SB 133

SENATE BILL 26-133
BY SENATOR(S) Bridges and Catlin, Amabile, Benavidez, Bright, Cutter,
Danielson, Frizell, Gonzales J., Kipp, Kirkmeyer, Lindstedt, Marchman,
Simpson, Snyder, Wallace, Coleman;
also REPRESENTATIVE(S) Martinez and Taggart, Bacon, Boesenecker,
Brown, Duran, Froelich, Gonzalez R., Hamrick, Jackson, Joseph, Lindsay,
Mauro, McCormick, Nguyen, Paschal, Rutinel, Rydin, Sirota, Smith, Soper,
Stewart K., Titone, Woodrow, McCluskie.
CONCERNING THE AUTHORIZATION TO ESTABLISH AN ARTIST COMPANY IN
     THE STATE, AND, IN CONNECTION THEREWITH, ENACTING THE
     "COLORADO ARTIST C OMPANY ACT ", AND MAKING AN
     APPROPRIATION.
Be it enacted by the General Assembly of the State of Colorado:
        SECTION 1. In Colorado Revised Statutes, add part 12 to article
80 of title 7 as follows:
                              PART 12
                    COLORADO ARTIST COMPANY ACT
        7-80-1201. Short title.
________
Capital letters or bold & italic numbers indicate new material added to existing law; dashes
through words or numbers indicate deletions from existing law and such material is not part of
the act.
     THE SHORT TITLE OF THIS PART 12 IS THE "COLORADO ARTIST
COMPANY ACT".
      7-80-1202. Definitions.
      AS USED IN THIS PART 12, UNLESS THE CONTEXT OTHERWISE
REQUIRES:
      (1) "ARTIST" MEANS AN INDIVIDUAL WHO CREATES ANY WORK OF
AUTHORSHIP OR ARTISTIC EXPRESSION COMPRISING WRITTEN, ORAL, VISUAL,
GRAPHIC, LITERARY, MUSICAL, AUDIOVISUAL, DIGITAL, OR PERFORMING ART
IN ANY MEDIUM, INCLUDING PAINTING, PRINTING, DRAWING, SCULPTURE,
CRAFT, PHOTOGRAPHY, MUSIC, WRITING, FILM, PERFORMANCE, INTERACTIVE
MEDIA, OR DIGITAL CONTENT.
      (2) "ARTIST COMPANY" MEANS A LIMITED LIABILITY COMPANY
ORGANIZED UNDER THIS PART 12 THAT MEETS THE REQUIREMENTS OF
SECTION 7-80-1203 (1).
      (3) "ARTISTIC MISSION" MEANS A SPECIFIC CREATIVE OR ARTISTIC OR
EDUCATIONAL PURPOSE, INCLUDING THE CREATION, DEVELOPMENT,
PRODUCTION, DISTRIBUTION, EXHIBITION, OR PERFORMANCE OF CREATIVE OR
ARTISTIC WORKS, OR OPERATIONS CONDUCTED IN FURTHERANCE OF THE
ARTS AND CULTURAL CONTRIBUTIONS.
      (4) "ARTISTIC WORK" MEANS CREATIVE OR ARTISTIC WORKS,
PROJECTS, OR ACTIVITIES CREATED, DEVELOPED, PRODUCED, DISTRIBUTED,
EXHIBITED, OR PERFORMED PURSUANT TO, OR IN FURTHERANCE OF, AN
ARTISTIC MISSION.
      (5) "GOVERNING BODY" MEANS THE MEMBERS, MANAGER, OR BOARD
OF MANAGERS RESPONSIBLE FOR THE MANAGEMENT AND GOVERNANCE OF
AN ARTIST COMPANY, AS SPECIFIED IN THE ARTIST COMPANY'S ARTICLES OF
ORGANIZATION OR OPERATING AGREEMENT.
      (6) "PUBLIC BENEFIT" MEANS A POSITIVE EFFECT OR REDUCTION OF
NEGATIVE EFFECTS ON ONE OR MORE CATEGORIES OF PERSONS,
COMMUNITIES, OR INTERESTS OTHER THAN MEMBERS IN THEIR CAPACITIES
AS MEMBERS, INCLUDING EFFECTS OF AN ARTISTIC, CHARITABLE, CULTURAL,
PAGE 2-SENATE BILL 26-133
EDUCATIONAL, LITERARY, OR TECHNOLOGICAL NATURE.
      (7) "PUBLIC BENEFIT ARTIST COMPANY" MEANS AN ARTIST COMPANY
THAT HAS ELECTED TO BE SUBJECT TO SECTIONS 7-80-1215 TO 7-80-1217.
      7-80-1203. Artist company - requirements.
      (1) AN ARTIST COMPANY IS A LIMITED LIABILITY COMPANY THAT:
      (a) IS ORGANIZED UNDER THIS PART 12;
     (b) HAS A STATED ARTISTIC MISSION SET FORTH IN ITS ARTICLES OF
ORGANIZATION OR OPERATING AGREEMENT; AND
      (c) IS FORMED AND OWNED BY ONE OR MORE ARTISTS WHO, AT THE
TIME OF THE ARTIST COMPANY'S FORMATION OR ELECTION TO BECOME AN
ARTIST COMPANY, OWN NOT LESS THAN FIFTY-ONE PERCENT OF ALL VOTING
SECURITIES OF THE ARTIST COMPANY. ARTISTS MUST AT ALL TIMES
MAINTAIN AN OWNERSHIP PERCENTAGE OF NOT LESS THAN FIFTY-ONE
PERCENT OF ALL VOTING SECURITIES OF THE ARTIST COMPANY.
      (2) AN ARTIST COMPANY MAY BE ORGANIZED FOR ANY LAWFUL
PURPOSE PERMITTED FOR LIMITED LIABILITY COMPANIES UNDER THIS
ARTICLE 80 IF THE PURPOSE INCLUDES OR MATERIALLY FURTHERS THE
ARTISTIC MISSION.
      (3) AN ARTIST COMPANY MAY SPECIFY IN ITS ARTICLES OF
ORGANIZATION OR OPERATING AGREEMENT:
      (a) THAT THE ARTISTIC MISSION HAS PRIMACY OVER FINANCIAL
OBJECTIVES;
     (b) THAT THE ARTISTIC MISSION AND FINANCIAL OBJECTIVES ARE OF
EQUAL PRIORITY; OR
      (c) ANY OTHER PRIORITY OR BALANCING BETWEEN THE ARTISTIC
MISSION AND FINANCIAL OBJECTIVES.
      7-80-1204. Election to become an artist company.
PAGE 3-SENATE BILL 26-133
      (1) A LIMITED LIABILITY COMPANY THAT IS NOT AN ARTIST COMPANY
MAY ELECT TO BECOME AN ARTIST COMPANY BY COMPLYING WITH THIS
SECTION. TO ELECT TO BECOME AN ARTIST COMPANY, A LIMITED LIABILITY
COMPANY SHALL:
      (a) AMEND ITS ARTICLES OF ORGANIZATION TO:
      (I)   STATE THE ARTISTIC MISSION OF THE LIMITED LIABILITY
COMPANY;
     (II) STATE THAT THE LIMITED LIABILITY COMPANY ELECTS TO BE
GOVERNED BY THIS PART 12 AS AN ARTIST COMPANY; AND
      (III) INCLUDE ANY OTHER PROVISIONS REQUIRED BY SECTIONS
7-80-1203 AND 7-80-1206;
      (b) ENSURE THAT, AT THE TIME OF ELECTION, ONE OR MORE ARTISTS
OWN NOT LESS THAN FIFTY-ONE PERCENT OF THE VOTING SECURITIES OF THE
ENTITY;
      (c) OBTAIN APPROVAL FOR THE ELECTION BY THE VOTE OR CONSENT
REQUIRED TO AMEND THE ARTICLES OF ORGANIZATION PURSUANT TO THE
LIMITED LIABILITY COMPANY'S OPERATING AGREEMENT OR, IF THE
OPERATING AGREEMENT DOES NOT SPECIFY THE VOTE OR CONSENT
REQUIRED, BY THE UNANIMOUS CONSENT OF ALL MEMBERS; AND
      (d) FILE THE AMENDED ARTICLES OF ORGANIZATION WITH THE
SECRETARY OF STATE IN ACCORDANCE WITH SECTION 7-90-301.
