Generally, an Indiana limited liability company that has no members is dissolved. Ind. Code § 23-18-9-1.1(c). (For an interesting case from Alabama involving the dissolution of an LLC for lack of members, see our Indiana Law Blog article, Family Businesses: Succession Planning for LLCs.) Although that provision is in the chapter entitled “Voluntary Dissolution,” it is really not voluntary at all. It is really a statutory dissolution that occurs automatically, and it can be triggered by several different events that result in the dissociation of a sole, or last remaining, member.
There are, however, two exceptions to the statutory dissolution of an LLC with no members. First, the LLC will not be dissolved if the operating agreement provides specifically for the admission of a member after the dissociation of a sole or last remaining member, and a member is actually admitted under that provision within 90 days of the first date the LLC had no members. In our experience, very few operating agreements contain such a provision.
The second exception applies if the reason the LLC has no members is the death of the sole or last remaining member. In that case, the LLC is not dissolved if the operating agreement provides for the member’s personal representative, or the personal representative’s designee, to be admitted as a member and that person is admitted within 90 days of the member’s death. See Ind. Code 23-18-6-5(a)(4). Again, it is safe to say that few operating agreements have such provisions. Moreover, even if one exists, there is a significant possibility that no member will be appointed before the 90 day window closes.
Indiana Business Law Blog
On March 13, 2024, the Indiana Governor signed Senate Enrolled Act 18, which, among other things, amends the Indiana Business Flexibility Act with the goal of addressing problems that can arise from the death of the sole member of a limited liability company. The following article is based on our analysis and understanding of SEA 18, particularly Sections 2 and 3.