What Should Go Into a Florida Business Operating Agreement? Part 4
Florida business litigation attorney L. Reed Bloodworth, the managing partner of Bloodworth Law, discusses what should go into a Florida business operating agreement? Part 4 in the series: Conflicts of Interest.
Conflicts of Interest
Reed said that whenever he prepares an operating agreement, he has entire sections dedicated to conflicts of interest. And where you don’t want one partner or LLC member doing something that is beneficial for them individually, but detrimental to the entity.
In a partnership agreement, Reed designates everyone who has certain rights, who has certain powers, or the obligations held, and then how to transfer interests.
Who’s Going to Manage the Company?
For example, who’s going to manage the company? For an LLC, there is manager-managed, or you can appoint a manager, and it doesn’t necessarily have to be a member.
Then there is, member-managed, where the actual members can manage. They can all vote on it, or you could appoint managing members or a member. There are different ways that you can manage an LLC. And then what are the authorities and powers of those managing people?
What Limitations Will Be Placed On Which Members?
What limitations do you want to put on various members? Do you actually set out the authority for the different members?
Name who’s going to be the officers, what’s the compensation, what type of indemnification do the members or managing member get in the event of a lawsuit, or some type of liability arising.
And then similar aspects for just the normal members, you can put into your agreement a limitation of liability for the members.
What Are the Rights and Powers of the Members?
This gets into the rights and powers of the members. So you can say, “This is the power of the company, this is the limitation on the liability of these members. When and where should the members meet? That typically involves a notice, and where and how it’s going to take place.
So if one of the members does something like they’ve run off with a trade secret, or they violate their non-compete agreement. They leave and try to just start up their own company doing the same thing, you will want to have the ability to go shut that down, putting injunctive relief as the ability of the company into your operating agreement.
How Do You Keep Confidential Information Confidential?
What type of agreement do you have to keep your confidential information confidential? Do you want non-compete, non-solicitation clauses in the operating agreement? How do you protect your legitimate business interest? This is something that a company has that is valuable, may not be known necessarily, and can go part and parcel with non-compete, non-solicitation clauses.
Non-Competes and Non-Solicitation
Again, if you are going to include non-compete, non-solicitation clauses, you probably want to put the ability in there to seek injunctive release.
Be sure to watch the other parts in this series on what should go into a Florida Business Operating Agreement as explained by Florida business litigation attorney L. Reed Bloodworth.