Drafting LLC Operating Agreements and Corporate Shareholders’ Agreements

1:00 p.m. – 1:05 p.m.

Welcome and Introduction

1:05 p.m. – 2:30 p.m.

Drafting LLC Operating Agreements and Corporate Shareholders' Agreements

When setting up a corporation or limited liability company (LLC), you will be called upon to draft an agreement among the founders describing how the company will be governed. For corporations, this is called a stockholders' or shareholders' agreement. For LLCs, this is called an operating agreement. The agreement will cover a range of topics such as: how the company will be managed; the rights and duties of present and future owners of the company; who has the right to vote on matters affecting the company's business; who is entitled to distributions and/or allocations of the company's profits and losses; and what happens when an owner dies, becomes disabled or is no longer able or willing to participate in the company's business. While there are many published templates for these agreements, each client is unique and the agreement will need to be custom-tailored to each client's particular needs. In this fast-paced, entertaining program, you will learn the secrets of drafting successful operating and shareholders' agreements from someone who has been drafting them for almost a half-century, including:

• Why "small businesses" and "startup enterprises" require different forms of operating or shareholders' agreement.

• How a corporation's shareholders' agreement interfaces with the corporation's bylaws.

• Voting, management, and capital structure provisions.

• The special provisions that are required in an S corporation's shareholders' agreement.

• The special provisions that are required in a "corporate mimic" LLC operating agreement for a startup enterprise.

• "Buy-sell" (restrictions on share transfer) and valuation provisions in an operating or shareholders' agreement.

• The pros and cons of so-called "Golden Rule" (or "Russian Roulette") buyout provisions.

• Provisions that protect minority owners of a corporation or LLC (or permit the majority owners to expel them); and

• Ethical considerations in drafting LLC operating agreements and corporate shareholders' agreements.

Speaker: 

Clifford R. Ennico, Esq., Law Offices of Clifford R. Ennico, Fairfield, CT

(1.5 Credits in Areas of Professional Practice)