Judiciary Committee reviews omnibus LLC revisions in HB 2371 amid debate over series LLCs and Delaware model

The Committee on Judiciary opened a hearing on House Bill 2,371, an omnibus bill that would amend the Kansas Revised Limited Liability Company Act and related statutes, receiving a bill brief from the reviser's office and proponent, neutral and technical testimony.

Jason Thompson, reviser, Statute's Office, summarized the scope: “House Bill 2,371 amends parts of 3 acts in current law,” identifying changes to the Kansas Revised Limited Liability Company Act, the Business Entity Transactions Act and the Business Entity Standard Treatment Act. He pointed members to the bill brief for section-by-section detail and highlighted that section 16 addresses the series LLC provision (KSA 17‑76‑143) and sections 20–23 address statutory public benefit LLCs.

Proponents from the Kansas Bar Association study committee said the bill is an omnibus modernization. “We represent a study committee of the Kansas Bar Association that has reviewed the Kansas Revised Limited Liability Company Act,” testified William (Bill) Quicke of the Polsinelli law firm, who said the committee drew on practitioners, academics, banking representatives and the secretary of state's office to align Kansas law with contemporary practice. Quicke said much of the drafting follows recent Delaware amendments and that the committee alternates periodic reviews of corporate and LLC statutes.

Representative questions focused on whether Kansas would follow Delaware or adopt different language. Quicke said Kansas has long modeled business‑entity law on Delaware, but the study committee reviews Delaware changes and recommends whether Kansas should follow. When Representative Carmichael raised a potential conflict because Polsinelli represents Lockton, Quicke acknowledged, “Polsonelli does represent Lockton.” Committee members asked how any Lockton‑sponsored changes (a separate bill, HB 2355, discussed informally) would be handled.

Clay Barker of the Kansas Secretary of State's office said the office supports the bill generally as a member of the working group but sought one technical change tied to filing fees in section 16. Barker explained that the fee for forming an LLC in Kansas is statutorily fixed at $150 and asked that the bill give the secretary regulatory authority to treat $150 as a ceiling and reduce the fee by regulation if appropriate, noting about 29,000 LLCs form in Kansas each year and that any fee reduction would be coordinated with budget staff because receipts go to the state general fund.

Industry neutral testimony described differing views about series LLC language. Eric Stafford of the Kansas Chamber testified as neutral and said the Chamber appreciates the Bar Association's work to modernize statutes but that the Chamber's proposed series LLC language—drawn in part from Missouri and Illinois precedent—aims to provide clarity for businesses and make Kansas a more attractive place for investment. “We are here today as a neutral party,” Stafford said, adding that in his view some deviations from Delaware are technical clarifications rather than substantive shifts.

Kelly Van Swal of the Kansas Bankers Association said banks share some concerns about series LLC provisions tied to taxation and creditor remedies. “Tax is an issue for us because when a garnishment or a tax levy comes into the bank, it's done by their tax ID number,” Van Swal testified, and the association sought clearer language on how series LLCs present tax IDs and on fraudulent transfers, referencing KSA 33‑102 (transfer to delay or defraud creditors) as a potential cross‑reference.

Committee members asked whether the draft language deviated substantively from Delaware, whether that was advisable and whether any changes would create uncertainty for practitioners. Proponents said the committee sought to incorporate Delaware updates where appropriate but that some series LLC provisions reflect other state models; opponents and neutral parties urged careful review of series provisions and cross‑references to tax and fraudulent‑transfer law.

The committee did not take final action on HB 2371 at the hearing. Members said they wanted time to review written materials, the reviser's brief and the technical amendments proposed by stakeholders before moving the bill forward.

The hearing closed after committee members and conferees completed questions and staff offered to circulate additional materials.

Ending: Committee members signaled continued review, with technical issues—series LLC treatment, public‑benefit LLC changes and fee‑authority language—flagged for follow‑up before any formal committee vote.