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Corporations and limited liabilty companies

Why should I use you to form a new llc or corporation?  

We are not a corporate service company although we provide entity formation services.  We are not a legal forms company although we make some legal forms available online.  We are a law firm.  We provide legal advice to our clients under an engagement letter which outlines the services we will provide.  We are not simply providing our clients with forms, but we are providing our clients with the proper formation documentation for their new enterprise and proper advice as to how to operate it.

We provide legal advice to our clients on how to operate their new business after it is formed.  We are more than a service company or a forms company.  After your business is formed, we're still here to help.

The Secretary of State doesn't have a form of operating agreement. Do I really need one?

Many laymen believe that single member limited liability companies (llc) don't need an operating agreement since the member is effectively the company.  Many people who form their own llc don't prepare one.  The Georgia code does not require a written operating agreement.  However the code requires that the members be identified in either the Articles or Organization or a "written" operating agreement.  The online form provided by the Georgia Secretary of State does not include a provision for identifying the members and their ownership interests.  Indeed, most organizers would prefer that the identity of members not be disclosed on a public record.  Where members are not identified in the Articles of Organization and there is no written operating agreement, there are no members of the company. 

One court has held that failure to name members in either the Articles of Organization or a written operating agreement signed by the members leaves the llc without any members, and therefor unable to transact business:

"... Thus, any operating agreement as to Dixie was oral, rather than written. The parties do not dispute that no members were listed in Dixie's Articles of Organization or that the LLC had no formal records which might indicate admission of members. Under these facts, Dixie had no members as contemplated in Section 505 of the Act." Zeising  v. Shelton (CA No 12-2614; W.D. La., 2014).

At the very least every company should have an operating agreement setting out the members and their percentage interest in the company.  Failure to add more detailed provisions simply defaults to those of the Georgia act, but for the entity to transact business there must be a written record of the members. 

Further, the operating agreement details the names of the persons that can act for the entity.  Failure to create a written operating agreement would prevent third parties, such as banks, from being able to determine who has the requisite authority to bind the company.  Sooner or later, a written operating agreement is going to be required for any company that is trying to do business.  This should be done at the time the entity is formed.

The Sturgeon Law Firm

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