Page 14

business law 14

Important

3 N

Changesfor North Carolina

LLCs

orth Carolina recently overhauled its Limited Liability Company (LLC) Act, repealing the previous Act at N.C. Gen. Stat. §§ 57C in its entirety and replacing it with a revised Act at N.C. Gen. Stat. §§ 57D effective January 1, 2014. Importantly, the revised Act is applicable retroactively, meaning it applies to all active LLCs, even if formed prior to January 1, 2014. This article will address the most significant changes and how these changes affect current and future LLCs. For existing and future LLCs, the LLC’s operating agreement will control, so long as it does not conflict with the items outlined at the end of this article. However, if the LLC does not have an operating agreement, all of the provisions of the revised Act will apply, regardless of when the LLC was formed. I f you are a single -member or otherwise small LLC, you may be wondering if you need an operating agreement. An operating agreement provides many advantages. It allows the member(s) to retain control of the functions of the LLC. It outlines the LLC’s operations and can be helpful in

Connect And Grow With Women In Our Community

By Karen Boardman

the event in conflict among members. Perhaps most importantly, an operating agreement increases the division between the LLC members personally and the LLC as an entity, limiting the members’ liability in the event of claims against the LLC. In order to take advantage of the limited liability afforded to members of an LLC, the members must prove a separation exists between the members and the LLC – that the LLC is not merely serving as a “shell”. The fewer members in an LLC, the more crucial establishing this division becomes. For example, if Jane Smith is operating Jane Smith Photography, LLC, but has not taken the appropriate steps to separate herself personally from the business, a claimant may be able to prove that the LLC is really just a “shell” for Jane, giving that claimant access to Jane’s personal assets rather than just the LLC’s assets. Doing so would negate the biggest advantage to operating an LLC: the limited liability it affords to its members. As for the significant changes, the revised Act distinguishes between economic interest rights (the right to take part in the LLC’s profits and losses)

Women with Know How March 2014 Issue  

We publish a monthly E-Magazine and online resource guide exclusively for women, that is organized by industry type. Our monthly E-Magazine...

Women with Know How March 2014 Issue  

We publish a monthly E-Magazine and online resource guide exclusively for women, that is organized by industry type. Our monthly E-Magazine...

Advertisement