NEW YORK LIMITED LIABILITY COMPANY LAW CHAPTER 34 ARTICLE 4 SECTION 413: DEALING WITH LEGAL REDEMPTION CONTROVERSIES, AS IT PERTAINS TO NEW YORK LLCs.

 

By John Kiritsis, Esq., CPA, MBA, MS, JD, LL.M

 

Kiritsis Law Group

 

212 922 0005

 

Section 413 of Chapter 34 Article 4 of the New York Limited Liability Company Law pertains to the right of an LLC in New York to redeem a member's interest. This section specifies the circumstances under which an LLC may redeem a member's interest, such as by agreement or as provided in the operating agreement. The section covers the procedures for effecting a redemption, including the notice and approval requirements for members and any other necessary parties. The section also covers the effect of the redemption on the LLC and its members, and the potential for economic or management rights to be modified or terminated as a result of the redemption. Additionally, the section provides guidance on the procedures for amending the operating agreement in connection with a redemption, and the potential for dissenting members to have the right to receive fair value for their membership interests.

 

LLCs are required to have an operating agreement, which is a document that sets out the rules and procedures for running the company.  The operating agreement can be very flexible and can be tailored to meet the specific needs of the company and its members.  LLCs are not required to hold regular meetings or keep minutes, although it is generally a good practice to do so.  LLCs can have one or more managers, who are responsible for the day-to-day operations of the company. The managers of an LLC can be members or non-members, and can be appointed or elected by the members. LLCs are required to file an annual report with the state, which typically includes information about the company's ownership and management. LLCs are not required to have a board of directors, although some larger LLCs may choose to have one.

 

Sources:

 

New York Business Corporation Law

 

New York Limited Liability Company

 

New York General Obligations Law

 

NYS Office of Professions

 

U.S. Constitution

 

 Universal Athletic Sales Co. v. American Gym Recreational Equipment Corp., 546 F.2d 530 (3d Cir. 1976) (USA)

 

Vernon v. Schuster, 179 A.D.2d 1088 (N.Y. App. Div. 1992) (USA)

 

Sea-Land Service, Inc. v. Pepper Source, 941 F.2d 519 (7th Cir. 1991) (USA)

 

Pereira v. United States, 347 U.S. 1 (1954) (USA)

 

St. Paul Fire & Marine Ins. Co. v. Pietrangelo, 677 F. Supp. 742 (D.N.J. 1988) (USA)

 

VTB Capital plc v. Nutritek International Corp., 2013 WL 788649 (2d Cir. Mar. 5, 2013) (USA)

 

Leasco Data Processing Equipment Corp. v. Maxwell, 468 F.2d 1326 (2d Cir. 1972) (USA)

 

In re Refco, Inc. Securities Litigation, 503 F. Supp. 2d 611 (S.D.N.Y. 2007) (USA)

 

Gertz v. Fitchburg Gas & Elec. Light Co., 23 N.E.2d 862 (Mass. 1939) (USA)

 

Fletcher v. Atex, Inc., 68 F.3d 1451 (2d Cir. 1995) (USA)

 

United States v. Jon-T Chemicals, Inc., 768 F.2d 686 (5th Cir. 1985) (USA)

 

New York Business Corporation Law

 

New York Limited Liability Company

 

New York General Obligations Law

 

NYS Office of Professions

 

U.S. Constitution

 

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