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Category: series

Business Ownership Deals: Buying And Selling (Transferring) Membership Interests In LLCs – Part 4, Operating Agreement (“OA”) Changes

Posted on April 22, 2024July 9, 2024 by g83js92js91
Categories: Business Law & Contracts, business owners, business partners, limited liability company, operating agreement, series

A very common question we get asked at our law firm of McGrath and Spielberger is “What do I need to do to add an owner to my company?” The answer to that exact question is similar to the related question of “How do we transfer the ownership interests of a Member who is leaving the LLC?” Of course, you can also have a situation in which a current Member is only transferring or selling some of that Member’s interests in the company.

bigstock Business Man Signing A Contrac 262517662

This Part 4 of our ongoing series focuses on Operating Agreement amendments and/or similar changes as a result of a change in ownership / membership. See Part 1 of this series for a general overview of sale / purchase / transfer of company membership interests and the legal process, Part 2 for more information on the Purchase and Sale Agreement / Membership Interest Transfer Agreement, and Part 3 regarding “Resolution” which should be a part of the membership interest (ownership) transfer process.

A transfer of membership / ownership interests in an LLC should result in amending the Operating Agreement (shorthand = “OR”) or the creation and execution of a new Operating Agreement. We’ll now address 3 different common scenarios, and keep in mind these are brief summaries, they are not intended to be a detailed or comprehensive listing of all relevant or necessary items / issues.

  1. AMENDING THE WRITTEN OPERATING AGREEMENT. If there is a written, executed OA in place of reasonable quality, then an amendment document can be utilized. The Amendment to OA would at least summarize the situation and the changes, reference other key documents, be dated, and be executed by the LLC itself and each individual Member (including any new Members and any outgoing Members).
  2. REPLACING AN EXISTING OPERATING AGREEMENT. There are times when replacing a past-written OA with a new one makes the most sense, including when there is a change in ownership. We’ll address this in more detail in a separate article.
  3. CREATING THE COMPANY’S FIRST WRITTEN OPERATING AGREEMENT. Many LLCs do not have a written OA. In nearly every instance, the creation and execution of a written OA should take place in light of the change in ownership structure. Interestingly, depending on the circumstances and applicable strategical goals, sometimes it makes sense for that OA to come into existence: before the change in membership (which may then also require an Amendment to OA as discussed above); or concurrent with the change in membership; or after the change in membership. We may address those timing options, and why each could make sense, in a different article.

An Amendment to Operating Agreement is often 1 or 2 pages long. An entire Operating Agreement is typically between 10 and 50 pages long. Yes, you correctly infer that there is a wide variety as to how complex and detailed Operating Agreements can be.

An LLC Operating Agreement is typically a private document vs. something which gets “filed” with anyone. This doesn’t mean it is forever confidential, it’s just internal. The contents of an LLC OA could be agreed to be confidential by the parties, although that also does not guarantee it will never be seen by outside persons or entities.

The law does not require an LLC OA to be notarized or witnessed by any third parties. In concept, there could be a requirement within a certain limited liability company which does require it – but that would be uncommon.

The LLC OA – including any properly agreed upon amendments – are typically part of the formal proof of the issues covered in the OA. This means that membership / ownership listings (including changes) in such documents are excellent proof of who owns how much. Anyone who is a signor to an OA or related Amendment should have a tough time later claiming to be unaware of the content of such documents or to deny that they agreed to the content.

LLC Operating Agreements and their Amendments are commonly worked on by business law attorneys. However, attorneys need to pay attention and have their brains and skill sets engaged even when performing straightforward work. Paying attention gets the best results for clients, which is what we do here at McGrath & Spielberger.

Posted in Business Law & Contracts, business owners, business partners, limited liability company, operating agreement, series

Arbitration Fees – How Much do Arbitrators Cost?

Posted on August 26, 2021April 25, 2022 by g83js92js91
Categories: arbitration, arbitration'contracts, Business Law & Contracts, Continuing Series, contract law, contracts, Jason A McGrath, NC Rules of Civil Procedure, North Carolina, series, small business

Business law Attorney Jason McGrath shares some information about how much you should expect to pay in fees to an Arbitrator in this short video.

https://youtu.be/_mJseLaXzM0

Here are some of the key points contained in this informational video:

  • Arbitrators typically charge fees similar to what lawyers charge.
  • Does the Arbitrator require a minimum amount when the arbitration is scheduled? This may be called a cancellation fee or a retainer fee. The arbitrator may require this to offset a loss if the arbitration cancels.
  • Arbitrators can sometimes be bargained with to lower fees but normally these are set fees.
  • Arbitration fees (which are mostly made up of the Arbitrator’s fees) are often split evenly between the parties, but this can be altered by contract, law, or court order.

You should get advice from an attorney to assist in handling litigation issues like arbitration.

This is part of a continuing series of video blogs on contract law and arbitration – you can find the first part of this series on our blog or on our YouTube Channel.

If you need legal services in North Carolina, South Carolina, Georgia, Florida, Ohio, or Tennessee we invite you to fill out our confidential client form for possible legal assistance.