     (2) UPON THE FILING OF AMENDED ARTICLES OF ORGANIZATION
PURSUANT TO SUBSECTION (1)(d) OF THIS SECTION:
      (a) THE LIMITED LIABILITY COMPANY CONTINUES TO BE THE SAME
ENTITY THAT EXISTED BEFORE THE ELECTION;
      (b) ALL RIGHTS, TITLE, AND INTERESTS TO ALL REAL PROPERTY AND
OTHER PROPERTY OWNED BY THE LIMITED LIABILITY COMPANY REMAIN
VESTED IN THE ARTIST COMPANY;
      (c) ALL LIABILITIES AND OBLIGATIONS OF THE LIMITED LIABILITY
PAGE 4-SENATE BILL 26-133
COMPANY REMAIN LIABILITIES AND OBLIGATIONS OF THE ARTIST COMPANY;
      (d) ALL RIGHTS OF CREDITORS AND ALL LIENS UPON ANY PROPERTY
OF THE LIMITED LIABILITY COMPANY ARE PRESERVED UNIMPAIRED;
      (e) ANY ACTION OR PROCEEDING PENDING AGAINST THE LIMITED
LIABILITY COMPANY MAY BE CONTINUED AGAINST THE ARTIST COMPANY AS
IF THE ELECTION HAD NOT OCCURRED; AND
      (f) THE ARTIST COMPANY IS SUBJECT TO THIS PART 12.
      (3) AN ELECTION CONDUCTED PURSUANT TO THIS SECTION DOES NOT
CONSTITUTE A DISSOLUTION, TERMINATION, OR TRANSFER OF ASSETS OF THE
LIMITED LIABILITY COMPANY.
       (4) (a) THE ELECTION TO BECOME AN ARTIST COMPANY PURSUANT
TO THIS SECTION DOES NOT AFFECT A MEMBER'S LIABILITY FOR OBLIGATIONS
OF THE LIMITED LIABILITY COMPANY INCURRED PRIOR TO THE ELECTION
BECOMING EFFECTIVE.
     (b) UNLESS OTHERWISE AGREED TO BY THE MEMBERS, ELECTION TO
BECOME AN ARTIST COMPANY DOES NOT AFFECT A MEMBER'S EXISTING
RIGHTS UNDER THE OPERATING AGREEMENT OF THE LIMITED LIABILITY
COMPANY, EXCEPT TO THE EXTENT THE RIGHTS ARE UNDER AN OPERATING
AGREEMENT ENTERED INTO ON OR AFTER THE EFFECTIVE DATE OF THIS PART
12 AND ARE INCONSISTENT WITH THE REQUIREMENTS OF THIS PART 12.
      7-80-1205. Application of article 80.
      (1)   EXCEPT AS OTHERWISE PROVIDED IN THIS PART 12, THE
PROVISIONS OF THIS ARTICLE 80 THAT ARE APPLICABLE TO LIMITED LIABILITY
COMPANIES APPLY TO ARTIST COMPANIES.
      (2) IN THE EVENT OF A CONFLICT BETWEEN THIS PART 12 AND OTHER
PROVISIONS OF THIS ARTICLE 80, THIS PART 12 CONTROLS.
       (3) NOTWITHSTANDING SECTION 7-80-108 OR ANOTHER PROVISION
OF THIS ARTICLE 80, THE REQUIREMENTS IMPOSED BY SECTIONS 7-80-1203
(1)(c) AND 7-80-1214 (2) SHALL NOT BE ALTERED IN AN OPERATING
AGREEMENT. ALL OTHER PROVISIONS OF THIS PART 12 MAY BE MODIFIED BY
PAGE 5-SENATE BILL 26-133
THE OPERATING AGREEMENT TO THE EXTENT PERMITTED BY SECTION
7-80-108 AND THIS PART 12.
      7-80-1206.     Formation of artist company - articles of
organization - public benefit artist company requirements.
      (1) A PERSON MAY FORM AN ARTIST COMPANY BY FILING ARTICLES
OF ORGANIZATION WITH THE SECRETARY OF STATE PURSUANT TO SECTION
7-90-301 THAT MEET THE REQUIREMENTS SET FORTH IN SECTIONS 7-80-204
AND 7-80-1203 AND SUBSECTION (7) OF THIS SECTION IF THE ARTIST
COMPANY WILL BE A PUBLIC BENEFIT ARTIST COMPANY, WHICH ARTICLES OF
ORGANIZATION MUST INCLUDE, IN ADDITION TO THE INFORMATION REQUIRED
BY SUBSECTION 7-80-204:
      (a)   A STATEMENT OF THE ARTISTIC MISSION OF THE ARTIST
COMPANY;
       (b) A STATEMENT REGARDING THE PRIORITY OF THE ARTISTIC
MISSION AND FINANCIAL OBJECTIVES AS PROVIDED IN SECTION 7-80-1203
(3); AND
       (c) A STATEMENT AS TO WHETHER THE ARTIST COMPANY ELECTS TO
BE A PUBLIC BENEFIT ARTIST COMPANY SUBJECT TO SECTIONS 7-80-1215 TO
7-80-1217 AND, IF SUCH ELECTION IS MADE, ONE OR MORE SPECIFIC PUBLIC
BENEFITS TO BE PROMOTED BY THE ARTIST COMPANY.
      (2)   THE INCORPORATORS MAY ALSO MAKE ELECTIONS IN THE
ARTICLES OF ORGANIZATION OF AN ARTIST COMPANY REGARDING THE
FOLLOWING:
      (a) THE STRUCTURE OF EQUITY OWNERSHIP FROM THE OPTIONS
PROVIDED IN SECTION 7-80-1207;
      (b) THE STRUCTURE OF THE GOVERNING BODY FROM THE OPTIONS
PROVIDED IN SECTION 7-80-1208;
      (c) WHETHER FIDUCIARY DUTIES APPLY AS PROVIDED IN SECTION
7-80-1211;
      (d) WHICH EXISTING ARTISTIC WORK SHOULD BE ASSIGNED OR
PAGE 6-SENATE BILL 26-133
EXCLUSIVELY LICENSED TO THE ARTIST COMPANY AS PROVIDED IN SECTION
7-80-1212;
      (e) WHETHER ARTISTIC WORK CREATED BY MEMBERS DURING THEIR
MEMBERSHIP IS ASSIGNED OR EXCLUSIVELY LICENSED TO THE ARTIST
COMPANY AS PROVIDED IN SECTION 7-80-1213 (1);
      (f) THE TAX TREATMENT OF THE ARTIST COMPANY;
      (g) WHETHER DISTRIBUTIONS ARE MADE BASED ON OWNERSHIP
PERCENTAGES OR ALTERNATIVE MECHANISMS, WITH SPACE TO DESCRIBE
SUCH ALTERNATIVE MECHANISMS;
      (h) BASIC PROVISIONS REGARDING TERMINATION OF A MEMBER'S
MEMBERSHIP INTEREST UPON WITHDRAWAL FROM THE ARTIST COMPANY,
ADMISSION OF NEW MEMBERS, AND RIGHTS TO ARTISTIC WORK UPON
MEMBER WITHDRAWAL AND TERMINATION OF MEMBERSHIP INTEREST; AND
      (i) WHETHER CERTAIN DECISIONS REQUIRE ARTIST SUPERMAJORITY
OR UNANIMOUS APPROVAL.
      (3) IF THE ELECTION IS MADE UNDER SUBSECTION (2)(e) OF THIS
SECTION, THE ARTICLES OF ORGANIZATION MUST ALSO INCLUDE A
NARRATIVE DESCRIPTION OF THE ARTISTIC WORK TO BE CREATED BY THE
ARTIST COMPANY TO SET FORTH THE SCOPE OF ARTISTIC WORK SUBJECT TO
THE ASSIGNMENT OR EXCLUSIVE LICENSE.
      (4) AN ELECTION REGARDING WHETHER SELECTED TERMS IN THE
ARTICLES OF ORGANIZATION MAY BE SUPERSEDED BY A SUBSEQUENTLY
ADOPTED OPERATING AGREEMENT:
      (a) WITHOUT AMENDMENT TO THE ARTICLES OF ORGANIZATION; OR
     (b) ONLY WITH CONCURRENT AMENDMENT TO THE ARTICLES OF
ORGANIZATION.
      (5) ARTICLES OF ORGANIZATION FILED PURSUANT TO SUBSECTION (1)
OF THIS SECTION MAY INCLUDE OTHER PROVISIONS CONSISTENT WITH LAW
AS THE INCORPORATORS ELECT TO INCLUDE.
PAGE 7-SENATE BILL 26-133
      (6) IF AN ARTIST COMPANY ELECTS TO BECOME A PUBLIC BENEFIT
ARTIST COMPANY PURSUANT TO SECTION 7-80-1215, THE ARTIST COMPANY
SHALL STATE IN THE HEADING OF ITS ARTICLES OF ORGANIZATION THAT IT IS
A "PUBLIC BENEFIT ARTIST COMPANY". A CERTIFICATE OF MEMBERSHIP
INTEREST OR OTHER SECURITY ISSUED BY A PUBLIC BENEFIT ARTIST
COMPANY MUST NOTE CONSPICUOUSLY THAT THE PUBLIC BENEFIT ARTIST
COMPANY IS A PUBLIC BENEFIT ARTIST COMPANY FORMED PURSUANT TO THIS
PART 12.
