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Richard - Bizlaw
Richard - Bizlaw, Attorney
Category: Business Law
Satisfied Customers: 10630
Experience:  30 years of corporate, litigation and international law
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The short version of the story is this Alex/I as BNWINC are

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The short version of the story is this:
Alex/I as BNWINC are currently 49% owners of BNW2005INC (Wa S-Corp) along with Slalom Holdings (Rob Forbes) as a 51% owner.
Last summer, Rob et al. proposed the concept of moving forward in business as an LLC (for presumably more favorable tax reasons).
Alex/I agreed verbally to the concept of this idea at an Aug 2008 in-person meeting.

On Sep 2, 2008 Rob et al, filed Articles of Organization with the WA Sec of State listing Alex as a member of this newly formed LLC
On Sep 30, 2008 Rob et al, requested via e-mail Alex's SSN to form a new LLC Company
On Oct 6, 2008 Alex replied via email he was not authorizing formation of a new Company (LLC or whatever) using his name or SSN without first receiving and reviewinsg paperwork.
On May 29, 2009 Rob et al, sent a "draft" Articles of Organization to Alex for initial review
On June 1, 2009 Alex/Karin learn from WA Sec of State that the LLC has also filed an initial Annual Report on Oct 24/08
Submitted: 8 years ago.
Category: Business Law
Expert:  Richard - Bizlaw replied 8 years ago.

I suggest the first order of business is to determine if you have any objections to the articles of formation of the LLC and terms under which it will operate. Even though the LLC has been formed, the existing business cannot be moved to it with the approval of the existing company. You should also be aware that an integral part of an LLC is what is called the Operating Agreement. This is the equivalent of a partnership agreement and sets forth how the business will be operated. It often incorporates things that would be in a shareholder agreement. It is a pretty extensive document. That is where you need to focus your attention to determine that the new entity will work as you and your partner intend.


Until that is accomplished, the business should continue in its present form. As I indicated the existing corporation has certain rights to protect its business which will prevent the majority owner from unilaterally changing the business by putting it in the LLC. However, if you get into these issues you will need to retain counsel. Hopefully, you can work out the terms of the way you and your partner will operate. The LLC is a more flexible form of organization than the S Corp. so it has advantages.


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