How to represent minority owners in a LLC?
How to represent minority owners in a LLC?
Meanwhile, prudent practice when representing a minority shareholder or minority owner in an LLC is to negotiate for agreements protecting the minority from a forced buy-out including discount (s). Obviously, a buy/sell agreement with either a fixed price or an appropriate valuation formula would be a first objective.
What are the rights of minority shareholders in Illinois?
In Illinois, majority shareholders in a closely held corporation owe a fiduciary duty to minority shareholders. Majority shareholders are required to deal fairly with minority shareholders and not oppress their rights.
Can a minority owner be included in an operating agreement?
The LLC act permits any number of such protections to be included in the Operating Agreement. The only things you can’t do in the operating agreement are listed in section 805 ILCS 180/15-5 (b). If you represent a minority owner, you and your client cannot afford to rely on the statute for protection.
Where are minority shareholders rights found in BCA?
In the BCA, we find this term in the context of dissenter’s rights (805 ILCS 5/11.60-70) and in the minority shareholders’ rights section (805 ILCS 5/12.56). In the LLC act, the term occurs in the provision giving members the right to dissociate and receive payment for their interest in the company (805 ILCS 180/35-60).
Meanwhile, prudent practice when representing a minority shareholder or minority owner in an LLC is to negotiate for agreements protecting the minority from a forced buy-out including discount (s). Obviously, a buy/sell agreement with either a fixed price or an appropriate valuation formula would be a first objective.
In Illinois, majority shareholders in a closely held corporation owe a fiduciary duty to minority shareholders. Majority shareholders are required to deal fairly with minority shareholders and not oppress their rights.
In the BCA, we find this term in the context of dissenter’s rights (805 ILCS 5/11.60-70) and in the minority shareholders’ rights section (805 ILCS 5/12.56). In the LLC act, the term occurs in the provision giving members the right to dissociate and receive payment for their interest in the company (805 ILCS 180/35-60).
The LLC act permits any number of such protections to be included in the Operating Agreement. The only things you can’t do in the operating agreement are listed in section 805 ILCS 180/15-5 (b). If you represent a minority owner, you and your client cannot afford to rely on the statute for protection.