My question involves business law in the state of: DE
This is in regards to a 5 person LLC. Person A owns 60% interest the others each are 10%. Can all of us sign and agree in the operating agreement that person A has complete control and full discretion over all of the profit distributions?
We are creating an operating agreement and we want zero ambiguity(no chance for a money-type lawsuit) and I think we are going to put this into the agreement where person A has full discretion then each 3rd year it is up for a vote where each person has equal vote, then another 3 years of discretion is allowed. This gives Person A the ability to use the capital to grow the business, but provides for a check and balance. We are also having each person initial each line of the operating agreement so they know what they are getting into. We also included extensive examples in the operating agreement detailing how every situation could go down in real life.
Any suggestions on this and/or how others do this cashflow control yet have checks and balances too?
This is in regards to a 5 person LLC. Person A owns 60% interest the others each are 10%. Can all of us sign and agree in the operating agreement that person A has complete control and full discretion over all of the profit distributions?
We are creating an operating agreement and we want zero ambiguity(no chance for a money-type lawsuit) and I think we are going to put this into the agreement where person A has full discretion then each 3rd year it is up for a vote where each person has equal vote, then another 3 years of discretion is allowed. This gives Person A the ability to use the capital to grow the business, but provides for a check and balance. We are also having each person initial each line of the operating agreement so they know what they are getting into. We also included extensive examples in the operating agreement detailing how every situation could go down in real life.
Any suggestions on this and/or how others do this cashflow control yet have checks and balances too?
Business Finance: Control of Profit Distributions for a LLC
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