Understanding Colorado LLC Regulations

 

Colorado’s LLC statutes lay out the procedures for forming and operating a limited liability corporation (LLC).

We provide straightforward explanations of Colorado LLC legislation in this book, including:

Requirements for forming an LLC
Duties of a Registered Agent and Appointment
Operating Contracts
Requirements for Periodic Reports

Requirements for forming an LLC

The prerequisites for founding an LLC are outlined in Colorado LLC legislation. To make the procedure easier, the state of Colorado has designed an online Articles of Organization form.

Colorado Corporation Formation Statute

The Colorado Limited Liability Company Act contains the following LLC creation statutes:

7-80-204 is a section. Articles of incorporation

(1) The articles of incorporation must state:

(a) The limited liability company’s domestic entity name, which must correspond with part 6 of article 90 of this Act;

(a) (Amended by L. 94, p. 712, 7, effective July 1, 1994.)

(b.5) The address of the original primary office of the limited liability firm;

(c) The limited liability company’s first registered agent’s name and registered agent address;

(d) Each individual creating the limited liability corporation in accordance with Section 7-80-203’s genuine name and postal address;

(e) That management of the limited liability company is delegated to one or more managers or to the members, as the case may be;

(f) (Amended by L. 2003, p. 2265, 179, effective July 1, 2004.)

(g) That the limited liability firm has at least one member; and

(h) Any additional things relevant to the limited liability company or the articles of formation that the limited liability company’s founders decide to include.

What This Means: Key Points*

The Colorado LLC Act specifies the procedures for establishing (or creating) an LLC. To satisfy these criteria, the State of Colorado provides online LLC filing.

The following information is required for the creation of a Colorado LLC:

The name of LLC (Must meet Colorado LLC naming requirements)
The street and postal addresses of the LLC’s primary office
Name of the registered agent and location of the Colorado registered office
Whether the LLC is controlled by members or by managers
Each individual submitting the formation forms must include their actual name and address.

Duties of a Registered Agent and Appointment

The responsibilities and appointment of the LLC registered agent are defined under Colorado LLC legislation.

Registered Agent Statute in Colorado

The Colorado Corporations and Associations Act contains the following registered agent statutes:

7-90-701 Section Registered representative

(1) Any domestic entity for whom a constituent filed document is on file in the secretary of state’s records and every foreign entity permitted to do business or conduct operations in this state must maintain a registered agent in this state who shall be:

(a) Any person over the age of eighteen whose principal home or customary place of business is in this state;

(a) A domestic corporation with a regular place of business in this state; or

(c) A foreign entity with a regular place of business in this state that is permitted to do business or conduct operations in this state.

(2) A person or organization with a regular place of business in this state may act as its own registered agent.

(3) Any document given to the secretary of state for filing on behalf of an entity that appoints a person as the entity’s registered agent must include a statement stating that the person has agreed to the appointment.

What This Means: Key Points*

The role of a registered agent is to accept service of process (legal summons to a lawsuit).

A registered agent in Colorado must:

Keep a registered office in Colorado (i.e., no P.O. boxes)
Be an adult, a Colorado company or LLC, or a foreign corporation or LLC with the same business address as the registered office address.

Operating Contracts

Colorado LLC statutes specify how to create and maintain an LLC operating agreement.

The Colorado Limited Liability Company Act contains the following operating agreement statutes:

7-80-108 is a section. Operating agreement effect – nonwaivable clauses – statute of frauds

(1)

(a) To the extent that such provisions are compatible with law, the operating agreement may include any provisions concerning the affairs of the limited liability company and the conduct of its operations. An operational agreement defines the rights, obligations, limits, qualifications, and relationships among the managers, the members, the members’ assignees and transferees, and the limited liability company, unless otherwise stated in subsections (1.5), (2), or (3) of this section. Except as provided in subsections (1.5), (2), or (3) of this section, such provisions shall have precedence over any conflicting provision of this article. If the operating agreement does not provide otherwise, this item takes precedence.

(a) Any operating agreement of its members binds a limited liability business.

