Massachusetts enacted its LLC statute in 1996, called the Massachusetts Limited Liability Act, which authorizes the formation of new LLCs in Massachusetts and permits foreign LLCs to engage in business in Massachusetts. In addition to the act, the Code of Massachusetts Regulations (CMR) contains rules established by the Secretary of the Commonwealth regarding the practices and procedures of the Corporations Division pertaining to limited liability companies. The website for the Corporations Division provides information and forms to facilitate compliance with the act.
Forming a New LLC
A new LLC is formed in Massachusetts when a Certificate of Organization that substantially complies with the act is filed with the Secretary of Commonwealth. Anyone who is an owner of the LLC is referred to as a “member” and the act permits the formation of an LLC with only one member. The website of the Corporations Division provides a form of the Certificate, which can be downloaded for completion and filing. As of November 2010, a $500 fee must accompany the certificate of organization.
Qualifying Foreign LLCs
The Massachusetts Limited Liability Act permits a foreign LLC to engage in business in Massachusetts as long as it files an Application for Registration with the Corporations Division within 10 days of starting to do business in Massachusetts. Along with the application, the foreign LLC must provide a certificate of legal existence or good standing from the state where the foreign LLC was formed. The Corporations Division provides a form application for filing that must be accompanied with a $500 fee.
In order for an LLC to maintain its good standing in Massachusetts, the Act requires that an annual report be filed. The Corporations Division provides a form annual report, which requires the same information provided in the Certificate of Organization or Application for Registration. The fee for filing the report is also $500. Failure to file the annual report and pay the fee will result in the LLC being administratively dissolved by the Secretary of the Commonwealth. An administratively dissolved LLC can be reinstated if all past due annual reports are filed along with a reinstatement fee of $100.
Flexible LLC Laws
Along with the formation and maintenance requirements for an LLC, the Act also specifies the powers, duties and obligations of an LLC and its members, such as stating that management of the LLC is vested equally in all members. However, the Act is also flexible in that it provides the LLC and its members with the authorization to alter the statutorily specified powers, duties and obligations by private agreement, commonly called an operating agreement. Although an operating agreement is not required by the act, it is advisable to have one in order to ensure that the members of the LLC realize the benefits of forming the LLC such as protection from personal liability and the tax advantages of a partnership.
- Massachusetts Legislature: Limited Liability Act Section 12
- Massachusetts Secretary of the Commonwealth: Corporations Division - Limited Liability Company Information
- Massachusetts Legislature: Limited Liability Act Section 48
- Massachusetts Secretary of the Commonwealth: Corporations Division - Foreign Limited liability Company Information
- Massachusetts Legislature: Limited Liability Act Section 6
- Daniel Karpman Attorney At Law: The Massachusetts Limited Liability Company ("LLC")