The Wyoming Legislature amended the Wyoming LLC Statute dealing with the Liability of Members and Managers, which is copied below, to make it more difficult to impose liability on a member or manager of an LLC, for the debts, obligations or other liabilities of the LLC, commonly referred to as “Piercing the Corporate Veil.”  The new law limits the factors which a court can consider, and identifies factors the court is not to consider, when deciding whether to impose liability on an LLC member or manager.  The legislation is in response to Greenhunter Energy, Inc. v. W. Ecosystems Tech., Inc. case, in which a Wyoming Court pierced the corporate veil.

17‑29‑304.  Liability of members and managers.

(a)  The debts, obligations or other liabilities of a limited liability company, whether arising in contract, tort or otherwise:

(i)  Are solely the debts, obligations or other liabilities of the company; and

(ii)  Do not become the debts, obligations or other liabilities of a member or manager solely by reason of the member acting as a member or manager acting as a manager.

(b)  Repealed by Laws 2016, ch. 54, § 2.

(c)  For purposes of imposing liability on any member or manager of a limited liability company for the debts, obligations or other liabilities of the company, a court shall consider only the following factors no one (1) of which, except fraud, is sufficient to impose liability:

(i)  Fraud;

(ii)  Inadequate capitalization;

(iii)  Failure to observe company formalities as required by law; and

(iv)  Intermingling of assets, business operations and finances of the company and the members to such an extent that there is no distinction between them.

(d)  In any analysis conducted under subsection (c) of this section, a court shall not consider factors intrinsic to the character and operation of a limited liability company, whether a single or multiple member limited liability company. Factors intrinsic to the character and operation of a limited liability company include but are not limited to:

(i)  The ability to elect treatment as a disregarded or pass‑through entity for tax purposes;

(ii)  Flexible operation or organization including the failure to observe any particular formality relating to the exercise of the company’s powers or management of its activities;

(iii)  The exercise of ownership, influence and governance by a member or manager;

(iv)  The protection of members’ and managers’ personal assets from the obligations and acts of the limited liability company

Wyoming adopts House Bill No. HB 0101, amending the Wyoming Business Corporations Act to: authorize Corporations to use electronic networks or databases for the creation or maintenance of corporate records; authorizing the use of a data address to identify a corporation’s shareholder; authorizing corporations to accept shareholder votes if signed by a network signature that corresponds to a data address; and specifying requirements for use of electronic networks or databases. http://legisweb.state.wy.us/2018/Introduced/HB0101.pdf

The law essentially permits Corporations to maintain corporate records electronically.

The law is effective on July 1, 2018.

 

 

Wyoming adopts House Bill No. HB0070 providing that a person who develops, sells or facilitates the exchange of an open blockchain token (such as certain cryptocurrency) is not subject to specified securities and money transmission laws in Wyoming. https://legisweb.state.wy.us/2018/Introduced/HB0070.pdf

The new law, effective as of July 1, 2018, provides that the developer or seller of an open blockchain token shall not be subject to certain securities and money transmission laws in Wyoming, if all of the following are met:

(i) The token has not been marketed by the developer or seller as an investment;

(ii) The token is exchangeable for goods or services; and

(iii) The developer or seller of the token has not entered into a repurchase agreement of any kind or entered into an agreement to locate a buyer for the token.

 

Further, a person who facilitates the exchange of an open blockchain token shall not be deemed a broker-dealer or a person who otherwise deals in securities under Wyoming Law and shall not be subject to the provisions of W.S. 17-4-301 through 17-4-510 if all of the following are met:

(i) The person has a reasonable and good faith belief that a token subject to exchange:

(A) Conforms to the requirements of paragraphs (a)(i) and (ii) of W.S. Section 17-4-206; and

(B) Is not the subject of a repurchase agreement of any kind or the subject of an agreement to locate a buyer for the token.

(ii) The person takes reasonably prompt action to terminate the exchange of a token that does not conform to the requirements of this W.S. Section 17-4-206.

(c) As used in this W.S. Section 17-4-206, “open blockchain token” means a digital unit which is:

(i) Created:

(A) In response to the verification or collection of a specified number of transactions relating to a digital ledger or database;

(B) Based on random selection or the possession or age of existing units; or

(C) Using any combination of the methods specified in subparagraphs (A) and (B) of this paragraph.

(ii) Recorded in a digital ledger or database which is chronological, consensus-based, decentralized and mathematically verified in nature, especially relating to the supply of units and their distribution; and

(iii) Capable of being traded or transferred between persons without an intermediary or custodian of value.

 

Wyoming Statute Section 17-4-102 was amended to exclude a person who facilitates the exchange of an open blockchain token under Section 17-4-206(c) from the definition of a “Broker-dealer.” A Broker-dealer otherwise generally means a person engaged in the business of effecting transactions in securities for 2the account of others or for the person’s own account.

Wyoming Statute Section 17-4-102 was amended to exclude the open blockchain token from the definition of a “security.”

