Rhode Island’s New LLC Act: What Business Owners Need to Know Before 2028

October 2026 | Bilodeau Capalbo, LLC

Rhode Island has enacted a comprehensive new Limited Liability Company Act that will substantially change the statutory framework governing limited liability companies, their members, managers, and business operations. The legislation, enacted through 2026 Rhode Island Public Laws Chapters 246 and 247, establishes a new Chapter 7-16.1 of the Rhode Island General Laws, scheduled to take effect January 1, 2028.

The new Act addresses important issues involving LLC operating agreements, management authority, fiduciary duties, voting rights, ownership interests, business transactions, and dissolution.

For Rhode Island business owners, these changes present an important opportunity to evaluate existing operating agreements, ownership arrangements, and management procedures before the new statutory framework becomes applicable.

The changes are particularly significant for closely held businesses, real estate investment companies, family-owned LLCs, and businesses with multiple members whose interests and responsibilities are governed by operating agreements.

Bilodeau Capalbo, LLC represents business owners, LLC members, managers, investors, and business entities in matters involving business formation, corporate governance, operating agreements, commercial transactions, and business litigation.

1. Why Rhode Island Is Replacing Its Existing LLC Act

Rhode Island’s existing Limited Liability Company Act, codified at R.I. Gen. Laws Chapter 7-16, has governed limited liability companies for decades.

Although the existing statute establishes fundamental rules concerning formation, management, membership interests, and dissolution, it does not address certain governance and fiduciary duty issues with the same specificity found in more modern LLC statutes.

The new Rhode Island Limited Liability Company Act draws upon the Revised Uniform Limited Liability Company Act and establishes a more detailed statutory framework addressing relationships among members, managers, and the LLC itself.

Among the most important developments are express statutory provisions governing fiduciary duties, operating agreements, management structures, voting requirements, and business transactions.

These changes may affect how operating agreements are drafted, how business decisions are authorized, and how disputes among LLC members and managers are evaluated.

2. When Does Rhode Island’s New LLC Act Take Effect?

The new Rhode Island Limited Liability Company Act is scheduled to take effect January 1, 2028.

However, the legislation establishes transitional provisions governing its application to LLCs formed before that date.

Under R.I. Gen. Laws § 7-16.1-110, the new Act generally applies to newly formed LLCs beginning January 1, 2028.

For LLCs formed before that date, the legislation provides a transition period during which an existing company may elect to be governed by the new Act in accordance with the applicable statutory requirements.

Beginning January 1, 2029, the new Act generally governs existing Rhode Island LLCs as well, subject to the statute’s transitional provisions.

This distinction is important because business owners should not assume that every existing LLC will automatically become subject to all provisions of the new Act on January 1, 2028.

Existing LLCs should evaluate their operating agreements and governance arrangements well before the transition period concludes.

3. New Statutory Fiduciary Duties for LLC Members and Managers

One of the most significant changes concerns the express statutory recognition of fiduciary duties applicable to LLC members and managers.

R.I. Gen. Laws § 7-16.1-409 establishes standards concerning duties of loyalty and care.

Under the new framework, the applicable duties depend in part upon whether the LLC is member-managed or manager-managed.

The statutory duty of loyalty addresses matters including accounting for company property and opportunities, conflicts of interest, transactions involving the company, and certain competing activities.

The duty of care addresses conduct involving gross negligence, recklessness, intentional misconduct, and knowing violations of law.

These provisions are particularly important in disputes involving closely held businesses where one or more members exercise substantial control over company finances, management decisions, or business opportunities.

How Fiduciary Duties May Affect LLC Litigation

Disputes may arise when one member alleges that another member or manager improperly transferred company assets, diverted a business opportunity, engaged in self-dealing, or acted contrary to duties owed to the LLC.

The new statutory provisions provide a more express framework for evaluating certain obligations of members and managers.

However, whether a particular duty exists, has been breached, or supports a claim for relief will continue to depend upon the applicable law, governing agreements, and facts of the dispute.

Business owners should also recognize that the new Act establishes rules concerning the extent to which operating agreements may modify certain statutory obligations.

These issues make careful drafting and review of operating agreements particularly important.

For more information concerning ownership litigation, visit our Business Law and Commercial Litigation Practice.

4. Operating Agreements Under the New Rhode Island LLC Act

An operating agreement establishes important rights and obligations concerning the ownership, management, and operation of a limited liability company.

Operating agreements commonly address management authority, voting rights, capital contributions, financial distributions, membership transfers, withdrawal, dissociation, and dissolution.

Under R.I. Gen. Laws § 7-16.1-105, the new Act establishes a comprehensive framework governing the relationship between operating agreements and statutory requirements.

The operating agreement generally governs relationships among members and managers and the company’s activities, while statutory default provisions address matters not otherwise governed by the agreement.

