New Nevada Law Increases Protection of Single Owners of Corporations and LLCs

On June 16, 2011, Nevada’s governor signed a new law specifically making a charging order the exclusive remedy of a judgment creditor against owners of both LLCs and corporations in Nevada.

The legislation specifically includes a sole member of an LLC and a sole shareholder of a corporation.

Nevada is clearly working to provide better asset protection for owners of closely held businesses.  The new law, which was signed by the governor a few days ago, passed the Nevada senate by a vote of 21-0 and the Nevada Assembly by a vote of 42-0.

Earlier this year, the Florida Supreme Court ruled that under Florida law, creditors of a sole member of an LLC were not limited to pursuing a charging order, but could also pursue other remedies against that debtor.  Since that time, a lot of attention has been focused on single member LLCs.

Since the new Nevada statute is only a few days old, commentators are just beginning to offer insights into the new legislation.  But the new Nevada statute is a clear reminder that some states provide better protection than others for business owners (particularly single owners).  Nevada, like Delaware, is currently a good choice for forming a corporation or a limited liability company from an asset protection standpoint.