Limited Liability Companies

Question 1

Formation

Answer 1

Only requires ONE PERSON to form.

Certificate of Formation must be filed with secretary of state, name must include LLC.

Question 2

Members (Owners)

Answer 2

Can only be admitted through unanimous vote, cannot withdraw without consent of all other members, members may transfer their interests.

Upon dissociation all MUST CONSENT to CONTINUE LLC or LLC will dissolve after 90 days.

Question 3

Liability

Answer 3

LLC is a separate entity and responsible for its own contracts and tort obligations.

Members not liable for LLC obligations

Court may pierce veil.

Question 4

Management Default

Answer 4

Member Management, unless cert. of formation specifies otherwise.

Each member can participate in management and each member is an agent for the business

Question 5

Manger Management (Optional Alternative to Default)

Answer 5

LLC desinates mangers, choice must disclose in cert. of formation. Manger does not have to be a member.

Question 6

Voting Power

Answer 6

Not equal it is based on contribution

Question 7

Profits and Losses

Answer 7

Based on contribution

Question 8

Fiduciary Duties

Answer 8

MANAGING members owe duty of care/loyalty to LLC and other members

Non-managing members owe no duty.