Formation of the LLC
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Chapter 3: Formation of the LLC
James R. Cambridge, Kerr Russell; George J. Christopoulos, Kerr Russell

During the current COVID-19 pandemic, several temporary orders alter certain procedures and filing deadlines in Michigan courts. See Update: Michigan Court Changes Due to COVID-19 for details. Follow blog posts and discussion in the ICLE Community for further information, and check with your local court about their emergency protocols.

Critical Planning Decisions
Permissible Members
Articles of Organization
State Administration
Changes in Registered Office or Resident Agent
Execution and Filing of Documents with the Corporations, Securities, and Commercial Licensing Bureau, Corporations Division
Securities Law Considerations
Taxation Registration and Application Requirements
Litigation Issues Involving LLCs

I.   Overview

§3.1   Limited liability companies (LLCs) provide many opportunities and alternatives for conducting business. The LLC combines the limited liability of a corporation with the flexibility and pass-through tax advantages of a partnership. Although limited liability is important, the organizational flexibility the LLC affords business planners and professionals is perhaps the LLC’s biggest advantage over many other business forms. However, with this flexibility comes responsibility. Business planners and professionals (including lawyers) must thoughtfully consider how the LLC will be organized and operated. Not only must they give careful consideration to short-term business plans and relationships between members but also to long-term goals and relationships.

Every LLC will likely be different, since business goals and personal relationships will vary from entity to entity. Consequently, you, as the lawyer, will have to analyze each LLC venture individually and, in consultation with the LLC organizers and their other business planners and professionals, decide on how the LLC should be organized and operated. You must then reduce those provisions to writing in the articles of organization and the operating agreement.

The Michigan Limited Liability Company Act (LLCA) defines a limited liability company as an unincorporated membership organization that is formed under the act. MCL 450.4102(2)(k). An LLC may be formed for any lawful purpose for which a domestic corporation or a domestic partnership may be formed except as otherwise provided by law. MCL 450.4201.

Because the LLC is a creature of statute, compliance with the act’s organizational requirements is necessary to properly form an LLC. Essentially, there is only one simple requirement that must be met to form an LLC. Prescribed articles of organization must be executed by one or more persons, who may or may not become members of the LLC, and then filed with the Michigan Department of Licensing and Regulatory Affairs, Corporations, Securities, and Commercial Licensing Bureau, Corporations Division. MCL 450.4202. Before the 2002 amendments, one or more persons who would become members were required to sign the articles of organization. The 2002 amendments changed this to provide that one or more persons who may or may not become members, may sign the articles and form the LLC. MCL 450.4103(1), .4202(1). See §3.16 for a discussion. When this requirement is met, the LLC is formed. MCL 450.4202. For a generic organization checklist for the formation of an LLC, see form 3.1.

Forms and Exhibits

Form 3.01 Organization Checklist for an LLC
Form 3.02 Articles of Organization (for Use by Domestic Limited Liability Companies) (CSCL/CD-700)
Form 3.03 Certificate of Amendment to the Articles of Organization (for use by Limited Liability Companies) (CSCL/CD-715)
Form 3.04 Restated Articles of Organization (for use by Domestic Limited Liability Companies) (CSCL/CD-710)
Form 3.05 Certificate of Correction for use by Corporations and Limited Liability Companies (CSCL/CD-518)
Form 3.06 Application for Reservation of Name (CSCL/CD-540)
Form 3.07 Certificate of Assumed Name for use by Corporations, Limited Partnerships, and Limited Liability Companies (CSCL/CD-541)
Form 3.08 Certificate of Termination of Assumed Name (CSCL/CD-543)
Form 3.09 Certificate of Restoration of Good Standing (Domestic LLC) (CSCL/CD-770)
Form 3.10 Certificate of Change of Registered Office and/or Change of Resident Agent (CSCL/CD-520)
Form 3.11 Resignation of Resident Agent (CSCL/CD-521)
Form 3.12 Expedited Service Request (CSCL/CD-272)
Form 3.13 Application for Employer Identification Number (IRS SS-4)
Form 3.14 Registration for Michigan Taxes (Department of Treasury Form 518)