If you are a part owner in an LLC, should your LLC to have regular member meetings? While corporations are required to have meetings of their shareholders at least annually, typically there’s no such legal requirement in the Uniform LLC Act upon which many State LLC laws are based. But that observation does not end the discussion.
An LLC is often managed by its members, which means that every decision about the operation of the company’s business must be made by the members themselves. But there is typically no legal requirement to have in-person meetings. According to law, your decisions may be made by phone calls and email exchanges. Your operating agreement may impose other restrictions, but of course your operating agreement is merely an agreement among the owners, so those restrictions may be changed if you and your partners agree.
So the question is, should you bother to have any in-person meetings among the owners?
The answer goes beyond the law and looks to best business practices. In a different post in the blog, we discussed the value of Strategic Law, that is using the law to help you strategize about your business opportunities. You’ve heard many times that you need to spend time working on your business not only in your business. Well, it is good to have regularly scheduled and formal meetings among partners in a company exactly so that you spend some time strategizing together, that is, working on your business.
At a formal meeting you should discuss formalities. Examples include more complicated topics that you would not necessarily feel comfortable bringing up at any other time, and other items that keep getting pushed off because of daily work pressures. These include:
- Should the operating agreement be amended to make it reflect actual or desired governance practices?
- Should the business plan be revised?
- Should there be new corporate goals?
- Is the company operating legally, or have any laws changed that warrant new actions?
- Are the financial reports in a form and detail that is sufficient?
- Has the competitive landscape changed?
Bring advisors to your meetings. Your key advisors include your accountant and lawyer, maybe a consultant and a banker. They might attend separately to different parts of the meeting or all together to get them to bounce ideas off of each other. Consider having one of your advisors actually conduct the meeting.
How often should you have such meetings with your partners? We recommend at least twice per year. Once you really start focusing on your strategic business thinking you will see opportunities more readily, and your business will grow faster.
To a great extent, function follows form, meaning that if you build in a requirement to have regular formal meetings, you will be forced to adhere to the schedule and you will accomplish more at the meeting—and as a result you will see greater success in your business!
Entrepreneurs are going to save the world, and Argent Place Law wants to help. That’s why we are a team of entrepreneur-lawyers serving Entrepreneurs just like you. Think how great it will be to have a legal team with entrepreneurial experience to call on when you meet with your partners to take advantage your strategic business opportunities. Call Argent Place Law to find out: 703-539-2518.