CHAPTER 25-9
LIMITED LIABILITY COMPANIES WHOLLY-OWNED BY THE NATION

25-9-1 General Provisions for Tribally-Owned LLC’s

(A)    Tribally-Owned Companies. There are hereby authorized to be created limited liability companies wholly-owned by the Nation, with the Nation as the sole Owner. Tribally-owned limited liability companies shall be created by a duly adopted resolution of the Tribal Council. The organizer shall file in accordance with Section 25-1-11. When the organizer files the Articles of Organization and the Operating Agreement of a Tribally-owned LLC, a certified copy of the resolution authorizing the formation of the LLC and approving the articles shall be included. Tribally-owned LLC’s shall be considered to be instrumentalities of the Nation.

(B)    Tribally-Owned Subsidiary Companies. There are hereby authorized to be created by resolution of the Board of Directors of a Tribally-owned limited liability company or of a Tribal Corporation, or of a wholly-owned subsidiary of such a Tribally-owned LLC or Tribal Corporation, subsidiary LLC’s to be wholly-owned by the parent Tribally-owned LLC or parent Tribal Corporation, which shall be instrumentalities of the Nation. The organizer of such a Tribally-owned subsidiary LLC shall file in accordance with Section 25-1-11. When the organizer files the Articles of Organization and the Operating Agreement of the Tribally-owned subsidiary LLC, a certified copy of a resolution of the Board of Directors of the parent Tribally-owned LLC or parent Tribal Corporation authorizing the formation of the subsidiary LLC and approving the articles shall be included.

(C)    Privileges and Immunities. The limited liability companies established under Sections 25-9-1(A) and 25-9-1(B) shall be considered to be instrumentalities of the Nation, and their agents and officers considered agents and officers of the Nation, created for the purpose of carrying out authorities and responsibilities of the Tribal Council for economic development of the Nation and the advancement of its Tribal members. Such LLC’s, their agents, directors, officers, managers and employees shall, therefore, be entitled to all of the privileges and immunities enjoyed by the Nation, including but not limited to immunities from suit in Federal, State and Tribal courts and from Federal, State, and local taxation or regulation.

(D)    Ownership.

(1)    No Ownership interest in any LLC in which the Nation is an Owner may be alienated unless approved by the Tribal Council. Further, no Ownership interest in any Tribally-owned subsidiary LLC may be alienated unless approved by a duly adopted resolution of the Board of Directors of the parent Tribally-owned LLC or parent Tribal Corporation.

(2)    All interests in any Tribally-owned LLC shall be held by and for a Nation, or in the case of a wholly-owned subsidiary LLC, by the parent Tribally-owned LLC or parent Tribal Corporation. No individual member of the Nation shall have any personal ownership interest in any LLC organized under this Part, whether by virtue of such person’s status as a member of a Nation, as an officer of a Nation’s Government, or otherwise.

(E)    Project Companies with Non-Tribal members. Any LLC created pursuant to this Part, including subsidiary LLC’s, may form or own interests or shares in partnerships, corporations, or other limited liability companies with other governmental or non-governmental entities or persons under the laws of the Nation or any other jurisdiction (“Project Companies”); provided, however, that the partial ownership interest in such Project Companies shall not diminish or affect the privileges and immunities of the Tribally-owned LLC’s or Tribally-owned subsidiary LLC’s created pursuant to this Part.

(F)    Purpose of Tribally-Owned LLC’s. All Tribally-owned LLC’s, whether directly or indirectly owned, shall state in their Operating Agreement the purpose of the LLC that relates to the overall needs, priorities, goals, and objectives of the Nation’s government, including how the LLC will contribute to tribal economic policy and further the goals of self-determination and economic self-sufficiency.

(G)    Waiver of Sovereign Immunity. The limited liability companies established under Sections 25-9-1(A) and 25-9-1(B) may only waive the privileges and immunities granted under Section 25-9-1(C) in the following manner:

(1)    The LLC may specifically grant limited waivers of its immunity from suit and consent to be sued in Tribal Court or another court of competent jurisdiction or consent to binding arbitration pursuant to the procedures and authorities set forth in the LLC’s Operating Agreement; provided, however, that

(a)    Any such waiver or consent to suit granted pursuant to the LLC’s Operating Agreement shall in no way extend to any action against the Nation, nor shall it in any way be deemed a waiver of any of the rights, privileges and immunities of the Nation;

(b)    Any recovery against the LLC shall be limited to the assets of the LLC (or such portion of the LLC’s assets as further limited by the waiver or consent) and the Nation shall not be liable for the payment or performance of any of the obligations of the LLC, and no recourse shall be had against any assets or revenues of the Nation in order to satisfy the obligations of the LLC; including assets of the Nation leased, loaned, or assigned to the LLC for its use, without transfer of title, and

(c)    Any waiver of the LLC’s immunities granted pursuant to the LLC’s Operating Agreement shall be further limited or conditioned by the terms of such waiver.

