H. B. 2638
(By Delegates Kiss and Smirl)
[Introduced February 22, 1995; referred to the
Committee on the Judiciary.]
A BILL to amend chapter thirty-one of the code of West Virginia,
one thousand nine hundred thirty-one, as amended, by adding
thereto a new article, designated article one-b, relating to
professional limited liability companies; setting forth
definitions; providing who may become a member of a
professional limited liability company; requiring the use of
certain initials or phrases to identify professional limited
liability companies; requiring that a foreign professional
limited liability company obtain a certificate of authority;
providing for mergers and consolidations of domestic
professional limited liability companies with foreign
professional limited liability companies or foreign
professional corporations; setting forth how professional
limited liability companies may render professional
services; providing that professional law limited liability companies may qualify as fiduciaries; providing for the
continuation of professional relationships in the context of
professional limited liability companies; setting forth
provisions regarding the liability of professional limited
liability companies, members, managers, employees and agents
with respect to professional limited liability companies,
members, managers, employees and agents; providing that
professional limited liability companies may not engage in
certain business activities; setting forth provisions
regarding the qualifications of professional limited
liability company members and managers; requiring that
professional limited liability companies engaged in
architecture, engineering, land surveying or landscape
architecture obtain a certificate of authority; requiring
that professional limited liability companies engaged in the
practice of accounting obtain and maintain certain
registration; requiring that professional limited liability
companies engaged in the practice of law obtain and maintain
any authorization required by state bar; allowing
individuals or professional business entities duly licensed
to practice law in any jurisdiction as members or managers
of professional limited liability companies engaged in the
practice of law; setting forth provisions with respect to
the transfer of membership interests in a professional limited liability company; providing for the
disqualification of a professional limited liability company
member, manager, agent or employee if such person becomes
legally disqualified to render professional services;
setting forth provisions regarding the conversion of a
professional limited liability company into a limited
liability company and the disposition of membership
interests of deceased or disqualified members of
professional limited liability companies; providing for the
management of a professional limited liability company;
setting forth provisions regarding the necessity of local
business licenses for professional limited liability
companies; setting forth provisions regarding the
consolidation and merger of professional limited liability
companies; providing that article one-a, chapter thirty-one
of this code applies to professional limited liability
companies; and providing for coordination of this article
with other provisions of this code.
Be it enacted by the Legislature of West Virginia:
That chapter thirty-one of the code of West Virginia, one
thousand nine hundred thirty-one, as amended, be amended by
adding thereto a new article, designated article one-b, to read
as follows:
ARTICLE 1B. PROFESSIONAL LIMITED LIABILITY COMPANIES.
§31-1B-1. Legislative purpose.
It is the intent of this legislation to provide for the
association of a group of individuals and professional
corporations, professional limited liability companies or other
business entities, to provide professional services as a limited
liability company and, as a limited liability company, to render
the same professional services to the public for which those
individuals or other business entities are required by law to be
licensed or to obtain other legal authorization from this state.
§31-1B-2. Definitions.
(a) Except as otherwise expressly provided herein, all terms
defined in article one-a of this chapter shall have the same
meanings for purposes of this article.
(b) As used in this article:
(1) "Professional business entity" means: (A) A
professional limited liability company, (B) a professional
corporation, or (C) a partnership each of the partners of which
is duly licensed or otherwise legally authorized to render the
same professional services as those for which the partnership was
organized.
