HB54 Summary

• Clarifies that the law of the state where a foreign limited liability company is formed governs its internal affairs, organization, member liability, agent authority, and asset availability.

• Specifies that limited liability companies and foreign limited liability companies are treated as partnerships for Alabama taxation purposes (other than Chapter 14A of Title 40), unless classified differently for federal income tax purposes.

• Limits member liability for wrongful distributions to the amount of distributions actually received under normal circumstances; members who unknowingly receive improper distributions have no liability.

• Exempts reasonable compensation for services and bona fide retirement plan payments from distribution limitation rules.

• Establishes transition provisions for limited liability companies formed before January 1, 2015, allowing them to elect coverage under the 2014 law; all LLC's become subject to the new law on or after January 1, 2017.