(2)    The sovereign immunity of the LLC shall not extend to actions against the LLC by the Nation acting as Owner, or, in the case of a subsidiary LLC created pursuant to this Part, by the parent LLC acting as Owner, pursuant to Section 25-9-1(A).

(3)    The LLC must follow the method mandated by Section 25-9-2(B).

25-9-2 Special Formation Requirements For Tribally-Owned LLC’S

(A)    Formation.

(1)    Tribally-owned LLC’s. The Chairperson of the Tribal Council shall be the organizer of any Tribally-owned limited liability company.

(2)    Subsidiaries of Tribally-owned LLC’s. A Board Member of the parent Tribally-owned LLC or parent Tribal Corporation shall be the organizer of any Tribally-owned subsidiary LLC. If practicable, such Board Member shall also be a member of the Nation.

(3)    Unless a delayed effective date is specified:

(a)    The existence of a Tribally-owned LLC begins when the Articles of Organization have been approved by resolution of the Tribal Council in accordance with Section 25-9-1(A) and have been filed with the Office of the Secretary in accordance with Section 25-1-11.

(b)    The existence of a subsidiary LLC owned by a Tribally-owned LLC or Tribal Corporation begins when the Articles of Organization have been approved by a resolution of the Directors of the parent Tribally-owned LLC or Tribal Corporation and have been filed with the Office of the Secretary in accordance with Section 25-1-11.

(c)    The Articles of Organization of any Tribally-owned LLC or subsidiary thereof, and any amendments thereto, shall be filed with the Office of the Secretary in accordance with Section 25-1-11, and shall state at a minimum the items set forth in Section 25-9-2(B) below.

(B)    Additional Requirements for the Articles of Organization. As set forth in Section 25-9-1(G), Tribally-owned limited liability companies established under Sections 25-9-1(A) and 25-9-1(B) may grant a limited waiver of sovereign immunity in order to promote economic development through commercial transactions for which such a waiver is necessary and beneficial to the Nation. The method for granting a limited waiver of sovereign immunity through the above mentioned entities is as follows:

(1)    The sovereign immunity of a Tribally-owned LLC may be waived only by:

(a)    A resolution adopted by the Board of Directors of the Tribally-owned LLC for the specific purpose of granting a waiver, or in the case of Owner managed Tribally- owned subsidiary LLC, by the Owner’s Board of Directors; and

(b)    The language of the waiver must be explicit; and

(c)    The waiver must be contained in a written contract or commercial document to which the LLC is a party.

(2)    Waivers of sovereign immunity by resolution of the Board of Directors may be granted only when necessary to secure a substantial advantage or benefit to the Tribally-owned LLC. Waivers of sovereign immunity by resolution may not be general but must be specific and limited as to duration, grantee, transaction, property or funds of the Tribally-owned LLC subject to the waiver, court having jurisdiction and applicable law.

25-9-3 Management of Tribally Owned LLC’s.

(A)    Management.

(1)    All Tribally-owned LLC’s formed pursuant to Section 25-9-1(A) of this Code shall be managed by a Board of Directors in the manner described in the Company’s Operating Agreement. The qualifications, number, terms and method for selecting and removing Directors of any Tribally-owned LLC shall be specified in the LLC’s Operating Agreement.

(2)    All Tribally-owned subsidiary LLC’s formed pursuant to Section 25-9-1(B) of this Code may be Owner managed or managed by a Board of Directors. If managed by a Board of Directors, the Company’s Operating Agreement shall set forth the qualifications, number, terms and method for selecting and removing the Directors. If Owner managed, the LLC shall have one or more persons exercising the functions of Chief Executive Officer.

(B)    Board of Directors.

(1)    Appointment of directors. The Tribal Council shall retain the power to appoint the board of directors for LLC’s wholly owned by the Nation. For all such LLC’s, including subsidiary tribal corporations, the board of directors shall be compromised of members of the Tribal Council, tribal members, and individuals experienced in business and tribal government.

(2)    Removal of directors. A director of a LLC wholly owned by the Nation may be removed with cause by the Tribal Council.

(3)    Loans to directors. A LLC wholly owned, directly or indirectly, by the Nation may not lend money to or guarantee the personal obligation of a director, officer or employee of the corporation under any circumstances.

25-9-4 Decisions and Voting for Tribally-Owned LLC’s

(A)    Voting.

(1)    The Ownership interests in all Tribally-owned LLC’s shall be voted in the accordance with the Tribal Council’s procedures for voting and passing Tribal resolutions.

