Opportunities and Pitfalls Under Ohio’s New LLC Act
On January 1, 2022, the new Ohio Revised Limited Liability Act in O.R.C. Chapter 1706 (the “New Act”) will go into effect and govern all LLCs formed or registered to do business in Ohio. The new Act is a complete replacement of existing Ohio LLC law under O.R.C. Chapter 1705 and constitutes the default rules for governing Ohio LLCs; however,
the new Act emphasizes the principles of “freedom of contract” in providing business owners and investors the ability to override the majority of the default rules under the new Act through the company’s operating agreement.
Consequently, the new Act provides a litany of opportunities to business owners and investors to specifically tailor their relationships and management structures. In order to help their clients take advantage of these opportunities,
practitioners must become keenly aware of the default rules under the new Act and avoid any unintentional consequences or “pitfalls” with respect to the application of the law to their clients’ businesses. Practitioners should
begin to review their existing clients’ operating agreements to ensure that their terms align with the business owners’ expectations while navigating the requirements under the new Act.
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