The Uniform Limited Liability Company Act is a set of laws that governs the filing standards and some business aspects of a limited liability company (LLC) in Iowa. The laws are found in Chapter 489 of the Iowa Code. Although the act allows the LLC's operating agreement to manage the company's internal affairs and practices, some requirements in the legislation specifically apply to all LLCs in the state.
Name, Purpose and Duration
A limited liability company in Iowa must use the organization type as the end part of its name using the full designation or abbreviations approved under §489.108 of the Iowa Code, like "LLC" or "Limited Company." The name of an LLC cannot be similar to or the same as another authorized business entity in the state. An LLC in Iowa may form for any purpose, as long as the purpose is legal, and may be a non-profit. Iowa law allows an LLC to have a perpetual duration once formed.
Certificate of Organization
An LLC must file a Certificate of Organization with the Iowa Secretary of State for legal formation. The certificate has to include the company's name and address, the name and address of the registered agent and the name of the managers. Additional information may be entered, but is not required for validation under §489.201(3) of the Iowa Code. The certificate may be amended by the LLC at any time, but a statement must be sent to the Secretary of State that lists the LLC's name, the original certificate filing date and the changes being made.
LLCs can sue or be sued as a business entity under §489.105 of the Iowa Code. A company that does not have at least one member is limited to certain activities, which include filing a certificate of amendment or correction, filing an activity report every two years, adding a member and filing a dissolution or termination of the company, per §489.105(2) of the Iowa Code.
The activities of and procedures affecting members, like the requirements for a member to transfer interest, are controlled by the corresponding provisions of the LLC's operating agreement. An operating agreement is not required under Iowa law but may be adopted by members. Such an agreement assists in LLC functions like membership procedure, membership withdrawl, distributions, and dissolution. However, §489.111 of the Iowa code allows an LLC to enforce the terms of the operating agreement at any time, even without written acknowledgment of the agreement from members. The act of joining the LLC is considered automatic assent to the agreement by the new member.
Distributions to Members
Iowa law restricts the distribution of LLC income, assets and other items under certain circumstances, as set forth under §489.405 of the Iowa Code. An LLC cannot make a distribution to a member that would render the company unable to function or pay bills. The company is permitted to rely on internal accounting statements and financial records when determining whether or not a distribution to a member would violate Iowa law.
An Iowa LLC must have a registered agent on file with the Secretary of State. A registered agent is a person or business that accepts legal notices on behalf of the LLC. An LLC may change its agent if the company sends a statement to the Secretary of State containing its business name, the LLC's registered mailing address and the name and mailing address of both the former agent and the new agent. A registered agent may resign by sending a statement to the Secretary of State including the name of the company and a statement of resignation. The Secretary of State notifies the LLC of the resignation of its agent by mail, but the resignation is not effective until 30 days after the statement was filed.
An LLC may dissolve, or cease to exist as a business, in a variety of situations under §489.701 of the Iowa Code. An event in the operating agreement that is noted as a dissolution "trigger" dissolves the company upon occurrence. All members may vote to dissolve the LLC, or the LLC may be dissolved if there are no members for a period of 90 days. Illegal activity or a court order may cause an LLC to dissolve. The LLC is required to settle all debts and transfer assets to members in accordance with the operating agreement upon dissolution.