No need for an operating agreement, just ask a lawyer

[Chris Martin]

I ran across this that came out of the Special Superior Court for Complex Business Cases, Cumberland County, NC.

Preamble: "An old saying declares that “the cobbler’s children have no shoes.” Lawyers may suffer from the same problem, if they are too busy dealing with their clients’ legal affairs to address their own. This case arises because the members of a law firm organized as a PLLC did not adopt an operating agreement or any other documents governing the operation of the PLLC."

38 pages of lawyers pissing on eachother. Something to put you to sleep tonight.

NO. COA09-1020 NC Court of Appeals

[Bill Gulley]

If I didn't set up the first LLC in Missouri, it was one of the first, the Secretary of State folks had to call to see if the bill passed and they didn't have any forms!

Which means, my LLC experience goes back a long way and I have several since. But my expierence in forming a company in your state should not be relied on, my info is hopefully to suggest and advise on angles that may be of interest. There are hybird LLCs, judicial proceedings have taken place all over the country and what is acceptable in one state may not be applicable in another.

But my gut feeling as the question of keeping minutes seems to me to be ill advised allowing your company to be idle, just lay there expecting it to cover what ever you do.

Consider that an LLC is a corporate structure, a corporate entity, as a hybird of more formal corporate entities. A corporation has formal requirements, meetings, elections of officers, audits and other requirements. The LLC were designed initially to provide some of the benefits of the corporate structure without all of the formal requirements. But that does not mean you can prudently avoid all aspects of business management and throw cares to the wind.

You will be expected to treat your LLC as a seperate entity and give it that due respect in a way as a corporation for it to live at its fullest potential. If you ignore it, it will likely ignore you, if you don't treat it with attention, others will not pay much attention to it either, if you follow what I'm saying, in the above post the law firm failed to dot the "i's" and cross the "t's", they failed to set the company in full force and effect and lost the protection it may have provided.

The best way to treat your limited liability corporate entity is as a corporate entity. If you go through the motions and treat your company as a real corporate structure it will be viewed as such should you need it seen in that light, in court!

I'd also disagree with any off the cuff remark by any attorney who would suggest doing less, attorneys often have other motives, like fixing screw ups done by thier clients, it could well be that....oh don't bother with that (thinking, I can fix that later if I need to).....yes, some attorneys are like that.

The easiest way for an attorney to convince a judge that your company is not really a properly run business entity is to show that you didn't act prudently in running the business, you failed to treat it as a corporate entity and ignored it in your dealings and then the question is, if the owner didn't recognize the business entity, why should this court recongize it? This person acted alone as an individual avoiding any relationship to the company! The judge is more likely to agree leaving you flapping in the wind due to inattention and laziness or being uninformed.

So, I suggest you treat your company with some respect, take care of it and it will take care of you, it is a seperate living beast in the corporate world.

While you don't need to touch on every corporate requirement for an LLC, you will be better off if you do the basics, set guidelines to work by, have at least an annual meeting and meetings for any large purchase or sale of real property, keep a record of those meetings and execute all business in the name of the LLC properly.

BTW, as to closing companies and your OA, it is not the business of any closing company to "appove" any operating agreement what they need is to see is that the transaction is an authorized transaction with the person executing documents having the authority to do so, they could care less about your internal compliance! What that affidavit screams to me is that, I'm personally responsible for my acts under my company name! I wouldn't touch that with your ten foot pole! Just me....