(c) An operating agreement may be entered into before, after, or at the time of filing of articles of organization, and it may be rendered effective as of the creation of the limited liability corporation or as of the time or date specified in the operating agreement.

(1.5) To the extent that a member, manager, or other person who is a party to or is otherwise bound by the operating agreement has duties, including but not limited to fiduciary duties, to a limited liability company or another member, manager, or other person who is a party to or is otherwise bound by an operating agreement, such member, manager, or other person’s duties may be restricted or eliminated by provisions in the operating agreement, as long as

(2) An operating agreement may not include the following clauses:

(a) (Amended by L. 2006, p. 855, 20, effective July 1, 2006.)

(b) Restrict the rights of members and management in violation of Section 7-80-408;

(c) (Amended by L. 2006, p. 855, 20, effective July 1, 2006.)

(d) Remove the requirement of good faith and fair dealing under section 7-80-404 (3), except that the operating agreement may specify the criteria by which the obligation’s performance is to be judged, provided such standards are not unreasonable.

(d.5) Remove or alter the requirements of section 7-80-801 (1)(c)(I), except to extend the period specified therein to no later than the first anniversary of the day the last surviving member’s membership was terminated; or

(e) Without the approval of such people, restrict or impose responsibilities on persons other than the members, their assignees and transferees, and the limited liability company.

(2.5)

(a) An operational agreement may include one or more sections dealing with the operation of the agreement or any of its terms, such as enforcement, interpretation, construction, applicability, severability of clauses, integration, the impact of parole evidence, and other issues.

(b) Unless otherwise specified in the operating agreement, if any provision of an operating agreement or its application to any person or circumstance is unenforceable or otherwise invalid under subsections (1.5) or (2) of this section or otherwise, the provision shall be limited, construed, and applied in a valid and enforceable manner, and the remaining provisions of the operating agreement shall be given effect without the invalid provision or application.

(c) Unless otherwise provided in the operating agreement, when it is claimed or appears to the court that any provision of the operating agreement may violate subsection (1.5) or (2) of this section, the parties must be given a reasonable opportunity to present evidence as to its commercial setting, purpose, and efficacy.

(3) No operating agreement may: unless it is stated in a written operating agreement or other document authorized in line with a written operating agreement;

(a) (Amended by L. 2004, p. 936, 3, effective July 1, 2004.)

(a) (Deleted by amendment, L. 97, p. 1503, 12, effective June 3, 1997.) (Deleted by amendment, L. 97, p. 1503, 12, effective June 3, 1997.)

(c) (Amended by L. 2004, p. 936, 3, effective July 1, 2004.)

(d) Modify any requirement in this article that a specific action or provision be documented.

(4) The purpose of this article is to give maximum effect to the concept of contract freedom and the enforceability of operational agreements.

(5) An operational agreement is not subject to any statute of frauds, including section 38-10-112, C.R.S., respecting invalid agreements, but does not include any obligation under this article that a specific action or provision be documented.

What This Means: Key Points*

An LLC operating agreement enables LLC members to establish ground rules for how their particular LLC will run. These regulations are often referred to as “terms” or “provisions.”

Operating agreements are governed by state law. If the legislation states that LLC members cannot dissolve an LLC unless all members agree, LLC members cannot amend or override the statute by an operating agreement.

It is simpler to negotiate difficulties regarding the running of the LLC when an operating agreement is in place. In the event of a litigation or disagreement, LLC members (or the courts) will have something to refer to.

If an LLC member cannot settle a disagreement and there is no operating agreement, the courts will apply LLC legislation to determine the matter.

Making an Operating Contract

Some LLCs, such as professional or real estate LLCs, may need special terms, but others may merely require basic provisions:

Responsibilities of each member
How will new members be admitted?
How may current members transfer or cancel their membership?
How will earnings and dividends be distributed?
The procedure for making changes to the operating agreement

Requirements for Periodic Reports

Colorado LLC statutes outline the requirements for yearly LLC reporting, referred to as a periodic report by the state. To make the procedure easier, the state of Colorado has built an online gateway for periodic reports.

