Limited Liability Company Flashcards
What is an LLC?
Tax treatment of corporation, and liability of corporations.
No limitations on shareholders, no residency requirement, and no natural person requirements.
Operating Agreement must be filed with state.
Owners are called members. Managed by all members
What is the default rule for whether a LLC is member managed or manager managed?
Member managed if operating agreement does not specify.
What is the rule for whether a member who buys goods for a business has authority to bind the LLC without the express approval of the other members?
Members of a manager-managed LLC do not have authority to bind the LLC.
Members of a member-managed LLC have broad authority to bind the LLC. Each member has equal rights with respect to the management of the LLC. However, an act outside the ordinary course of the activities of the company may be undertaken only with the consent of all members. (see if agency relationship)
What is the rule for dissociation and an LLC?
An LLC may dissolve upon the occurrence of various events, including consent of all members, passage of 90 days without members, by court order, or by the happening of a dissolution-causing event per the operating agreement.
Dissociation alone does not cause dissolution. A member can withdraw or dissociate at any time and without reason, even if doing so violates the operating agreement, by providing notice to the LLC.
Written notice is not required under the ULLCA.
Dissociation does not discharge the member’s interest or liability and does not necessarily trigger dissolution and winding up.
The dissociated member relinquishes his right to participate in the LLC and is entitled to distributions only if the continuing members receive payment.
