Arbitration provisions are indispensable in most multi-member LLC operating agreements. The new blog post under the link below addresses the issue of which is better in an arbitration: a single arbitrator or a three-arbitrator panel. For most multi-member LLCs, a single arbitrator is the answer, but we should all be aware of arguments to the contrary.
Here’s the link:
If your practice involves forming LLCs, I can guarantee you that before long, it will also involve assisting your LLC formation clients in buying and selling LLCs and other business entities.
The following post by Lou Vlahos of the FarrellFritz law firm contains an excellent summary of several key federal tax rules governing these sales and purchases.
Many of us have LLC clients whose LLCs have employees who are immigrants. The following link addresses the meaning of Trump’s election for employees and employers in this situation:
I’ve already addressed once in this blog the Delaware case holding that an LLC may be subject to corporate law if its operating agreement so provides; but the subject is so important that I want to state below the title and the first paragraph of a new article about that case that just appeared:
2016-SEP Bus. L. Today 1
Business Law Today
DELAWARE INSIDER: BE CAREFUL WHAT YOU ASK FOR: COURT OF CHANCERY FINDS CORPORATE LAW GOVERNS LLC BASED ON DRAFTING OF LLC AGREEMENT
Jason C. Jowers
Copyright © 2016 by the American Bar Association; Jason C. Jowers
It is the policy of the Delaware Limited Liability Company Act (LLC Act) “to give the maximum effect to the principle of freedom of contract and to the enforceability of limited liability company agreements.” Indeed, cases routinely refer to LLCs as “creatures of contract,” given that the LLC Act generally cedes governance of the entity to the terms of the LLC agreement, establishing few mandatory provisions and normally only providing “gap fillers” where an LLC agreement is silent. Consequently, members of an LLC “can ‘customize’ their company, largely free of externally imposed restrictions.” Robert L. Symonds, Jr. & Matthew J. O’Toole, Delaware Limited Liability Companies § 1.03[A][a], at 1-13(2015). But what happens when drafters of LLC agreements use their statutorily granted freedom to adopt a governance structure that is similar to that of a corporation? Does adopting a corporate-style structure also adopt the corporate case law interpreting that structure and imposing restrictions?
In the recent case of Obeid v. Hogan, 2016 WL 3356851 (Del. Ch. June 10, 2016), the Delaware Court of Chancery confirmed that a Delaware LLC may adopt a governance structure that looks more like a corporation than a traditional LLC, but it also explained that “[t]he choices that the drafters make have consequences.” By adopting a corporate-style of governance, such as a board of directors, the Court of Chancery will to some extent turn by analogy to Delaware’s case law governing corporate boards of directors. If the LLC agreement drafters wish to adopt a board of directors structure but do not wish to import Delaware’s body of board governance case law by analogy, the drafters should specify rules in the LLC agreement to the extent they wish to deviate from the traditional corporate rules.
Although LLCs are statutory entities, they are profoundly contractual. The Nobel Prize in Economics was won this year by two contractual theorists. For a summary of their thoughts, click here:
Few of us are likely ever to represent LLCs that have a realistic chance of going public. However, for those LLCs that do, the article under the link below outlines a potentially very useful structure for an LLC public offering.
Here is the link:
Here is a link that will enable you to open and download the article itself:
I do my best to monitor on a daily basis all developments in LLC law and tax and in related fields and to send posts about these developments. One of the related fields is land law. In case you’re interested, here is the URL for an excellent blawg on land law to which I subscribe (and to which you may also want to subscribe): https://lawoftheland.wordpress.com/?blogsub=confirming#blog_subscription-3
On October 5, 2016, the Treasury Department released important new regulations governing major issues in partnership taxation. As readers will know, partnership taxation is by far the most common federal income tax regimen of multi-member LLCs. The post under the link below provides a brief but excellent summary and evaluation of the new regulations.
Here is the link:
Many readers of this blog are LLC lawyers and estate planning lawyers. The article under the following link argues that Trump’s election will have a dramatic effect on all law practice: