Inconsistencies Among Utah’s 3 New ‘Uniform’ Entity Acts

Note: All articles on Utah’s New LLC Act are in the process of being updated to conform to the changes made before it was enacted in 2014. Please check back to see the revised articles.

The Utah Legislature, in its 2011 General Session, enacted SB 131 entitled “Unincorporated Business Entity Uniform Acts” and Governor Gary Herbert signed SB 131 into law.

As adopted, SB 131 [See “Acronyms and New Terms“] includes three separate Acts:

  • Utah Uniform Partnership Act (UUPA) [See “Acronyms and New Terms“], which replaces the existing Utah statute on general partnerships and limited liability partnerships (LLP) [See “Acronyms and New Terms“]
  • Utah Uniform Limited Partnership Act (UULPA) [See “Acronyms and New Terms“], which replaces the existing Utah statute on limited partnerships
  • Utah Revised Uniform Limited Liability Company Act (URULLCA) [See “Acronyms and New Terms“], which replaces the existing Utah statute on limited liability companies

Those 3 Acts are based on 3 separate ‘Uniform’ Acts promulgated by NCCUSL [See “Acronyms and New Terms“]:

Following is a summary of some (but not all) of the inconsistencies among the three ‘Uniform’ Acts, as adopted in Utah via SB 131.

UUPA UULPA URULLCA
1. To form entity, must written certificate be filed with Division?

No
48-1b-202(1)

Yes
48-2d-201(1)

Yes
48-3-201(1)

UUPA includes a major historical change – to treat a general partnership as an entity separate from its owners [§48-1b-201(1)]; yet, no filing is required to form the entity unless LLP status is elected
2. Is business purpose required?

Yes
48-1b-101(2)(a)

No
48-2d-104(2)

No
48-3-104(2)

3. Is entity required to engage in business for profit?

Yes
48-1b-202(1)

No*
48-2d-104(2)

No*
48-3-104(2)

*Under federal and state tax laws, unincorporated multi-member entities are, by default, treated as tax partnerships – which require a joining together in business for profit
4. Must management structure be disclosed in filed certificate of formation? N/A

Yes
48-2d-201(1)(c)

No
48-3-201(2)

Under UUPA, no certificate needs to be filed unless LLP status is desired. Under UULPA, certificate of formation must disclose whether it is a ‘limited partnership’ or a ‘LLLP’ as well as the name and street and mailing addresses of each general partner
5. Must identity of control person be disclosed in filed charter? N/A

Yes
48-2d-201(1)(c)

No
48-3-201(2)

6. Does filed certificate of formation give notice of its contents? N/A

Yes
48-2d-103(3)

No
48-3-201(3)
Yes
48-3-103(4)(c)

Under UUPA, no certificate of formation is allowed or required but a separate ‘Statement of Partnership Authority’ may be filed that enables third party reliance on ‘position authority.’ A similar concept is included in URULLCA
7. To become an owner, must a person acquire an economic interest in the entity or make a contribution to the entity? Yes Yes

No
48-3-401(4)

8. Provides default rule for sharing profits and losses?

Yes
48-1b-401(2)

No No
9. Default rule for sharing distributions is based on: Per capita
48-1b-401(2)

Value of contributions
48-2d-503

Per capita
48-3-404(1)
10. Which fiduciary duties apply to control persons?

Care
Loyalty
48-1b-404(1)

Care
Loyalty
48-2d-408

Care
Loyalty
Other?
48-3-409
48-3-110(3)(d)
11. May fiduciary duties be eliminated?

No
48-1b-103(2)(c)

No
48-2d-110(2)(e),(f)

Almost
48-3-110(3)(d)

Current Utah LLC law does not allow fiduciary duties to be diminished
12. Does control person have non-compete duty during winding-up of entity’s ‘activities’? No

Yes
48-2d-408(2)(c)

Member-managed: No
48-3-409(2)(c)
Manager-managed: Yes
48-3-409(7)
13. Is control person entitled to compensation for winding up the entity?

Yes
48-1b-401(8)

No
48-2d-406(6)

No*
48-3-407(6)

*Under URULLCA, the answer is ‘Yes’ for member in member-managed LLC
14. Does owner have right to dissociate at any time?

Yes
48-1b-601(1)

LP: No
48-2d-601(1)
GP: Yes
48-2d-603(1)

Yes
48-3-601(1)

15. Does owner have right to a distribution upon dissociation?

No, if dissolved
48-1b-603(1)(a)
Yes, if not dissolved
48-1b-701(1)

No*
48-2d-406(6)

No
48-3-404(3)
*Current Utah LP law entitles limited partner, on 6 mos. notice, to withdraw and receive fair value for his/her LP interest — §48-2a-603 — missing in new law
16. Does statute specify which records are to be maintained and available for inspection?

Only generally
48-1b-403(2)

Yes
48-2d-111

Only generally
48-3-410(1)(a)
48-3-410(2)(a)

17. If a ‘transferable interest’ is evidenced by a certificate issued by the entity, does transfer of the certificate transfer the interest? N/A N/A

Yes
48-3-502(4)

18. Must capital account be maintained for each owner?

Yes
48-1b-401(1)

Yes in effect, since distributions based on value of contributions
48-2d-503

No provision
19. Is ‘principal office’ a key term? No Yes Yes
Under UUPA, the key corresponding term is “chief executive office”
20. Does filing of ‘Declaration of Dissolution’ by Division when entity is dissolved administratively give constructive notice to third parties? N/A

No
48-2d-103(4)

Maybe
48-3-103(4)

21. Does constructive notice of filed documents apply only to third parties? N/A

No
48-2d-103(2)

Yes
48-3-103(4)

22. Imposes duty on control persons to keep entity’s file at Division current and accurate? N/A

Yes
48-2d-208

Yes
48-3-207

23. Includes accounting rules for how to record contributions to the entity and distributions from the entity? Yes No No
24. Must annual report be filed at Division? No

Yes
48-2d-210(1)

Yes
48-3-209(1)