However, the Act also establishes limitations on the extent to which operating agreements may alter certain statutory rights and duties.

Why Existing Operating Agreements Should Be Reviewed

Operating agreements prepared under the existing Rhode Island LLC Act may contain provisions that differ from the new statutory defaults.

For example, an agreement may address voting thresholds, management authority, fiduciary obligations, capital contributions, or distributions in ways that require careful evaluation under the new law.

An operating agreement may also be silent concerning matters that the new Act addresses expressly.

Where the agreement does not control a particular issue, applicable statutory provisions may determine the parties’ rights and obligations.

Business owners should consider reviewing their operating agreements before the new Act becomes applicable to determine whether amendments are appropriate.

The need for an amendment will depend upon the existing agreement, the ownership structure, the applicable transitional provisions, and the objectives of the members.

5. Management Authority and Voting Requirements

Management authority is a frequent source of disputes among LLC members.

Questions may arise concerning which individuals have authority to enter contracts, incur debt, transfer company property, approve expenditures, admit new members, or make other significant business decisions.

R.I. Gen. Laws § 7-16.1-407 establishes rules concerning management structures, voting, and certain consent requirements.

The new Act distinguishes between member-managed and manager-managed LLCs and provides default rules governing management authority and member decisions.

Certain actions outside the ordinary course of business and amendments to operating agreements may require unanimous member consent under the statutory defaults, subject to the governing provisions of the Act and the operating agreement.

These requirements may be particularly important for LLCs with multiple members, unequal ownership interests, or disagreements concerning management authority.

Preventing Disputes Through Clear Governance Provisions

Operating agreements should clearly identify the persons authorized to manage the business, the decisions requiring member approval, applicable voting thresholds, and procedures for resolving disagreements.

Businesses should also consider how their governing documents address deadlocks, removal of managers, ownership transfers, and extraordinary transactions.

Clear organizational provisions can help reduce uncertainty and establish procedures for addressing disputes before they disrupt business operations.

6. LLC Member Rights, Ownership Disputes, and Financial Obligations

Disputes among LLC members frequently involve ownership percentages, capital contributions, distributions, access to financial records, and the interpretation of operating agreements.

These disputes can become particularly complicated when members disagree concerning whether an ownership interest has been diluted, whether a capital contribution was properly credited, or whether distributions were made in accordance with the governing agreements.

Other disputes may concern whether a member has been properly dissociated, whether an ownership transfer is valid, or whether a manager has acted beyond the authority established by the operating agreement.

The new LLC Act provides a more detailed statutory framework addressing relationships among members, managers, and the company.

However, the resolution of any particular dispute will continue to require examination of the governing agreement, financial records, applicable statutes, and conduct of the parties.

Bilodeau Capalbo, LLC represents LLC members, managers, and business entities in disputes involving operating agreements, fiduciary duties, ownership rights, distributions, capital contributions, dissociation, and business dissolution.

7. Changes to LLC Formation and Organizational Requirements

The new Act also modifies the statutory framework for forming Rhode Island limited liability companies.

R.I. Gen. Laws § 7-16.1-201 addresses formation through the filing of a certificate of organization.

This replaces the terminology and certain procedures associated with articles of organization under the existing statutory framework.

The new legislation also addresses organizational names, registered agents, management arrangements, and other formation requirements.

Business owners forming an LLC after the new Act becomes effective should ensure that their organizational documents and filings comply with the requirements then in force.

Those considering professional service LLCs or specialized organizational structures should also evaluate the applicable naming, licensing, and organizational requirements.

8. Business Transactions, Ownership Transfers, and Restructuring

The new Rhode Island LLC Act includes provisions addressing mergers, interest exchanges, conversions, and domestications.

These transactions may involve significant changes to an entity’s ownership, organizational structure, jurisdiction, or business operations.

The statutory framework governing these transactions is important because the legal requirements may affect member approval, contractual obligations, ownership interests, creditor rights, and the continued existence of an entity.

Business owners considering a merger, restructuring, conversion, or transfer of substantial ownership interests should review their operating agreements and applicable statutory requirements before proceeding.

Bilodeau Capalbo, LLC assists business owners with commercial agreements, business transactions, organizational restructuring, and disputes arising from ownership transfers.

9. LLC Dissolution, Dissociation, and Winding Up

Disputes among LLC members may eventually result in withdrawal, dissociation, negotiated buyouts, dissolution, or litigation concerning the winding up of business affairs.

These matters can involve substantial financial and legal issues, including the valuation of ownership interests, allocation of company assets, satisfaction of creditor claims, and distribution of remaining property.

The new Act addresses the statutory framework applicable to LLC membership and business operations, including provisions relevant to dissolution and winding up.

The availability of judicial dissolution or other relief depends upon the applicable statutory requirements, governing agreements, and facts of the dispute.

