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Damien Bosco
Damien Bosco, Attorney
Category: Business Law
Satisfied Customers: 2497
Experience:  Helping you with your legal questions.
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I am reading your response on anti-dilution of shareholders

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I am reading your response on anti-dilution of shareholders in an LLC I am trying to close a deal to take 51% of an LLC, but the founder (at 26% with Double voting rights) says that we cannot legally ask for anti-dilution rights
JA: Can you tell me what state the LLC is registered in?
Customer: Michigan
JA: Has anything been officially filed? If so, what?
Customer: The LLC was set up a couple years ago. We are negotiating the rewrite of the Operating Agreement
JA: Anything else you want the lawyer to know before I connect you?
Customer: that is the important bit

Hello: My name is ***** ***** I am an attorney. I will do my best to help you. Please give me a moment to review your question.

What basis does the founder have to that anti-dilution rights are illegal? Against the SEC? Against Michigan law?

Customer: replied 1 month ago.
He has not stated - I assume Michigan law and regulations surrounding LLCs.

I have never heard of such a blanket prevention. It is not illegal. It is a standard provision that some choose to include in an operating agreement. The anti-dilution provisions allow a member to maintain its membership interest percentage in the case when the LLC issues membership interests to new members. Such protections may include: a veto right on new issuance of membership interests and admission of new members; limitation on capital calls (for example, no additional capital calls without consent of all members); and pre-emptive rights that allow a member to purchase any class of membership interest being offered in order to maintain their percentage interest. - See more at: https://www.lexisnexis.com/legalnewsroom/corporate/b/blog/archive/2013/11/20/what-should-be-included-in-llc-operating-agreements-part-ii.aspx#sthash.1krrpWVy.dpuf

If you need further help, let me know.

Customer: replied 1 month ago.
Thanks very much...

You are welcome!

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