News & Analysis as of

Operating Agreements Limited Liability Company (LLC) Members

Winstead PC

Entity Formation as a Process: The Strategic Importance of Carefully Drafting Limited Liability Company Agreements Before Forming...

Winstead PC on

From early-stage startups to seasoned enterprises, businesses eventually form at least one legal entity to carry out their operations. Down the road, as opportunities arise for a business to expand, acquire others, merge, or...more

Miller Nash LLP

Business Owner Exit Planning: LLC Operating Agreements

Miller Nash LLP on

Limited liability companies (LLC or LLCs) are an attractive choice of entity for many non-public companies. An LLC is the preferred choice of entity for many advisors, including me, unless the facts warrant something...more

Bradley Arant Boult Cummings LLP

Avoiding the Pitfalls of Assigning an Interest in an LLC

One of the goals in a business divorce is finality – ending a business relationship once and for all. But what if the end isn’t really the end?...more

Patterson Belknap Webb & Tyler LLP

Commercial Division Dismisses Petition to Dissolve LLCs Based on Broadly Stated Purpose Provision

In Lazar v. Attena LLC, Justice Andrea Masley of the New York County Commercial Division granted Arik Mor and Uriel Zichron’s (together, “Respondents”) motion to dismiss a petition to dissolve three limited liability...more

Farrell Fritz, P.C.

Departing LLC Members: Exercise Your Put Option Before Insolvency Approaches

Farrell Fritz, P.C. on

Several weeks ago, I had the pleasure of first appearing on this blog, with a piece about a Delaware Chancery Court decision considering—as a matter of apparent first impression—whether an LLC could exercise, then walk back a...more

Jaburg Wilk

Will Your Vote Count? Member and Manager Voting under Arizona’s New LLC Act

Jaburg Wilk on

Arizona's new Limited Liability Company Act (the "New Act"), which goes into effect for all Arizona LLCs on September 1, 2020, and already governs limited liability companies (each an "LLC") formed on or after September 1,...more

Jaburg Wilk

Careful What You Say: The Unintended Consequences Of Oral Operating Agreements

Jaburg Wilk on

The New Arizona Limited Liability Company Act (the "New Act"), applicable immediately for all Arizona limited liability companies (each, a "LLC") formed on or after September 1, 2019 and applicable September 1, 2020 for all...more

Patton Sullivan Brodehl LLP

LLC Managers or Members With “Sole Discretion” Must Still Act in Good Faith

LLC managers (or members vested with decision-making authority) are sometimes lulled into a false sense of security by “sole discretion” provisions in their LLC’s operating agreement.  That can be a costly mistake....more

Nutter McClennen & Fish LLP

Membership Interests: A Forced Marriage

Membership and interests of an LLC are two different things. Understanding the differences between membership and interests in an LLC makes you better equipped to optimally design economic and management relationships for...more

Farrell Fritz, P.C.

A Case of LLC Withdrawal Symptoms

Farrell Fritz, P.C. on

I was especially drawn to the case I’m about to introduce involving LLC member withdrawal, owing to the Jacobs v Cartalemi case that I litigated to a successful conclusion about two years ago, also involving member...more

Jaburg Wilk

Attention all Arizona Limited Liability Companies- The New LLC Law Applies to You!

Jaburg Wilk on

The New Arizona Limited Liability Company Act (the “New LLC Act”) will impact all Arizona limited liability companies this year. The Arizona Limited Liability Company Act was recently amended. For any Arizona LLC formed on or...more

Ogletree, Deakins, Nash, Smoak & Stewart,...

Louisiana Court Upholds Ruling Allowing for the Reformation of a Noncompetition Agreement

The Louisiana Second Circuit Court of Appeal recently held that a noncompetition provision under La. R.S 23:921 affecting a former member of an accounting limited liability company (LLC) could be reformed when the scope of...more

Patton Sullivan Brodehl LLP

An LLC’s Attorney Represents the LLC’s Members Too, Right?

