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Ask a Lawyer -- LLCs
LLC Question 157
Question:
I and my friend became 50/50 partners and started LLC in 2005. Now we agree to make it 90/10 partners; as he is not actively participating. What are the different ways it can be done?
Response: When you say "50/50 partners in the LLC", I generally take that to mean 50/50 ownership interest for voting purposes, 50/50 split of profits and 50/50 split of losses. These three separate types of member interest in the LLC are generally all held in an equal percentage but it possible to vary them. In any event, the normal method of altering ownership percentages among LLC members is through amendment of the LLC operating agreement. I've previous written about amending an LLC operating agreement here. What if the LLC has never had a written LLC operating agreement? Even easier, just draft a new LLC operating agreement with the new percentages.
My only caveat would be if the ownership percentages for the LLC members were written into the articles of organization filed with the state. This would be highly unusual. In such a case, amendment of the articles would be necessary.
Submitted: 12/21/2007; VENKATA, TX
Response: 12/28/2007; JJR
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