     (7) AN ARTIST COMPANY'S NAME MAY CONTAIN THE WORDS "ARTIST
COMPANY" OR THE ABBREVIATIONS "ALLC", "A CORP", "AC", OR "A.C." IN
LIEU OF OR IN ADDITION TO ANY TERM OR ABBREVIATION OTHERWISE
PERMITTED BY SECTION 7-90-601 (3)(c).
      7-80-1207. Ownership of equity.
      (1) SUBJECT TO THE REQUIREMENTS SET FORTH IN SECTION
7-80-1203 (1)(c), AN ARTIST COMPANY HAS THE SAME OPTIONS WITH
RESPECT TO EQUITY OWNERSHIP PROVIDED TO LIMITED LIABILITY COMPANIES
GENERALLY UNDER THIS ARTICLE 80.
      (2) THE INCORPORATORS OF AN ARTIST COMPANY MAY ELECT IN THE
ARTICLES OF ORGANIZATION ONE OF THE FOLLOWING STRUCTURES FOR
EQUITY OWNERSHIP:
      (a) OWNERSHIP BASED ON THE SALE OF UNITS, INCLUDING
FRACTIONAL UNITS;
      (b) PRO RATA OWNERSHIP BASED ON THE NUMBER OF MEMBERS;
      (c) PRO RATA OWNERSHIP BASED ON CAPITAL CONTRIBUTIONS,
INCLUDING IN-KIND CONTRIBUTIONS OF CASH, PROPERTY, ARTISTIC WORK,
ROYALTY SHARING, REVENUE PARTICIPATION RIGHTS, OR OTHER INTANGIBLE
ASSETS; OR
      (d) FIXED OWNERSHIP PERCENTAGES BY INDIVIDUAL MEMBER.
      (3) UNLESS OTHERWISE SPECIFIED IN AN OPERATING AGREEMENT,
ALLOCATIONS AND DISTRIBUTIONS MUST BE MADE BASED ON OWNERSHIP
PERCENTAGES; EXCEPT THAT THE OPERATING AGREEMENT MAY ESTABLISH
PAGE 8-SENATE BILL 26-133
ALTERNATIVE ALLOCATION OR DISTRIBUTION MECHANISMS, INCLUDING
ALLOCATIONS OR DISTRIBUTIONS BASED ON REVENUE PARTICIPATION,
ROYALTY SHARING, RECOUPMENT WATERFALLS, OR OTHER CRITERIA
INDEPENDENT OF OWNERSHIP PERCENTAGES.
      7-80-1208. Governing body.
      (1) AN ARTIST COMPANY HAS THE SAME GOVERNANCE OPTIONS
PROVIDED TO LIMITED LIABILITY COMPANIES GENERALLY UNDER THIS
ARTICLE 80.
      (2) THE INCORPORATORS OF AN ARTIST COMPANY MAY ELECT IN THE
ARTICLES OF ORGANIZATION ONE OF THE FOLLOWING GOVERNANCE
STRUCTURES:
      (a) GOVERNANCE BY MEMBERS, WITH VOTING BASED ON OWNERSHIP
PERCENTAGES;
      (b) GOVERNANCE BY A SINGLE MANAGER, WITH THE MANAGER
ELECTED BY MEMBERS; OR
      (c) GOVERNANCE BY A BOARD OF MANAGERS, WITH MANAGERS
ELECTED BY MEMBERS.
      (3)   MORE COMPLEX GOVERNANCE STRUCTURES, INCLUDING
SEPARATE VOTING FOR ARTISTIC DECISIONS VERSUS BUSINESS DECISIONS,
MAY BE SPECIFIED IN AN OPERATING AGREEMENT.
      7-80-1209. Governance principles.
      (1)    UNLESS OTHERWISE PROVIDED IN THE ARTICLES  OF
ORGANIZATION OR OPERATING AGREEMENT OF AN ARTIST COMPANY:
      (a) A QUORUM FOR A MEETING OF MEMBERS OR MANAGERS CONSISTS
OF A MAJORITY OF THE VOTING INTERESTS OR MANAGERS, AS APPLICABLE,
ENTITLED TO VOTE AT THE MEETING;
      (b) EXCEPT AS PROVIDED IN SUBSECTION (1)(c) OF THIS SECTION, AN
ACT OF THE MEMBERS OR MANAGERS REQUIRES APPROVAL BY A MAJORITY
OF THOSE PRESENT AT A MEETING AT WHICH A QUORUM IS PRESENT; EXCEPT
PAGE 9-SENATE BILL 26-133
THAT THE FOLLOWING ACTIONS REQUIRE APPROVAL BY A MAJORITY OF ALL
VOTING INTERESTS OF THE MEMBERS:
      (I) AMENDMENT OF THE ARTICLES OF ORGANIZATION;
      (II) ADOPTION OR AMENDMENT OF AN OPERATING AGREEMENT;
      (III) MERGER, CONSOLIDATION, CONVERSION, CHANGE OF CONTROL,
OR OTHER BUSINESS COMBINATION TRANSACTION;
      (IV) DISSOLUTION OF THE ARTIST COMPANY;
     (V) ELECTION TO BECOME OR CEASE TO BE A PUBLIC BENEFIT ARTIST
COMPANY; AND
     (VI) OTHER MATTERS AS MAY BE SPECIFIED IN THE ARTICLES OF
ORGANIZATION OR OPERATING AGREEMENT; AND
     (c) THE FOLLOWING ACTIONS REQUIRE APPROVAL BY A MAJORITY OF
ALL VOTING INTERESTS OF ARTIST-MEMBERS, EVEN IF THE ACTION IS
EFFECTUATED BY AN AMENDMENT TO THE ARTICLES OF ORGANIZATION OR
OPERATING AGREEMENT:
     (I) AN ACTION MATERIALLY AFFECTING THE OWNERSHIP, LICENSING,
TRANSFER, OR REVERSIONARY RIGHTS OF ARTISTIC WORK OF THE ARTIST
COMPANY OR ARTIST-MEMBERS;
      (II) CHANGING THE DEFINITION OR SCOPE OF "PUBLIC BENEFIT"
UNDER THE ARTICLES OF ORGANIZATION OR OPERATING AGREEMENT OF A
PUBLIC BENEFIT ARTIST COMPANY;
      (III) ELECTING TO BECOME OR CEASING TO BE A PUBLIC BENEFIT
ARTIST COMPANY;
      (IV) CEASING TO BE AN ARTIST COMPANY, INCLUDING AN ACTION
THAT CAUSES THE ENTITY TO NO LONGER MEET THE REQUIREMENTS SET
FORTH IN SECTION 7-80-1203 (1);
      (V) MODIFYING THE GOVERNING CONTROL OF THE ARTIST COMPANY,
INCLUDING WITH RESPECT TO MANAGEMENT STRUCTURE, VOTING RIGHTS, OR
PAGE 10-SENATE BILL 26-133
DECISION-MAKING AUTHORITY; AND
     (VI) APPROVING THE ANNUAL OPERATING BUDGET OF THE ARTIST
COMPANY.
       (2) THE FOLLOWING IS NOT INDIVIDUALLY AN INDICATION OF LACK
OF GOOD GOVERNANCE, GROUNDS FOR PIERCING THE LIMITED LIABILITY
VEIL, OR EVIDENCE OF IMPROPER CORPORATE FORMALITIES:
      (a) FAILURE TO PREPARE WRITTEN MINUTES OF MEETINGS OF THE
GOVERNING BODY IF THERE IS ADEQUATE WRITTEN EVIDENCE OF FORMAL
APPROVALS TAKEN BY THE GOVERNING BODY;
     (b) FAILURE TO HOLD ANNUAL MEETINGS OF MEMBERS OF AN ARTIST
COMPANY; OR
      (c)   FAILURE OF AN ARTIST COMPANY TO OBSERVE OTHER
FORMALITIES CUSTOMARILY ASSOCIATED WITH COLORADO LIMITED
LIABILITY COMPANIES OR OTHER ENTITY FORMS.
      7-80-1210. Acceptance of capital.