Not long ago, The LLC Jungle posted an article addressing the perils of attorney representation of an LLC with two equal “co-managing members.”  See Why Having “Co-Managers” for Your LLC is a Terrible Idea. This post...more

Farrell Fritz, P.C.

Court Looks to Partnership Law in Ruling Against Petitioner’s Status as LLC Member

Farrell Fritz, P.C. on

What makes someone a member of an LLC? It’s a question that frequently arises in business divorce cases involving LLCs that have no written operating agreement much less certificated membership interests. ...more

Allen Matkins

Terence, This Trust Business Is Stupid Stuff!

Allen Matkins on

The California Revised Uniform Limited Liability Company Act defines "person" to mean, among other things a "trust, a trustee of a trust, including, but not limited to, a trust described under Division 9 (commencing with...more

Allen Matkins

The CARULLCA Adds To Confusion About Trusts As Persons

Allen Matkins on

Today's post continues my discussion of the Court of Appeal's holding in Han v. Hallberg, 2019 Cal. App. LEXIS 475 that a trust is a person that may be a partner under the California Uniform Partnership Act. As I noted...more

Patton Sullivan Brodehl LLP

Why LLC Managers Should Take Member “Books and Records” Requests Seriously

Under California’s Revised Limited Liability Company Act (“RULLCA”), LLC participants have substantial freedom to structure their relationship in a customized manner under their governing operating agreement.  But one of the...more

Winstead PC

When Temptation Trumps Restraint: Limits of the Protection of LLC Managers

Winstead PC on

...Temptation is powerful. We all know this well, which is why these quotes by author and bon vivant Oscar Wilde, and actress and legendary sex symbol Mae West evoke nods of agreement. But giving into temptation can result...more

Patton Sullivan Brodehl LLP

Dissolving an LLC when its Purpose Fails

Most LLC Operating Agreements contain a provision describing the “purpose” of the business. These “purpose statements” can be extremely broad and open-ended, parroting the boilerplate language required to be present in the...more

Patton Sullivan Brodehl LLP

Does an LLC Manager’s “Sole Discretion” Eliminate the Implied Covenant of Good Faith and Fair Dealing?

It is no secret that LLC managers enjoy a lot of discretion regarding how they operate the LLC. Members of the LLC often find it difficult to challenge the manager’s decisions on key transactions, investments, and other...more

Cole Schotz

Reflecting The Parties’ Intentions In Operating Agreements: Reminder On Silent Terms

Cole Schotz on

Does your operating agreement reflect your intentions? New Jersey’s Revised Uniform Limited Liability Company Act (the “RULLCA”) became effective on March 18, 2013. As noted in a post we authored in 2014, although initially...more

Fox Rothschild LLP

Important Changes To The Illinois LLC Act

Fox Rothschild LLP on

Changes to the Illinois Limited Liability Company Act that took effect on July 1, 2017 may impact either your current Illinois LLCs or your future ventures. The changes generally conformed Illinois law more closely to a model...more

Mintz - Bankruptcy & Restructuring Viewpoints

Exculpatory Provisions Under Delaware Law: Say What You Mean And Mean What You Say

Exculpation provisions in operating agreements must be carefully crafted in order to protect members, managers, directors and officers for breaches of fiduciary duties...more

Allen Matkins

The Limited Liability Company Agreement That Has No Name

Allen Matkins on

Practitioners under California’s Revised Uniform Limited Liability Company Act will be familiar with the concept of an “operating agreement” (Cal. Corp. Code § 17701.02(s)). Indeed, I expect that nearly every LLC formed...more

Farrell Fritz, P.C.

Episode 4: John Cunningham Interview on Avoiding LLC Deadlock

Farrell Fritz, P.C. on

A huge percentage of limited liability companies consist of two co-equal, 50% members, which poses the danger of management deadlock and dysfunction leading to dissolution or other litigation. In this episode, you'll hear my...more

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