Rhode IslandS27802026 Regular SessionSenateWALLET

AN ACT RELATING TO CORPORATIONS, ASSOCIATIONS AND PARTNERSHIPS -- UNIFORM PARTNERSHIP ACT -- THE RHODE ISLAND LIMITED LIABILITY COMPANY ACT .

Sponsored By: Matthew L. LaMountain (Democratic)

Signed by Governor

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52 provisions identified: 7 benefits, 5 costs, 40 mixed.

Liability insurance for professional LLCs

LLCs that provide professional services must carry liability insurance if it is reasonably available. Coverage must equal $50,000 per professional employee, with at least $100,000 and no more than $500,000 total. The deductible per claim may be no more than $25,000 times the number of professional employees. Instead of insurance, you may set aside $500,000 in segregated funds or use a bank letter of credit or bonds.

New uniform LLC law takes over

Rhode Island replaces many old LLC rules with a new uniform LLC law. It repeals prior sections on distributions, membership interests, creditor remedies, dissolution, and foreign company rules. Before January 1, 2027, the new law applies to newly formed LLCs and to older LLCs that opt in; starting January 1, 2027, it applies to all LLCs. Deals under this law do not override other Rhode Island laws or allow acts those laws forbid. The law also repeals sections 7-16-5.3 and 7-16-5.4.

Rules and insurance for professional firms

LLCs may offer professional services if licensing rules allow. State agencies can set rules for professional LLCs. Registered LLPs that render professional services must carry liability insurance if reasonably available: $50,000 per professional employee, with at least $100,000 and no more than $500,000. A deductible can be up to $25,000 per claim times the number of professional employees. Instead of insurance, you can set aside $500,000 or use a letter of credit or bonds. Out‑of‑state coverage or funds count if they meet or exceed these amounts.

Penalty for naming fake agent

It is a crime to list a registered agent without that person’s permission. A violator can be fined up to $1,000, jailed up to one year, or both.

LLC tax filing, fees, penalties

LLCs must file an annual return and pay an annual charge. If taxed as a corporation federally, the LLC pays corporate taxes; if not, it pays a fee equal to the corporate minimum tax. For noncorporate LLCs, the charge is due by the 15th day of the fourth month after the fiscal year ends. For tax years on or after January 1, 2028, returns are due when the federal return is due, even if there is a federal extension. If the annual charge is late, an extra $100 applies. The tax division can share compliance status with the secretary of state, who starts revocation for nonpayment and may revoke after July 15 when a one‑year nonpayment list is certified.

Interest transfers and creditor remedies

You may transfer your economic interest without causing a breakup. A transferee usually gets only distribution rights, not management or record access. A judgment creditor’s exclusive remedy is a charging order to capture distributions. Courts can appoint a receiver and may foreclose if distributions won’t pay the debt in time. If the debtor is the sole member, a foreclosure buyer can become the member.

LLC duties, voting, and protections

By default, members run the LLC unless the formation papers say managers do. Ordinary matters take a majority; big changes often need everyone. Members or managers owe duties of loyalty, care, and good faith. All members can approve a conflict deal after full disclosure. The LLC must reimburse proper expenses, can indemnify in many cases, advance expenses, and buy insurance for members or managers.

LLC shield stronger; pros still liable

LLC debts belong to the company, not to owners or managers just because of their roles. Skipping company formalities, by itself, does not make an owner personally liable. Licensed professionals remain personally liable for their own negligence or misconduct. The LLC is also liable when members or agents act within their authority.

New LLC payout and distribution rules

The law replaces old default payout rules for LLC members. Profit and cash splits no longer default to each member’s capital value. There is no automatic right to interim payouts or special cash-only rights unless your operating agreement says so. When an interim payout is made, it is usually in equal shares and paid in money. A solvency test now blocks payouts that would leave the company unable to pay its debts. The old statute that made managers or members liable for unlawful distributions is repealed.

New rules for LLC owner lawsuits

As a member, you can sue directly for your own rights if you show a personal injury, not just harm to the company. To sue for the company, you must first demand action (or show it is futile) and state the details in the complaint. The court may pause discovery while an independent special litigation committee investigates. If the case succeeds, money goes to the LLC, not you; the court can award you reasonable legal costs from the recovery. You need court approval to settle or dismiss a derivative case.

