13. Limited Liability Companies Flashcards
1
Q
What is unique about LLC?
A
Separate legal entity
Distinct from members
2
Q
What is required for LLC?
A
File certificate of organisation with SoS
- Name of LLC
- Address of registered office
- Name + address of registered agent
3
Q
What is required for approving business activities?
A
Ordinary business activities
- Majority vote (members)
Extraordinary business activities
- Unanimous vote (members)
4
Q
What duties do members owe to LLC?
A
Duty of Care
- Act with care that same person would exercise under similar circumstances in manner reasonably believed to be in LLC’s best interests.
Duty of Loyalty
- Account for benefits derived
- NOT deal with adverse parties
- NOT compete with LLC’s business
5
Q
What are members liable for?
A
Gross negligent decisions (NOT poor/erroneous decisions)
6
Q
What is the rule for taxation on LLCs?
A
‘Pass through basis’ (LLC pays tax on its owners’ personal tax returns)
