Partnering up on a business venture? There are quite a few matters you should be sure about before you ink the deal. One of those is how voting is covered. Is it one man, one vote? Is it in accordance with percentage of membership interest? Do you have a majority?
This is HIGHLY relevant as it relates to decision making in the business in many aspects, especially if you ever want to make changes to your governing document. Let’s say you all agreed to a section in the original agreement that no longer serves your best interests (think retirement, incapacity, management, proxy voting, dealing with deadlocks); how easy will it be to get the support from your partner(s) to make the change?
This is absolutely something you need to have settled going in! Fight for your voting rights! Many people sign operating agreements/ partnership agreements in haste. As soon as they confirm how much “equity” they have, they sign away and don’t think much about the details. But we assure you- the devil is in them. We have seen some situations end in quite a nasty dispute, involving mediators, receivers and in some cases, a dissolution of the business!
Don’t let this happen to you. Have your governing document reviewed BEFORE signing to ensure your interests are protected! Contact C&G today!!
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