A limited liability company (LLC) is a business type with the legal aspects of both a corporation and a partnership. The personal assets of LLC members are protected from the company's creditors and debts, but the company must file Articles of Organization with the Secretary of State to gain legal recognition and legally conduct business. In Arkansas, the laws governing an LLC are found in Chapter 32 of Title 4 of the Arkansas Code.
The Articles of Organization that an LLC in Arkansas files with the Secretary of State must contain the name of the LLC. The name cannot already be in use by another entity doing business in Arkansas and must contain the words "Limited Liability Company" or an approved abbreviation, like "LLC." The Articles must include the address of the company's principal office, the name and address of the registered agent and the management type. The Articles must be signed and dated by the organizing owners, who are known as members. The filing fee for articles of organization is $50 as of 2010.
Registered Agent Standards
The registered agent is a person or business designated by the LLC to accept legal notices and correspondence from the state for the company. The LLC must have a registered agent on file with the Secretary of State at all times. A registered agent must be at least 18 years old and a resident of Arkansas. An entity that is serving as a registered agent for an LLC must be headquartered in Arkansas or have authorization to do business in the state.
An operating agreement is drafted by the organizers of the LLC and contains rules and procedures for the operation of the company and treatment of members. Arkansas law does not require an operating agreement as part of a legal LLC formation; only Articles of Organization are required, per Section 4-32-201 of the Arkansas Code. Arkansas law allows a written operating agreement to dictate most aspects of the LLC, but some restrictions apply. The operating agreement cannot include a provision restricting member access to business records, eliminate or reduce a member's duty of care or loyalty to the LLC or restrict the member's ability to conduct fair business deals or in good faith. The requirements to expel a member from the LLC must be the same for all members, as well as the procedures for any specified events that automatically terminate the company.
The LLC may distribute assets and income to members in accordance with the operating agreement, but Section 4-26-620 of the Arkansas Code forbids distributions to members that would render the company unable to pay outstanding debts. No distribution can leave the LLC with assets less than the sum of one and one-fourth multiplied by the company's total debts.
An LLC may dissolve, or cease to exist as a business in Arkansas, in various ways. The occurrence of an event that is detailed in the operating agreement or makes the LLC's business activities illegal may trigger dissolution, as well as the recording of the number of member votes needed to dissolve under the operating agreement. A court order may grant dissolution. If the Articles of Organization specify an end date, the LLC terminates once that day is reached. An LLC can voluntarily file articles of dissolution with the secretary of state for $50 as of 2010, but filing Articles of Dissolution by court order is free.