Corporate and LLC Governance
Once a decision has made as to what type of entity is best for a business, it is important that the governing documents be prepared carefully, especially where there is more than one owner of the business. Questions such as whether, and under what circumstances, an ownership interest can be bought or sold, what the financial contributions of the owners are to be, how decisions are to be made, and what happens if an owner dies or is incapacitated, should be addressed.
Often, our clients want to keep ownership of the business in the hands of the original founders, or their families. Suddenly finding yourself in business with a stranger (or, perhaps worse, the estranged spouse of the person with whom you went into business) can be very difficult. Corporate shareholder agreements and LLC operating agreements can address these issues, preferably when the business is started and everyone is on the same page.
The financial contributions of the business owners should also be addressed when the business starts. On the one hand, it can be fatal to a business for the owners to find that they are not in agreement as to how much must be invested by each, and when. On the other hand, it can be catastrophic to an owner to learn that his or her obligations to the business have not been limited to what he or she can afford.
Business decision making should also be addressed early on. While the founders may be in complete agreement at the start, the unexpected does occur, and how the business will respond to an unexpected turn of events needs to be clear.
At Rice & Stallknecht, P.C. we have a great deal of experience as business lawyers drafting operating agreements and bylaws to assist our clients in ensuring that the business is run the way our clients want.