business entity used today in Florida, the document that alleviates problems caused by the death or incapacity of the company’s owner is an operating agreement. Even if the LLC has only one member or owner, the operating agreement can act like a Will for the business. My article titled Do I need an operating agreement for my Florida LLC on LLC operating agreements is a quick read and contains helpful information about those.
For a corporation, the bylaws and shareholder agreement should contain continuity provisions specifying who will take over in the event of the demise of the owner. In Florida, the LLC has eclipsed the Inc. as the preferred business entity because only one governing document is needed as opposed to two. Also, the protections are the same but the management and documentation requirements are less for the LLC. My article entitled Which is better the Inc. or the LLC discusses the differences between these two types of entities in more detail. What can I do to prepare for a transition In addition to having properly drafted governing documents like an operating agreement prepared by your corporate lawyer, a prudent measure is to develop e https://remontibudowa.com/
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https://przewodnikmodowy.pl/a transition plan. The operating agreement will say who takes over, but the internal transition plan will tell that person what actually do. This transition plan is similar to what you would prepare for any disaster response. But this transition plan must be balanced against the needs of the business to protect its proprietary information.
To put it in other terms, the operating agreement is like telling everyone concerned that person X gets everything in your safe. The transition plan would tell person X how to open the safe. What is a business transition plan and what should be in it A business normally has clients, vendors, and may have employees or independent contractors. The client and vendor information may be confidential or even a trade secret. The business may have other trade secret information, trademarks, and a virtual presence like social media and e-commerce accounts. The owner may not regularly share all of that information with employees and contractors or the employees and contractors may be subject to confidentiality, non-compete, and/or non-solicitation agreements. Therefore the business owner can prepare that information but need not share it with anyone until a triggering event occurs.
As long as the person tasked to take over the business or another trusted person other than the business owner knows of the existence of the document, whether paper or digital, or its location is defined in the operating agreement or other writing, then when the triggering event occurs the document can be easily retrieved. Ideally it would contain information about the operations of the business and how to contact important parties like vendors and clients.
The transition plan should also include passwords and log-in information for all of the businesses online accounts or the location of those so the party tasked with taking over the business to run it or wind it up can more easily do so. Whether to continue to operate the business, to sell it, or to wind it up would be up to the person into whose hands the business owner placed the business in the operating agreement. Depending on the circumstances that decision could be made by that person alone or together with others. How does this transition plan apply to single member LLCs and multi-member LLCs If the LLC has multiple members, then the operating agreement will normally contain a provision for the disposition of the deceased member’s shares. For example in those cases the shares may automatically revert to the company upon a member’s death imposing a purchase obligation on the business to pay the member’s named beneficiary under an agreed formula over a specified
