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Irwin Law
Irwin Law, Attorney
Category: Legal
Satisfied Customers: 6851
Experience:  Lawyer & Real Estate Broker, 30+ years, foreclosure, land contracts, inheritance, probate.
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I want to make sure regarding the interpretation of the Idaho

Customer Question

I want to make sure regarding the interpretation of the Idaho Limited Liability Company Act.
I want to make sure I am able to restrict voting rights of Members. I want to offer Transferable Interests to Persons who have contributed time and effort, but not capital and who will not be involved in day to day operations.
The following excerpts are from an Operating Agreement I had done back in 2005.
I read a brief excerpt of the Idaho Act that lead me to think that all Members, regardless of Class, have equal voting rights. I am hoping I am able to restrict Voting rights, so that is the focus of this specific question, providing the example of the language used below to restrict voting rights whilst maintaining pro rata distribution based upon Membership Unit ownership.
Firstly, I want three classes of Units (A,B,C):
Class A:
A Class A member shall be entitled to serve as Manager and have all voting rights on all matters.
The Manager shall have the right at any time and from time to time to admit one or more additional Class A Members upon such terms and conditions as the Manager shall determine in its sole discretion, provided that it obtains the prior written consent of a Majority in Interest of all the Class A Members, and any such Person receiving Class A Interests shall make a Capital Contribution to the Company (in cash or other property) corresponding to the fair market value of such Interest, as determined in the sole discretion of the Manager.
Class B:
A Class B member shall not be entitled to serve as Manager nor participate in the election of a Manager.
The Manager shall have the right at any time and from time to time to admit one or more additional Class B Members and/or sell or award additional Class B Interests (or rights to acquire additional Class B interests) to Persons who are employed by or otherwise have benefited the Company, upon such terms and conditions as determined in the sole discretion of the Manager.
Class C:
A Class C member shall not be entitled to serve as Manager nor participate in the election of a Manager.
The Manager shall have the right at any time and from time to time to admit one or more additional Class C Members and/or sell or award additional Class C Interests (or rights to acquire additional Class C interests), provided that any such Person receiving Class C Interests shall make a Capital Contribution to the Company (in cash or other property) corresponding to the fair market value of such Interest, as determined in the sole discretion of the Manager.
Submitted: 7 months ago.
Category: Legal
Expert:  Irwin Law replied 7 months ago.
In Idaho, the LLC Act governs any matters not otherwise provided for in the operating agreement. The LLC Act does not prohibit the restriction of voting rights of various classes of members. Those restrictions that are applicable concerning the form and content of an operating agreement, are as follows: the operating agreement may not (i) vary an LLC’s capacity to sue and be sued in its own name; (ii) vary the law applicable to the company; (iii) vary the power of a court to order a person to sign a record under the LLC Act; (iv) eliminate fiduciary duties; (v) eliminate the contractual obligation of good faith and fair dealing; (vi) unreasonably restrict the rights and duties regarding access to information; (vii) vary the power of a court to decree dissolution under circumstances set forth in the LLC Act; (viii) unreasonably restrict the right of a member to maintain an action under the LLC Act; (ix) restrict the right to approve a merger, conversion, or domestication under the Idaho Code to a member that will have personal liability with respect to a surviving, converted, or domesticated organization; or (x) restrict the right of a person other than a member or manager.
Expert:  Irwin Law replied 7 months ago.
If you have no further questions, I would appreciate your rating (positive I hope) for this assistance.
Expert:  Irwin Law replied 7 months ago.
Hello again. Do you have a follow-up question? I am not an employee of Just Answer and I receive credit for assisting you based on your rating. I hope that you will enter a positive rating for my assistance here by clicking on 3, 4, or 5, for which there is no additional cost to you. Thanks again for using JUST ANSWER.

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