Bipartisan bill seeks to modernize rules governing LLCs

TRENTON – A bipartisan bill has been introduced to try and make the state more attractive to businesses.

Assemblymen John J. Burzichelli, (D-3), West Deptford, and Scott T. Rumana, (R-40), Wayne, said today they’ve introduced legislation – A4359 – that seeks to modernize the rules governing the formation of limited liability companies in New Jersey.

Burzichelli and Rumana are both members of the Red Tape Review Commission formed to find ways to eliminate unnecessary regulation and help stimulate economic development.

“Streamlining the ways companies can form in New Jersey is a smart step toward increased job creation and economic growth,” Burzichelli said in a release.

And Rumana said, “This is another solid bipartisan idea to cut red tape and spur the economy.”

The bill would modernize regulations for creating and operating LLCs

Significant changes would include: eEliminating the default and overlooked rule that LLCs have a limited duration; allowing LLC operating agreements to be oral, written or implied; allocating profits and losses on a per capita basis; and providing remedies when members of a company act in an oppressive or harmful way to other members.

According to the bill, if an LLC elects to be taxed as a partnership, it does not pay federal income tax on its profits. Rather, its members are taxed on their share of the LLC’s income.

As a result, LLCs have become the business entity form of choice for new businesses, and far more New Jersey LLCs have been formed in recent years than corporations and limited partnerships combined, according to Burzichelli and Rumana’s bill.

The bill has been referred to the Assembly Regulatory Oversight and Gaming Committee. Bipartisan bill seeks to modernize rules governing LLCs