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Terms in this set (83)

>Owners (members) have limited liability as well as the benefits of partnership tax treatment.
>Formation: must file "articles of organization" that includes (1) the name of the LLC (must include "LLC"), (2) the address of the LLC's registered office and (3) the name of its registered agent.
>Operating Agreement: Real detail of the operation and governance is found in the agreement. The operating agreement can displace almost all of the statutory provisions.
>Management and Operation: Management is presumed to be by all of the members unless otherwise agreed specifically in the articles.
If management is by the members, (1) a majority vote is required to approve most decisions and (2) each member is an agent of the LLC.
>Financial Rights: Unless otherwise agreed, profits and losses are allocated on the basis of contributions.
>Liability: Members generally are not personally liable for the LLC's obligations, and can only lose the amount of their investments.
>Fiduciary Duties: The fiduciary duties owed by a member or a manager to the LLC and its members are the duties of care and loyalty.
>Transferability of Ownership Interests: Financial rights are unilaterally transferable, but management rights are not. One can become a member only with the consent of all of the members.
>Taxation: Partnerships and LLCs are taxed on a "pass through" basis. There is no entity-level tax, instead business income is passed through to the owners and reported on the owners' individual tax returns.
>Record shareholder as of the record date has the right to vote.
>Proxies: A proxy is a (1) writing (fax and email ok), (2) signed by record shareholder, (3) directed to secretary of the corporation, (4) authorizing another to vote the shares. Proxies are revocable, unless its coupled with an interest.
>Voting Trust: A written trust, controlling how the shares will be voted. A copy must be sent to the corporation, and the shareholder transfers legal title to the shares to the voting trustee. Original shareholders receive trust certificates and retain all shareholder rights except for voting.
>Voting Agreement: Shareholders can enter into voting agreements, in writing and signed by all participating shareholders. Specifically Enforceable in some states, not in others.
>Meetings: Shareholders usually vote in meetings, either an annual meeting (held every year to elect directors) or a special meeting. A special meeting can be called by the board, the president, or any holder of at least ten percent of the voting shares (or anyone authorized in the bylaws).
>Notice Requirement: Must give written notice to every shareholder entitled to vote. Notice must always state the time and purpose of the meeting, and for special meetings, must also state the purpose of the meeting (nothing outside the purpose can be acted upon). Failure to give notice voids all actions at the meeting unless notice is waived expressly or impliedly.
>How does voting Occur? There must be a quorum represented at the meeting, determined by the number of shares. A quorum requires a majority of outstanding voting shares. Quorum is still met if shareholders leave the meeting, and the votes cast for must only exceed the votes cast against.
>Cumulative Voting: only available when shareholders elect directors. Multiply the number of shares times the number of directors to be elected, can be distributed any way you want.