Operating Agreements are flexible and can govern the operation of a limited liability company’s (LLC’s) business. Operating Agreements are discernible from Member Control Agreements because Member Control Agreements construe the rights of the LLC’s members and management of the LLC while Operating Agreements govern how business operations are conducted. Operating Agreements also determine provisions such as who governors and managers of the LLC will be, when and under what conditions meetings must or may be held, how voting occurs and who may vote. Operating Agreements are prudent from an operational standpoint and from a liability standpoint should a plaintiff attempt to “pierce the corporate veil” by alleging that the LLC is simply an alter ego of an officer, member or organizer and thus seek to hold that individual personally liable for plaintiff’s claims against the LLC.
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*This material is educational only, it does not constitute legal advice, it should not be relied on and it does not create an attorney-client relationship.