Kiritsis & Associates
By John Kiritsis, Esq., CPA, MBA, MS, JD, LL.M
Kiritsis Law Group
212 922 0005
The ownership structure of a limited liability company (LLC) is an important aspect of the business that should be clearly defined in the operating agreement. An operating agreement should include the following information related to ownership structure:
Percentage of ownership: The operating agreement should specify the percentage of ownership for each member of the LLC. This helps to determine each member's share of profits and losses, voting rights, and other rights and responsibilities.
Capital contributions: The operating agreement should specify the initial capital contributions made by each member, as well as any additional contributions that may be required in the future. It should also specify how capital contributions will be accounted for and how they will be returned to members if they leave the LLC.
Transfer of interests: The operating agreement should specify any restrictions on the transfer of ownership interests, including whether interests may be sold, transferred to others, or pledged as collateral.
Right of first refusal: The operating agreement may include a right of first refusal, which gives existing members the opportunity to buy out a departing member's interest before it is sold to an outside party.
Buy-sell agreements: The operating agreement may include provisions for a buy-sell agreement, which sets the terms and conditions for the transfer of ownership interests in the event of a member's death, disability, or other triggering event.
It's important to carefully consider and address the ownership structure in the operating agreement to ensure that everyone is on the same page and to minimize potential disputes among members. The operating agreement should be reviewed periodically and updated as necessary to reflect changes in the business or the members involved.
DEALING WITH LLC MANAGEMENT ISSUES IN AN OPERATING AGREEMENT.
Law Offices of Kiritsis & Associates
212 922 0005
Author: John Kiritsis, Esq., CPA, MBA, MS, JD, LL.M
The management structure of a limited liability company (LLC) is an important aspect of the business that should be clearly defined in the operating agreement. An operating agreement should include the following information related to management:
Managerial structure: The operating agreement should specify the type of management structure the LLC will have. An LLC can be managed by its members (member-managed), or by one or more appointed managers (manager-managed).
Authority and responsibilities of managers: The operating agreement should clearly specify the authority and responsibilities of the managers, including their powers to make decisions, execute contracts, and authorize expenditures.
Voting rights: The operating agreement should specify how decisions will be made and how members will vote on important issues. This could include majority vote, supermajority vote, or unanimity requirements.
Decisions requiring member approval: The operating agreement should specify the types of decisions that require member approval, such as changes to the operating agreement, the admission of new members, or the dissolution of the LLC.
Reporting requirements: The operating agreement should specify any reporting requirements for the managers, such as regular financial statements or updates on the progress of the business.
Termination of managers: The operating agreement should specify the conditions under which a manager's authority may be terminated, such as a breach of the operating agreement, a material change in the business, or a vote of the members.
Having a clear and detailed operating agreement can help ensure that management issues are addressed and minimize the potential for disputes among members. It's important to review the operating agreement periodically and make updates as necessary to reflect changes in the business or the members involved.
New York Business Corporation Law
New York Limited Liability Company
New York General Obligations Law
NYS Office of Professions
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Law Offices of Kiritsis & Associates
Phone # 212 922 0005
Manhattan Office (Main Office):
633 Third Avenue
New York, NY 10017
Brooklyn Office (By Appointment Only):
1023 74th Street
Brooklyn, NY 11228
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Ventnor, NJ 08406
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