(This is Part 3 of our LLC Series)
Certain fundamental changes in the life of an LLC, such as a merger or liquidation of the LLC, require a vote by the members. These fundamental changes include the following:
- Amendment of the articles of organization (requires at least a majority vote of the members; this requirement can be modified upward by the operating agreement).
- Amendment of the operating agreement (requires unanimous vote of the members; this requirement can be modified downward by the operating agreement).
- Merger or consolidation of the LLC with or into any other LLC (requires at least a majority vote of the members; this requirement can be modified upward by the operating agreement).
- Winding up and dissolution of the LLC (requires at least a majority vote of the members; this requirement can be modified upward by the operating agreement).
- Conversion into another business entity or a foreign other business entity or a foreign LLC (requires at least a majority vote of the members).
Matters of general operating policy should be considered and authorized by the general manager or managers of the LLC. Although there is no statutory requirement with respect to how frequently the managers should act, it is advisable that the managers meet at least quarterly. In addition, a specially convened meeting of the managers may be called if action is required before the next regular meeting of the managers. Action by the managers may also be taken by the unanimous written consent of the managers. Although in most cases it is likely that most manager actions will be taken by unanimous written consent without a meeting, it may prove useful to schedule a regular managers’ meeting to address significant matters which have arisen on a quarterly or, at least, annual basis. Manager meetings can be held either in person or by conference telephone so long as all managers in attendance can hear each other simultaneously.
Matters appropriate for manager action, which can be immediately approved by written consent or which might arise and be accumulated, pending approval by the managers, include the following:
- Appointment of officers, setting of salaries, and declaration of bonuses (at least annually, typically at a meeting of the managers immediately following the annual meeting of members).
- Appointment of manager committees, if any.
- Opening of LLC bank accounts and the designation and change of LLC managers and officers authorized as signatories. Any bank’s LLC account form will usually include a resolution which the party executing the form represents to have been adopted by the managers of the LLC.
- LLC borrowing and delivery of collateral in connection with such borrowing.
- Consummation of material contracts for the purchase or lease of significant assets or services or the disposition of LLC assets or for the rendering of services outside the ordinary course of the business of the LLC.
- Policy decisions with respect to the construction of material assets or the investment of material amounts in research and development projects.
- The adoption of pension, profit-sharing, bonus and other employee benefit plans.
- The repurchase of LLC interests.
- Amendment of LLC bylaws (if any).
- Review of financial statements of the LLC.
- Appointment of auditors, if any.
- Any action that requires a member vote.
- The issuance and sale by the LLC of additional interests in the LLC.
In the case of any such actions, the secretary of the LLC should prepare minutes of the meeting at which such actions were approved or prepare the form of written consent evidencing any such manager or member actions.
The information provided herein is not intended as legal advice and should not be acted upon. If you have additional questions about this subject matter or would like to consult with an attorney about this or related subject matters, please call or email Josef Cowan at the Cowan Law Group (949) 333-0919 or at firstname.lastname@example.org.