3. Limited Liability Companies (ULLCA)

Question 1

What is required to form a limited liability company?

Answer 1

1) At least one member

2) Certificate of Organisation
- Company’s name + address
- Agent’s name + address

3) File Certificate with Secretary of State

Question 2

Are members liable to the company?

Answer 2

No (veil protected)

- But court may pierce veil to reach members’ personal assets

Question 3

What duties do members owe to the company?

Answer 3

Care

Loyalty

Question 4

What is required for dissociation?

Answer 4

• Notice (express will to withdraw)
• Agreed event
• Valid expulsion
• Member’s death/incapacity/bankruptcy
• Court judgment
• Termination of company

Question 5

What is required for dissolution?

Answer 5

By company

• Operating agreement event
• Unanimous vote
• 90 days after all members’ dissociation

By court

• Unlawful conduct
• Unreasonably practicable to continue company
• Fraudulent conduct
• Oppression/Harmful manner

Question 6

Is an LLC managed by members or managers?

Answer 6

Members

• By default
• Operating Agreement/Certificate of Organization
• Otherwise members must appoint managers to have LLC run by managers instead

Managers
- Operating Agreement/Certificate of Organization

Question 7

What is the difference between dissolution of a corporation, LLC and partnerships by its owners?

Answer 7

Corporation
- By SHs (Ds’ deadlock/Ds not appointed)

LLC
- By members (members’ dissociation + 90 days/unanimous vote/event)

Partnership
- By partners (rightful dissociation/wrongful dissociation + majority vote/unanimous vote/event)