      (1) AN ARTIST COMPANY MAY ACCEPT CAPITAL IN ANY FORM,
INCLUDING:
      (a) GRANTS;
      (b) REFUNDABLE GRANTS;
      (c) FIRST LOSS CAPITAL;
      (d) PROGRAM-RELATED INVESTMENTS;
      (e) MISSION-RELATED INVESTMENTS;
      (f) A FINANCIAL AGREEMENT FOR IMPACT RETURNS INVESTMENTS;
      (g) DEBT INSTRUMENTS;
      (h) EQUITY INVESTMENTS;
PAGE 11-SENATE BILL 26-133
      (i) CONVERTIBLE INVESTMENT INSTRUMENTS;
      (j) FINANCIAL INSTRUMENTS, INCLUDING REVENUE, CASH FLOW, AND
PROFIT PARTICIPATION RIGHTS;
      (k) ROYALTY SHARING RIGHTS; AND
      (l) IN-KIND CONTRIBUTIONS, INCLUDING INTELLECTUAL PROPERTY
SUCH AS ARTISTIC WORK.
      (2) IF AND TO THE EXTENT THAT A DONOR, WITH RESPECT TO GRANTS
OR REFUNDABLE GRANTS, IS REQUIRED TO EXERCISE EXPENDITURE
RESPONSIBILITY, THE DONOR IS ENTITLED TO THE STATEMENTS PREPARED
FOR MEMBERS AS SET FORTH IN SECTION 7-80-1217.
      (3)  IF AND TO THE EXTENT THAT A DONOR REQUESTS THAT
DONATIONS BE TAX DEDUCTIBLE, UNLESS AND UNTIL THE FEDERAL INTERNAL
REVENUE SERVICE PROVIDES THAT ARTIST COMPANIES ARE ENTITLED TO
STATUS AS TAX EXEMPT ORGANIZATIONS, DONATIONS TO AN ARTIST
COMPANY MAY BE MADE THROUGH A SEPARATE TAX EXEMPT
ORGANIZATION.
      7-80-1211. Fiduciary duties.
      (1) EXCEPT AS OTHERWISE PROVIDED IN THIS SECTION, THE DUTIES
OF MEMBERS AND MANAGERS OF AN ARTIST COMPANY ARE GOVERNED BY
SECTION 7-80-404.
      (2) IN ADDITION TO THE DUTIES SPECIFIED IN SECTION 7-80-404, THE
ARTICLES OF ORGANIZATION OR OPERATING AGREEMENT OF AN ARTIST
COMPANY MAY SPECIFY DUTIES OF MEMBERS OR MANAGERS WITH RESPECT
TO THE ARTISTIC MISSION OF THE ARTIST COMPANY, INCLUDING DUTIES TO:
     (a) PRESERVE AND PROMOTE THE ARTISTIC MISSION OF THE ARTIST
COMPANY;
       (b) BALANCE THE ARTISTIC MISSION WITH THE FINANCIAL INTERESTS
OF THE ARTIST COMPANY AND THE PECUNIARY INTERESTS OF THE MEMBERS;
OR
PAGE 12-SENATE BILL 26-133
      (c) CONSULT WITH OR OBTAIN APPROVAL FROM ARTIST-MEMBERS ON
DECISIONS MATERIALLY AFFECTING THE ARTISTIC DIRECTION OR CREATIVE
OUTPUT OF THE ARTIST COMPANY.
      (3) THE DUTIES SPECIFIED IN SUBSECTIONS (1) AND (2) OF THIS
SECTION MAY BE MODIFIED BY THE ARTICLES OF ORGANIZATION OR
OPERATING AGREEMENT OF AN ARTIST COMPANY TO THE EXTENT PERMITTED
BY SECTIONS 7-80-108 AND 7-80-204.
      (4) FOR PUBLIC BENEFIT ARTIST COMPANIES, THE DUTIES OF
MEMBERS AND MANAGERS ARE FURTHER SPECIFIED IN SECTION 7-80-1216.
      (5) THE ARTICLES OF ORGANIZATION MAY INCLUDE ELECTIONS
ALLOWING INCORPORATORS TO ACCEPT THE DEFAULT DUTIES DESCRIBED
UNDER THIS SECTION OR TO MODIFY SPECIFIC DUTIES AS PERMITTED BY
SUBSECTION (3) OF THIS SECTION.
      7-80-1212. Intellectual property as a capital contribution -
assignment or exclusive licensing to artist company.
      (1)  A MEMBER OF AN ARTIST COMPANY MAY ASSIGN OR
EXCLUSIVELY LICENSE TO THE ARTIST COMPANY INTELLECTUAL PROPERTY,
INCLUDING ARTISTIC WORK OR ANY RIGHT OR RIGHTS RELATED TO THE
ARTISTIC WORK, AS IN-KIND CAPITAL CONTRIBUTIONS, INCLUDING AS THE
INITIAL CAPITAL CONTRIBUTION OF THE MEMBER TO BECOME A MEMBER OF
THE ARTIST COMPANY.
      (2) THE ARTICLES OF ORGANIZATION OR OPERATING AGREEMENT OF
AN ARTIST COMPANY MAY PROVIDE FOR THE VALUATION OF ARTISTIC WORK,
OR ANY RIGHT OR RIGHTS RELATED TO THE ARTISTIC WORK, ASSIGNED OR
EXCLUSIVELY LICENSED TO THE ARTIST COMPANY PURSUANT TO THIS
SECTION. IF, PRIOR TO THE TIME OF ASSIGNMENT OR EXCLUSIVE LICENSING,
THE GOVERNING BODY OF THE ARTIST COMPANY AND THE ASSIGNING OR
EXCLUSIVE LICENSING MEMBER FAIL TO AGREE ON A VALUATION, THE
MEMBER MAY ELECT TO EITHER:
      (a) DECLINE TO ASSIGN OR EXCLUSIVELY LICENSE THE ARTISTIC
WORK, OR ANY RIGHT OR RIGHTS RELATED TO THE ARTISTIC WORK, TO THE
ARTIST COMPANY; OR
PAGE 13-SENATE BILL 26-133
      (b) HAVE AN INDEPENDENT PROFESSIONAL VALUATOR MUTUALLY
AGREED TO BY THE PARTIES DETERMINE THE VALUATION OF THE ARTISTIC
WORK AT THE ARTIST COMPANY'S COST, WHICH DETERMINATION IS FINAL
AND BINDING.
      (3) ANY ASSIGNMENT OR EXCLUSIVE LICENSING OF ARTISTIC WORK
TO AN ARTIST COMPANY PURSUANT TO THIS SECTION MAY BE LIMITED IN
SCOPE TO INCLUDE ONLY THE ARTISTIC WORK, OR ANY RIGHT OR RIGHTS
RELATED TO THE ARTISTIC WORK, REQUIRED FOR THE ARTISTIC MISSION OF
THE ARTIST COMPANY.
      (4)    UNLESS     OTHERWISE SPECIFIED IN THE ARTICLES OF
ORGANIZATION OR OPERATING AGREEMENT OF AN ARTIST COMPANY,
ARTISTIC WORK ASSIGNED OR EXCLUSIVELY LICENSED TO THE ARTIST
COMPANY PURSUANT TO THIS SECTION IS ASSIGNED OR EXCLUSIVELY
LICENSED SUBJECT TO THE REVERSIONARY RIGHTS SET FORTH IN SECTION
7-80-1221 (2)(a)(I), WHICH REVERSIONARY RIGHTS CONSTITUTE A RETAINED
INTEREST THAT DOES NOT TRANSFER TO THE ARTIST COMPANY AND IS NOT
AVAILABLE TO CREDITORS OF THE ARTIST COMPANY. INTELLECTUAL
PROPERTY CONTRIBUTED TO THE ARTIST COMPANY THAT DOES NOT
CONSTITUTE ARTISTIC WORK IS NOT SUBJECT TO THE REVERSIONARY RIGHTS
AND IS AN ASSET OF THE ARTIST COMPANY.
       7-80-1213. Artistic work created during membership -
restriction on transfer.
     (1) THE ARTICLES OF ORGANIZATION OR OPERATING AGREEMENT OF
AN ARTIST COMPANY MAY REQUIRE ARTIST-MEMBERS TO ASSIGN OR
EXCLUSIVELY LICENSE TO THE ARTIST COMPANY ARTISTIC WORK CREATED
BY THE ARTIST-MEMBERS DURING MEMBERSHIP THAT RELATES TO THE
ARTISTIC MISSION OF THE ARTIST COMPANY. ARTISTIC WORK ASSIGNED OR
EXCLUSIVELY LICENSED PURSUANT TO THIS SUBSECTION (1) IS SUBJECT TO
THE REVERSIONARY RIGHTS SET FORTH IN SECTION 7-80-1221 (2)(a)(I),
WHICH REVERSIONARY RIGHTS CONSTITUTE A RETAINED INTEREST THAT
DOES NOT TRANSFER TO THE ARTIST COMPANY AND IS NOT AVAILABLE TO
CREDITORS OF THE ARTIST COMPANY. INTELLECTUAL PROPERTY CREATED ON
BEHALF OF THE ARTIST COMPANY THAT DOES NOT CONSTITUTE ARTISTIC
WORK IS NOT SUBJECT TO THE REVERSIONARY RIGHTS AND IS AN ASSET OF
THE ARTIST COMPANY.