(2)    The Ownership interests in a Tribally-owned subsidiary LLC shall be voted as provided in the Company’s Operating Agreement.

25-9-5 Distributions for Tribally-Owned LLC’s

(A)    Distributions of Income.

(1)    Subject to the Nation’s ultimate ownership right to all income generated by its Tribally-owned LLCs, a Tribally-owned LLC shall distribute the net income of the LLC to the Nation as set forth in a dividend plan adopted in accordance with the Operating Agreement and duly approved by the Tribal Council, except that a Tribally-owned LLC may retain reserves necessary to carry on the LLC’s business in a reasonably prudent manner and as recommended by the Board of Directors, subject to further limitations set forth in Section 25-5-7 and in the Operating Agreement.

(2)    Subject to the parent Tribally-owned LLC’s or parent Tribal Corporation’s ultimate ownership right to all income generated by its subsidiary LLCs, a subsidiary LLC created pursuant to Section 25-9-1(B) shall distribute the net income of the LLC to the parent Tribally-owned LLC or parent Tribal Corporation as set forth in a dividend plan adopted in accordance with the Operating Agreement and duly approved by its Board of Directors, except that a Tribally-owned LLC may retain reserves necessary to carry on the LLC’s business in a reasonably prudent manner and as recommended by the Board of Directors, subject to further limitations set forth in Section 25-5-7 and in the Operating Agreement.

25-9-6 Additional Reports and Audits

(A)    Audit. In addition to any Owner inspection rights provided in the Operating Agreement of a Tribally-owned LLC, the Tribal Council may at any time, by process in the manner required to be provided in the Operating Agreement, require that any LLC wholly-owned by the Nation, whether directly or indirectly, or an LLC in which the Nation owns the majority interest, be audited by an independent auditor hired by the Nation who shall have the absolute right to require access to all of the LLC’s records and documents necessary for such an audit.

(B)    Financial, Business, and Planning Information. In addition to any reports to the Owner required by the Operating Agreement, the Board of Directors of each Tribally-owned LLC, whether owned directly or indirectly, shall submit the following information to the Tribal Council:

(1)    Copies of any periodic financial statements (including monthly or quarterly balance sheets, profit and loss statements, and cash flow statements) as may be prepared in the ordinary course of business, promptly after such statements are furnished to the LLC’s Board of Directors;

(2)    A full report of the business activities of the company within 120 days after the close of each fiscal year; and

(3)    A proposed annual plan for the following year, including any proposed funding from the Nation or anticipated distributions to the Nation.

25-9-7 Actions Against Tribally-Owned LLC’s

(A)    Court Actions By the Nation Authorized. The Nation, as Owner of any Tribally-owned limited liability company organized pursuant to this Code, or in the case of a subsidiary LLC created pursuant to this Part, the parent Tribally-owned LLC or Tribal Corporation acting as Owner, may bring a civil action against the LLC, its Board of Directors or its officers in the Tribal Court only pursuant to this Part to:

(1)    Enjoin temporarily or permanently any action of the LLC that is an ultra vires act outside the authority of the LLC and that is either:

(a)    Unlawful; or

(b)    Has or could cause material harm to the assets of the LLC or the Nation if no immediate action is taken.

(c)    Require the distribution of the LLC’s surplus net income, to the extent permitted by Section 25-5-7.

(2)    An action against a LLC pursuant to this Section by the Nation or by a parent LLC or Corporation, acting as Owner, shall not act as a waiver of the Nation’s, or the parent LLC or parent Corporation’s, sovereign immunity from suit of any kind, including a countersuit by the Tribally-owned LLC, its Board of Directors or its officers.

(3)    In accordance with Section 25-9-1(C), the sovereign immunity of the LLC shall not extend to actions against the LLC by the Nation acting as Owner, or, in the case of a subsidiary LLC created pursuant to this Part, by the parent LLC acting as Owner.

(4)    Nothing contained herein shall be construed as authorizing actions of any kind whatsoever against the Nation.

(B)    Tribal Approval Required. The filing of any court action against a Tribally-owned LLC pursuant to this Part must be authorized by the Nation as Owner in the same manner as required in Section 25-9-4(A) for voting on any item properly coming before the Nation as Owner. The request for consideration of the proposed court action may be made by any member of the Tribal Council.

(C)    Relief Available. In any action brought under this Part, the Tribal Court may, based on clear and convincing evidence set forth in its findings of fact and conclusions of law:

(1)    Issue a temporary restraining order, preliminary injunction, and permanent injunctive relief pursuant to the procedures and standards applicable in the Tribal Court, except that no bond need be posted for any preliminary injunctive relief; or

(2)    Order that funds of the LLC be distributed to the Nation to the extent permitted by the Operating Agreement and Section 25-5-7 of this Code.