Good News for Limited Liability Companies

In Michigan, a limited liability company (“LLC”) is established by filing of Articles of Organization with the Bureau of Commercial Services. Included in those Articles of Organization is the proposed name of the new entity. The Bureau reviews all Articles of Organization submitted to it and will refuse to file the Articles if the proposed name suggests that the LLC will engage in a business that is not permitted for LLCs (for example, banking or the practice of medicine).

Until recently, whenever this happened there was little a frustrated business filer could do beyond turning toward Lansing, shaking a fist in the air and choosing a different name. The landscape changed, however, with the issuance of an unpublished opinion by the Michigan Court of Appeals this past summer. In Jackson v Department of Energy, Labor and Econ Growth, No. 297762, 2011 Mich App LEXIS 1159 (June 23, 2011), the Court ruled that the Bureau could not consider the intended activities of an LLC in determining whether or not to accept its Articles of Organization for filing, even if it suspects or knows that those activities are not permitted for an LLC. As long as the Articles of Organization substantially comply with the requirements of the Michigan Limited Liability Act, the Bureau must endorse and file them.

This ruling is a bit of good news for business owners who recognize the importance of selecting the “right” name for their LLC, and who want to be free to decide for themselves just what that “right” name should be.

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