PAGE 14-SENATE BILL 26-133
       (2) IF THE ASSIGNMENT OR EXCLUSIVE LICENSING TERMS DESCRIBED
IN SUBSECTION (1) OF THIS SECTION ARE INCLUDED IN AN ARTIST COMPANY'S
ARTICLES OF ORGANIZATION OR OPERATING AGREEMENT, THE ARTICLES OF
ORGANIZATION OR OPERATING AGREEMENT OF THE ARTIST COMPANY MUST
ALSO INCLUDE A NARRATIVE DESCRIPTION OF THE ARTISTIC WORK TO BE
CREATED BY THE ARTIST COMPANY TO DELINEATE THE SCOPE OF ARTISTIC
WORK SUBJECT TO ASSIGNMENT OR EXCLUSIVE LICENSING.
     (3) AN ARTIST-MEMBER MAY RETAIN SPECIFIED ARTISTIC WORK
CREATED BY THE ARTIST-MEMBER DURING THE ARTIST-MEMBER'S
MEMBERSHIP BY PROVIDING WRITTEN NOTICE TO THE ARTIST COMPANY
DESCRIBING THE ARTISTIC WORK TO BE RETAINED BY THE ARTIST-MEMBER.
THE WRITTEN NOTICE MAY BE PROVIDED AT THE TIME THE ARTIST-MEMBER
JOINS THE ARTIST COMPANY OR WITHIN THIRTY DAYS AFTER THE
GENERATION OF THE ARTISTIC WORK. IF A WRITTEN NOTICE IS PROVIDED, THE
ARTIST-MEMBER SHALL GRANT THE ARTIST COMPANY A NONEXCLUSIVE,
PERPETUAL, IRREVOCABLE LICENSE TO THE ARTISTIC WORK TO THE EXTENT
THAT THE ARTIST-MEMBER USES THE ARTISTIC WORK IN THE
ARTIST-MEMBER'S WORK FOR THE ARTIST COMPANY.
        (4) ALL ARTISTIC WORK ASSIGNED OR EXCLUSIVELY LICENSED TO OR
CREATED BY ARTIST-MEMBERS ON BEHALF OF THE ARTIST COMPANY MUST
BE OWNED BY EITHER THE ARTIST-MEMBERS OR THE ARTIST COMPANY AND
IS SUBJECT TO THE REVERSIONARY RIGHTS DESCRIBED IN SECTION 7-80-1221
(2)(a)(I). THE ARTISTIC WORK SHALL NOT BE TRANSFERRED TO, OWNED BY,
ASSIGNED TO, OR EXCLUSIVELY LICENSED TO NONARTIST MEMBERS OR
INVESTORS OR OTHER NONARTIST THIRD PARTIES EXCEPT THROUGH LICENSES
OR OTHER CONTRACTUAL AGREEMENTS ENTERED INTO WITH UNAFFILIATED
THIRD PARTIES IN THE ORDINARY COURSE OF BUSINESS FOR BONA FIDE
COMMERCIAL PURPOSES. LICENSES AND CONTRACTUAL AGREEMENTS
DESCRIBED IN THIS SUBSECTION (4) ARE SUBJECT TO THE REVERSIONARY
RIGHTS DESCRIBED IN SECTION 7-80-1221 (2)(a)(I). THE ARTICLES OF
ORGANIZATION OR OPERATING AGREEMENT MAY ADDRESS:
     (a) TREATMENT OF ARTISTIC WORK UPON AN ARTIST-MEMBER'S
DEPARTURE FROM THE ARTIST COMPANY, INCLUDING WHETHER THE ARTISTIC
WORK REMAINS WITH THE ARTIST COMPANY OR REVERTS TO THE DEPARTED
ARTIST-MEMBER IN SPECIFIED DEPARTURE SCENARIOS;
      (b) RIGHTS OF DEPARTED ARTIST-MEMBERS TO CONTINUE RECEIVING
PAGE 15-SENATE BILL 26-133
ROYALTIES OR REVENUES FROM ARTISTIC WORK CREATED DURING THEIR
MEMBERSHIP;
      (c) RIGHTS OF REMAINING ARTIST-MEMBERS TO CONTINUE USING OR
EXPLOITING ARTISTIC    WORK    CREATED    JOINTLY   WITH     DEPARTED
ARTIST-MEMBERS;
      (d) PROCEDURES AND CONSENT REQUIREMENTS FOR ANY SALE OR
ASSIGNMENT OF ARTISTIC WORK TO NONARTIST THIRD PARTIES, WHICH MUST
INCLUDE THE CONSENT OF THE ARTIST-MEMBER WHO CREATED THE ARTISTIC
WORK AND PROVIDE FOR CONSIDERATION TO BE PAID TO THE
ARTIST-MEMBER FOR RELINQUISHMENT OF THE ARTIST -MEMBER'S
REVERSIONARY RIGHTS IF THE REVERSIONARY RIGHTS ARE TO BE INCLUDED
IN THE SALE OR ASSIGNMENT; AND
      (e) UPON DISSOLUTION OF THE ARTIST COMPANY, REVERSIONARY
RIGHTS AS DESCRIBED IN SECTION 7-80-1221 (2)(a)(I).
      7-80-1214. Separation of economic rights from governance and
control.
      (1) THE ARTICLES OF ORGANIZATION OR OPERATING AGREEMENT OF
AN ARTIST COMPANY MAY PROVIDE FOR THE SEPARATION OF ECONOMIC
RIGHTS FROM GOVERNANCE AND CONTROL RIGHTS.
        (2) ANY GOVERNANCE AND CONTROL RIGHTS MUST AT ALL TIMES
REMAIN WITH ARTIST-MEMBERS IN ACCORDANCE WITH SECTION 7-80-1203
(1)(c). NONARTIST INVESTORS MAY HOLD ECONOMIC RIGHTS, INCLUDING
RIGHTS TO DISTRIBUTIONS, ROYALTIES, REVENUE PARTICIPATION, OR OTHER
FINANCIAL RETURNS, WITHOUT CORRESPONDING GOVERNANCE OR CONTROL
RIGHTS.
      (3) AN OPERATING AGREEMENT MAY SPECIFY THE EXTENT AND
NATURE OF ECONOMIC RIGHTS HELD BY NONARTIST INVESTORS, INCLUDING
PRIORITY OF DISTRIBUTIONS, REVENUE PARTICIPATION ARRANGEMENTS,
RECOUPMENT PROVISIONS, AND OTHER FINANCIAL TERMS.
      7-80-1215. Public benefit artist company - election.
      (1)   AN ARTIST COMPANY MAY ELECT AT FORMATION OR BY
PAGE 16-SENATE BILL 26-133
AMENDING ITS ARTICLES OF ORGANIZATION IN ACCORDANCE WITH THIS PART
12 TO BE A PUBLIC BENEFIT ARTIST COMPANY BY:
      (a) STATING IN THE HEADING OF ITS ARTICLES OF ORGANIZATION
THAT IT IS A "PUBLIC BENEFIT ARTIST COMPANY";
      (b) SETTING FORTH IN ITS ARTICLES OF ORGANIZATION AND IN ITS
OPERATING AGREEMENT, IF ANY, ONE OR MORE SPECIFIC PUBLIC BENEFITS TO
BE PROMOTED BY THE ARTIST COMPANY; AND
      (c) STATING IN ITS OPERATING AGREEMENT, IF ANY, THAT IT IS A
PUBLIC BENEFIT ARTIST COMPANY.
      (2) AN ARTIST COMPANY THAT IS NOT FORMED AS A PUBLIC BENEFIT
ARTIST COMPANY MAY BECOME A PUBLIC BENEFIT ARTIST COMPANY BY:
       (a) AMENDING ITS ARTICLES OF ORGANIZATION AND OPERATING
AGREEMENT TO COMPLY WITH THE REQUIREMENTS OF SUBSECTION (1) OF
THIS SECTION; AND
       (b) OBTAINING APPROVAL OF THE ELECTION BY A MAJORITY OF ALL
VOTING INTERESTS OF THE MEMBERS AS REQUIRED BY SECTION 7-80-1209
(1)(b)(V) AND THE MAJORITY OF ALL VOTING INTERESTS OF
ARTIST-MEMBERS AS REQUIRED BY SECTION 7-80-1209 (1)(c)(III).