Not every ownership disagreement justifies dissolution. In some circumstances, negotiated buyouts, amendments to governing agreements, or other resolutions may allow the business to continue operating.

Where litigation is necessary, our attorneys evaluate available claims, defenses, and remedies in light of the client’s ownership interests and commercial objectives.

10. What Rhode Island LLC Owners Should Do Before 2028

The enactment of the new LLC Act provides an opportunity for business owners to evaluate their existing organizational arrangements.

Before the new statutory framework becomes applicable, LLC owners should consider reviewing:

• Existing operating agreements and amendments.
• Management structures and authority to bind the company.
• Member voting rights and consent requirements.
• Fiduciary duty and conflict-of-interest provisions.
• Capital contribution requirements.
• Profit and loss allocations and financial distributions.
• Ownership transfer restrictions and buy-sell provisions.
• Member withdrawal and dissociation procedures.
• Deadlock resolution provisions.
• Dissolution and winding-up procedures.
• Company records and organizational compliance.

A review does not necessarily mean that every LLC must amend its operating agreement.

Rather, the purpose is to determine whether the existing agreement accurately reflects the members’ intentions and remains appropriate under the statutory framework that will govern the company.

Businesses with multiple owners, significant real estate holdings, substantial assets, or complicated management arrangements may have particular reasons to undertake this review before the transition period concludes.

11. How the New LLC Act May Affect Business Litigation

The new legislation is significant not only for business formation and governance but also for litigation involving LLC members and managers.

Disputes concerning fiduciary duties, operating agreements, management authority, voting rights, distributions, and ownership interests may require analysis of both the contractual provisions governing the LLC and the statutory framework applicable at the relevant time.

The effective date of the legislation, the formation date of the LLC, the transitional provisions, and the timing of the disputed conduct may all affect the legal analysis.

Business owners and their attorneys should therefore avoid assuming that a dispute arising before the new Act becomes applicable will necessarily be governed by the same statutory provisions as conduct occurring afterward.

Bilodeau Capalbo, LLC represents LLC members, managers, investors, and business entities in disputes involving contractual obligations, fiduciary duties, ownership rights, financial distributions, dissociation, dissolution, and related commercial litigation.

Our attorneys evaluate the applicable statutory framework, operating agreements, financial documentation, and evidence concerning the parties’ conduct to determine available claims, defenses, and remedies.

12. Business Law and LLC Litigation Representation at Bilodeau Capalbo, LLC

Business ownership disputes require an understanding of both the governing law and the practical financial and operational issues affecting the enterprise.

Bilodeau Capalbo, LLC combines business litigation experience with legal services involving business formation, commercial transactions, operating agreements, corporate governance, and ownership disputes.

Our managing partner, Andrew R. Bilodeau, holds a Master of Business Administration from Northeastern University and brings substantial entrepreneurial and business management experience to the firm’s practice.

This background provides additional insight into the financial and operational considerations that frequently arise in business ownership disputes and commercial transactions.

Our attorneys represent clients throughout Rhode Island, Massachusetts, and Connecticut in matters involving business law, commercial litigation, and related legal issues.

We recognize that changes in business entity law can affect both existing organizational arrangements and future business decisions. Our objective is to help clients understand their legal obligations, evaluate potential risks, and protect their financial and ownership interests.

Speak With a Rhode Island Business Lawyer About the New LLC Act

If you own or manage a Rhode Island limited liability company, are considering forming a new business, or are involved in a dispute concerning an LLC operating agreement, ownership rights, management authority, or fiduciary duties, Bilodeau Capalbo, LLC can assist you in evaluating your legal options.

Our attorneys provide business law and commercial litigation representation involving LLC formation, operating agreements, corporate governance, ownership disputes, and business transactions.

With significant changes to Rhode Island LLC law scheduled to begin in 2028, existing business owners may benefit from reviewing their organizational documents and governance arrangements before the new statutory framework becomes applicable.

Contact Bilodeau Capalbo, LLC to discuss your business law matter.

Call 401-300-4055 or contact our attorneys online.

Bilodeau Capalbo, LLC
1350 Division Road, Suite 102
West Warwick, Rhode Island 02879
Telephone: 401-300-4055

This article provides general information about legislation enacted as of October 2026. It is not legal advice concerning any particular LLC, operating agreement, or dispute. The application of the new law depends upon its effective dates, transitional provisions, and the circumstances involved. Subsequent legislative amendments or judicial decisions may affect the discussion.

Legislative Sources

Rhode Island Public Laws 2026, Chapters 246 and 247, enacting the new Rhode Island Limited Liability Company Act, R.I. Gen. Laws Chapter 7-16.1.

Relevant provisions include §§ 7-16.1-105 (operating agreements), 7-16.1-110 (application to existing relationships), 7-16.1-201 (formation), 7-16.1-407 (management), and 7-16.1-409 (standards of conduct for members and managers).