Limited Liability Company

News & Analysis as of

Florida LLC’s can now prevent members from withdrawing

The new Florida LLC Act was revised this year so that a Florida LLC’s operating agreement can prohibit a member from withdrawing from the company. Withdrawal can allow a member to terminate his or her obligations as a member,...more

MoFo New York Tax Insights - Volume 6, Issue 7 - July 2015

In This Issue: - Important Changes at NYS and NYC Tax Agencies - Court of Appeals Upholds Constitutionality of Taxing Nonresidents on Gain from S Corporation Stock Sale in Two Separate Decisions - NYC Tribunal...more

New Pennsylvania Law to Simplify Entity Transactions

Pennsylvania’s new Entity Transactions Law is expected to streamline the process of effecting certain fundamental changes or change of control transactions. Effective July 1, 2015, companies doing, or wishing to conduct,...more

Purchaser of LLC Units May Enforce Non-Compete Without Employee Consent

As ubiquitous as limited liability company interests may be these days, litigants are still arguing over whether the sale of LLC membership units is like the sale of stock. When a stock sale takes place, the new owners of...more

Del. Chancery Court Hints that Persons Other than “Managers” May Owe Fiduciary Duties to an LLC

In CMS Investment Holdings, LLC v. Castle, 2015 WL 3894021 (Del., June 23, 2015), the Delaware Court of Chancery hinted that persons other than LLC Managers may, in the future, be found to owe fiduciary duties to an LLC....more

UK Supreme Court case of Anson v. HMRC [2015] UKSC 44

Delaware LLC held to be UK tax transparent - The UK Supreme Court has handed down its judgment on the final appeal in the Anson case, in which it treated a taxpayer's interest in a Delaware LLC as transparent for UK tax...more

New LLC Is Not Delivered By Sale Membership Interests

Readers of this blog should be well aware of California’s general antipathy to covenants not to compete. See links below. Other jurisdictions, however, are less averse. Assuming that a covenant not to compete is...more

Expansion of Fiduciary Duties Will Impact Florida LLCs – Is it Time to Update Your Operating Agreement?

Amendments to the Florida Revised Limited Liability Company Act go into effect on July 1, 2015. It governs all limited liability companies in the state of Florida. Effective July 1, 2015, the Act was amended, in part, to...more

IRS Ruling Addresses LLC Eligibility for Cancellation of Debt Exception

In new CCA 201525010, the IRS addressed the issue of whether a general “exculpatory” debt of an LLC is recourse or non-recourse for purposes of classifying debt-relief as potential cancellation of debt (COD) income. Recourse...more

Bonds and Sukuk Issuances under the New UAE Commercial Companies Law

The long anticipated UAE Federal Commercial Companies Law no. 2 of 2015 (the “New Companies Law”) was issued on 25 March 2015 and will be in force by 1 July 2015 to replace the existing UAE Federal Commercial Companies Law...more

BE-10 Filings For Foreign Subsidiaries: the Countdown is On

The countdown is on: every five years, the U.S. Department of Commerce’s (DoC) Bureau of Economic Analysis (BEA) conducts a survey of U.S. corporate entities with foreign affiliates. The DoC conducts these surveys to produce...more

$228 Million: The Cost of Independent Contractor Misclassification for FedEx Ground in California

Yesterday, June 12, FedEx announced in papers filed with the SEC that its Ground Division “has reached an agreement in principle with [drivers] in the independent contractor litigation that is pending in …California [federal...more

Charging Orders on LLCs in Kentucky

The organization of any business as a limited liability company ("LLC") brings with it attendant protections for the members from the liabilities that arise in the course of the business as well as beneficial tax treatment....more

Business Court Refuses To Unwind Mediated Settlement Agreement

The Defendants in last week's decision in DeCristoforo v. Givens, 2015 NCBC 53 were hellbent on getting out from under a settlement they had agreed to at mediation. They offered a host of challenges to the validity of their...more

Court Of Chancery Confirms Jurisdiction Over Escrows

There are often disputes over funds held in escrow under earn out or indemnification provisions in various deals. This decision confirms that the Court of Chancery will take jurisdiction over a suit seeking specific...more

The Dangers of Operating An LLC Without an Operating Agreement

What could possibly go wrong if you and your fellow limited liability company owners decide to operate your LLC without an operating agreement? Lots of things, many of which could cause you significant financial pain and...more

Should You Be an LLC or S Corp?

The answer is it depends, as a business owner, on what your goals and objectives are. Both LLCs and S corporations are tax efficient. LLCs and S corporations are both pass-through entities; meaning, generally speaking,...more

Montana Law Revised To Allow Captives To Organize As Limited Liability Companies

On April 28, 2015, Montana Governor Steve Bullock signed into law amendments to Montana’s law regarding captive insurers. Significantly, the amendments make it possible for public entities in Montana to set up captives....more

LLCs Not Subject To Texas Attorney Fee Statute ... For Now

In a matter of first impression, the United States District Court for the Northern District of Texas recently held that Section 38.001 of the Texas Civil Practice and Remedies Code — the statutory provision allowing a...more

Hampton v. Turner, C.A. No. 8963-VCN (Del. Ch. Apr. 29, 2015) (Noble, V.C.)

In a letter opinion analyzing how provisions of a limited liability company operating agreement fit together, the Court of Chancery denied defendants’ motion for summary judgment as to plaintiffs’ claim for judicial...more

Court Of Chancery Explains LLC Agreement

A repeat issue with using the LLC form of entity is trying to figure out what the LLC agreement means. This decision is another example of the Court sorting through conflicting interpretations that must have surprised at...more

Massachusetts Federal Court Holds That LLC Operating Agreement Does Not Shield Defendants from Liability for Breaching Their...

A recent decision by Judge F. Dennis Saylor of the U.S. District Court for the District of Massachusetts, Butler v. Moore, C.A. No. 10-10207-FDS U.S. Dist. LEXIS 39416 (D. Mass. Mar. 26, 2015), offers an example of how...more

Protecting the Identity of Your LLC Members & LP Partners in Litigation, Part II: Strategies for Discovery

You want to protect the identity of your business’ owners, but your opponent issued discovery requesting a copy of your organizational chart and/or information on the identities of your LLC members or LP partners. You are...more

Alterations Don’t Always Render a Deed Void (or How NOT to do Foreclosure Investing)

Most real estate investors assume that when a deed is altered by someone other than the grantor, without the grantor’s knowledge or consent, before it is recorded, then the deed is void and conveys no title, even as to bona...more

Protecting the Identity of Your LLC Members & LP Partners in Litigation, Part I: Motions to Remand

The situation is familiar: You represent a LLC or LP and file suit in state court to avoid disclosing the identity of your members/partners. But then the identity of those members/partners becomes an issue when the defendant...more

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