Nicastro, Eric W.

English

DOCS@RWU

Roger Williams University Law ReviewVolume 8 | Issue 2 Article 26Spring 20032002 Survey of Rhode Island Law: Legislation:Business Law: An Act Relating to Corporations,Associations and Partnerships - Limited LiabilityPartnerships and the Rhode Island LimitedLiability Company ActEric W. NicastroRoger Williams University School of LawFollow this and additional works at: http://docs.rwu.edu/rwu_LRThis Survey of Rhode Island Law is brought to you for free and open access by the Journals at DOCS@RWU. It has been accepted for inclusion inRoger Williams University Law Review by an authorized administrator of DOCS@RWU. For more information, please contact mwu@rwu.edu.Recommended CitationNicastro, Eric W. (2003) "2002 Survey of Rhode Island Law: Legislation: Business Law: An Act Relating to Corporations,Associations and Partnerships - Limited Liability Partnerships and the Rhode Island Limited Liability Company Act ," Roger WilliamsUniversity Law Review: Vol. 8: Iss. 2, Article 26.Available at: http://docs.rwu.edu/rwu_LR/vol8/iss2/26586 ROGER WILLIAMS UNIVERSITY LAW REVIEW [Vol. 8:421Business Law. An Act Relating to Corporations, Associationsand Partnerships - Limited Liability Partnerships and the RhodeIsland Limited Liability Company Act. This Act provides that aregistered limited liability partnership or limited liability companymay render professional services, so long as they meet specific in-surance requirements. Personal liability of a member of a limitedliability company is limited to his or her own negligence or miscon-duct so long as that individual proves that the company is in com-pliance with the insurance requirements. Effective July 28, 2002.2002 R.I. Pub. Laws ch. 205.SUMMARYPrior to the enactment of this legislation (the Act), limited lia-bility partnerships could not perform certain professional ser-vices.1 The Act amends section 7-12-31.1 of the Rhode IslandGeneral Laws in chapter 7-12 entitled "Partnerships," by allowinglimited liability partnerships to render any lawful professional ser-vices. 2 Regulatory agencies may adopt rules and regulations thatshall not be inconsistent with law "regarding a domestic and for-eign limited liability partnership rendering professional services."3Similarly, section two of the Act amends section 7-16-3, entitled"The Rhode Island Limited Liability Company Act," to allow lim-ited liability companies to render professional services as well.4The rules and regulations adopted by the regulatory agencies shallnot be inconsistent with law. 5Section three of the Act amends Chapter 7-16 of the Rhode Is-land General Laws entitled "The Rhode Island Limited LiabilityCompany Act," by adding various sections.6 The Act provides thatthe liability of a person authorized to practice a profession, his orher own negligence shall not be affected merely because the indi-vidual provides professional services in this state as a member oragent of a limited liability company (LLC). 7 The individual is onlyliable for his or her own negligence and not the negligence of an-1. 2002 R.I. Pub. Laws ch. 205 (codified as amended at R.I. GEN. LAWS § 7-12-31.1(b) (2002)).2. R.I. GEN. LAWS § 7-12-31.1(b) (2002).3. Id.4. Id. § 7-16-3.5. Id. § 7-16-3.1.6. Id.7. Id. § 7-16-3.2(a).SURVEY SECTIONother member solely by being a member of the organization.8 Anypersonal liability of a member of an LLC shall not be less than orgreater than the personal liability of a shareholder of a profes-sional corporation rendering the same professional services as theLLC. 9 However, section 7-16-3.3 mandates that the LLC mustcarry insurance designed to cover the negligence of a member ofthe LLC that falls outside of the limitation set forth in section 7-16-3.2.1o The insurance coverage must not be less than $100,000,nor should the required coverage exceed $500,000.11The Act places the burden of proving that the negligence,wrongful acts, or misconduct of a member of an LLC falls outsidethe personal limitation in section 7-16-3.2, on the person claimingthe limitation. 12 The burden is met by proving that the LLC is incompliance with the requirements of the statute, or that there is$500,000 segregated, and designated specifically for the satisfac-tion of judgments against the LLC. 13Finally, the Act provides that a general partnership may beconverted to an LLC by filing articles of organization accompaniedby a certificate of conversion including the various listed items setforth in section 7-16-5.3.14 After conversion, the LLC shall "pos-sess all rights, privileges, immunities, powers, and franchises, of apublic as well as a private nature, of the former general partner-ship," and be subject to all restrictions as applicable to the formergeneral partnership and to the extent applicable to the new LLC.15Eric W. Nicastro8. Id. § 7-16-3.2(b).9. Id. § 7-16-3.2(c).10. Id. § 7-16-3.3.11. Id.12. Id. § 7-16-3.3(b)(2).13. Id. § 7-16-3.3(e).14. Id. § 7-16-5.3.15. Id. § 7-16-5.3(c)(1).2003]

2002 Survey of Rhode Island Law: Legislation: Business Law: An Act Relating to Corporations, Associations and Partnerships - Limited Liability Partnerships and the Rhode Island Limited Liability Company Act

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2002 Survey of Rhode Island Law: Legislation: Business Law: An Act Relating to Corporations, Associations and Partnerships - Limited Liability Partnerships and the Rhode Island Limited Liability Company Act

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