Who has control in the company? Board vs Shareholders?
An investor proposed an operating agreement where he had the majority of Class A shares. He added myself and him as Board Of Managers, him being Chairman of the board. This investor said decisions can't be made without my approval but because he has the majority of Class A shares, I thought it was completely irrelevant what my position was in the company.
Don't the majority shareholders make the decision for the company? Do Class A share holders have the say or do the board of managers?
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Sounds like you have an LLC, not a corporation. The background/default rules for LLC "corporate" governance (keeping in mind that an LLC is not a corp) are a lot less defined than for a corporation. In either case. with a closely held busines (corporation or LLC), these rules can be established through contractual agreement by the parties. You and your business parther need to decide how you want to resolve business disagreements rather than assuming it has to work one way or the other.
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You need an attorney with focused experience in corporate governance.
Here it's unclear whether you have a corporation or a limited liability company.
In a corporation, a shareholders' agreement would apply. In a LLC, an operating agreement applies. In both cases, the agreement can determine the make up of the board of directors of the corporation and the board of managers of the LLC, respectively. The bylaws of the corporation and the operating agreement of the LLC determine the size of the board. The operations of the entity are determined by the board, with each board member having a vote. The shareholders of the corporation and the members of the LLC determine who are the board members, and they can by agreement or by vote do that.
Regards,
YWC
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Yee Wah Chin
The Law Office of Yee Wah Chin
Admitted in New York & Washington, D.C.
Tel. 202-213-3143
Email ywchin@ywc-antitrust.com; ywchin@alum.mit.edu
www.ywc-antitrust.com
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In a manager-managed LLC the business and affairs of the company are overseen by the Board of Managers but carried out by the company's officers and other employees. Certain actions may require Board approval, e.g., entering into a material employment contract, or both Board and shareholder approval, e.g., entering into a merger agreement. All of this is generally laid out in the operating agreement, but if not the laws of the state in which LLC is organized will have certain default provisions.
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Hi,
I concur that it is unclear what the structure is here. I would be happy to discuss over a free phone consult so feel free to contact me anytime. once I better understand the underlying structure and facts I can offer some insights.
I look forward to your reply.
Kind regards,
Frank
Natoli-Lapin, LLC
www.LanternLegal.com
866-871-8655
frank@lanternlegal.com