LLCs

Question 1

LLC Formation

Answer 1

Document filed with the state + LLC

Question 2

LLC Management

Answer 2

Equal management rights

Question 3

LLC Authority to Bind

Answer 3

Each member (owner) has authority to bind the company to contracts carrying on the ordinary course of business, unless they lack actual authority and the third party knows this.

Question 4

LLC Distributions

Answer 4

Based on contributions

Question 5

LLC Liability

Answer 5

Not personally liable for the LLCs obligations and stand to lose only the amount of investment.

Courts can pierce the veil.

Question 6

LLC Duties

Answer 6

Owe fiduciary duties of care and loyalty.

Question 7

Duty of Care (LLC)

Answer 7

The care that a person in a similar position would exercise under similar circumstances in a manner reasonably believed to be in the best interests of the LLC.

*Because of business judgment rule, can typically only be held liable for grossly negligent or worse decisions.

Question 8

LLC Transfers

Answer 8

Owners can transfer their financial interest but not their management rights.

Question 9

LLC Dissociation

Answer 9

Same as partnerships

Question 10

LLC Dissolution

Answer 10

-happening of an agreed event
-consent of all members
-90 days with no members
-court order (not practicable)