Operating Agreements & Bylaws
An operating agreement is an agreement by all members of a limited liability company that sets forth the rights, duties, and expectations of the members of the company. It important to agree upon these matters before a dispute arises. Typical provisions includes what duties will be performed by each member, what compensation and distributions will be made to the members, restrictions on the sale of membership interest in the company, what happens to a member’s interest upon incapacity or death. A carefully drafted operating agreement will address the issues that may foreseeable arise, and save you money and time if a dispute ever arises.
Bylaws perform the same purpose as a operating agreement, but apply to corporations. Because corporations are required hold annual shareholder meetings where the directors and officers of the company are elected, it is important to adopt bylaws that govern the calling and conduct of meetings, shareholder voting rights, and shareholder dividends.