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Annual Meetings for LLC Members

Annual Meetings for LLC members picMany start-up businesses select the limited liability company (LLC) as their legal structure. The LLC entity offers its owners flexibility and fairly simple required formalities. For example, the members and managers of a LLC are typically not required under the law to hold annual meetings. However, it is common for the Operating Agreement governing the LLC to require annual meetings because there are a variety of benefits that result, including:

  • Helps prevent piercing the corporate veil. When a creditor sues the entity and seeks to also hold the LLC members personally liable, it is typically done by piercing the corporate veil. A creditor can pierce the corporate veil if it can be proven that the LLC was not operated as a prudent and separate business. In order words, by holding regular meetings and having the members vote on key business decisions, you can prove that the LLC was a viable entity separate from its owners. It is essential that you properly document that the meetings were held by keeping minutes of same.
  • Requiring members to vote on LLC actions . If your business is owned by several members, it is important for the managers and members to vote to approve or reject proposed actions being taken by the company. For instance, any time the LLC borrows a significant amount of money, the entity should put all members on notice of a meeting to discuss whether the loan is the appropriate course of action for the business to take. This helps prevent internal disputes among the managers and members as well.

If you own a business that is incorporated as a LLC, it is important to confirm that your Operating Agreement requires annual meetings. If you need assistance drafting or revising your Operating Agreement to include this requirement, we can help. We can also provide guidance on how to properly conduct and document your annual meetings. Investing a small amount of money to comply with the annual meeting requirements could potentially save you a significant sum in the future.

If you are interested in learning more about Operating Agreements, annual meetings of LLC members, or how we can assist you with your business-related needs, contact the knowledgeable lawyers at The Swenson Law Firm to schedule an appointment.

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