Maintaining LLC control with less than 50% ownership


3

Hopefully someone can gimme a hand. This is actually a question for a school project, but I've got some ideas kicking in my head for a startup, so I have good cause to know this for personal benefit too!

I'm creating a fictional LLC agreement for my business law course: my "investors" require a 51% share of the LLC. Part of the assignment requires that I "...come up a mechanism to maintain control even when my interest is less than 50%."

I've done some googling and turned up nothing. Maybe I'm looking at the wrong keywords.

Help is appreciated!

LLC Legal Legal Documents

asked Nov 7 '10 at 08:30
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Matt H.
130 points

3 Answers


6

One of the great things about an LLC is that an Operating Agreement can allocate economic interests differently than it allocates voting rights.

Please see "Can an LLC have Members with a Non-ownership Economic Interest? ", which describes a real-life client situation where we created an LLC with five classes of ownership interests.

Disclaimer: This post does not constitute legal advice and does not establish an attorney-client relationship.

answered Nov 8 '10 at 13:30
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Dana Shultz
6,015 points

2

Google "passive investor". A passive investor is someone who invests money in a business (and expects a monetary return for his investment), but is not involved in the day to day management decisions of a business. Basically, they give you money in exchange for equity, without meddling in business decisions.

answered Nov 7 '10 at 09:14
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Zuly Gonzalez
9,194 points

2

The Ford family owns about 2% of the total shares yet maintains control over the Ford motor company. Just a matter of having different share classes.

answered Nov 7 '10 at 09:17
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Nsanders
251 points

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