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1. Restrictions on the Nature of the Company Business
- A. Do the Managers desire to participate in other ventures, apart from the
LLC?
- B. Should the business allowed under the LLC be restricted to permit
other ventures by the Managers, without a conflict of interest?
2. Is the LLC to be operated by (a) the joint Members (owners) or (b) by
Managers?
- A. If by managers, how many? Are the owners to be the managers? How are the
managers to be selected? By vote of the owners?
- B. Are the managers to act as a board of directors, setting policy to be
implemented, or are they to be "hands on" operator-managers involved in day to
day decision making?
- C. Are there to be regular meetings of the managers?
3. Officers: Are there to be "officers" of the LLC?
NOTE: For practical purposes in dealing with others, it may be desirable
to install officers of the LLC. This is because many people do not understand
the legal structure of an LLC, and are unfamiliar with the term "Manager" as
used in the LLC law. They often feel more secure filling orders and contracting
with a person who has a title that is recognized, such as CEO or President, etc.
- A. What are the officers? How are they selected?
- B. What are the duties of officers?
- C. Are officers to be paid? How is the amount to be decided? Who has the
authority to change the amount?
4. Restrictions on Powers of Members, Managers and Officers:
NOTE: A restriction on powers of members, managers or officers in the
Operating Agreement can help to avoid company liability, or joint liability of
other members, for acts of an officer, manager or member which is not authorized
by the Company ( these are called "ultra vires" acts ). Under the law, a member
acting for the company who has no authority to so act does not bind the company
if the other party knows of his limited authority. If the Articles of
Organization say that the company is to be operated by its members, then the act
of any member can bind the company, and the other members, even if the member
has no authority to act, unless the other party has actual knowledge of the lack
of authority.
5. Transfer of Member’s Interest ( Buy out)
- A. What triggers the buy out?
- Bankruptcy, or assignments for the benefit of creditors, or judgment liens,
etc?
- Marital dissolution, or death of a spouse?
- Retirement, sickness for a specified period, or death?
- Withdrawal of a member?
- B. Are there to be any restrictions on transfer of interest, to avoid
having the business owned by members who cannot get along, or who are
unskilled? If so, what restrictions?
- Company has option to buy, or the Company must buy?
- If option, should other members then have option to buy if Company
chooses not to?
- What is the option price? How is it determined?
- What is the option period?
- What are the terms of payment? Does company have option, within
specified limits?
6. Dissolution ( Dissolving the Company )
- How are the affairs of the Company wound up, and its assets distributed?
Who has the responsibility for doing so?
[LLC Formation] [Corporation Formation] [Partnership Formation] [Business Buy-out]
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