Legal Question in Business Law in Texas
Two CEO's
My prospective business partner and I are trying to formulate as much of our operating agreement as possible before seeking an attorney to finalize the agreement. Is it possible there be two 50/50 members/ owners/operators of an LLC, but one is the President, and the other Vice President, and both still agree to split the profits generated (even though one has more power than the other)? Being there is no such thing as a company with two CEO's.
2 Answers from Attorneys
Re: Two CEO's
Yes, you have a great deal of flexibility with LLCs. You can agree to divide control and profits, and create officer positions with few restrictions.
I advise most clients to carefully consider buy-sell issues before moving forward, however, as they can become very meaningful with the passage of time. For example, if either of you is married and/or has children (or if one of you simply decides to sell his interest to a third party), you may want to include a "buyback" right in the LLC Company Agreement (or in a separate "Buy-Sell Agreement) in favor of the other owner or the LLC itself. Otherwise, the remaining member risks winding up with a partner he didn't anticipate, should one of you pass away or elect to sell.
Re: Two CEO's
Based on what you have written, there is a wide variety of items that two parties may agree on when developing a business realtionship. I generally advise that the business/individuals ensure that the agreement contain all the paragraphs and terms required to protect the entity/individuals currently and into the future. If my local law firm can assist you with this legal issue or any other legal matter, please conatact my legal assistant Jennifer ([email protected]) to arrange for an initial consultation.
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