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Posted in arbitration, arbitration'contracts, Business Law & Contracts, Continuing Series, contract law, contracts, Jason A McGrath, NC Rules of Civil Procedure, North Carolina, series, small business

Decision On An Arbitration Provision In A Contract

Posted on January 22, 2020April 20, 2022 by g83js92js91
Categories: arbitration, business law, Business Law & Contracts, Business Law Disputes, Continuing Series, contract law, contracts, Jason A McGrath, lawsuit, Litigation, North Carolina, series, video
Attorney Jason McGrath discusses some items to consider when deciding to include an arbitration provision in a contract matter in this short video.

Watch here > https://youtu.be/rOPNhRSSLVE

Here are some of the key points contained in the video:

⬤  Arbitration: do you prefer arbitration or a formal court case if there is a dispute?

⬤  The intent of an arbitration provision in a contract is to avoid a formal court case.

⬤  Arbitration provisions are, in general, enforceable and typically will be binding in the same way that a civil court judgment can be enforced.

⬤  There are ways to appeal an arbitration decision but they are limited.

⬤  Arbitration is usually less expensive than a formal court case.

⬤  You should talk to an attorney for advice when considering including an arbitration provision to your business contract.

If you need legal services in North Carolina, South Carolina, Georgia, Florida, Ohio, or Tennessee we invite you to fill out our confidential client form for possible legal assistance.

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Posted in arbitration, business law, Business Law & Contracts, Business Law Disputes, Continuing Series, contract law, contracts, Jason A McGrath, lawsuit, Litigation, North Carolina, series, video

Where Does an Arbitration Physically Take Place?

Posted on May 27, 2019April 20, 2022 by g83js92js91
Categories: arbitration, business, Business Law & Contracts, Business Law Disputes, Continuing Series, contract law, contracts, Jason A McGrath, lawyer, Litigation, llc, North Carolina, series, video

Attorney Jason McGrath shares some information about where you can expect an arbitration proceeding to physically take place in this short video and summarized in this blog post.

Understand the practical logistics of an arbitration that may arise from a dispute about your business contract.

Here are some of the key points contained in this informational video:

Where will the arbitration physically take place? What city or county? An attorney’s office? The courthouse? City hall?

  • As far as city or county, arbitration often takes place where a related lawsuit would be (or is) taking place.
  • Some arbitration agreements will dictate what city or county the arbitration must occur in.
  • Arbitration can usually occur anywhere that the parties agree.
  • The arbitration hearing could take place at a private law office or the arbitrator’s office.
  • Arbitration doesn’t usually occur in the courthouse.

Occasionally a court will enter an order as to the logistical specifics of arbitration, such as the hearing location. You should get advice from a contract attorney to assist in handling litigation issues like arbitration.

If you need legal services in North Carolina, South Carolina, Georgia, Florida, Ohio or Tennessee, we invite you to fill out our confidential client form for possible legal assistance.

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Posted in arbitration, business, Business Law & Contracts, Business Law Disputes, Continuing Series, contract law, contracts, Jason A McGrath, lawyer, Litigation, llc, North Carolina, series, video

Follow the Contract’s Arbitration Clause or File a Lawsuit?

Posted on February 4, 2019April 25, 2022 by g83js92js91
Categories: arbitration, arbitration clause, business law, Business Law & Contracts, Business Law Disputes, contract law, contracts, Dispute, Jason A McGrath, lawsuit, North Carolina, series

Attorney Jason McGrath explains some things to consider when deciding whether to follow a contract’s arbitration clause or file a lawsuit in this short video.

Click here to watch on YouTube or watch the video below.

Here are some of the key points contained in the video:

  • How do you end up in arbitration vs. in court?
  • Typically, someone has to decide – do we follow the arbitration clause or just file a lawsuit?
  • Parties usually just file a formal lawsuit as if there is no arbitration clause.
  • There can be some negatives to ignoring the arbitration clause.

You should have your attorney take a look at the contract and then make a careful decision on how to proceed based on a through legal analysis of your case and the contract.

If you need legal services in North Carolina, South Carolina, Georgia, Florida, Ohio, or Tennessee we invite you to fill out our confidential client form for possible legal assistance.

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Posted in arbitration, arbitration clause, business law, Business Law & Contracts, Business Law Disputes, contract law, contracts, Dispute, Jason A McGrath, lawsuit, North Carolina, series

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Recent Posts

  • Business Ownership Deals (Part 6 of Series): How Many Different Attorneys Need To Be Involved?
  • Business Ownership Deals: Buying And Selling (Transferring) Membership Interests In LLCs – Part 5, Filings With The Secretary Of State
  • Business Ownership Deals: Buying And Selling (Transferring) Membership Interests In LLCs – Part 4, Operating Agreement (“OA”) Changes
  • Business Ownership Deals: Buying And Selling (Transferring) Membership Interests In LLCs – Part 3, The Company Resolution
  • Business Ownership Deals: Buying And Selling (Transferring) Membership Interests In LLCs (Part 2)

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