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NEVIS AMENDS ITS LIMITED LIABILITY COMPANY ORDINANCE

The Nevis Limited Liability Company (Amendment) Ordinance, 2015 (the “Ordinance”) became effective on July 1, 2015. From an asset protection perspective, the two main provisions in the Ordinance include: (i) the restatement of the section regarding charging orders; and (ii) the addition of a new section regarding fraudulent transfers.

The charging order section now states that a charging order is the sole remedy available to any judgment creditor (including a bankruptcy trustee) of a member’s interest, whether the company has a single or multiple members. Additionally, a charging order may not include any amount that constitutes a fine, penalty or award of punitive damages.

A charging order does not constitute a lien on a member’s interest in the company. Moreover, a creditor who obtains a charging order against a member may not: (i) become an assignee of any member’s interest; (ii) hold or be entitled to exercise any member rights in relation to that interest; (iii) interfere in the management of the company; (iv) liquidate or seize company assets; (v) restrict the company’s business; or (vi) dissolve the company.

A charging order is non-renewable and expires 3 years after the date the order is entered. Further, the company may continue to make calls upon its members for further investments and may retain a distribution that would otherwise go to the charged member as such member’s satisfaction of the call.

A new Section 43A was added to the Ordinance regarding fraudulent conveyances, which includes the ability of a creditor of a member to recover a claim against such member from property transferred to the company. This section states that a creditor must prove beyond a reasonable doubt that a transfer was intended to defraud the creditor and that the member was thereby rendered insolvent, considering all of his assets including the full fair market value of the LLC interest. In determining insolvency, if the fair market value of such member’s property exceeded the value of the creditor’s claim at the time of the transfer, then the property transferred shall not be deemed to have been transferred with the intent to defraud the creditor.

There is a two year statute of limitations in which a creditor must bring a claim against a company’s member. Additionally, before bringing an action, every creditor shall first deposit a bond in the sum of $100,000 for securing the payment of all costs as may become payable by the creditor.

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