The Office of General Counsel issued the following opinion on April 17, 2003, representing the position of the New York State Insurance Department.
Re: Licensing of a Limited Liability Company
May a non-member, non-manager "officer" of a limited liability company ("LLC") that seeks to be licensed as an insurance agent or broker be the sublicensee of said LLC?
No, a person who is called an "officer" of an LLC may not be a sublicensee.
XYZ Investment Services, LLC ("XYZ") wishes to be licensed as an insurance "producer" (insurance agent and/or broker) in New York. XYZ is a single-member LLC, the sole member being ABC Insurance Company. XYZ is a member-managed LLC. Accordingly, it does not have any managers.
N.Y. Insurance Law § 2103(c) and (d) (McKinney 2000) provides that, as regards the issuance of an insurance agents license:
(c) Any such license issued to a firm or association shall authorize only the members thereof, named in such license as sub-licensees, to act individually as agents thereunder, and any such license issued to a corporation shall authorize only the officers and directors there, named in such license as sub-licensees, to act individually as agents thereunder. Every sub-licensee, acting as insurance agent pursuant to such a license shall be authorized so to act only in the name of the licensee.
(d) Every individual applicant for a license under this section and every proposed sub-licensee shall be eighteen years of age or over at the time of the issuance of such license.
Similar provisions in N.Y. Insurance Law Section 2104(b) and (c)(1) govern the issuance of insurance broker licenses. New York Insurance Law 107(a)(20) (McKinney Supp. 2003) defines a "firm" as "a partnership, limited or unlimited, general or special."
Any licensee that is not a natural person must have one or more sublicensees, all of which must be natural persons at least eighteen years of age. For a corporation, the sublicensee must be an officer or director; for a firm or association, the sublicensee must be a member. N.Y. Ins. Law § 2103(d) and 2104(c)(1).
Although Sections 2103 and 2104 have not been amended to deal with the licensing of the new business form of the LLC, this Department has taken the position that managers and members of an LLC are equivalent to directors or officers of a corporation or members of a firm. Directors and officers of a corporation, members of a firm, and members and managers of LLCs have roles under New York law regarding their entities that are defined by statute. They are not simply employees of the entity. In the situation presented here, however, XYZ is not manager-managed and its sole member is a corporation (ABC Insurance Company.)
Wisconsin Statutes Section 183.0401 provides as follows:
1) Unless the articles of organization vest management of a limited liability company in one or more managers, management of the limited liability company shall be vested in the members, subject to any provision in an operating agreement or this chapter restricting or enlarging the management rights and duties of any member or group of members.
2) If the articles of organization vest management of a limited liability company in one or more managers, management of the business or affairs of the limited liability company shall be vested in the manager or managers, subject to any provisions in an operating agreement or this chapter restricting or enlarging the management rights and duties of any manager or group of managers. Unless otherwise provided in an operating agreement, the manager or managers:
(a) Shall be designated, appointed, elected, removed or replaced by a vote of the members that meets the requirements under section 183.0404 (1)(a).
(b) Need not be members of the limited liability company or individuals.
(c) Shall hold office until a successor is elected and qualified, or until prior death, resignation or removal.
We thus see no authorization in Wisconsin law for LLCs to have either "officers" or "directors", just as there is no authorization in New York law for an LLC to have "officers" or "directors." In the absence of such statutory authorization, we do not believe that persons an LLC chooses to describe as "officers" or "directors" have any legal status other than being employees of the LLC. Since N.Y. Insurance Law Sections 2103 and 2104 do not allow ordinary employees to be sublicensees, employees designated as "officers" or "directors" of LLCs (in the absence of statutory authorization) should not be considered to be eligible to be sublicensees.
For further information you may contact Associate Attorney Patrick M. Harrigan at the Albany Office.