Many LLC’s title their managers as CEO, president or vice president. Under the strict terms of the Indiana LLC statute, LLCs are operated by their managers. But in the real world, when dealing with the public or other organizations, the title of president or vice president has more real world meaning. The layman (and let’s face it, a heck of a lot of non-business lawyers) would think of a president or CEO as someone with more “juice” than a manager.
Heck, convenience stores have managers, but they are often just a cashier that got promoted to an exempt salaried position and paid less per hour than he had earned as a non-exempt cash register cowboy. But the Author digresses…
The proposed law would create Ind. Code 23-18-4-4(3). It authorizes officers for LLCs managed by managers or members and sets up a framework for the rights, powers and duties of these officers. Ind. Code 23-19-3-2.5 is added to allow the written operating agreement for an LLC to provide for officers.
“POOR MAN’S” BUY-SELL AGREEMENT
A new section is proposed for Ind. Code 23-18-6. Proposed section 2.5 allows that ANY single member’s interest in an LLC may be designated as “Transfer on Death (TOD).” One or more beneficiaries can be designated. Also, the member interest can be held as joint tenants with rights of survivorship between two individuals.
This proposed section 2.5 has a couple of very important caveats, however. The written operating agreement must provide for such transfers or not prohibit them. Also, any transfers in section 2.5 are subject to other transfer restrictions, redemption options or other provisions.
Of course, business practitioners know that successful businesses need transition planning in the form of a “buy-sell,” stock or membership transfer agreement, or some other form of transition planning.
Many businesses owners wish to transfer their businesses to their children, other family members or key employees. And often, business owners wish to keep certain people out of the transitioning business. High on this list are the spouses and “disruptive” children of current “partners.”
If your business requires some transition planning, please contact the Author to discuss some solutions. Or if your current transition plan just needs a revision or a tune-up, the Author is also available to help.