CH 38- Limited liability companies

Nature of LLC

• state law

• owners called members

• limited liability members

  • liability

  • tortious conduct

• when liability may be imposed

  • guarantees

  • comingling

  • corporate formalities

• similarities to corporation

Forming an LLC

• articles of organization

  • where to file

  • what it includes

• Performing contracts

  • when

  • novation

Jurisdictional requirements

• corporate headquarters

• members location

Advantages of LLC

• limited liability

• flexible taxation

• foreign investors

• Disadvantages

  • not uniform between states

Management of an LLC

• Member managed

• manager managed

• fiduciary duties

  • Care and loyalty

LLC operation agreement

• how to operate

• not required

• includes:

  • management

  • profits

  • transfer membership

  • lost members

  • member meetings

  • voting rights

• no agreement → statue

Forming an LLC

• articles of organization

  • where to file

  • what it includes

• performing contracts

  • When

  • novation

• Jurisdictional requirements

  • corporate headquarters

  • members location

• advantages

  • limited liability

  • flexible taxation

  • foreign investors

• disadvantages

  • not uniform between states

Management of an LLC

• member managed

• manager managed

• fiduciary duties

  • care and loyalty

LLC Operating Agreement

• how to operate

• not required

• includes:

  • management

  • profits

  • transfer membership

  • lost members

  • voting rights

• no agreement → statute

Dissociating and dissolution of an LLC

• members can

  • voluntary

  • expulsion

  • court order

  • incompetence

  • BK

  • death

• dissociate → other members continue

effect of dissociation on a member

• right to participate

• no agent

• loyalty

• buyout

• liability

winding up an LLC

• collect assets and liquidate

  • optimize value

• debts to creditors

• member capital contribution

• return balance to members