The act provides Michigan business owners with the ability to establish a limited liability company as a separate legal entity, called a domestic limited liability company, or LLC. Article 2 of the act provides that a limited liability company comes into existence when articles of organization are filed that comply with the requirements of section 450.4203. The requirements include: choosing a name that includes the words “limited liability company” or abbreviation LLC; listing the principal address for the company; listing the business activity for the company; and identifying the name address of the organizer and registered agent for service of process for the company. The articles of organization are filed with the Bureau of Commercial Services, Corporation Division of the Michigan Department of Energy, Labor & Economic Growth. The Bureau provides an optional form for use with instructions (see Resources).
Any person required under Michigan law to provide professional services under license from any state agency can form a professional limited liability company. Article 9 Sections 450.4901 to 450.4910 of the act specify the requirement for this type of limited liability company, which also include filing articles of organization with the Bureau. In addition to the information provided in the articles for a domestic LLC, the articles for a professional LLC must state the professional service to be engaged by the company, such a legal, medical or engineering. The Bureau provides an optional form for professional LLCs to use with instructions (see Resources).
A limited liability company formed in another state -- a foreign LLC -- is authorized under the act to engage in business in Michigan by complying with the provisions of Article 10 Sections 450.5001 to 450.5010 of the act. Prior to engaging in business, the foreign LLC must submit an Application for Certificate of Authority to Transact Business in Michigan with the Bureau. The application requires the same information required of a domestic LLC, with the added requirement that a certificate of good standing be included with the application. This certificate is issued by the foreign LLC’s state of formation and indicates that the foreign LLC is in compliance with the laws of that state. The Bureau provides an optional application form for use with instructions (see Resources).
In January 2009, Michigan amended the act to provide for a new type of limited liability company called a low-profit LLC or L3C. This type of limited liability company is a hybrid between a nonprofit and for-profit business. According to the Council of Michigan Foundations, a low-profit LLC is designed as an alternative investment structure for foundations that previously could only use an investment structure called program-related investments, or PRIs. The Council described PRIs as requiring legal fees and organizational costs that are so expensive and complex as to make a PRI an undesirable investment structure. However, with a low-profit LLC becoming a statutory authorized entity under Michigan law, foundations can use this type of entity to make investments without the expense and complexity of PRIs. Article 1, Section 450.4102(m)(i) to (iii) of the act specifies the requirements for forming a low-profit LLC which are in addition to those required for forming a domestic LLC.