No. ( 1989 )

Natalie Meyer Secretary of State 1560 Broadway Denver, CO 80203

Dear Secretary Meyer:

This opinion letter is written in response to your February 15, 1989, letter in which you inquired about the authority of the Secretary of State to require Wyoming limited liability companies to register as foreign corporations.

QUESTION PRESENTED AND CONCLUSION

Are Wyoming limited liability companies foreign corporations which are entitled to certificates of authority?

No.

ANALYSIS

A foreign corporation is defined as "a corporation for profit organized under laws other than the laws of this state." Section 7-1-102(8), C.R.S. (1986). As long as the entity is a corporation under the laws of the state in which it is formed, Colorado will recognize it. Section 7-9-101(2), C.R.S. (1986). Foreign corporations conducting business in Colorado must obtain certificates of authority from the Secretary. Section 7-9-101(1), C.R.S. (1986). Entities which are not foreign corporations are not entitled to certificates of authority.

A Wyoming limited liability company is not a corporation under Wyoming law. A limited liability company is defined as as entity organized pursuant to title 17, chapter 15 of the Wyoming Statutes. Wyo. Stat. § 17-15-102(a)(iii) (1977). A corporation is defined as an entity organized pursuant to title 17, chapter 1 of the Wyoming statutes. Wyo. Stat. §17-1-102(a)(i) (1961).

The Wyoming limited liability company is established pursuant to Wyo. Stat. §§ 17-15-101 through 17-15-136 (1977). A limited liability company is established by filing duplicate signed and verified articles of organization. The words "limited liability company" must be the last words of the name, and the company must be identified as a "limited liability company" on all documents. Wyo. Stat. § 17-15-105(a) (1977). Omission of the word "limited" may result in personal liability. Wyo. Stat. §17-15-105(a)(ii) (1977). A limited liability company has, at most, a duration of only 30 years, Wyo. Stat. § 17-15-107(a)(ii) and it may terminate on the death, retirement, resignation, expulsion, bankruptcy, or dissolution of a member. Wyo. Stat. § 17-15-107(a)(viii). The interest may be transferred or assigned only as provided in the operating agreement. The transferee of an interest has no right to participate in the management of the business or to become a member unless all other members approve. Wyo. Stat. § 17-15-122 (1977).

Wyoming Business Corporations are significantly different. The corporations code distinguishes between corporations and limited liability companies. Wyo. Stat. § 17-1-107(a)(ii) (1961). Wyoming corporations have a right to perpetual succession, Wyo. Stat. § 17-1-104(a)(ii) (1961), and the participation rights of transferees are not limited, Wyo. Stat. § 17-1-114 through 121 (1961).

The legislative history confirms that the limited liability company is not a corporation under Wyoming law. Materials submitted to the Wyoming legislature by advocates of the limited liability company compared it to "partnership associations" adopted in Pennsylvania in 1874 and in Michigan in 1877, and to "limited partnership associations" adopted in New Jersey in 1880 and in Ohio in 1881.¹

Moreover, the Internal Revenue Service (I.R.S.) has determined that the limited liability company is not a corporation for tax purposes. Rev. Rule 88-76, CCH Standard Federal Tax Reports, § 6723. The I.R.S. concluded that the Wyoming limited liability company was not a corporation because it did not possess either continuity of life or the free transferability of interests.

Based upon the statutory definitions, the legislative history, and the Internal Revenue Service ruling, I conclude that the limited liability company is not a corporation under Wyoming law. Because it is not a corporation under Wyoming law, the Wyoming limited liability company is not entitled to obtain a Colorado certificate of authority.

SUMMARY

Wyoming limited liability companies cannot obtain from Colorado certificates of authority as foreign corporations.

Sincerely,

DUANE WOODARD Attorney General

CORPORATIONS INCORPORATION SECRETARY OF STATE

§ 7-1-102(8), C.R.S. (1986)

§ 7-9-101(2), C.R.S. (1986)

§ 24-21-101, C.R.S. (1988)

Wyo. Stat. §§ 17-15-101 through 17-15-136 (1977).

Wyo. Stat. § 17-15-102(a)(iii), (1977).

Wyo. Stat. § 17-1-102(a)(1) (1961).

SECRETARY OF STATE DEPT.

Wyoming limited liability companies cannot obtain certificates of authority.

¹ The legislative history was obtained from the Office of the Wyoming Secretary of State.