MEE

Question 1

When does a member become dissociated from an LLC?

Answer 1

When member gives notice of her express will to withdraw;

Occurrence of an agreed upon event in the operating agreement;

Expulsion by the unanimous vote of the other members;

By judicial order for misconduct;
Bankruptcy, incapacity, or death;

Question 2

What is the effect of a dissociated member?

Answer 2

A dissociating member will remain liable on the debts and obligations of the LLC until notice is given to all creditors of the dissociating member, OR until 90 days after filing with the secretary of state the intent to dissociate.

Upon dissociation, the dissociated partner loses their right to participate in the management BUT he still has the right to receive distributions.

Question 3

What is dissolution?

What are the 3 ways a corporation can be dissolved?

Answer 3

Dissolution is the process that leads to the ending of the corporation… followed by winding up the business.

A corporation may be dissolved upon
1. Judicial Dissolution
2. Voluntary Dissolution
3. Administrative dissolution

Question 4

what is judicial dissolution

DISW

Answer 4

A shareholder may
petition the court to dissolve the corp. if:

• The directors are deadlocked in a decision AND irreparable injury to the corporation; 
• The Directors have acted in a manner that is illegal, oppressive, or fraudulent
• The shareholders are deadlocked in voting power and have failed to elect Directors for at least two consecutive annual meetings;  OR
• The corporate assets have been wasted or misapplied.

Question 5

What is voluntary dissolution of a corporation

Answer 5

When the BOD
may propose dissolution to the shareholders. Voluntary dissolution can occur if:

• The BoD adopts a proposal to dissolve;
• Notice given to all SH’s of meeting to vote on it – must state the purpose of the meeting; AND
• 3) Adoption by the SH’s by a majority vote – unless a greater number is required under state law or the Articles of Incorp

Question 6

what is administrative dissolution

Answer 6

action brought by state to dissolve corp

Usually occurs due to failure to adhere to statutory requirements or formalities, but can be remedied by corp

Question 7

What is winding up of a corporation

Answer 7

Upon dissolution, the corp activities must be wound up. 

At this point, corp must provide notice of the dissolution to creditors. 
* notice sent to creditors must set forth the steps necessary for them to take to enforce their claims against the dissolving corporation

• If proper dissolution and winding up procedures are NOT followed, then a creditor’s claim may be enforced against:  (1) the dissolved LLC;  and
• (2) the members personally if the assets of the company have been distributed after dissolution (but such liability cannot exceed the total value of assets distributed to said member post-dissolution).