New rules for out-of-state LLCs

Rhode Island removes the old certificate that authorized foreign LLCs to do business. Prior rules about doing business without registration and serving papers through the secretary of state are repealed. Flexible name-registration, prompt correction filings, conversion transfer of authority, and the simple cancellation filing route are also repealed. Out-of-state companies may face new steps or uncertainty when registering, converting, winding down, or handling lawsuits.

Rules for foreign LLC status

Foreign LLCs can keep Rhode Island registration after a merger or conversion by filing a transfer request and a good‑standing certificate. The Secretary of State may revoke a foreign LLC’s authority for fraud, unpaid fees or taxes, missing reports, or lacking a registered agent, but must give at least 60 days’ notice to fix it. After revocation, the LLC loses the right to do business until it is reinstated. An LLC has up to 20 years to reinstate by filing missing documents, getting a Taxation good‑standing letter, and paying $50 for each year or part‑year since revocation. A foreign LLC may withdraw its registration by filing a statement that business has stopped and taxes and fees are paid. The Attorney General can sue to stop a foreign LLC from doing business if it violates these rules.

Stronger rules for LLC filings

To form an LLC, file a certificate with your name, principal office, and Rhode Island registered agent. Authorized people must sign, and signers affirm truth under penalty of perjury. If a filed record is wrong or becomes wrong, you must promptly correct it. Courts can order a holdout to sign or allow filing without a signature. Delivery to the Secretary of State counts only when received. Anyone who relied on a false filing you knew about can recover damages.

Member contributions and payout rules

Member contributions can be property, services, other benefits, or a promise to provide them. A duty to contribute does not end because of death, disability, or termination. If a promised non-cash contribution fails, the LLC can require cash equal to its value. Members or managers who approve an illegal distribution can be personally liable. Lawsuits over an improper distribution must start within two years.

Old LLC chapter and defaults repealed

Rhode Island repeals its prior LLC law and its old default rules. The repeal removes past requirements and defaults on resident agents, manager and member voting, manager duties and liability limits, agency rules, and recordkeeping and inspection rights. It also removes old capital‑contribution and enforcement defaults, the quick filing correction option, and the prior merger pathway with its plan, approval, and abandonment rules. The past member derivative‑suit framework, including heightened pleading and fee‑shifting, is also repealed. The Attorney General’s prior special power to restrain foreign LLCs under the old chapter is eliminated. New uniform rules now govern under the replacement chapter.

Convert an LLC or into one

A Rhode Island LLC can convert into another entity type, or a foreign entity can become a Rhode Island LLC, if its home law allows. The conversion plan must be in writing and name both entities, list the jurisdictions and types, explain how interests convert, and include the proposed public record and private rules when needed. This gives owners a standard path to reorganize without re‑forming from scratch.

New Rhode Island LLC law and dates

Rhode Island creates a new Limited Liability Company law. Section 1 takes effect when the act is signed. Sections 2 and 3 take effect January 1, 2028. The law clarifies what a certificate of organization is and standardizes many key LLC terms. This gives organizers, members, and agents clearer rules to follow.

Option to form low-profit LLC

You can form a low‑profit LLC (L3C) to further charitable or educational goals. The articles must say income is not a significant purpose and no political purpose. If the company no longer meets the rules, it must drop L3C status and change its name. L3Cs follow the same LLC rules otherwise.

How courts apply the new LLC law

Courts and lawyers aim to apply this law the same way other states do. Lawsuits and rights that started before this chapter took effect stay under the old law.

LLC basics: entity and membership

An LLC is separate from its members and can exist forever. It can form for any lawful purpose, including nonprofit aims. The LLC can sue and be sued in its own name. You can become a member by the operating agreement, a covered transaction, or unanimous consent. Someone can be a member without making a contribution or getting a transferable interest.

Operating agreements now clearly control

Your operating agreement binds the LLC even if the company did not sign it. New members are treated as agreeing to it. When a filed public record conflicts with the operating agreement, members and managers follow the agreement, while outsiders can rely on the public record. Amendments after someone becomes a transferee or a former member cannot add new debts to that person.

Uniform merger and conversion rules

The law sets clear definitions and standard steps for mergers, interest exchanges, conversions, and domestications. Merger plans must be in writing and state each party’s name, jurisdiction, entity type, and how interests convert, plus any changes to public or private governing documents. Plans may rely on outside facts or events if the plan explains how those facts affect the deal. If a merger needs state notice or approval, the same applies to an interest exchange, conversion, or domestication. Charity assets cannot be diverted from their purpose without a court order, and parties can still use other lawful methods to reach similar outcomes.

