LLC Flashcards
how is LLC created?
when the articles of incorporation are filled with he appropriate name, the LLC, mailing address, and members name
if no members will not come into existence until it has at least one member
Operating Agreement
not required but member may adopt operating agreement that governs how it will be managed, can be express, implied, written or oral
absent operating agreement statutory provisions control
membership requirement
at least one member, there is no maximum member requirement but if member joins after need consent of all members
transfer of membership
transferee only entitled to profits or losses not management of LLC
termination of LLC
if member terminate not automatically dissolved
allocation of profits and losses
determined by the contribution of the members
how may an LLC be managed
by direct (members) or by centralized (one or more managers)
Member liability
members and managers are generally not liable unless the veil is pierced
Piercing the corporate veil
liable if undercapitalization, comming funds, confusion of business affairs, deception of creditors
determine based on one or two test: mere instrumentality, unity of interest
Mere Instrumentality test
members dominated the entity such that the LLC had no will of its own
members domination used to commit fraud or wrong
control proximately caused the injury
unity of interest test
LLC did not have existence independent of members because such unity of intent and ownership between entity and member that the failure to pierce field would be unjust
Members duty to LLC
duty of loyalty and care
similar to that of corporation
disassociation
members can withdrawl at any time for any reason without written notice and withdrawl does not necessarily trigger
may LLC merge with another LLC or other business entity
yes
involuntary dissolution
member may seek if controlling members acts in a way that is oppressive or directly harmful to the member seeking the order
action must violate members reasonable expectation