      (3) A PUBLIC BENEFIT ARTIST COMPANY MAY CEASE TO BE A PUBLIC
BENEFIT ARTIST COMPANY BY:
      (a) AMENDING ITS ARTICLES OF ORGANIZATION TO REMOVE THE
DESIGNATION AS A PUBLIC BENEFIT ARTIST COMPANY AND THE SPECIFIC
PUBLIC BENEFITS; AND
      (b) OBTAINING APPROVAL OF THE AMENDMENT BY A MAJORITY OF
ALL VOTING INTERESTS OF THE MEMBERS AS REQUIRED BY SECTION
7-80-1209 (1)(b)(V) AND THE MAJORITY OF ALL VOTING INTERESTS OF
ARTIST-MEMBERS AS REQUIRED BY SECTION 7-80-1209 (1)(c)(III).
       (4) A PUBLIC BENEFIT ARTIST COMPANY THAT ELECTS TO CEASE
BEING A PUBLIC BENEFIT ARTIST COMPANY REMAINS SUBJECT TO THIS PART
12 AS AN ARTIST COMPANY.
PAGE 17-SENATE BILL 26-133
      (5) IN THE EVENT OF ANY INCONSISTENCY BETWEEN THE PUBLIC
BENEFITS TO BE PROMOTED BY A PUBLIC BENEFIT ARTIST COMPANY AS SET
FORTH IN ITS OPERATING AGREEMENT AND IN ITS ARTICLES OF
ORGANIZATION, THE OPERATING AGREEMENT CONTROLS AMONG THE
MEMBERS, THE MANAGERS, AND OTHER PERSONS THAT ARE PARTY TO OR
OTHERWISE BOUND BY THE OPERATING AGREEMENT.
       (6) A MANAGER OF A PUBLIC BENEFIT ARTIST COMPANY, OR, IF THERE
IS NO MANAGER, ANY MEMBER OF A PUBLIC BENEFIT ARTIST COMPANY, THAT
BECOMES AWARE THAT THE SPECIFIC PUBLIC BENEFITS TO BE PROMOTED BY
THE PUBLIC BENEFIT ARTIST COMPANY SET FORTH IN ITS OPERATING
AGREEMENT ARE INACCURATELY SET FORTH IN ITS ARTICLES OF
ORGANIZATION SHALL PROMPTLY AMEND THE ARTICLES OF ORGANIZATION
IN ACCORDANCE WITH SECTION 7-80-1209 (1)(c)(II).
       (7) THE ELECTION TO ADOPT A PUBLIC BENEFITS PROVISION MAY
FACILITATE CERTIFICATION OF AN ARTIST COMPANY UNDER THIRD-PARTY
STANDARDS APPLICABLE TO PUBLIC BENEFIT ARTIST COMPANIES.
     7-80-1216. Public benefit artist company - duties of members
and managers.
      (1)   THE MEMBERS OR MANAGERS OR OTHER PERSONS WITH
AUTHORITY TO MANAGE OR DIRECT THE BUSINESS AND AFFAIRS OF A PUBLIC
BENEFIT ARTIST COMPANY SHALL MANAGE OR DIRECT THE BUSINESS AND
AFFAIRS OF THE PUBLIC BENEFIT ARTIST COMPANY IN A MANNER THAT
BALANCES:
      (a) THE PECUNIARY INTERESTS OF THE MEMBERS;
     (b) THE BEST INTERESTS OF THOSE MATERIALLY AFFECTED BY ITS
CONDUCT;
     (c) THE SPECIFIC PUBLIC BENEFITS SET FORTH IN ITS ARTICLES OF
ORGANIZATION AND OPERATING AGREEMENT, IF ANY; AND
      (d) ITS ARTISTIC MISSION.
     (2) UNLESS OTHERWISE PROVIDED IN AN OPERATING AGREEMENT, A
MEMBER, A MANAGER, OR OTHER PERSON WITH AUTHORITY TO MANAGE OR
PAGE 18-SENATE BILL 26-133
DIRECT THE BUSINESS AND AFFAIRS OF A PUBLIC BENEFIT ARTIST COMPANY
DOES NOT HAVE ANY LIABILITY FOR MONETARY DAMAGES FOR THE FAILURE
TO MANAGE OR DIRECT THE BUSINESS AND AFFAIRS OF THE PUBLIC BENEFIT
ARTIST COMPANY AS PROVIDED IN SUBSECTION (1) OF THIS SECTION.
      (3) A MEMBER OR MANAGER OF A PUBLIC BENEFIT ARTIST COMPANY
OR ANOTHER PERSON WITH AUTHORITY TO MANAGE OR DIRECT THE BUSINESS
AND AFFAIRS OF A PUBLIC BENEFIT ARTIST COMPANY SHALL NOT, BY VIRTUE
OF THE PUBLIC BENEFITS PROVISIONS OF THIS PART 12 OR SUBSECTION (1) OF
THIS SECTION, HAVE ANY DUTY TO A PERSON ON ACCOUNT OF ANY INTEREST
OF THE PERSON IN THE PUBLIC BENEFITS SET FORTH IN ITS ARTICLES OF
ORGANIZATION AND OPERATING AGREEMENT, IF ANY, OR ON ACCOUNT OF
ANY INTEREST MATERIALLY AFFECTED BY THE PUBLIC BENEFIT ARTIST
COMPANY'S CONDUCT.
      (4) WITH RESPECT TO A DECISION IMPLICATING THE BALANCE
REQUIREMENT SET FORTH IN SUBSECTION (1) OF THIS SECTION, A MEMBER,
A MANAGER, OR OTHER PERSON WITH AUTHORITY TO MANAGE OR DIRECT
THE BUSINESS AND AFFAIRS OF A PUBLIC BENEFIT ARTIST COMPANY IS
DEEMED TO SATISFY THE PERSON'S FIDUCIARY DUTIES TO MEMBERS AND THE
PUBLIC BENEFIT ARTIST COMPANY IF THE PERSON'S DECISION IS BOTH
INFORMED AND DISINTERESTED AND NOT A DECISION THAT A PERSON OF
ORDINARY, SOUND JUDGMENT WOULD NOT APPROVE.
      7-80-1217. Public benefit artist company - annual statements.
      (1) A PUBLIC BENEFIT ARTIST COMPANY SHALL AT LEAST ANNUALLY
PROVIDE ITS MEMBERS AND DONORS WITH A STATEMENT SPECIFYING:
      (a) THE PUBLIC BENEFIT ARTIST COMPANY'S PROMOTION OF THE
PUBLIC BENEFITS SET FORTH IN ITS ARTICLES OF ORGANIZATION AND
OPERATING AGREEMENT, IF ANY;
      (b) THE PUBLIC BENEFIT ARTIST COMPANY'S FULFILLMENT OF ITS
ARTISTIC MISSION; AND
      (c) THE BEST INTERESTS OF THOSE MATERIALLY AFFECTED BY THE
PUBLIC BENEFIT ARTIST COMPANY'S CONDUCT.
      (2) THE STATEMENT REQUIRED BY SUBSECTION (1) OF THIS SECTION
PAGE 19-SENATE BILL 26-133
MUST INCLUDE:
      (a) THE OBJECTIVES THAT HAVE BEEN ESTABLISHED TO PROMOTE THE
PUBLIC BENEFIT ARTIST COMPANY'S PUBLIC BENEFITS, ARTISTIC MISSION,
AND INTERESTS;
      (b) THE STANDARDS THAT HAVE BEEN ADOPTED TO MEASURE THE
PUBLIC BENEFIT ARTIST COMPANY'S PROGRESS IN PROMOTING THE PUBLIC
BENEFIT ARTIST COMPANY'S PUBLIC BENEFITS, ARTISTIC MISSION, AND
INTERESTS;
      (c) OBJECTIVE FACTUAL INFORMATION BASED ON THE STANDARDS
DESCRIBED IN SUBSECTION (2)(b) OF THIS SECTION REGARDING THE PUBLIC
BENEFIT ARTIST COMPANY'S SUCCESS IN MEETING THE OBJECTIVES FOR
PROMOTING THE PUBLIC BENEFITS, ARTISTIC MISSION, AND INTERESTS; AND
      (d) AN ASSESSMENT OF THE PUBLIC BENEFIT ARTIST COMPANY'S
SUCCESS IN MEETING THE OBJECTIVES AND PROMOTING THE PUBLIC
BENEFITS, ARTISTIC MISSION, AND INTERESTS.
      (3) THE STATEMENT REQUIRED BY THIS SECTION MAY BE INCLUDED
IN OR PROVIDED CONCURRENTLY WITH ANY OTHER REPORT OR STATEMENT
PROVIDED TO MEMBERS.
      7-80-1218. Member transition.