Annual LLC report and late penalty

All Rhode Island and registered foreign LLCs must file an annual report each year between February 1 and May 1. Your first report is due in that window the year after your certificate became effective. Proof of mailing by May 1 counts. If you file more than 30 days late, you owe a $25 penalty for each year you miss.

Set fees for LLC filings

Key state fees now apply: $150 to form, $50 to amend or file an annual report, $100 to file a merger, and $50 to dissolve. Other fees include $20 for good standing, $30 for a certificate of fact, copies at 15¢/page plus $10 to certify, $50 to reserve a name or file a fictitious name, and $20 to change a resident agent (no fee for address‑only changes). Foreign registration is $150; cancellation is $75.

Filings give public notice after 90 days

The law sets when people are treated as having notice of key LLC events. Non‑members are deemed to have notice 90 days after certain filings take effect, like dissolution, termination, or a merger, exchange, conversion, or domestication. This creates predictable timelines for businesses and counterparties.

Forming an LLC and business names

Articles of organization must list the LLC name, Rhode Island resident agent, federal tax treatment, principal office (if known), and whether members or managers run the company. An authorized person or attorney‑in‑fact may sign. Your LLC name must include “limited liability company” or “l.l.c.” (or L3C labels) and be distinguishable. To use a trade name, file a fictitious name statement; until you file, you cannot sue on contracts made under that name.

How business filings work in RI

Filings must follow state rules, be in English, and be signed by an authorized person under penalty of perjury. A filing takes effect when the state issues the certificate, or on a later date you set within 90 days. You can withdraw a filing before it takes effect or correct errors; corrections relate back except for people who reasonably relied on the original. The Secretary of State will not file without required fees, and reinstatements need a tax good‑standing letter.

How courts handle insurance compliance

When someone challenges whether a registered limited liability partnership met its insurance or fund requirement, the court decides it. The person who claims limited liability must prove compliance. If the firm is in compliance, that proof is kept from the jury when deciding liability or damages.

How to wind up and pay claims

After dissolution, the LLC must wind up: pay debts, settle claims, and distribute assets. It can keep running for a reasonable time to preserve value and must file a dissolution statement that certifies no outstanding tax obligations and that fees and taxes are paid. If no members remain, a legal representative or transferees with a majority of distribution rights can appoint a wind‑up agent, and the court can supervise or appoint a receiver. Members can rescind dissolution within 120 days with unanimous consent and the right filing. A dissolved LLC can ask the court to set security for future claims, which protects members and transferees once posted. Payout order is creditors first (including member‑creditors), then return unreturned contributions, then the remainder in cash to owners by their pre‑dissolution rights.

Interest exchange deals and approvals

An LLC or another entity can acquire all of a class of interests in exchange for cash, securities, property, or rights, if authorized. The exchange plan must be in writing and name the parties, how interests convert, and any charter or operating‑agreement changes. For a domestic acquired LLC, all voting members must approve unless a prior, written operating‑agreement rule set a lower threshold and affected members with new liability consent in a record. Parties can amend or abandon the plan as allowed, and the acquired LLC must file a signed statement of interest exchange. The exchange takes effect when that statement is effective, and holders receive only the rights in the plan or any appraisal rights.

LLC agreements face guardrails

An operating agreement cannot waive certain core rules, like basic duties, filing needs, or accountability for bad faith and willful misconduct. It also cannot unreasonably block member information rights or override key dissolution and winding‑up rules. Membership alone does not make a person an agent who can bind the LLC.

LLC conversions: approvals and effects

To convert an LLC to another form, all members must approve unless your operating agreement allows fewer and you agreed to that rule. Members who will have post‑conversion liability must approve in writing. You can amend or abandon a filed plan before it takes effect, and you must file a conversion statement with required details. When conversion takes effect, the business continues without dissolution; all property and debts carry over; pre‑conversion liabilities stay, and new interest‑holder liability applies only to debts after conversion. A converted foreign entity can be served in Rhode Island, and any prior foreign registration is canceled at conversion.

