Episode 3: Professor Peter Molk Interview on Drafting Around LLC Default Rules
Prior LLC Jungle posts have addressed the tricky issue of LLC managerial authority in the context of the LLC’s dealings with third parties... As referenced in those posts, under Corporations Code section 17703.01, when an...more
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
The Revised Arizona Limited Liability Act ("New Act") has been effective since September 1, 2019 for new limited liability companies ("LLCs"). It now becomes effective for any existing LLCs on September 1, 2020. Especially...more
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
Under the “default” rules of most limited liability company laws, including California’s Revised Uniform Limited Liability Company Act, LLC managers owe fiduciary duties to the LLC and its members. Those default fiduciary...more
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
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
One of the hot button issues frequently leading to litigation in “The LLC Jungle” is the removal of an LLC’s manager. Thoughtfully drafted LLC Operating Agreements contain provisions addressing the criteria and procedures...more
Arizona Governor Doug Ducey signed SB 1353 into law on April 10, 2018, repealing Arizona’s previous LLC laws and replacing them with the new Arizona Limited Liability Company Act—colloquially known as ALLCA.1 ALLCA becomes...more
Separate classes a limited liability company (LLC) are like the different violin sections in an orchestra. The owners of all classes of units are LLC members. The LLC classes may be called Class 1 and Class 2, but neither...more
The trend in most real estate-related LLCs is to have a single appointed manager. Under the LLC’s operating agreement, the manager typically has authority to make the day to day business decisions on behalf of the LLC, while...more
Limited liability companies (LLCs) are famously referred to as “creatures of contract”, whereas the governance of a corporation is comparatively fixed by statute. When forming an LLC, the members have broad discretion to...more
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
One of the recurring issues I see in my litigation practice is LLC managers engaging in “questionable conduct” with third parties — outsiders to the LLC. By “questionable conduct,” I generally mean binding the LLC to...more
LLCs are celebrated for allowing business partners to freely define their relationship by contract — i.e., the LLC operating agreement. The operating agreement generally covers all of the important aspects of the company and...more
There are not many published California Court of Appeal opinions providing guidance for LLC managers and members. That’s why it’s an “LLC Jungle” out there. While unpublished opinions are not binding precedent outside of...more
The “Seven Critical Mistakes LLCs Make” Series - This series of posts covers some of the most serious mistakes that LLCs regularly make. Here are...short summaries of each: Choosing the Wrong Business Partners —...more
Significant changes have been made to the Illinois Limited Liability Company Act (the Act) that will impact both existing and new LLCs. These changes, which took effect on July 1, 2017, were designed in part to bring the Act...more
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
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
The Tennessee Business Court has provided additional guidance to commercial litigators concerning internecine legal battles between members of limited liability companies. The Court has determined the fiduciary duties of...more