(2) "Professional limited liability company" means: (A) A
limited liability company that is organized under this article
and article one-a of this chapter for the sole and specific
purpose of rendering professional services and, except as otherwise expressly permitted by this article, that has as its
members only persons or professional business entities that
themselves are duly licensed or otherwise legally authorized
within this state to render the same professional service as the
professional limited liability company; (B) a limited liability
company that is organized under this article and article one-a of
this chapter for the sole and specific purpose of rendering
professional services of architects licensed under article
twelve, chapter thirty of this code, engineers licensed under
article thirteen, chapter thirty of this code, land surveyors
licensed under article thirteen-a, chapter thirty of this code,
and landscape architects licensed under article twenty-two,
chapter thirty of this code, or any combination thereof, and all
of whose members are persons or professional business entities
duly licensed or legally authorized to perform such services:
Provided, That nothing herein shall be construed to allow any
member of any of such professions to conduct that person's
practice in a manner contrary to the standards of ethics of such
profession; or (C) a limited liability company that is organized
under this article and article one-a of this chapter for the sole
and specific purpose of rendering the professional services of
two or more practitioners of medicine licensed under article
three, chapter thirty of this code, or two or more dentists
licensed under article four, chapter thirty of this code, or two or more dental hygienists licensed under article four, chapter
thirty of this code, or two or more pharmacists licensed under
article five, chapter thirty of this code, or two or more
optometrists licensed under article eight, chapter thirty of this
code, or two or more osteopathic physicians and surgeons licensed
under article fourteen, chapter thirty of this code, or two or
more assistants to osteopathic physicians and surgeons licensed
under article fourteen-a, chapter thirty of this code, or two or
more chiropractors licensed under article sixteen, chapter thirty
of this code, or two or more physical therapists licensed under
article twenty, chapter thirty of this code, or two or more
psychologists licensed under article twenty-one, chapter thirty
of this code, or two or more hearing aid dealers licensed under
article twenty-six, chapter thirty of this code, or two or more
hearing aid fitters licensed under article twenty-six, chapter
thirty of this code, or two or more occupational therapists
licensed under article twenty-eight, chapter thirty of this code,
or two or more social workers licensed under article thirty,
chapter thirty of this code, or two or more professional
counselors licensed under article thirty-one, chapter thirty of
this code, or two or more speech-language pathologists licensed
under article thirty-two, chapter thirty of this code, or two or
more audiologists licensed under article thirty-two, chapter
thirty of this code, or any combination thereof, and all of whose members are persons or professional business entities duly
licensed or otherwise legally authorized to perform such
services: Provided, That nothing herein shall be construed to
allow any member of any of such professions to conduct that
person's practice in a manner contrary to the standards of ethics
of such profession.
(3) "Professional corporation" means a corporation that is
organized under chapter thirty of this code.
(4) "Professional services" means any type of personal
service to the public that requires as a condition precedent to
the rendering of that service or the use of that title the
obtaining of a license, certification or other legal
authorization and shall be limited to the personal services
rendered by those persons whose professions are set forth in
chapter thirty of this code.
§31-1B-3. Who may become a member.
Two or more individuals or professional business entities
duly licensed or otherwise legally authorized to render the same
professional services within this state may become members of a
limited liability company for pecuniary profit under article
one-a of this chapter, for the sole and specific purpose of
rendering the same and specific professional service, subject to
any laws, not inconsistent with this article, which are
applicable to the practice of that profession in the limited liability company form.
§31-1B-4. Use of initials "P.L.C." or "P.L.L.C." following
company name.
A professional limited liability company shall use the
initials "P.L.L.C." or the phrase "a professional limited
company" or "a professional limited liability company"
immediately after its limited liability company name in the place
of any word or abbreviation required by article one-a of this
chapter, to indicate that the limited liability company is duly
organized under and subject to the provisions of this article.
§31-1B-5. Annual registration fee.
A professional liability company organized under this
article and article one-a of this chapter shall pay the secretary
of state, in addition to any other fees required under article
one-a, a registration fee of fifty dollars at the time it files
its articles of organization and annually thereafter shall pay
the secretary of state a registration renewal fee of fifty
dollars.
§31-1B-6. Certificate of authority for foreign professional
limited liability company.
(a) Notwithstanding any other provision of this article, a
foreign professional limited liability company organized under
the laws of a jurisdiction other than this state to perform a
professional service of the type defined in section two of this article, may apply for and obtain a certificate of authority to
render those professional services in this state on the following
terms and conditions:
(1) Only members, managers, employees and agents licensed or
otherwise legally qualified by this state may perform the
professional service in this state.
(2) The professional limited liability company must meet
every requirement of this article, except the requirement that
all of its members and managers be licensed to perform the
professional service in this state.
(3) The powers of any foreign professional limited liability
company admitted under this section shall not exceed the powers
permitted to domestic professional limited liability companies
under this article.
(b) In order to qualify, a foreign professional limited
liability company shall make application to the secretary of
state as provided in article one-a of this chapter and, in
addition, shall set forth the name and address of each member,
manager, employee and agent of the limited liability company who
will be providing the professional service in this state and
whether those members, managers, employees and agents are
licensed, or otherwise legally qualified, to perform the
professional service in this state.
(c) A foreign professional limited liability company shall
pay the secretary of state, at the time it applies for a
certificate of authority, a registration fee of fifty dollars,
and annually thereafter shall pay the secretary of state a
registration renewal fee of fifty dollars.
