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Im trying to create an operating agreement where the member

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I'm trying to create an operating agreement where the member that has a majority interest can include new members later, while, at the same time issue themselves enough units to maintain their majority status. Does this do the trick?

1.8 MEMBERSHIP INTEREST. Each member’s interest shall be expressed in units.
1.9 ADMISSION OF ADDITIONAL MEMBERS. The Member(s) holding a majority of the capital interests in the Company, in their sole discretion, may issue any number of additional units in order to add members to the Company or increase the number of units held by a current or past member.
Submitted: 1 year ago.
Category: Business Law
Expert:  Irwin Law replied 1 year ago.

If new members are admitted, but the majority owner always retains 51%, wouldn't that dilute the ownership of minority members without their consent. I am not sure that you can do that without the consent of minority interest members. That might be why you can't find such a template. That aside, the language you drafted doesn't do what you want. There is no provision that specifically permits a change in ownership interest of the minority members.

I hope that this information is helpful. Please click on a smiley face so that I will be compensated for assisting you. If you have a follow up question please send me back a Reply without entering any rating. Also, be sure to verify this information with a local attorney who is familiar with your local laws and procedures. Thanks again for using Pearl.Com- Just Answer. Your business is appreciated.

Customer: replied 1 year ago.

What I'm looking to do is to create a situation where I can add more employees and give them units, but still maintain 51% ownership interest. Can I do that and if so how?

Expert:  Irwin Law replied 1 year ago.
In other words you are the sole member now, and you wish to include minority member owners in the future. To do that, issue 100 units to yourself, and in the future, never issue more than 99 units to others. I believe that the man works out.
Customer: replied 1 year ago.

I'm sorry it took so long to respond. If I keep 100 units for myself and issue 99 to everyone else, am I still the "majority member" in terms of making decisions? Meaning, in the operating agreement, I can state that the "majority member" can make the decisions and refer to myself?

Expert:  Irwin Law replied 1 year ago.

You would structure the operating agreement for an Operating Manager to be selected by the majority vote of the members. Then elect yourself as the Operating Manager. Since you own 100 units and all the rest add up to 99, you own 50.25 percent vs 49.75 percent. Thus, you will have control of the LLC.

 

I hope that this information is helpful. Please click on a smiley face so that I will be compensated for assisting you. If you have a follow up question please send me back a Reply without entering any rating. Also, be sure to verify this information with a local attorney who is familiar with your local laws and procedures. Thanks again for using Pearl.Com- Just Answer. Your business is appreciated.

Irwin Law, Attorney
Category: Business Law
Satisfied Customers: 4958
Experience: 30+ yrs. representing small business, real estate, probate
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