      (1)  AN ARTIST COMPANY'S ARTICLES OF ORGANIZATION OR
OPERATING AGREEMENT MAY PROVIDE FOR:
     (a) PROCEDURES FOR ADMISSION OF NEW MEMBERS AND DEPARTURE,
WITHDRAWAL, EXPULSION, OR DISSOCIATION OF EXISTING MEMBERS, SO
LONG AS ARTISTS RETAIN OWNERSHIP IN ACCORDANCE WITH THE
REQUIREMENTS OF SECTION 7-80-1203 (1)(c);
     (b) RIGHTS TO ARTISTIC WORK, ROYALTY SHARING RIGHTS, AND
REVENUE PARTICIPATION RIGHTS UPON A MEMBER'S DEPARTURE, INCLUDING:
      (I) WHETHER ARTISTIC WORK ASSIGNED OR EXCLUSIVELY LICENSED
BY THE DEPARTING ARTIST-MEMBER REMAINS WITH THE ARTIST COMPANY
OR REVERTS TO THE MEMBER, IN WHOLE OR IN PART;
PAGE 20-SENATE BILL 26-133
      (II) WHETHER ARTISTIC WORK CREATED DURING THE MEMBER'S
MEMBERSHIP REMAINS WITH THE ARTIST COMPANY OR REVERTS TO THE
ARTIST-MEMBER IN SPECIFIED DEPARTURE SCENARIOS, IN WHOLE OR IN PART;
      (III) WHETHER AND ON WHAT TERMS THE DEPARTING
ARTIST-MEMBER RETAINS RIGHTS TO RECEIVE ROYALTIES OR REVENUES
FROM ARTISTIC WORK CREATED DURING THEIR MEMBERSHIP IN SPECIFIED
DEPARTURE SCENARIOS; AND
      (IV)   WHETHER AND ON WHAT TERMS THE DEPARTING
ARTIST-MEMBER RETAINS RIGHTS TO USE COLLECTIVE NAMES, TRADEMARKS,
OR OTHER IDENTIFIERS ASSOCIATED WITH THE ARTIST COMPANY;
      (c)  CONTINUING ECONOMIC RIGHTS OF DEPARTED MEMBERS,
INCLUDING DISTRIBUTION RIGHTS, ROYALTY SHARING, AND REVENUE
PARTICIPATION;
      (d) RIGHTS AND OBLIGATIONS OF REMAINING MEMBERS, INCLUDING
RIGHTS TO CONTINUE EXPLOITING ARTISTIC WORK JOINTLY CREATED WITH
DEPARTED ARTIST-MEMBERS;
     (e) VALUATION AND BUYOUT PROVISIONS FOR A DEPARTING
MEMBER'S INTEREST; AND
      (f) DISPUTE RESOLUTION PROCEDURES.
      (2)   IN THE ABSENCE OF PROVISIONS ADDRESSING MEMBER
DEPARTURE IN THE ARTICLES OF ORGANIZATION OR OPERATING AGREEMENT
OF AN ARTIST COMPANY:
     (a) A DEPARTING MEMBER'S OWNERSHIP INTEREST IS SUBJECT TO THE
DEFAULT PROVISIONS OF THIS ARTICLE 80;
      (b) ARTISTIC WORK ASSIGNED OR EXCLUSIVELY LICENSED BY THE
MEMBER, IF AN ARTIST-MEMBER, TO THE ARTIST COMPANY REMAINS THE
PROPERTY OF THE ARTIST COMPANY, SUBJECT TO ANY REVERSIONARY
RIGHTS PROVIDED IN SECTION 7-80-1221 (2)(a)(I);
      (c)  ARTISTIC WORK CREATED BY THE MEMBER, IF AN
ARTIST-MEMBER, DURING THEIR MEMBERSHIP SHALL BE TREATED IN
PAGE 21-SENATE BILL 26-133
ACCORDANCE WITH ANY ASSIGNMENT OR EXCLUSIVE LICENSING TERMS
INCLUDED IN THE ARTICLES OF ORGANIZATION OR OPERATING AGREEMENT
PURSUANT TO SECTION 7-80-1213 (1) OR, IN THE ABSENCE OF SUCH TERMS,
IS GOVERNED BY FEDERAL INTELLECTUAL PROPERTY LAW; AND
      (d)  THE DEPARTING MEMBER HAS NO CONTINUING RIGHTS TO
DISTRIBUTIONS, ROYALTIES, OR REVENUES EXCEPT AS MAY BE REQUIRED BY
SECTION 7-80-1213 (4) OR 7-80-1221 (2)(a)(I).
      (3) THE ADMISSION OF A NEW MEMBER MUST INCLUDE THE CONSENT
SPECIFIED IN THE ARTICLES OF ORGANIZATION OR OPERATING AGREEMENT
OF AN ARTIST COMPANY OR, IN THE ABSENCE OF SUCH SPECIFICATION, THE
CONSENT REQUIRED BY SECTION 7-80-701.
      7-80-1219. Reporting requirements.
      AN ARTIST COMPANY SHALL FILE THE PERIODIC REPORT REQUIRED OF
LIMITED LIABILITY COMPANIES UNDER SECTION 7-90-501.
      7-80-1220. Limitation on liability - no private right of action.
      (1) A PERSON SHALL NOT HAVE A PRIVATE RIGHT OF ACTION AGAINST
AN ARTIST COMPANY, ITS GOVERNING BODY, ITS MANAGER, OR ITS MEMBERS
BASED ON:
      (a) THE ARTIST COMPANY'S FAILURE TO PURSUE OR CREATE A PUBLIC
BENEFIT;
      (b) THE ARTIST COMPANY'S FAILURE TO FULFILL ITS ARTISTIC
MISSION; OR
      (c) ANY ALLEGED BREACH OF DUTIES DESCRIBED IN SECTION
7-80-1216.
      (2) THE LIMITATION ON PRIVATE RIGHTS OF ACTION SET FORTH IN
THIS SECTION DOES NOT LIMIT ANY OTHER RIGHTS OR REMEDIES AVAILABLE
UNDER LAW.
      7-80-1221. Dissolution and winding up - artistic work
reversionary rights - distribution of assets.
PAGE 22-SENATE BILL 26-133
       (1) DISSOLUTION OF AN ARTIST COMPANY IS GOVERNED BY PART 8
OF THIS ARTICLE 80, EXCEPT AS OTHERWISE PROVIDED IN THIS SECTION.
      (2) (a) (I) EXCEPT AS IS NECESSARY TO COMPLY WITH APPLICABLE
FEDERAL INCOME TAX LAW, INCLUDING SECTION 704 AND OTHER
APPLICABLE PROVISIONS OF SUBCHAPTER K OF THE INTERNAL REVENUE
CODE OF 1986, AS AMENDED, UPON DISSOLUTION OF AN ARTIST COMPANY,
ALL RIGHTS TO ARTISTIC WORK ASSIGNED OR EXCLUSIVELY LICENSED BY
ARTIST - MEMBERS TO THE ARTIST COMPANY OR CREATED BY
ARTIST-MEMBERS OF THE ARTIST COMPANY DURING THE ARTIST-MEMBER'S
MEMBERSHIP REVERT TO THE ARTIST-MEMBERS THAT ASSIGNED,
EXCLUSIVELY LICENSED, OR CREATED SUCH ARTISTIC WORK AND ANY
APPLICABLE ASSIGNMENT OR EXCLUSIVE LICENSE AUTOMATICALLY
TERMINATES. THE OPERATING AGREEMENT OF ANY ARTIST COMPANY
TREATED AS A PARTNERSHIP FOR FEDERAL INCOME TAX PURPOSES MUST
INCLUDE ALLOCATION, DISTRIBUTION, VALUATION, CAPITAL ACCOUNT, AND
OTHER ECONOMIC PROVISIONS REASONABLY DESIGNED, TO THE EXTENT
PERMITTED BY APPLICABLE FEDERAL INCOME TAX LAW, TO FACILITATE THE
REVERSION OF ARTISTIC WORK TO THE ARTIST-MEMBERS UNDER THIS
SUBSECTION (2)(a)(I), INCLUDING PROVISIONS GOVERNING THE
DISTRIBUTION OF CASH AND OTHER PROPERTY OTHER THAN ARTISTIC WORK;
THE ALLOCATION OF ITEMS OF INCOME, GAIN, LOSS, DEDUCTION, AND
CREDIT; AND THE PRESERVATION OR SATISFACTION OF CONTINUING
ECONOMIC RIGHTS WITH RESPECT TO REVERTED ARTISTIC WORK. FOR
JOINTLY CREATED WORKS, ASSIGNED OR EXCLUSIVELY LICENSED RIGHTS
REVERT TO THE APPLICABLE ARTISTS:
     (A) AS SPECIFIED IN THE ARTICLES OF ORGANIZATION OR OPERATING
AGREEMENT OF THE ARTIST COMPANY;
      (B)  IF NOT SPECIFIED IN THE ARTICLES OF ORGANIZATION OR
OPERATING AGREEMENT OF THE ARTIST COMPANY, AS MUTUALLY AGREED
UPON BY THE APPLICABLE ARTISTS; OR
      (C)   IF MUTUAL AGREEMENT CANNOT BE REACHED BY THE
APPLICABLE ARTISTS, AS JOINTLY OWNED ARTISTIC WORK IN ACCORDANCE
FEDERAL INTELLECTUAL PROPERTY LAW.