Wyoming Statute Section 40-22-104 was amended to exempt a person who develops, sells or facilitates the exchange of an open blockchain token, as defined in 9 W.S. 17-4-206(c), from the Wyoming Money Transmitters Act, Wyoming Statute 40-22-101, et seq.

 

Wyoming amended the Wyoming Money Transmitter Act to provide an exemption for virtual currency. The bill exempts the “buying, selling, issuing, or taking custody of payment instruments or stored value in the form of virtual currency or receiving virtual currency for transmission to a location within or outside the United States by any means” from the Wyoming Money Transmitter Act.

“Virtual currency” is defined as any type of digital representation of value that: (A) Is used as a medium of exchange, unit of account or store of value; and (B) Is not recognized as legal tender by the United States government.

The new legislation can be found in Wyoming Statutes Section 40-22-102 and Section 40-22-104. House Bill 0019.

This will permit cryptocurrency exchanges, such as Coinbase, to operate more easily in Wyoming, while not having to comply with the requirements of the Wyoming Money Transmitter Act.

On March 10, 2018, Wyoming adopted legislation to permit Series LLC’s to be formed in Wyoming.  The law is effective as of July 1, 2018, and is copied below. A Wyoming Series LLC essentially permits you to create a series (or essentially a subset of LLCs) in one LLC. This permits the debts, obligations or other liabilities of the LLC to be compartmentalized in each series. So if one series incurs a debt, liability or obligation, the other series within the LLC will not be responsible for the debt, liability or obligation. As an example if you have multiple rental properties, each rental property could be held within a different series of the same LLC, and if someone was injured in one rental property, the rental properties in the other series will not be exposed or liable.

17‑29‑211.  Series of members, managers, transferable interests or assets. 

(a)  An operating agreement may establish or provide for the establishment of one (1) or more designated series of members, managers, transferable interests or assets.  This section shall govern any matter with respect to a series to the extent not otherwise provided in the operating agreement.

(b)  Subject to subsection (c) of this section, if an operating agreement establishes or provides for the establishment of a particular series:

(i)  The debts, obligations or other liabilities of the particular series, whether arising in contract, tort or otherwise, shall be enforceable against the assets of the series only and not against:

(A)  The assets of the limited liability company generally or any other series thereof;

(B)  Any member of the limited liability company.

(ii)  The debts, obligations or other liabilities of the limited liability company generally or any other series thereof, whether arising in contract, tort or otherwise, shall not be enforceable against the assets of the particular series.

(c)  The limitations on liabilities in subsection (b) of this section shall only apply if:

(i)  The records for the particular series that account for the assets of the series are separately maintained from the records that account for the assets of the limited liability company or any other series thereof.  Records that reasonably identify the assets of a particular series, including by specific listing, category, type, quantity, computational or allocational formula or procedure such as a percentage or share of assets or by any other method where the identity of the assets is objectively determinable, shall be deemed to account for the assets of the particular series separately from the assets of the limited liability company or any other series thereof;

(ii)  The operating agreement specifically provides for the limitations on liabilities; and

(iii)  Notice of the limitations on liabilities of the particular series is included in the articles of organization.  Notice under this paragraph shall be sufficient whether or not the limited liability company has established or referenced any particular series in the notice.

(d)  Nothing in this section, an operating agreement or articles of organization shall restrict:

(i)  A series or limited liability company on behalf of a series from agreeing in the operating agreement or otherwise that any or all of the debts, obligations or other liabilities of the limited liability company generally or any other series thereof shall be enforceable against the assets of the series;

(ii)  A limited liability company from agreeing in the operating agreement or otherwise that any or all of the debts, obligations or other liabilities of a series shall be enforceable against the assets of the limited liability company generally; or

(iii)  Notwithstanding W.S. 17‑29‑304(a), a member or manager from agreeing in the operating agreement or otherwise to be personally liable for any or all of the debts, obligations or other liabilities of a series.

(e)  A series established under this section shall have the power and capacity to, in its own name, contract, hold title to assets including real, personal and intangible property, grant liens and security interests and sue and be sued.  A series may:

(i)  Have separate rights, powers or duties with respect to specified property or obligations of the limited liability company or profits and losses associated with specified property or obligations;

(ii)  Carry on any lawful purpose regardless of whether for profit, except for the purpose of acting as a financial institution or acting as an insurer as defined in W.S. 26‑1‑102(a)(xvi);

(iii)  Hold assets directly or indirectly, including in the name of the series or the name of the limited liability company.

(f)  An operating agreement that establishes or provides for the establishment of a series may:

(i)  Provide for classes or groups of members or managers of the series having the relative rights, powers and duties specified in the operating agreement;

(ii)  Provide for and specify the future creation of additional classes or groups of members or managers of the series having the relative rights, powers and duties as may be established, including rights, powers and duties senior to existing classes and groups of members or managers of the series;

(iii)  Provide for the taking of an action, including the amendment of the operating agreement, without the vote or approval of any member or manager or class or group of members or managers of the series;

(iv)  Provide that any member or class or group of members of a series shall have no voting rights;

(v)  Grant to all or certain identified members or managers or class or group of members or managers of the series the right to vote on any matter separately or with all or any class or group of members or managers of the series. Voting by members or managers may be on a per capita, number, financial interest, class, group or other basis.

