The Pros And Cons Of The Operating Agreement

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The operating agreement is the members of LLC have a decision on how to operate the various aspects of the business (Miller, 2014, p.41). It is simply a contract. The LLC operating agreement must accommodate setting up sub-LLCs. Many states do not require the operating agreement because LLC exist. With other states, the operating agreement should be written so their interest can be protected. According to Miller, operating agreement typically contains provisions relating to the management and how future managers will be chosen or removed, how profit should be divided, how membership interests may be transferred, whether the dissociation of a member, such as by death, will trigger dissolution of the LLC, whether formal members’ meeting will …show more content…

A limited liability company agreement may provide that a member who fails to perform in accordance with, or to comply with the terms and conditions of, the limited liability company agreement shall be subject to specified penalties or specified consequences, and at the time or upon the happening of events specified in the limited liability company agreement, a member shall be subject to specified penalties or specified consequences (Washington State Legislative, 1994, sec 25.15.140). Let’s say a member of LLC read all the terms and conditions that is stated on the contract and then signed the contract. After a few days applying the rules that stated on the contract, the member violated one of the rules. The member must didn’t read that rule careful because he did the opposite of what the contract said. This allows the member the member to be punished for the action that was violated and the director had to let the member know the punishment. Unlike members, a limited liability company agreement may provide that a manager who fails to perform in accordance with, or to comply with the terms and conditions of, the limited liability company agreement shall be subject to specified penalties or specified consequences, and at the time or upon the happening of events specified in the limited liability company agreement, a manager shall be subject to specified penalties or specified consequences (Washington …show more content…

According to the Washington State Legislative, in the event of the death, resignation, or removal of the sole remaining manager occurs with regard to the sole remaining manager, and unless the limited liability company agreement provides otherwise, the limited liability company shall become member-managed unless one or more managers are appointed by majority vote of the members within ninety days after the occurrence of such an event (1994, sec. 25.15.185). The manager or owner need make sure they be prepare for situations like this because this can harm the company in so many ways. Tasks can decrease and this put more work on other employees. It is important that the managers recruit other individual from time to time so the company can have some fresh and new ideas to better the company. It is good that the limited liability company takes risks, but make sure they know the risk they are

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