LLC filings, certificates, and privacy

The Secretary of State must file compliant records and give a time‑stamped copy. If a filing is refused, you get a written reason within 10 business days and can ask Superior Court to order filing. Filed copies can be delivered to your agent, office, or as a free online download. On request, you can get a certificate of good standing or registration. Tax data shared with the Secretary stays confidential. You may record who can sign to transfer real estate or bind the LLC. The Secretary is not liable for filing a defective document. If reinstatement is denied, you get written reasons and can ask Superior Court to review within 30 days.

LLC naming, DBA, and reservations

Your name must include LLC, and new professional companies must use PLLC. Low‑profit LLCs must include L3C. You can reserve a name for 120 days. You can register a foreign LLC name for one year and renew it. To use a fictitious name (DBA), file a statement and pay $50; you cannot sue under that name until you file.

LLC revocation and getting reinstated

The Secretary of State can revoke an LLC for fraud, unpaid taxes or fees, missing filings, or no registered agent, after at least 60 days’ mailed notice. A revoked LLC still exists but may only wind up, and its registered agent remains in place. Within 20 years, the company can be reinstated by filing missing documents, paying $50 for each year or part‑year since revocation, and filing a tax good‑standing letter. Reinstatement relates back to the revocation date, but it does not undo rights of people who relied on the revocation before notice.

Member and former member records access

In a member‑managed LLC, members can inspect and copy records that matter to their rights with reasonable notice. In a manager‑managed LLC, ask in writing, state a related purpose, and the company must reply in 10 days about what it will provide. Former members can get records about the period when they were members. The LLC may charge reasonable copying costs and set reasonable confidentiality limits.

Member exits, death, and rights

A member can withdraw at any time. Leaving in breach of the operating agreement or too early in winding up can make the person pay damages. The law lists events that end membership, including written withdrawal, expulsion, foreclosure transfer, death, incapacity, bankruptcy, certain mergers or conversions, and finishing winding up. After dissociation, management rights end, but the person keeps only the economic interest. An estate representative can act for a deceased member to settle the estate and exercise transferee rights.

Mergers: filings, dates, effects

Merging entities must certify they owe no taxes and have paid all fees and taxes. If the survivor is a Rhode Island LLC, the merger is effective when the articles of merger are effective. For other survivors, it is effective on the later of the other law’s date or the articles’ effective date. When effective, non‑survivors end, all assets and debts move to the survivor, and owners get only the rights in the plan and any appraisal rights.

Merging companies: filings and service

You must file articles of merger listing each party’s name, jurisdiction, type, and approval, plus any required organic records. Parties may amend a plan only as allowed, and members can vote on changes that materially affect them. A filed merger can be abandoned before it takes effect by filing a signed abandonment. If the survivor is not a Rhode Island filing entity, it must appoint the Secretary of State to receive service of process for enforcement actions.

Moving an LLC’s legal home

An LLC can change its legal home (domesticate) into or out of Rhode Island if both places’ laws allow it. The plan must state names, how interests convert, and include the new certificate and any operating‑agreement text that must be in a record. All members must approve unless the operating agreement allows fewer and you agreed or joined after it was adopted. Merger protections in older agreements apply to domestications until those agreements are updated.

Name rules change; $50 fee gone

The $50 filing fee for each statement is eliminated. You can no longer reserve or transfer an LLC name in advance. An LLC may now use a fictitious business name even if it matches another registered entity’s name.

Operating agreements and member duties updated

An LLC’s operating agreement now governs member and manager rights unless the statute says otherwise. Rhode Island law controls an LLC’s internal affairs and member/manager liability. The law lets operating agreements change some fiduciary duties if the term is not manifestly unreasonable, but it cannot excuse bad faith, willful misconduct, or knowing law violations. Courts judge reasonableness based on when the term was adopted.

Registered agent and service rules

Every LLC must keep a registered agent with a Rhode Island business address. Agents can resign by filing; the resignation takes effect after 31 days or when a new agent is named. If the agent is missing or not on file, the Secretary of State accepts service and mails it to the company. Service on a registered agent must be in writing.

Rules for conflicted LLC deals

Acting in your own interest is not a breach by itself. You can defend a challenged deal by showing it was fair to the LLC. For certain permitted transactions, a member’s rights from that deal are treated like a nonmember’s, which can limit management and record access for that deal.

Transferring LLC interests and liability

Your economic interest in an LLC is personal property and can be transferred. If a transferee later becomes a member, they are responsible for member obligations they knew about when they joined. Buyers get clarity on what they receive and what they may owe.

