Limited Liability Companies -- Indiana Business Flexibility Act

The Indiana Business Flexibility Act is the statute that governs the formation, operation, and dissolution of Indiana LLCs.  It contains a number of default rules that apply unless the articles of organization or operating agreement provide some other rule.  However, it also contains some rules that cannot be modified by the articles or operating agreement.

  • Provides the definitions of terms used in the LLC statute, including essential definitions such as member, manager, interest, operating agreement, and event of dissolution.
Chapter 2. Organization and Powers.
  • Specifies requirements for articles of organization.
  • Establishes the requirements for the names of limited liability companies. 
  • Explains how to amend or restate articles of organization.
  • Lists the powers that LLCs may exercise.
  • Establishes the authority of members, managers, and officers to make binding commitments to others on behalf of the LLC.
  • Limits the personal liability of members, managers, and officers for the obligations of the LLC. 
  • Establishes the authority and right of members and managers to control the business and internal affairs of the LLC.
  • Addresses the liability of members and managers to the company or to the other members.
  • Creates default rules for member and manager voting.
  • Gives members and managers certain rights of access to company information.
  • Provides for resignation of managers.
  • Provides rules for capital contributions, allocations of profits and losses, and distributions, including unlawful distributions and the rights of dissociated members.
  • Creates rules for admission and dissociation of members (i.e., the acquisition and loss of membership, respectively), including withdrawal.
  • Establishes limits on the rights of assignees of interest.
  • Permits a member’s creditor to obtain a court “charging order” requiring the limited liability company to pay to the creditor any distributions that would otherwise be owed to the member.
  • Establishes rules and procedures for one limited liability company to merge with another limited liability company or with another type of entity, such as a corporation.
  • Permits a limited liability company to be converted into another type of entity and permits another type of entity to be converted into a limited liability company.
  • Establishes default rules on authority to sue on behalf of the LLC.
  • Provides default rules for dissolution of the LLC by a vote of the members and for dissolution when there are no members.
  • Permits a member to seek judicial dissolution.
  • Creates rules governing the winding up of the LLC’s business and affairs after dissolution.
  • Provides for notice to creditors that can ultimately cut off the creditors’ claims.
  • Permits the Indiana Secretary of State to dissolve a limited liability company that has not filed its required business entity reports.
  • Establishes a process for reinstatement of an LLC that has been administratively dissolved.
  • Creates rules for limited liability companies organized in another jurisdiction doing business in Indiana.
  • Requirements include a business entity report to be filed with the Secretary of State every two years.
  • States that the Indiana Business Flexibility Act is subject to the U.S. and Indiana Constitutions and to Indiana Code.