As a general proposition, LLCs organized in any of the states may engage in any lawful business or activity.1 While the purpose of any particular LLC may not be expanded in the articles of organization and other organic documents,2 it is permissible to restrict the purpose of a particular LLC in the articles of organization and other organic documents.3 More often than not, if the purpose of a particular LLC is addressed in either the articles of organization or the operating agreement, the purposes are nothing more than a generic statement that the company "may engage in any lawful activity or business." Such a generic formula will ultimately have consequences; whether or not those consequences are advantageous or detrimental is dependent upon your position in the dispute.

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* Author is a frequent speaker and writer on business organization law, he has published in journals including The Business Lawyer, the Delaware Journal of Corporate Law, the American Business Law Journal and the Journal of Taxation; he is an elected member of the American Law Institute.

Footnotes

1 The "purpose" statutes of the various LLC Acts are collected in Larry E. Ribstein & Robert R. Keatinge, Ribstein and Keatinge on Limited Liability Companies, app'x 4–9 (June 2017).

2 Once the range of permitted activities is anything that is lawful, that without this set is unlawful. While there has been consideration of use of LLC structures for illegal activities (see, e.g., Terence F. Cuff, Shop Talk: Drafting Partnership and LLC Agreements: Part I, 3 Bus. Entities (May/June 2001); Cuff, Shop Talk: Drafting Partnership and LLC Agreements: Part II, 3 Bus. Entities (July/Aug. 2001); Cuff, Shop Talk: Drafting Partnership and LLC Agreements: Part III, 3 Bus. Entities (Sept./Oct. 2001); Cuff, Shop Talk: Drafting Partnership and LLC Agreements: Part IV, 3 Bus. Entities 12 (Nov./Dec. 2001)), those activities are no more lawfully permitted because they are sanctioned by private ordering. See also Christine Hurt & D. Gordon Smith, Bromberg and Ribstein on Partnership § 2.11, Illegal Partnerships.

3 Whether, by private ordering, third parties will be deemed to be on notice of that limited purpose is a state-specific question. For example, under Kentucky law, while the articles of organization may restrict the purpose of an LLC, and while those articles of organization will be a public record, third parties will not, merely by virtue of that filing, to be deemed to have notice of that limitation. See Ky. Rev. Stat. Ann. §275.025(7). The same rule exists in Indiana. See Ind. Code §23-18-2-7. In contrast, under the Utah LLC Act, a third party would be deemed to have notice of that limitation. See Utah Code Ann. §48-2c-802(2)(c); Zions Gate R.V. Resort, LLC v. Oliphant, 326 P3d 118 ( Utah App. 2014). The notice effect on third parties of the provisions of the articles of organization of an LLC is collected at Ribstein & Keatinge, supra note 1, app'x 4-6. See also, generally, Deborah DeMott, Agency in the Alternatives: Common-Law Perspectives on Binding the Firm in Research Handbook on Partnerships, LLCs and Alternative Forms of Business Organizations (Robert W. Hillman & Mark J. Loewenstein eds.) (Edward Elgar Publishing, 2015).

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.