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Colin R. J. Bonini
Related Products. The revised regulations also make a technical change to the requirement for the bond to be reviewed on an annual basis by eliminating the specified date on which the review must take place.
The minimum amount of the surety bond or irrevocable letter of credit is based on the factors identified in that section. A licensee who obtains a surety bond that is effective for more than one year or an irrevocable letter of credit shall annually review the amount of the surety bond or letter of credit, to ensure that the minimum required amount is maintained.
By posting a Delaware preneed funeral contracts surety bond, principals licensees pledge to faithfully comply with all provisions of Chapter 34, Title 5 of the Delaware code and all regulations adopted thereunder. The principal will reimburse the surety for damages paid out. Although these bonds are continuous in nature, licenses expire annually on December Thus, it is possible to have an LLC with a corporation as the sole Manager just as it is possible to have a limited partnership with a sole corporate general partner.
The name must not be the same as or deceptively similar to that of any domestic or foreign filing entity authorized to transact business in Texas unless the existing entity with the similar name consents in writing. The certificate of formation must include the name of the LLC, the address of its registered office, the name and address of the registered agent for service of process, and any other matters the members determine to include therein.
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Thus an LLC could be organized to be run without Managers, as in the case of a close corporation, or it could be structured so that the day to day operations are run by Managers but Member approval is required for significant actions as in the case of many joint ventures and closely held corporations. Texas law also provides that an act including the execution of an instrument in the name of the LLC for the purpose of apparently carrying on in the usual way the business of the LLC by any of the persons named in TBOC section Lenders and others dealing with an LLC can determine with certainty who has authority to bind the LLC by reference to its certificate of formation, Company Agreement, and resolutions, just as in the case of a corporation.
In routine business transactions where verification of authority is not the norm in transactions involving corporations, the same principles of apparent authority should apply in the LLC context. The fiduciary duties of Managers could also be measured by reference to partnership law or the law of agency. Much like a corporate director who, in theory, represents all of the shareholders of the corporation rather than those who are responsible for his being a director, a Manager should be deemed to have a fiduciary duty to all of the Members.
Whether Members owe a fiduciary duty to the other Members or the LLC will likely be determined by reference to corporate principles in the absence of controlling provisions in the certificate of formation or Company Agreement.
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This Agreement is not intended to, and does not, create or impose any fiduciary or other duty on any Member or Manager. Furthermore, each of the Members, the Managers and the Company hereby, to the fullest extent permitted by Applicable Law [defined to mean the TBOC and other applicable Texas and federal statutes and regulations thereunder], restricts, limits, waives and eliminates any and all duties, including fiduciary duties, that otherwise may be implied by Applicable Law and, in doing so, acknowledges and agrees that the duties and obligations of each Member or Manager to each other and to the Company are only as expressly set forth in this Agreement and that no Member or Manager shall have any liability to the Company or any other Member or Manager for any act or omission except as specifically provided by Applicable Law or in this Agreement or another written agreement to which the Member or Manager is a party.
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The provisions of this Agreement, to the extent that they restrict, limit, waive and eliminate the duties and liabilities of a Member or Manager otherwise existing at law or in equity, are agreed by the Members to replace such other duties and liabilities of such Members or Managers. Rather, the duty arises only when a contract creates or governs a special relationship between the parties.
The elements which make a relationship special are absent in the relationship between an employer and an employee. While there are no reported Texas cases as to whether a contractual duty of good faith and fair dealing exists between Members in an LLC, or between Managers and Members in a Texas LLC, it is likely that the duty of good faith and fair dealing exists in those LLC relationships, just as fiduciary duties likely exist, except in each case to the extent that the duty has been restricted by contract as permitted by the TBOC. The issue could be addressed by structuring the LLC to be managed by Members who would then appoint representatives to act for them on an operating committee which would run the business in the name of the Members.
In such a situation, the Members would likely have fiduciary duties analogous to partners in a general partnership.
The LLC Agreement provided that, without the consent of the holders of two-thirds of the interests not held by the Manager or its affiliates, the Manager would not be entitled to cause the LLC to enter into any transaction with an affiliate that is less favorable to the LLC than that which could be entered into with an unaffiliated third party.
Auriga Capital Corp. Language in an LLC Agreement to the effect that no member or manager shall be liable for any act or omission unless attributable to gross negligence, fraud or willful misconduct provides limited exculpation from monetary liabilities, but having used a bad faith limit on exculpation, has been held to assume rather than eliminate common law fiduciary duties. April 20, A legal claim exists in Delaware for aiding and abetting a breach of fiduciary duty, whether arising under statute, contract, common law or otherwise.
The indemnification provisions should specify who is entitled to be indemnified for what and under what circumstances, which requires both thought and careful drafting. The Company Agreement in Texas, or LLC Agreement in Delaware, ordinarily would contain provisions relative to when and under what circumstances capital contributions are required, capital accounts and the allocation of profits and losses comparable to those in a limited partnership agreement.
A Member who receives a distribution that is not permitted under the preceding sentence has no liability to return the distribution unless the Member knew that the distribution was prohibited. The limitations on distributions by an LLC do not apply to payments for reasonable compensation for past or present services or reasonable payments made in the ordinary course of business under a bona fide retirement or other benefits program.
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Liability to Third Parties. This Article provides except as provided in the regulations, that a member or manager is not liable to third parties, expresses the legislative intent that limited liability be recognized in other jurisdictions and states a member is not a proper party to a proceeding by or against a Limited Liability Company. LLC Stats. These TBOC provisions and related corporate case law mean that in Texas veil piercing should not be applicable except in the case of actual fraud. It does not confer upon the Member any interest in specific LLC property.
A membership interest may be evidenced by a certificate if the Company Agreement so provides.
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The Company Agreement could provide for different classes of Members, each authorized to elect a specified number or percentage of the Managers. An assignment of a membership interest does not of itself dissolve the LLC or entitle the assignee to participate in the management and affairs of the LLC or to become, or to exercise any of the rights of, a Member.
An assignment entitles the assignee to be allocated income, gain, loss, deduction, credit or similar items, and receive distributions, to which the assignor was entitled to the extent those items are assigned and, for any proper purpose, to require reasonable information or account of transactions of the LLC and to make reasonable inspection of the books and records of the LLC.
Until the assignee becomes a Member, the assignor continues to be a Member and to have the power to exercise any rights or powers of a Member, except to the extent those rights or powers are assigned.
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