Minnesota LLC Contributions

 Minnesota LLC Contributions

Minnesota LLC Contributions

Minnesota LLC Contributions – Defined

M.S. § 322C.0102, Subd. 5 defines the term contribution with respect to a Minnesota limited liability company, in the following manner:

Subd. 5.  Contribution.

Contribution” means any benefit provided by a person to a limited liability company:

(1)     in order to become a member upon formation of the company and in accordance with an agreement between or among the persons that have agreed to become the initial members of the company;

(2)     in order to become a member after formation of the company and in accordance with an agreement between the person and the company; or

(3)     in the person’s capacity as a member and in accordance with the operating agreement or an agreement between the member and the company.

Minnesota LLC Contributions – Types

M.S. § 322C.0402 identifies the permissible types of Minnesota LLC contributions – by providing as follows:

A contribution may consist of

  • tangible or intangible property or
  • other benefit to a limited liability company,

including money, services performed, promissory notes, other agreements to contribute money or property, and contracts for services to be performed.

The preceding provision is intentionally broad, and includes past, present, and promised benefits.

Minnesota LLC Contributions – Liability

M.S. § 322C.0403 Subd. 1 identifies a person’s continuing obligation to make any promised Minnesota LLC contributions – by providing as follows:

A person’s obligation to make a contribution to a limited liability company

is not excused by the person’s

  • death,
  • disability, or
  • other inability to perform personally.

If a person does not make a required contribution,

  • the person or
  • the person’s estate

is obligated to contribute money equal to the value of the part of the contribution which has not been made,

at the option of the company.

M.S. § 322C.0403 Subd. 2 identifies a Minnesota limited liability company creditor’s right to enforce a person’s continuing obligation to make any promised Minnesota LLC contributions – by providing as follows:

A creditor of a limited liability company which

  • extends credit or
  • otherwise acts in reliance on an obligation described in subdivision 1

may enforce the obligation.

Minnesota LLC Contributions – Dissolution Distributions – Surplus

M.S. § 322C.0707, Subd. 2 identifies that any surplus remaining after the payment of a Company’s obligations must be distributed to the members upon dissolution of a Minnesota limited liability company, in the following order:

  1. Return of Minnesota limited liability company contributions made by the members, and
  2. An equal distribution of the remaining assets,

by providing as follows:

Subd. 2.   Distributions of surplus.

After a limited liability company complies with subdivision 1,

any surplus must be distributed in the following order,

subject to any charging order in effect under section 322C.0503:

(1)     to each person owning a transferable interest that reflects contributions made by a member and not previously returned, an amount equal to the value of the unreturned contributions; and

(2)     in equal shares among members and dissociated members, except to the extent necessary to comply with any transfer effective under section 322C.0502.

Minnesota LLC Dissolution Distributions – Charging Orders

M.S. § 322C.0503 Subd. 1 and Subd. 2 identify the effect of a charging order on a transferable interest upon dissolution of a Minnesota limited liability company, by providing as follows:

Subdivision 1.   Charging order against transferable interest.

On application by a judgment creditor of a member or transferee,

a court may enter a charging order

  • against the transferable interest of the judgment debtor
  • for the unsatisfied amount of the judgment.

A charging order

  • constitutes a lien on a judgment debtor’s transferable interest and
  • requires the limited liability company to pay over to the person to which the charging order was issued any distribution that would otherwise be paid to the judgment debtor.

Subd. 2.   Charging order effectuation.

To the extent necessary to effectuate the collection of distributions pursuant to a charging order in effect under subdivision 1, the court may:

(1)     appoint a receiver of the distributions subject to the charging order, with the power to make all inquiries the judgment debtor might have made; and

(2)     make all other orders necessary to give effect to the charging order.

Minnesota LLC Dissolution Distributions – Proportionate Distribution

M.S. § 322C.0707, Subd. 3 identifies the manner in which Minnesota limited liability company distributions are to be made to members upon dissolution of a Minnesota limited liability Company in the event there is not sufficient funds to return all of the Minnesota LLC contributions made by the members, by providing as follows:

Subd. 3.   Proportionate distribution.

If a limited liability company does not have sufficient surplus to comply with subdivision 2, clause (1), any surplus must be distributed among the owners of transferable interests in proportion to the value of their respective unreturned contributions.

Conclusion;

Minnesota LLC Contributions

If you desire legal assistance with issues relating to any Minnesota LLC contributions, please contact Minnesota Attorney Gary C. Dahle.

Legal fees will be applicable for services rendered – and advance payment may be required.

Minnesota LLC Articles of Organization

Minnesota LLC Board Management

Minnesota LLC Dissociation

Minnesota LLC Dissolution

Minnesota LLC Dissolution Distribution

Minnesota LLC Distribution

Minnesota LLC Governance

Minnesota LLC Members

Minnesota LLC Operating Agreements

Minnesota LLC Transferable Interest

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No claim to original government works.

Gary C. Dahle – Attorney at Law

2704 County Road 10, Mounds View, MN 55112

Phone: 763-780-8390  Fax: 763-780-1735

Gary@dahlelaw.com

Minnesota Secretary of State

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Information provided herein is only for general informational and educational purposes.

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