Operating Agreements

News & Analysis as of

The New Partnership Audit Rules Are Coming, Have You Checked Your Operating Agreement?

At the end of 2015, the Bipartisan Budget Act of 2015, as amended (the “BBA”), was enacted into law, and will be effective for tax years beginning after 2017. Under the BBA, the rules relating to the audit of partnership tax...more

Big Changes in Pennsylvania for LLCs, LLPs, LPs, and GPs

A major overhaul and modernization of the laws governing unincorporated associations in Pennsylvania took effect Tuesday. Act 170 of 2016, signed into law in November and currently being tracked by Barley Snyder...more

Do You Need to Do Business with Your Co-Owner’s Children? It Depends on the Language of Your Agreements.

Owners of closely-held businesses, including family-owned companies, often agree to restrict the owners’ ability to later transfer their ownership interests to third parties. Such restrictions prevent one owner from selling...more

New Law to Govern Pennsylvania Entities

Effective February 21, 2017, Pennsylvania law will change significantly for business corporations, nonprofit corporations, and especially for limited liability companies (“LLCs”), limited partnerships (“LPs”), limited...more

Major Changes to Business Entity Laws in Pennsylvania Beginning February 21, 2017

Pennsylvania has enacted a comprehensive set of laws (Act 170) modernizing the treatment of unincorporated associations, including limited liability companies, limited partnerships, limited liability partnerships, limited...more

NJ Supreme Court Clarifies Standard for Member Expulsion under LLC Act

One of the features of the Revised Uniform Limited Liability Company Act (RULLCA) that has been adopted in Minnesota and many other states is that it allows for an LLC to expel a member by judicial order under certain...more

First Department Affirms the Validity of an LLC Operating Agreement Adopted by Majority Members without Minority Consent: ...

In Shapiro v. Ettenson, No. 2849, 2017 BL 19404 (App. Div. 1st Dep’t Jan. 24, 2017), the Appellate Division, First Department recently affirmed a decision by Supreme Court Justice Kelly O’Neill Levy upholding an LLC operating...more

LLC Bound By Agreement Signed By Manager’s Manager

Justice Kenneth R. Yegan clearly and concisely frames the question in Western Surety Co. v. La Cumbre Office Partners, LLC, 2017 Cal. App. LEXIS 77 (2017)...more

Thinking About Becoming a Minority Member of a New York LLC Without an Operating Agreement? Think Again

An appellate decision last week sounds alarm bells for minority members of New York LLCs that have no operating agreement and for anyone considering becoming a minority member of an LLC without first having in place an...more

Operating Agreement Trumps Falsified Liquor License Application In Dispute Over LLC Membership

Oh, the things that can happen when the LLC members identified in the company’s operating agreement differ from those identified in official documents submitted to government agencies....more

Family Businesses Should Carefully Consider Indemnification and Advancement Obligations Included In Limited Liability Company...

When a family business operated as a limited liability company brings on professional management, the parties typically focus on items in the operating agreement such as capital contributions, allocations and distributions,...more

Tenth Circuit Affirms Refusal To Compel Arbitration Where Agreements Contained Conflicting Arbitration Provisions

Mr. Ragab sued two financial companies and a corporate officer for misrepresentation and for violating several consumer credit repair statutes. There were six agreements between the parties, including, for example, a...more

Sole Owners of Close Corporation and LLC Discover They're Not So Sole

What makes a shareholder a shareholder? What makes an LLC member a member? The simplicity of the questions belies the difficulties and endlessly unique fact patterns encountered in case after case involving close...more

LLC Operating Agreement Does Not Prevent Freeze-Out Merger

On October 24, 2016, Justice Charles E. Ramos of the New York Commercial Division denied a motion by minority members of a limited liability company (“LLC”) to enjoin a freeze-out merger that would cash out the minority...more

Managers of insolvent Missouri LLCs have no fiduciary duty to creditors

Two recent federal court decisions establish that managers of financially troubled Missouri limited liability companies do not owe a fiduciary duty to creditors of their troubled enterprises. Imperial Zinc Corp. v. Engineered...more

Business Litigation Alert: "To Protect Yourself from a Business Divorce - Agree to a Prenup"

When a business breaks up, it can often be very similar to the dissolution of a marriage. One prime example of this is the case of TransPerfect Global, Inc. (TransPerfect), a very successful language translation company...more

Entity Selection Series | Part One: The Benefits of a Limited Liability Company

So, you developed the next great start-up idea and you are looking to organize your company… Initially, the entrepreneur will have to decide what type of entity to use and under what state to form the company. Various legal...more

Delaware Supreme Court Explains Setoff And Recoupment

This decision explains the difference between a defendant’s right of setoff and recoupment. The key difference is that the right of setoff arises out of an independent transaction, while recoupment must be based on the same...more

Why Do You Need a Buy-Sell Agreement for Your Closely Held Company?

Why do you need a Buy-Sell Agreement for your closely held company? In a nutshell, your business partner might die, become disagreeable, or just simply lose his or her mind, and you need a set of rules to resolve the matter....more

Could your Oil and Gas Interest Cause You to Be Responsible for Multiemployer Plan Withdrawal Liability?

I noticed an interesting case from the Tenth Circuit which found that a two to three percent working interest in an oil and gas venture could generate self-employment income for the owner of that interest. The individual in...more

FRANCHISOR 101: Original Content Needed to Protect Ops Manuals

An important part of the franchise system is the confidential operating manual. Many franchisors claim protection of operating manuals under the law of trade secrets and copyright. Keeping the contents confidential is...more

New Management Contract Rules Hot Topic At NABL Conference

Over a thousand US public finance attorneys converged on the City of Chicago last week for the annual National Association of Bond Lawyers Bond Attorneys Workshop. The conference, the oldest and largest of its kind, featured...more

Consider Indemnification and Advancement Obligations When Drafting Limited Liability Company Operating Agreements

When parties are negotiating over the terms of a Delaware limited liability company operating agreement, the most heavily negotiated provisions typically involve things like capital contributions, allocations and...more

What Are Fiduciary Duties Between Members In An Arizona LLC?

A few years I wrote an article named Are There Fiduciary Duties between Members in an Arizona LLC? At the time, there were no published decisions in Arizona on this issue. However, a bankruptcy judge had dismissed my...more

Advancement Rights of Present and Future Officers Under LLC Agreement

Advancement and indemnification rights are vital in attracting the best and brightest individuals to serve as managers of Delaware entities. Those rights are meant to provide managers of Delaware entities comfort when...more

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