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Richard, Attorney
Category: Business Law
Satisfied Customers: 55596
Experience:  32 years of experience practicing law and a businessman.
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I am a member of a member-managed LLC and I desire to open

Resolved Question:

I am a member of a member-managed LLC and I desire to open a new business which will not directly compete with my current LLC but would utilize many of the same contact people and is in the same area of business. The members and I have discussed branching into this field in the past, b/c the new venture is a natural extension of what we are doing now, but have never done so. Would I be breaching my duty of loyalty by starting this new business prior to letting anyone know?
Submitted: 5 years ago.
Category: Business Law
Expert:  Richard replied 5 years ago.

Good morning. In these situations, when one doesn't want to let the others know, it's a pretty good indicator that one shouldn't probably do it without disclosure. To avoid this problem in the future, it's good to put a provision such as the following in the Operating Agreement:

Members Engaging in Other Business.

The Members may engage in or possess an
interest in other business ventures of every nature and description,
independently or with others, whether or not competitive with the Company or the Company's business, and neither the Company nor the other Members shall have
any right, by virtue of this Agreement, the relationships through the Company
or otherwise, in and to any such independent ventures or to the income or
profits derived therefrom.

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Customer: replied 5 years ago.
Would anyone want to join an LLC with me if I require them to allow me to compete with them?:) Thanks for your help!