Rights of parties holding interest in a company
I've been part of a small team at a startup (LLC) for about a year and a half now (since inception), working unders a PSA (Professional Services Agreement) that grants me a "membership interest".
There is currently a situation where one of the stake-holding members may be leaving. This affects the state of the company as a whole and impacts my decision to keep working. I asked my CEO about the state of the company finances and split of the shares and was told that "he was not going to discuss this with me because his lawyers advised against it."
Since I am holding membership interests, do I have any legal right to know the equity split and the situation?
Thanks so much!
EDIT: The company is registered in New York.
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It'd be nice to mention which state you are in. – Frenchie 12 years ago
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New York, I believe the LLC is registered here as well. – David Oritz 12 years ago
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You should consult with a NY-based lawyer. The first hour is usually free, but make sure to be clear on that from the onset. – Frenchie 12 years ago
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Will do, thanks! – David Oritz 12 years ago
1 Answer
The equity split, as your rights, are part of the LLC operating agreement which you must have signed, and should be able to review.
Since its not a corporation, you're not a shareholder, and the CEO is not really an officer of the corporation. You're both members (I assume the manager is a member, and not a hired manager here), and the rights and obligations are defined in the operating agreement.
Of course, if the managing member doesn't discuss equity issues with other members because "the lawyer told him so", its about a time to get a legal advice of your own as to how to deal with the situation.
