§ 489.1119 — Election to no longer be a professional limited liability company

Iowa § 489.1119

• Jurisdiction: Iowa
• Title XII: BUSINESS ENTITIES
• Ch. 489: UNIFORM LIMITED LIABILITY COMPANY ACT

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or operating agreement of the professional limited liability company may provide that
purchase is not required upon the death of a member, if the professional limited liability
company is dissolved within sixty days after the date of the member’s death.
b. Notwithstanding subsections 1 through 5, purchase by the professional limited liability
company is not required upon the death of a member if the professional limited liability
company voluntarily elects to no longer be a professional limited liability company but
continue its existence as a limited liability company pursuant to section 489.1119 within
sixty days after death.
7. Unless otherwise provided in the certificate of organization or an operating agreement
of the professional limited liability company or in an agreement among all members of the
professional limited liability company, all of the following apply:
a. The purchase price for interests shall be its book value as of the end of the month
immediately preceding the death or other event which requires purchase. Book value shall
be determined from the books and records of the professional limited liability company
in accordance with the regular method of accounting used by the professional limited
liability company, uniformly and consistently applied. Adjustments to book value shall
be made, if necessary, to take into account work in process and accounts receivable. A
final determination of book value made in good faith by an independent certified public
accountant or firm of certified public accountants employed by the professional limited
liability company for the purpose shall be conclusive on all persons.
b. The purchase price shall be paid in cash as follows:
(1) Upon the death of a member, thirty percent of the purchase price shall be paid within
ninety days after death, and the balance shall be paid in three equal annual installments on
the first three anniversaries of the death.
(2) Upon the happening of any other event referred to in this section, one-tenth of the
purchase price shall be paid within ninety days after the date of the event, and the balance
shall be paid in three equal annual installments on the first three anniversaries of the date of
the event.
c. Interest from the date of death or other event shall be payable annually on principal
payment dates, at the rate of six percent per annum on the unpaid balance of the purchase
price.
d. All persons who are members of the professional limited liability company on the date
of death or other event, and their executors, administrators, and legal representatives, shall,
to the extent the professional limited liability company fails to meet its obligations under this
section, be jointly liable for the payment of the purchase price and interest in proportion
to their percentage of ownership of the professional limited liability company’s interests,
disregarding interests of the deceased or withdrawing member.
e. The part of the purchase price remaining unpaid after the initial payment shall be
evidenced by a negotiable promissory note, which shall be executed by the professional
limited liability company and all members liable for payment. Any person liable on the note
shall have the right to prepay the note in full or in part at any time.
f. If the person making any payment is not reasonably able to determine which of two or
more persons is entitled to receive a payment, or if the payment is payable to a person who
is unknown, or who is under disability and there is no person legally competent to receive
the payment, or who cannot be found after the exercise of reasonable diligence by the person
making the payment, it shall be deposited with the treasurer of state and shall be subject to
the provisions of section 490.1440 with respect to funds deposited with the treasurer of state
upon the voluntary or involuntary dissolution of a business corporation.
8. Notwithstanding the other provisions of this section, no part of the purchase price
shall be required to be paid until the certificates, if any, representing the interests have been
surrendered to the professional limited liability company.
9. Notwithstanding the other provisions of this section, payment of any part of the
purchase price for interests of a deceased member shall not be required until the executor or
administrator of the deceased member provides any indemnity, release, or other document
from any taxing authority, which is reasonably necessary to protect the professional limited
liability company against liability for estate, inheritance, and death taxes.

10. The certificate of organization or an operating agreement of the professional limited
liability company or an agreement among all members of a professional limited liability
company may provide for a different purchase price, a different method of determining
the purchase price, a different interest rate or no interest, and other terms, conditions, and
schedules of payment.
11. The certificate of organization or an operating agreement of the professional limited
liability company or an agreement among all members of a professional limited liability
company may provide for the optional or mandatory purchase of its own interests by the
professional limited liability company in other situations, subject to any applicable law
regarding such a purchase.