Farm Limited Liability Company FAQs

See: Business Services, Business Registrations, FAQs (generally applicable to all business entities)

See: Business Services, Business Registrations, Limited Liability Company, General Business, FAQs

Can anyone hold membership interests in a farm limited liability company?
No, all members must be related individuals or one of the following:

• A trust for the benefit of an individual or a class of individuals who are related to every member of the limited liability company within specified degrees of kinship.
• An estate of a decedent who was related to every member of the limited liability company within specified degrees of kinship.

The members must be related within one of the following degrees of kinship:

• Parent
• Son
• Daughter
• Stepson
• Stepdaughter
• Grandparent
• Grandson
• Granddaughter
• Brother
• Sister
• Uncle
• Aunt
• Nephew
• Niece
• Great-grandparent
• Great-grandchild
• First cousin; or
• The spouse of a person so related.

Do all members need to be actively engaged in farming or ranching?
No, but at least one member must be actively engaged in farming or ranching.

Do any members need to live on the farm or ranch?
No, but at least one member must reside on or be actively engaged in farming or ranching.

Who can serve as a governor or manager of a farm limited liability company?
Only members who are actively engaged in farming can serve as governors or managers of a farm limited liability company.

Can a farm limited liability company acquire ownership to land and rent it out to be farmed by others?
No, a farm limited liability company must be actively engaged in farming.

May a farm limited liability company engage in business activities other than farming?
Yes, however 65% of the gross income over a period of five years, or every year of its existence, must be derived from farming. The income from nonfarm rent, nonfarm royalties, dividends, interest, and annuities cannot exceed 20% of the gross income of the limited liability company.

If a farm limited liability company ceases to farm, can the limited liability company be maintained?
Yes, the limited liability company can be maintained if an amendment is filed to convert the farm limited liability company to a business limited liability company after the land and livestock have been divested.

Can a farm limited liability company merge into a business limited liability company?
Yes, however, the farm limited liability company must divest of all livestock and owned or leased land since only a farm limited liability company may own or lease land used for farming or production of livestock.

Can a business limited liability company merge into a farm limited liability company?
Yes, however, 65% of the gross income of the surviving farm limited liability company must be derived from farming.

Can a farm limited liability company merge into a foreign limited liability company?
Yes, however, the land in North Dakota would need to be divested prior to the merger since a foreign limited liability company may not hold or lease land used for farming or ranching.

Can a foreign limited liability company engage in farming in North Dakota?
No, only a North Dakota limited liability company or a corporation created according to the provisions of North Dakota’s, Chapter 10-06.1 may engage in farming in North Dakota.