§31-1B-7. Merger or consolidation with foreign professional
limited liability company or foreign professional
corporation.
Any limited liability company organized under this article
may merge or consolidate with a foreign professional limited
liability company that has qualified to do business in this state
pursuant to section five of this article, or a foreign
professional corporation that has qualified to do business in
this state, but only if both limited liability companies or the
limited liability company and the professional corporation are
organized to render the same professional services: Provided,
That (a) the merger or consolidation is permitted by the laws of
the state under which the foreign professional limited liability
company or foreign professional corporation is organized; (b) if
the surviving professional business entity or new professional
business entity is a professional limited liability company
organized and operating under the laws of this state, all members
and managers of the remaining professional limited liability
company shall be licensed or otherwise legally authorized within
this state to render the same professional service as the professional limited liability company; and (c) if the surviving
professional business entity or new professional business entity
is a professional corporation organized and operating under the
laws of this state, all stockholders of the remaining
professional corporation, except stockholders subject to the
provisions of section fourteen of this article, shall be licensed
or otherwise legally authorized within this state to render the
same professional service as the professional corporation.
§31-1B-8. How limited liability company may render professional
services; nonprofessional employees and agents;
members and managers need not be employees, etc.
No professional limited liability company may render
professional services except through its members, managers,
employees and agents who are duly licensed or otherwise legally
authorized to render those professional services within this
state: Provided, That this provision shall not be interpreted to
preclude clerks, secretaries, bookkeepers, technicians and other
assistants who are not usually and ordinarily considered by
custom and practice to be rendering professional services to the
public for which a license or other legal authorization is
required from acting as employees, managers and agents of a
professional limited liability company and performing their usual
duties or from acting as employees, managers or agents of a
professional limited liability company. Nothing contained in this article shall be interpreted to require that the right of an
individual to be a member or manager of a limited liability
company organized under this article, or to organize that limited
liability company, is dependent upon the present or future
existence of an employment relationship between that individual
and that limited liability company, or that individual's present
or future active participation in any capacity in the production
of the income of that limited liability company or in the
performance of services rendered by that limited liability
company.
§31-1B-9. Professional relationships not affected; liability for
debts, etc., of limited liability company, its
members, managers, employees and agents.
The provisions of this article shall not be construed to
alter or affect the professional relationship between a person
furnishing professional services and a person receiving that
service either with respect to liability arising out of that
professional service or the confidential relationship between the
person rendering the professional service and the person
receiving that professional service, if any, and all confidential
relationships enjoyed under the laws of this state, whether now
in existence or hereafter enacted, shall remain inviolate. A
member, manager, agent or employee of a professional limited
liability company shall not, by reason of being a member, manager, agent or employee of such professional limited liability
company, be personally liable for any debts or claims against, or
the acts or omissions of, the professional limited liability
company or another member, manager, agent or employee of such
professional limited liability company, but the professional
limited liability company shall be liable for the acts or
omissions of its members, managers, agents, employees and
servants to the same extent to which any other limited liability
company would be liable for the acts or omissions of its members,
managers, agents, employees and servants while they are engaged
in carrying on the limited liability company business.
§31-1B-10. Professional limited liability company not to engage
in other business; investment of funds.
No professional limited liability company organized under
this article may engage in any business other than the rendering
of the professional services for which it was specifically
organized: Provided, That nothing in this code applicable to
limited liability companies shall be interpreted to prohibit a
limited liability company from investing its funds in real
estate, mortgages, stocks, bonds or any other type of
investments, from owning real or personal property, or from
exercising any other investment power granted to limited
liability companies under this chapter and not in conflict with
the provisions of this article.
§31-1B-11. Qualifications of members and managers.
No professional limited liability company may have as a
member anyone other than an individual or a professional business
entity that is duly licensed or otherwise legally authorized to
render the same professional services as those for which the
professional limited liability company was organized.
§31-1B-12. Special provisions for law limited liability
companies as to qualifications of members or
managers.
Individuals or professional business entities duly licensed
to practice law in this state or another state or foreign
jurisdiction may be members or managers of a professional limited
liability company engaged in the practice of law: Provided, That
only members, managers, employees and agents licensed to practice
law within this state may perform the practice of law in this
state.
§31-1B-13. Transfer of membership interests.
