Found an issue on this page? Let us know and we will look into it as soon as possible.
2 People Forming LLC
Anonymous3 views3 answers
My friend trademarked a product name which I plan to help him market. If the two of us form an LLC and I have a 49% stake, does that mean ultimately whatever his decision is in every matter is the final law? I.E. How to market, where to allocate money, what content goes on the product website.
For things that are to decide the running of the business, a 49% member has no say if your operating agreement is prepared so that decisions are done based on percentages.
Yes, your friend is pretty much in charge of all the decisions - majority vote controls, and if you have 49% I hope the two of you think alike. A well-written operating agreement can potentially get around some of your concerns, but ultimately, the majority is still in charge.
NOTE: If you find this response helpful, please click on the “thumbs up” button at the bottom.
DISCLAIMER: THE INFORMATION PRESENTED HERE IS GENERAL IN NATURE AND IS NOT INTENDED, NOR SHOULD IT BE CONSTRUED, AS LEGAL ADVICE. THIS POSTING DOES NOT CREATE ANY ATTORNEY-CLIENT RELATIONSHIP BETWEEN US. FOR SPECIFIC ADVICE ABOUT YOUR PARTICULAR SITUATION, CONSULT A QUALIFIED ATTORNEY.
I agree wit my colleagues, adding the following:
First, an LLC operating agreement usually requires a super-majority (substantially greater than 50%) vote on important issues, such as sale of the company or all of its assets. This is one level of protection for you.
Second, it is possible (though your friend may not agree) to have both of you act as managers under the OA. Given the closeness of your ownership percentages, I think it is reasonable for you to request this. Of course, with an even number of managers, the OA would need a mechanism to resolve deadlocks (please see the post at the link below).
You should consider having a lawyer prepare or review your OA to ensure that your interests are protected to the greatest extent possible.
Disclaimer: This post does not constitute legal advice and does not establish an attorney-client relationship.
