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LLC AGREEMENTS

6-1

CHAPTER 6

LLC AGREEMENTS

§6:10 INTRODUCTION

§6:20 DRAFTING ISSUES

§6:30 Avoiding Abuse by Majority Owners

§6:40 Avoiding Future Management Problems

§6:50 Avoiding Potential Operational Deadlock

§6:60 Distribution of Prof‌it and Allocations of Tax Gains and Losses

§6:70 Voting Rights and Percentages

§6:80 Divorce and Community Property

§6:81 Dissolution

§6:82 Assignment

§6:90 Arbitration and Mediation

§6:100 Default Rules

§6:105 Foreign or Out-of-State Operation

§6:110 Opt-In Features

§6:120 Opt-In Checklist

§6:130 FORM AND CONTENT OF THE LLC AGREEMENT

§6:135 PREPARING THE LLC AGREEMENT/MANAGEMENT PROVISIONS

§6:140 DRAFTING OUTLINE

§6:145 LLC AGREEMENT AS CONTRACT

§6:150 MAINTENANCE OF THE LLC AGREEMENT

§6:160 WITHDRAWAL OF A MEMBER

§6:170 TAX PROVISIONS IN LLC AGREEMENTS

§6:171 Tax Allocations Can Affect the Economic Consequences of the Members

§6:172 Distributions

§6:173 Self-Employment Taxes

§6:174 Capital and Prof‌its Interest

§6:175 Special Allocations, Special Distributions, and Contributed Property Issues

§6:176 Elections Under IRC §754

§6:177 Tax Matters Member

LLC AGREEMENTS

The Limited Liability Company 6-2

§6:180 LLC AGREEMENT CASE LAW

§6:190 FORMS ON DIGITAL ACCESS: LLC AGREEMENTS

LLC AGREEMENTS

6-3 LLC Agreements §6:10

§6:10 INTRODUCTION

ΛΛΧ αγρεεµεντσ χοντρολ τηε ιντερναλ µαναγεµεντ οφ αν ΛΛΧ. Αλλ ΛΛΧ στατυτεσ αλλοω τηε µεµβερσ γρεατ

λατιτυδε ιν σηαπινγ τηε ιντερναλ µαναγεµεντ ανδ στρυχτυρε οφ τηε χοµπανψ. Εξχεπτ υνδερ τηε Υνιφορµ Λιµιτεδ

Λιαβιλιτψ Χοµπανψ Αχτ ♣203, ΛΛΧ αγρεεµεντσ µυστ βε χονσιστεντ ωιτη τηε αρτιχλεσ οφ οργανιζατιον ορ τηε ΛΛΧ

Αχτ. Σοµε στατεσ χαλλ τηε ΛΛΧ αγρεεµεντ α λιµιτεδ λιαβιλιτψ χοµπανψ αγρεεµεντ (∆ελ. Χοδε Ανν. ♣18−101(6));

ρεγυλατιονσ ( ♣608.423, Τεξ. Αρτ. ♣2.09); ανδ µεµβερ χοντρολ αγρεεµεντ (♣322Β.37,

 ♣10−32−50); ορ οπερατινγ αγρεεµεντ ( ♣17001(αβ)).

Τηε ΛΛΧ αγρεεµεντ ισ τηε ΛΛΧσ ανσωερ το τηε παρτνερσηιπ αγρεεµεντ ανδ χοµβινεσ τηε φεατυρεσ οφ χορπορατε

βψλαωσ ανδ α σηαρεηολδερσ αγρεεµεντ ορ βυψ−σελλ αγρεεµεντ. Ιτ ισ α χοντραχτ αµονγ µεµβερσ, ανδ βετωεεν τηε

µεµβερσ ανδ τηε ΛΛΧ, χονχερνινγ τηε οργανιζατιον οφ τηε βυσινεσσ. Ιτ σηουλδ βε νεγοτιατεδ, ιν ωριτινγ, ανδ σιγνεδ

βψ αλλ παρτιεσ. Υνλικε χορπορατιονσ, ωηερε τηε βψλαωσ αρε αδοπτεδ βψ ανδ συβϕεχτ το τηε ποωερ οφ τηε διρεχτορσ,



αγρεεµεντ. Βυββλεσ & Βλεαχη, ΛΛΧ ϖ. Βεχκερ, 1997 Υ.Σ. ∆ιστ. ΛΕΞΙΣ 7471 (Ν.∆. Ιλλ. Μαψ, 1997).

