In the last post, we discussed Management and Voting, and Initial Capitalization
as two very important aspects of a basic LLC Operating Agreement.
Here are the other three most important provisions/ topics that must be
covered in a basic LLC Operating Agreement:
Distributions – How, when, and under what circumstances the members will get a
return on investment and priority of such payouts.
Transferability/Additional Members – It is pivotal that the agreement specifically addresses the member’s
rights to transfer an interest, if any, and under what circumstance or
procedure this must be done. It is just as pivotal to state the process
and requirements for taking on any new membership interests.
Buyout/Succession – Lastly, but not of the least importance, there should always be
a clause which defines the member’s or company’s rights to
buyout interests. This should include a succession plan for the future
of the business, or at the least, the structure for which an interest
is bought if a member is looking to get out.
If you or someone you know has questions or needs starting or operating
a small business, we can be reached at (203) 651-5521.