-070(10).

34 See id. § 14A.1-070(16).

35 See id. § 14A.1-070(43).

36 See id. § 14A.1-070(35).

37 Unincorporated nonprofit associations were first authorized by statute in Kentucky in 2015 pursuant to the adoption of the Uniform Unincorporated Nonprofit Association Act. See generally Thomas E. Rutledge, The 2015 Amendments to the Kentucky Business Entity Statutes, 43 N. KY. L. REV. 129, 156–72 (2015–16).

38 See KY. REV. STAT. ANN. § 14A.2-060(1)(u) (West 2017) (created by Act of Apr. 12, 2017, ch. 193, § 4, 2017 Ky. Acts) .

39 See id.. § 14A.2-060(1)(p); see also Rutledge, supra note 37, at 161.

40 See KY. REV. STAT. ANN. § 14A.6-010(1)(d)(6) (West 2017). With respect generally to the obligation of an unincorporated nonprofit association to file an annual report, see § 14A.6-010(6); see also Rutledge, supra note 37, at 159. With respect to who is a manager, see KY. REV. STAT. ANN. § 273A.095 (West 2017); see also Rutledge, supra note 37, at 164–65.

41 See Rutledge, supra note 37, at 159.

42 See KY. REV. STAT. ANN. § 273A.030(1) (West 2015); see also Rutledge, supra note 37, at 159–61.

43 See KY. REV. STAT. ANN. § 273A.040(3) (West 2017) (created by Act of Apr. 12, 2017, ch. 193, § 10, 2017 Ky. Acts); see also Rutledge, supra note 37, at 161 n.223.

44 See KY. REV. STAT. ANN. § 271B.8-530 (West 2017) (amended by Act of Apr. 12, 2017, ch. 193, § 6, 2017 Ky. Acts).

45 KY. REV. STAT. ANN. § 271B.8-530 (West 1989) (amended by Act of Apr. 12, 2017, ch. 193, § 6, 2017 Ky. Acts).

46 The Model Business Corporation Act (2016 Revision) likewise deleted this requirement. See MODEL. BUS. CORP. ACT § 8.53 (AM. BAR ASS'N 2016).

47 See KY. REV. STAT. ANN. § 271B.8-550(2)(d) (West 2017) (amended by Act of Apr. 12, 2017, ch. 193, § 7, 2017 Ky. Acts). Nothing in this amendment alters other mechanisms by which advancement or indemnification may be approved, examples being disinterested directors or special counsel. See § 271B.8-550(2)(a); § 271B.8-550(2)(c).

48 See, e.g., Sautter v. Supreme Conclave, Improved Order of Heptasophs, 71 A. 232, 233 (N.J. 1908); A.W. Ayers v. Burley Tobacco Growers Coop. Ass'n, 344 S.W.2d 836, 838 (Ky. 1961); McCallum v. Asbury, 393 P.2d 774, 775–76 (Or. 1964); see also Thomas E. Rutledge & Katharine M. Sagan, An Amendment Too Far?: Limits on the Ability of Less Than All Members to Amend the Operating Agreement, 16 FLA. ST. U. BUS. L. REV. 1 (2017).

49 See KY. REV. STAT. ANN. § 271B.10-010(2) (West 2017).

50 See KY. REV. STAT. ANN. § 271B.10-200(3) (West 2017) (created by Act of Apr. 12, 2017, ch. 193, § 8, 2017 Ky. Acts).

51 This revision of the statute is consistent with the Model Business Corporation Act (2016 Revision). See MODEL. BUS. CORP. ACT § 10.2(c) (AM. BAR ASS'N 2016).

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Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions