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FLCORPLAWYER
FLCORPLAWYER, Attorney
Category: Business Law
Satisfied Customers: 4634
Experience:  23 Years business & securities law, NY and FL bars. SEC all states.
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i am looking at a proposed LOI for investment and this is in

Resolved Question:

i am looking at a proposed LOI for investment and this is in the document:
Membership. In exchange for the XXX Capital Investment XYZ (“Company”), XXX shall be issued forty-nine (49%) of the Company’s outstanding membership interests, with minority ownership protections acceptable to XXX in his sole and absolute discretion without regard to any implied covenant of good faith and/or fair dealing (“XXX Interest”). (A person holding a Membership Interest (defined below) in the Company is hereafter referred to as a “Member”).
What does "with minority ownership protections" mean?
Submitted: 5 years ago.
Category: Business Law
Expert:  FLCORPLAWYER replied 5 years ago.

FLCORPLAWYER :

"Minority ownership protections" doesn't mean much. It means the "majority" has a fiduciary duty to deal with you fairly and honestly, but since you have 49% you can actually do nothing to insure how the business is run. They are basically promising you that if they steal your money, you can sue them for fraud. We already knew that.

Customer:

actually i will own 51 percent and the investor will own 49 percent

Customer:

thanks

Customer:

i understand that it means they are expecting me to deal with them fairly and if i do not they can sue me for fraud - if i reverse the parties in your answer

FLCORPLAWYER :

If you own 51%, then I love the language.

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