No member of a professional limited liability company
organized under this article may sell, assign, in whole or in
part, or otherwise transfer, that member's membership interest in
that professional limited liability company except to that
professional limited liability company or another individual or
professional business entity that is eligible to be a member of
that professional limited liability company.
§31-1B-14. Disqualification of member, manager, agent or
employee.
If any member, manager, agent or employee of a professional
limited liability company organized under this article who has
been rendering professional service to the public becomes legally
disqualified to render those professional services within this
state, that member, manager, agent or employee shall immediately
sever all employment with, and financial interests in, that
professional limited liability company, except that the member,
manager, agent or employee may be a member subject to the
provisions of this article. A professional limited liability
company's failure to require compliance with this provision shall
constitute a ground for the forfeiture of its articles of
organization and its dissolution or, in the case of a foreign
professional limited liability company, for the revocation of its
certificate of registration to transact business in this state.
§31-1B-15. Conversion into nonprofessional company; disposition
of membership interests of deceased or
disqualified members.
(a) A professional limited liability company organized under
this article shall continue until dissolved in accordance with
other provisions of this article or the provisions of article
one-a of this chapter.
(b) Whenever all members of a professional limited liability
company licensed under this article cease at any one time and for
any reason to be licensed, certified or registered in the
particular field of endeavor for which the professional limited
liability company was organized, or by the vote of the holders of
at least two thirds of its membership interests, the professional
limited liability company thereupon shall be treated as converted
into, and shall operate henceforth solely as, a limited liability
company under article one-a of this chapter, exclusive of this
article, but may be reconverted upon removal of the disability or
by the vote of the holders of at least two thirds of its
membership interests.
§31-1B-16. Management.
Unless the articles of organization or an operating
agreement provides for management of a professional limited
liability company by a manager or managers, management of a
professional limited liability company shall be vested in its
members. If the articles of organization or an operating
agreement provide for management of a professional limited
liability company by a manager or managers, each manager shall be
an individual or professional business entity duly licensed or
otherwise legally authorized to render the same professional
services within this state that the professional limited
liability company was organized for the purpose of rendering.
Only members or managers duly licensed or otherwise legally authorized to render the same professional services within this
state shall supervise and direct the provision of professional
services within this state.
§31-1B-17. Consolidation and merger.
A professional limited liability company operating pursuant
to this article may consolidate or merge with another
corporation, limited liability company or partnership only if the
surviving corporation, limited liability company, or partnership
is a professional corporation, a professional limited liability
company, or a partnership, all of the partners of which are
professional corporations, professional limited liability
companies, or individuals duly licensed or otherwise legally
authorized to render the same professional services as those for
which the surviving professional corporation, professional
limited liability company or partnership was incorporated.
§31-1B-18. Application of article one-a of this chapter.
The provisions of article one-a of this chapter shall be
applicable to professional limited liability companies organized
under the provisions of this article. Where a conflict arises
between the provisions of article one-a of this chapter and this
article, the provisions of this article shall control.
NOTE: The purpose of this bill is to authorize the
formation of professional limited liability companies to allow
certain individuals and business entities to provide professional services to the public as a limited liability company. Under the
bill, two or more individuals or professional business entities
would be able to become members of a professional limited
liability company. No professional limited liability company
would be able to render professional services except through its
members, managers, employees and agents, and no professional
limited liability company would be able to engage in certain
other business other than the rendering of professional services.
A professional limited liability company would be managed by a
manager or managers named in the professional limited liability
company's articles of organization or operating agreement, or, in
default of such provision, by its members. The bill would allow
foreign professional limited liability companies to obtain a
certificate of authority allowing them to act as professional
limited liability companies in West Virginia. No member of a
professional limited liability company would be able to transfer
membership interests in the professional limited liability
company except to the professional limited liability company or
another individual or professional business entity that is
eligible to become a member of that professional limited
liability company. If a member, manager, agent or employee of a
professional limited liability company were to become
disqualified to render professional services, then such person
would have to sever all employment with and financial interest in
the professional limited liability company. The bill would allow
consolidations and mergers of professional limited liability
companies with other business entities if the surviving entity
were a professional business entity. The bill would allow
professional limited liability companies to be converted into
limited liability companies on a two-thirds vote of the
professional limited liability company membership interests or on
the occurrence of certain other conditions. Finally, the bill
provides that the provisions of the West Virginia Limited
Liability Company Act would apply to this article unless a
conflict arises, in which case this article would control.
This article is new; therefore, underscoring and
strike-throughs have been omitted.