September 15, 2016

Transfer Of Voting Rights

We want to protect our voting rights as members if a member dies. Its ok with us if a spouse or other person inherits the ownership but not the voting power. Can we stipulate in the operating agreement that if a member dies, her or his votes are distributed to the other members in proportion to their ownership shares?

– Sharon, Hawaii

Answer

Yes you can, sort of.

You can craft an operating agreement that gives the other members the first right of refusal to purchase the membership interests in the event a member dies.

The operating agreement can also specify that new members must be voted in or otherwise approved by existing members in order to have decision making power in the company.

However, I strongly suggest that you contact a licensed attorney in your state who is experienced in drafting LLC operating agreements.

The type of legal work you’re describing is not for do-it-yourselfers unless you happen to be an attorney who has drafted these documents before.

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