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: New Jersey Law BlogWhat To Include In Your Limited Liability Company's Operating Agreement
In a limited liability company (LLC), if no operating agreement (the agreement between the members of the LLC) is in place, the limited liability company statute of the state where the LLC was formed controls the relationship between the members of the Company.
It is important that the members cover as much as possible in the Operating Agreement, rather than relying on the default provisions in the LLC statute. One example of what can happen if there is no Operating Agreement (or the Operating Agreement is silent on a particular issue) is what happens if a member of a limited liability company (LLC) wants to resign.
If the Company is a New Jersey LLC, if the Operating Agreement (the agreement between the members of the LLC) is silent, a member can resign by providing six months' notice to the Company and the other members, and is then entitled, within a reasonable time, to get paid the fair value of the resigning member's interest.
If the Company is a Delaware LLC, if the Operating Agreement is silent, a member is not entitled to resign (and would thus not be entitled to a payment for the value of the member's interest until the interest is sold or the Company is dissolved).
This shows that the members of an LLC should make clear what they would want to happen if one of the members wants to resign, so that they are not in danger of having the "default" provisions of the LLC statute, which are different from state to state, instead of their own wishes, govern the operations of the Company.
Full post as published by New Jersey Law Blog on September 19, 2008 (boomark / email).
What To Include In Your Limited Liability Company's Operating Agreement
In a limited liability company (LLC), if no operating agreement (the agreement between the members of the LLC) is in place, the limited liability company statute of the state where the LLC was formed controls the relationship between the members of the Company...
Limited Liability Companies: The LLC Operating Agreement
Warning!: Another recurring theme for this blog approaches: the most important thing for a limited liability company (LLC) is its operating agreement.For what needs to into this agreement I suggest reading Anatomy of a Limited Liability Company Operating Agreement- What Must Be There and Why the Operating Agreement for an LLC is the Most Important Document to Your Business and my own Limited Liability Companies: What Does an Operating Agreement Do For a LLC?.
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So you got into a LLC and now you want to get out?This could be a problem and the solution depends on a few things:Was the LLC set up before or after June 30, 1999?Is there an operating agreement?How does the member want to get out of the LLC?If the member wants to withdraw from a LLC set up before June 30, 1999 that has an operating agreement, then the operating agreement controls...
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