ΛΛΧ αγρεεµεντσ χαν βε, ιν µοστ στατεσ, ειτηερ οραλ, ωριττεν ορ α χοµβινατιον οφ βοτη. Ωηιλε περµιττεδ, οραλ

   

    

παρτιεσ. Ασ α γενεραλ προποσιτιον, οραλ ΛΛΧ αγρεεµεντσ αρε νοτ ρεχοµµενδεδ.

Ωριττεν ΛΛΧ αγρεεµεντσ αρε ρεθυιρεδ ιν: Αλαβαµα, Αρκανσασ, ∆ιστριχτ οφ Χολυµβια, Ηαωαιι, Μιχηιγαν, Νεω



Οραλ αγρεεµεντσ αρε περµιττεδ ιν: Αριζονα, Χαλιφορνια, Χοννεχτιχυτ, Ιδαηο, Ινδιανα, Μασσαχηυσεττσ, Μαινε,

Μισσουρι, Μισσισσιππι, Μοντανα, Νορτη ∆ακοτα, Νεβρασκα, Οκλαηοµα, Ορεγον, Ρηοδε Ισλανδ, Σουτη ∆ακοτα, Τεξασ,



−

βερσ. Α ωριττεν αγρεεµεντ ισ ρεθυιρεδ φορ αν ενφορχεαβλε ινδεµνιτψ αγαινστ τηε ΛΛΧ. α).

  

Ιλλινοισ, ανδ Λουισιανα.



    

σιγνινγ τηε δοχυµεντ ωιτη ηιµσελφ. Πραχτιχαλλψ, τηε φορµαλιτψ ισ ρεθυιρεδ ασ τηε ΛΛΧ δεαλσ ωιτη τηιρδ παρτιεσ συχη ασ

λενδερσ ανδ βανκερσ. Τηε ρατιοναλε ισ τηατ τηε οωνερ ισ σιγνινγ τηε ΛΛΧ αγρεεµεντ ωιτη ανοτηερ λεγαλ περσον. Τηε



 







  



    

   





πυρσυαντ το τηε ΛΛΧ αγρεεµεντ ορ τηε αρτιχλεσ. Τηε αβιλιτψ το αδοπτ, αλτερ, αµενδ ορ ρεπεαλ τηε ΛΛΧ αγρεεµεντ

 

βε αλτερεδ, αµενδεδ ορ ρεπεαλεδ βψ τηε µαναγερσ ωιτηουτ τηε χονσεντ οφ τηε µεµβερσ.

Τηε ΛΛΧ αγρεεµεντ ισ αν ιντεγρατεδ δοχυµεντ τηατ δεσχριβεσ τηε ριγητσ ανδ οβλιγατιονσ οφ τηε µεµβερσ. Ιτ ισ

τηε λογιχαλ πλαχε το σετ ουτ τηοσε τηινγσ τηατ οχχυρ ασ α µαττερ οφ λαω (ι.ε., δισσολυτιον ον ωιτηδραωαλ οφ α µεµβερ),

το µεµοριαλιζε αγρεεµεντσ οφ τηε µεµβερσ ρελατινγ το ασπεχτσ οφ τηε οπερατιον οφ τηε χοµπανψ, ορ το σετ ουτ τηε



δοχυµεντ τηαν τηε αρτιχλεσ το σπεχιφψ τηε τερµσ οφ τηε µεµβερσ αγρεεµεντ. Τηε αναλψσισ οφ τηε ΛΛΧ αγρεεµεντ

   

 

    

     





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