      (II) INTELLECTUAL PROPERTY THAT DOES NOT CONSTITUTE ARTISTIC
WORK IS NOT SUBJECT TO THE REVERSIONARY RIGHTS DESCRIBED IN THIS
PAGE 23-SENATE BILL 26-133
SECTION AND SHALL BE DISTRIBUTED PURSUANT TO SUBSECTION (3) OF THIS
SECTION.
      (III) EXCEPT AS IS NECESSARY TO COMPLY WITH APPLICABLE
FEDERAL INCOME TAX LAW, INCLUDING SECTION 704 AND OTHER
APPLICABLE PROVISIONS OF SUBCHAPTER K OF THE INTERNAL REVENUE
CODE OF 1986, AS AMENDED, THE REVERSIONARY RIGHTS DESCRIBED IN
SUBSECTION (2)(a)(I) OF THIS SECTION CONSTITUTE RETAINED INTERESTS
THAT WERE NEVER FULLY TRANSFERRED TO THE ARTIST COMPANY AND
THEREFORE ARE NOT ASSETS OF THE ARTIST COMPANY AVAILABLE TO
CREDITORS OR NONARTIST INVESTORS.
       (b) THE REVERSIONARY RIGHTS DESCRIBED IN SUBSECTION (2)(a)(I)
OF THIS SECTION ARE SUBJECT TO:
      (I) PERFECTED SECURITY INTERESTS OR LIENS GRANTED BY THE
ARTIST COMPANY WITH THE EXPRESS WRITTEN CONSENT OF THE ARTIST OR
ARTISTS HOLDING THE REVERSIONARY RIGHT;
     (II) EXISTING LICENSES TO THIRD PARTIES ENTERED INTO IN THE
ORDINARY COURSE OF BUSINESS; AND
      (III) CONTINUING ROYALTY SHARING, REVENUE PARTICIPATION
OBLIGATIONS, RECOUPMENT PROVISIONS, RETURN OF CAPITAL, OR OTHER
ECONOMIC OBLIGATIONS SPECIFIED IN THE ARTICLES OF ORGANIZATION OR
OPERATING AGREEMENT OF THE ARTIST COMPANY.
      (c) THE ARTICLES OF ORGANIZATION OR OPERATING AGREEMENT OF
AN ARTIST COMPANY MAY SPECIFY THE TERMS OF A REVERSION, INCLUDING:
      (I) PRIORITY AMONG ARTISTS IN CLAIMING REVERSIONARY RIGHTS;
      (II) ALLOCATION OF REVERSIONARY RIGHTS IN JOINT WORKS;
      (III) CONTINUING OBLIGATIONS TO SHARE ROYALTIES OR REVENUES
FROM REVERTED ARTISTIC WORK; AND
      (IV) RIGHTS TO USE COLLECTIVE NAMES, TRADEMARKS, OR OTHER
IDENTIFIERS.
PAGE 24-SENATE BILL 26-133
      (3) UPON DISSOLUTION, AFTER GIVING EFFECT TO ANY ARTISTIC
WORK REVERSIONARY RIGHTS DESCRIBED IN SUBSECTION (2)(a)(I) OF THIS
SECTION, AND AFTER PAYMENT OR PROVISION FOR LIABILITIES:
      (a) ASSETS SHALL BE DISTRIBUTED IN ACCORDANCE WITH PRIORITY
AND DISTRIBUTION PROVISIONS IN THE ARTICLES OF ORGANIZATION OR
OPERATING AGREEMENT OF THE ARTIST COMPANY, INCLUDING PREFERENCES
FOR HOLDERS OF REVENUE PARTICIPATION RIGHTS, ROYALTY SHARING
RIGHTS, OR OTHER ECONOMIC INTERESTS; OR
     (b) IF NOT SPECIFIED, ASSETS SHALL BE DISTRIBUTED PRO RATA TO
MEMBERS BASED ON OWNERSHIP PERCENTAGES.
      (4) THE ARTICLES OF ORGANIZATION OR OPERATING AGREEMENT OF
AN ARTIST COMPANY MAY SPECIFY:
     (a) PRIORITY OF DISTRIBUTIONS AMONG DIFFERENT CLASSES OF
ECONOMIC INTERESTS;
      (b) TREATMENT OF UNVESTED OR CONTINGENT ECONOMIC RIGHTS;
      (c) ALLOCATION OF REMAINING INTELLECTUAL PROPERTY VALUE; OR
      (d) OTHER DISSOLUTION AND DISTRIBUTION TERMS.
      7-80-1222. Effect on other limited liability companies.
      THIS PART 12 DOES NOT AFFECT A STATUTE OR RULE OF LAW THAT IS
APPLICABLE TO A LIMITED LIABILITY COMPANY THAT IS NOT AN ARTIST
COMPANY.
      7-80-1223. Jurisdiction - foreign artists.
      (1) A PERSON FROM A JURISDICTION OTHER THAN COLORADO MAY
FORM A LIMITED LIABILITY COMPANY AS AN ARTIST COMPANY PURSUANT TO
THIS PART 12 OR CAUSE AN EXISTING LIMITED LIABILITY COMPANY TO
BECOME AN ARTIST COMPANY BY AMENDING ITS ARTICLES OF ORGANIZATION
IN ACCORDANCE WITH THIS PART 12.
      (2) THE FORMATION OF AN ARTIST COMPANY UNDER THIS PART 12 IS
PAGE 25-SENATE BILL 26-133
GOVERNED BY THE LAWS OF THE STATE, AND AN ARTIST COMPANY FORMED
UNDER THIS PART 12 IS A DOMESTIC LIMITED LIABILITY COMPANY FOR ALL
PURPOSES UNDER THIS ARTICLE 80, REGARDLESS OF THE RESIDENCE OR
DOMICILE OF ITS ARTIST-MEMBERS.
      (3) NOTHING IN THIS SECTION AFFECTS THE REQUIREMENTS FOR
FOREIGN LIMITED LIABILITY COMPANIES UNDER PART 9 OF THIS ARTICLE 80.
       7-80-1224. Timeline for implementation - repeal.
     (1) NO LATER THAN JULY 1, 2027, THE SECRETARY OF STATE SHALL
MAKE ANY CHANGES NECESSARY TO IMPLEMENT THIS PART 12, INCLUDING
ACCEPTING ARTICLES OF ORGANIZATION AND AMENDED ARTICLES OF
ORGANIZATION FILED PURSUANT TO THIS PART 12.
       (2) THIS SECTION IS REPEALED, EFFECTIVE JULY 1, 2028.
       SECTION 2. Appropriation. (1) For the 2026-27 state fiscal year,
$93,878 is appropriated to the department of state. This appropriation is
from the department of state cash fund created in section 24-21-104 (3)(b),
C.R.S. To implement this act, the department may use this appropriation as
follows:
       (a) $5,478 for use by the business and licensing division for personal
services, which amount is based on an assumption that the division will
require an additional 0.1 FTE;
      (b) $88,400 for use by the information technology division for
personal services.
       SECTION 3. Act subject to petition - effective date. This act
takes effect at 12:01 a.m. on the day following the expiration of the
ninety-day period after final adjournment of the general assembly (August
12, 2026, if adjournment sine die is on May 13, 2026); except that, if a
referendum petition is filed pursuant to section 1 (3) of article V of the state
constitution against this act or an item, section, or part of this act within
such period, then the act, item, section, or part will not take effect unless
PAGE 26-SENATE BILL 26-133
approved by the people at the general election to be held in November 2026
and, in such case, will take effect on the date of the official declaration of
the vote thereon by the governor.
____________________________  ____________________________
James Rashad Coleman, Sr.  Julie McCluskie
PRESIDENT OF  SPEAKER OF THE HOUSE
THE SENATE  OF REPRESENTATIVES
____________________________  ____________________________
Esther van Mourik  Vanessa Reilly
SECRETARY OF  CHIEF CLERK OF THE HOUSE
THE SENATE  OF REPRESENTATIVES
       APPROVED________________________________________
                          (Date and Time)
                    _________________________________________
                   Jared S. Polis
                   GOVERNOR OF THE STATE OF COLORADO
PAGE 27-SENATE BILL 26-133