Colorado LLC Statute Requiring Periodic Reports

The Colorado Corporations and Associations Act contains the following periodic report statutes:

7-90-501 is a section. Regular reports

(1) Each reporting entity must send to the secretary of state a monthly report that indicates the entity name of the reporting entity, the jurisdiction under the legislation of which the reporting entity is constituted, and:

(a) and (b) (Amended by L. 2003, p. 2296, 210, effective July 1, 2004.)

(c) The registered agent name and address of the reporting entity’s registered agent;

(d) The primary office address of the reporting organization.

(e) (Amended by L. 2003, p. 2296, 210, effective July 1, 2004.)

(2) and (3) (Amended by L. 2003, p. 2296, 210, effective July 1, 2004.)

(4)

(a) The annual report must be submitted in the manner specified by the secretary of state.

Repealed (b).

(c)

(I) Unless otherwise elected as provided in subparagraph (II) of this paragraph (c), a reporting entity shall deliver its first periodic report to the secretary of state for filing pursuant to part 3 of this article no later than the last day of the second calendar month following the first anniversary of the calendar month in which the reporting entity’s constituent filed document or statement of foreign entity authority, as the case may be, became effective or, in the case of a reporting entity, the last day of the second calendar month following the Unless otherwise specified in subparagraphs (II) or (III) of this paragraph (c), each reporting entity must submit an annual periodic report to the secretary of state.

(II) [Editor’s note: This version of subparagraph (II) is valid for ninety days after the secretary of state certifies it. (See the editor’s note following this section.)] The secretary of state may permit a reporting entity to select an anniversary month other than the anniversary month established in subparagraph (I) of this paragraph (c) by delivering to the secretary of state a statement of election of alternative anniversary month for filing pursuant to part 3 of this article.

(II) [Editor’s note: This version of subparagraph (II) takes effect ninety days after the secretary of state certifies it. (See the editor’s comment after this section.)] A reporting entity may choose an anniversary month other than the one specified in subparagraph (I) of this paragraph when submitting the constituent submitted document or the periodic report (c). If an entity chooses to modify its anniversary month under this subparagraph (II), it may not change its anniversary month again for at least one year.

(III) The secretary of state may allow a reporting entity to opt to submit the periodic report required by this section biennially by providing a statement of election of biannual reporting to the secretary of state for filing according to part 3 of this article.

(d) The information in the periodic report must be current as of the day it is given to the secretary of state for submission on behalf of the reporting entity in accordance with part 3 of this article. A delayed effective date should not be stated in any periodic report.

(e) (Amended by L. 2002, p. 1843, 98, effective July 1, 2002; L. 2002, p. 1707, 96, effective October 1, 2002.)

(f) (Amended by L. 2005, p. 1208, 11, effective October 1, 2005.)

(5) (Amended by L. 2005, p. 1208, 11, effective October 1, 2005.)

(5.5) (As amended by L. 2010, (HB 10-1403), ch. 404, page 1997, paragraph 15, effective August 11, 2010.)

(6) (Amended by L. 2004, p. 1484, 223, effective July 1, 2004.)

(7) Each reporting entity that fails or refuses to deliver to the secretary of state a periodic report for filing on or before the due date prescribed in subsection (4) of this section and pay the prescribed processing fee is subject to a penalty, which shall be determined and collected in accordance with C.R.S. section 24-21-104 (3).

(7.5) Beginning July 27, 2009, a domestic limited partnership created or administered by article 62 of this chapter that is not a reporting limited partnership may provide to the secretary of state a statement of election to be a reporting entity, which states:

(a) The domestic limited partnership’s domestic entity name;

(b) The main office address of its main office;

(c) The name and registered agent address of its registered agent; and

(d) The domestic limited partnership chooses to become a reporting limited partnership.

What This Means: Key Points*

Your Colorado periodic report may be filed online.

Your Colorado LLC periodic report must include (and be current as of the date of filing) the following information:

The company’s name
Principal office street address and postal address
Street address of the registered agent and the registered office

Due dates for periodic reports:

Periodic reports are required every five months, beginning two months before and ending two months after the day the LLC was created.