Kiritsis & Associates

 

NY LLC LAW CHAPTER 34 ARTICLE 10: RULES AND PROCEDURES, FOR DERIVATIVE TYPES OF SUITS.

 

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

 

Kiritsis Law Group

 

212 922 0005

Chapter 34 Article 10 of the New York Limited Liability Company Law pertains to the enforcement and interpretation of the law. It covers the rules and procedures for bringing actions and filing claims related to LLCs in New York, including actions for breach of fiduciary duty and derivative actions on behalf of the LLC. The article also discusses the application of the law to LLCs formed before its enactment, as well as the rules for severability and construction of the law's provisions. Additionally, it covers the repeal and amendment of the law and the effective date of such changes.

 

A limited liability company (LLC) is a business structure that combines the flexibility and tax benefits of a partnership with the limited liability protection of a corporation. LLCs are governed by state law, and the rules for forming and operating an LLC vary from state to state. In most states, an LLC is formed by filing articles of organization with the state's Secretary of State. LLCs are owned by their members, who can be individuals, corporations, or other LLCs.  Members of an LLC are generally not personally liable for the company's debts or legal liabilities.  LLCs are typically taxed as pass-through entities, which means that the company's profits and losses are passed through to the members and reported on their individual tax returns. LLCs can also elect to be taxed as a corporation, which may be beneficial in certain circumstances.

 

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

 

 Hadley v. Baxendale, 9 Exch. 341 (1854)

 

Wood v. Lucy, Lady Duff-Gordon, 222 N.Y. 88 (1917)

 

Jacob & Youngs v. Kent, 230 N.Y. 239 (1921)

 

Restatement (Second) of Contracts (1981)

 

Peevyhouse v. Garland Coal & Mining Co., 382 P.2d 109 (Okla. 1962)

 

Frigaliment Importing Co. v. B.N.S. International Sales Corp., 190 F. Supp. 116 (S.D.N.Y. 1960)

 

UCC § 2-207, Comment 1

 

Williams v. Walker-Thomas Furniture Co., 350 F.2d 445 (D.C. Cir. 1965)

 

Farnsworth on Contracts (1990)

 

Henningsen v. Bloomfield Motors, Inc., 32 N.J. 358 (1960)

 

The “Battle of the Forms” - UCC § 2-207

 

The “Parol Evidence Rule” - UCC § 2-202

 

The “Perfect Tender Rule” - UCC § 2-601

 

The “Statute of Frauds” - UCC § 2-201

 

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