(g)  The management of a series shall be vested as follows:

(i)  In the members of the series pursuant to W.S. 17-29-407(b).  A member shall cease to be a member of a series upon the divestment of all of the member’s transferable interests of the series.  The fact that a person ceases to be a member of a particular series shall not by itself cause the person to cease to be a member of the limited liability company or any other series thereof or cause the termination of the series, regardless of whether the person was the last remaining member of the series; or

(ii)  If the operating agreement provides for the management of the series in whole or in part by a manager, the management shall be vested in one (1) or more managers who shall be chosen as provided in the operating agreement and who shall hold the offices and have the responsibilities as specified in the agreement. A manager shall cease to be a manager of a series as provided in an operating agreement and subject to W.S. 17‑29‑407(c)(v). The fact that a person ceases to be a manager of a particular series shall not by itself cause the person to cease to be a manager of the limited liability company or any other series thereof.

(h)  Notwithstanding W.S. 17‑29‑404 and subject to subsections (j) and (m) of this section, if a member of a series becomes entitled to receive a distribution, the member has the status of, and is entitled to all remedies available to, a creditor of the series with respect to the distribution. An operating agreement may provide for the establishment of a record date for allocations and distributions associated with a series.

(j)  Notwithstanding W.S. 17‑29‑405(a), a limited liability company may make a distribution with respect to a series that has been established under this section unless the total assets of the series after the distribution would be less than the sum of its total liabilities plus the amount that would be needed, if the series were to be dissolved, wound up and terminated at the time of the distribution, to satisfy the preferential rights upon winding up and termination of members whose preferential rights are superior to those of the persons receiving the distribution.  A member that receives a distribution knowing that the distribution was made in violation of this subsection is personally liable to the series for the amount of the distribution. This subsection shall not affect any obligation or liability of a member under an agreement or other applicable law for the amount of a distribution, except that any action under this subsection shall be subject to W.S. 17‑29‑406(e).  For purposes of this subsection, “distribution” does not include amounts constituting reasonable compensation for present or past services or reasonable payments made in the ordinary course of business under a bona fide retirement plan or other benefits program.

(k)  Subject to W.S. 17‑29‑702, a series established under this section may be terminated and its affairs wound up without causing the dissolution of the limited liability company. The termination of the series shall not affect the limitations on liabilities of the series as provided in subsection (b) of this section. A series is terminated and its affairs shall be wound up upon the occurrence of any of the following:

(i)  The dissolution of the limited liability company under W.S. 17‑29‑702;

(ii)  The time or happening of events specified in the operating agreement;

(iii)  The vote or consent of members of the series who own more than two‑thirds (2/3) of the interests in the profits of the series; or

(iv)  On application by a member or manager of the series, the entry of a court order terminating the series on the grounds that it is not reasonably practicable to carry on the purposes of the series in conformity with the operating agreement.

(m)  A person winding up the affairs of a series may, in the name of the limited liability company and for and on behalf of the limited liability company and the series, take all actions with respect to the series as authorized by W.S. 17‑29‑702.  The person shall provide for the claims and obligations of the series and distribute the assets of the series as provided in W.S. 17‑29‑708.  Actions taken in accordance with this subsection shall not affect the liability of members and shall not impose liability on a liquidating trustee appointed in accordance with this subsection.  Notwithstanding W.S. 17‑29‑702, the following persons may wind up the affairs of a series:

(i)  A manager of the series who has not wrongfully terminated the series;

(ii)  If the series has no manager who qualifies under paragraph (i) of this subsection, the members of the series or a person approved by the members;

(iii)  The members who own more than fifty (50%) percent of the interests in the profits of the series;

(iv)  On application of a member or manager of the series or any personal representative or assignee of the member or manager, and upon cause shown, a court or a liquidating trustee appointed by the court.

(n)  A foreign limited liability company doing business in this state and governed by an operating agreement that establishes or provides for the establishment of one (1) or more designated series of members, managers, transferable interests or assets shall state the following on its certificate of authority:

(i)  That the operating agreement of the foreign limited liability company establishes or provides for the establishment of series having separate rights, powers or duties with respect to specified property or obligations of the foreign limited liability company or profits and losses associated with specified property or obligations;

(ii)  If any of the debts, obligations or other liabilities of any particular series, whether arising in contract, tort or otherwise, shall be enforceable against the assets of the particular series only and not against the assets of the foreign limited liability company generally or any other series thereof;

(iii)  If any of the debts, obligations or other liabilities of the foreign limited liability company generally or any other series thereof, whether arising in contract, tort or otherwise, shall be enforceable against the assets of the particular series.