When an LLC must dissolve

An LLC dissolves when its agreement says so, when all members consent, or after 90 days with no members unless transferees fix it by adding a member. A court can order liquidation or dissolution for deadlock, fraud, serious internal harm, unpaid debts, or waste. The court may also order other remedies instead of dissolution. If a member files to dissolve, other members can elect to buy that member’s interest at fair value, and the court can set the price, terms, and interest at the civil judgment rate.

Electronic signature limits apply

State law changes how electronic signatures and deliveries work with the federal ESIGN Act. It does not change Section 101(c) and does not allow e‑delivery of the notices listed in Section 103(b). Businesses that use e‑signatures must follow these state limits.

Creditor claims and LLC shutdowns

A dissolved LLC can send written notice to known claimants and give at least 120 days to submit claims; late claims are barred. If a timely claim is rejected, the claimant has 90 days to sue. The LLC may also publish notice; most actions must start within three years after publication or be barred. Claimants can collect from undistributed assets or from former owners only up to what they received. Creditors can show insolvency with an unsatisfied judgment or a signed admission. Insider petitioners must disclose their status and list known creditors in a liquidation filing.

Merger approvals and investor rights

Domestic LLCs can merge with domestic or foreign entities if authorized. A domestic merging LLC needs approval from all members entitled to vote, and members who would be personally liable after the merger must approve in writing unless the operating agreement says otherwise. Investors have appraisal rights only if the operating agreement or the plan grants them.

Move your LLC across states

You can amend or abandon a domestication plan; material changes need member approval. To domesticate, file a statement naming both entities, confirm approval, and attach the new certificate of organization. When effective, the company continues as the same legal entity; assets, debts, and rights carry over, and no dissolution or winding up is required. New interest holders are liable only for post‑domestication debts; former holders keep liability for pre‑domestication debts. A foreign company that domesticates can be served in Rhode Island, and any prior foreign registration here is canceled when domestication takes effect.

Recorded authority and denial filings

A recorded statement of authority can conclusively protect a buyer who pays value and does not know otherwise. For real estate, record a certified copy in the land records for this protection. A later cancellation, limiting filing, or five‑year lapse can end that protection. If you are named with granted authority and you deny it, you must file a statement of denial with the Secretary of State.

Rules for out-of-state LLCs in Rhode Island

A foreign LLC’s home law controls its internal affairs and member liability. A foreign LLC must register before doing business here; unregistered companies cannot start lawsuits in Rhode Island courts. To register, file a statement with your name (or an approved alternate), formation state, business type, offices, and Rhode Island agent, and update filings when key details change. Some activities do not count as doing business, like holding a bank account or isolated transactions. If you should have registered but did not, you appoint the Secretary of State to receive legal papers for in‑state claims. Noncomplying names must be changed for use here. If you convert to a domestic filing entity, your foreign registration ends on the conversion date; if you dissolve or convert to a nonfiling entity, file a withdrawal with a tax‑clearance certification.

Sponsors & Cosponsors

Sponsor

Matthew L. LaMountain
Democratic • Senate

Cosponsors

John P. Burke
Democratic • Senate
Andrew R. Dimitri
Democratic • Senate

Roll Call Votes

All Roll Calls

Yes: 104 • No: 1

House vote • 6/11/2026

LIMITED LIABILITY COMPANY ACT PASSAGE

Yes: 67 • No: 0

Senate vote • 6/10/2026

UNIFORM PARTNERSHIP ACT -- RI LIMITED LIABILITY COMPANY ACT Passage

Yes: 37 • No: 1

Actions Timeline

Signed by Governor — Chapter 246
6/23/2026Governor
Transmitted to Governor
6/18/2026Governor
House passed Sub A in concurrence
6/11/2026House
Placed on the House Consent Calendar (06/11/2026)
6/11/2026House
Senate passed Sub A
6/10/2026Senate
Placed on Senate Calendar (06/10/2026)
6/9/2026Senate
Committee recommends passage of Sub A
6/9/2026
Proposed Substitute
6/8/2026
Scheduled for consideration (06/09/2026)
6/5/2026
Committee recommended measure be held for further study
3/31/2026
Scheduled for hearing and/or consideration (03/31/2026)
3/27/2026
Introduced, referred to Senate Commerce
3/4/2026Senate

Bill Text

S2780 - As Introduced
3/4/2026
HTML PDF
S2780 - Substitute
3/4/2026
HTML PDF

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