In the first part of this series, I mentioned that LLC Bylaws or Operating Agreement (as Bylaws were called in the original version of the Minnesota Limited Liability Company Act) is one of the essential documents and an integral part of LLC formation in Minnesota.
Bylaws may be adopted by the organizers or the first Board of Governors. Remember, though, that the power of the Board in this respect is usually subject to the power of the LLC members to adopt, amend or repeal any Bylaws.
An LLC may adopt Bylaws provisions to establish the management of the LLC, including the regulation of the internal affairs. Bylaws provisions, however, should not be inconsistent with Minnesota law or the Articles of Organization.
The Bylaws typically regulate such matters as: the election and compensation of the governors, Member meetings, Board meetings, notice procedures, voting rights and procedures, election and authority of the managers, removal of the managers, compensation issues, recordkeeping, establishment of the fiscal year, and other management-related issues. A buy-sell agreement may be included in the Bylaws, but this agreement needs to be written in conformity with the rest of the Bylaws.
Thus, the Bylaws cover a broad range of issues and are indispensable to proper management of the business. It is important to remember, however, that, where the LLC is expected to be governed and managed by its members, the members should consider executing a Member Control Agreement. The Member Control Agreement is much broader than the Bylaws and may provide a much greater degree of flexibility necessary in many member-managed LLCs.
Sherayzen Law Office has developed a great degree of concentration and experience in drafting business governance documents. We have consulted start-up and already established clients in Minnesota and throughout the United States with respect to governance documents. We have wide-ranging experience in drafting Bylaws, Member Control Agreements, as well as combination of these two documents known as “Member Control and Operating Agreement”.