Asked by Islam Soliman on May 05, 2024
Verified
The operating agreement of a limited liability company cannot provide for the calculation of a buyout price on a member's dissociation because the event has not yet occurred.
Operating Agreement
A contract among the members of a Limited Liability Company (LLC) that outlines the business's financial and functional decisions including provisions for its governance and operation.
Buyout Price
The predetermined amount of money required to purchase all or a specified percentage of ownership in a company or asset.
Dissociation
The process by which a member's involvement in an entity or partnership is terminated, often involving the alteration of the entity's legal and financial relationships.
- Recognize the legal consequences associated with the use of operating agreements in Limited Liability Companies.
Verified Answer
KW
Kendyl WilliamsMay 08, 2024
Final Answer :
False
Explanation :
An operating agreement of a limited liability company can indeed provide for the calculation of a buyout price on a member's dissociation, including specifying the method for determining the value of the member's interest in advance of any such event occurring. This is a common practice to ensure clarity and fairness in the event of a member's departure.
Learning Objectives
- Recognize the legal consequences associated with the use of operating agreements in Limited Liability Companies.