Limited liability company

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Related to Operating agreement: Joint operating agreement

Limited liability company (LLC)

A company that has characteristics of both a corporation and partnership. Like a corporation, it offers owners limited liability and like a partnership, taxation is at individual owner level rather than at corporate level.
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Limited Liability Company

In the United States, a company with limited liability amongst its owners, that is, one in which a partner is not liable for more than his/her/its investment in case of insolvency. In other words, a co-owner of a limited company would lose the value of his/her investment if the company declares bankruptcy, but would not be held liable for other outstanding debts. A limited liability company is one of the most common corporate structures in the United States. It is designated by the letters "LLC" after its name.

A limited liability company is taxed as if it were a partnership, but has the ability to raise capital by acquiring new partners as if it were a corporation. However, because a limited liability company is not publicly-traded, it may have more difficulty raising capital than corporations. A limited liability company is designed to give at least some employees a share in the company's equity, while protecting them from potential losses. See also: Limited company.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved

Limited liability company.

Organizing a business enterprise as a limited liability company (LLC) under the laws of the state where it operates protects its owners or shareholders from personal responsibility for company debts that exceed the amount those owners or shareholders have invested.

In addition, an LLC's taxable income is divided proportionally among the owners, who pay tax on their share of the income at their individual rates. The LLC itself owes no income tax.

The limited liability protection is similar to what limited partners in a partnership or investors in a traditional, or C, corporation enjoy.

The tax treatment is similar to that of a partnership or S corporation, another form of organization that's available for businesses with fewer than 75 employees. However, only some states allow businesses to use LLC incorporation.

Dictionary of Financial Terms. Copyright © 2008 Lightbulb Press, Inc. All Rights Reserved.

limited liability company

A cross between a corporation and a partnership, the limited liability company must be created by documents filed in the same place as corporations.This type of organization enjoys much of the informality of a partnership, the tax benefits of a partnership with all income taxed at the shareholder level but not at the company level (see double taxation), and the limited liability granted to corporate shareholders, who cannot be held personally liable for a corporate debt or transgressions. Be aware, however, that members of a limited liability company may well be safe from contractual claims against the company, but most claims for negligence or wrongdoing will include some theory of personal liability against the members also.

Example: A claim against a limited liability company may be for its negligence in allowing mud and water to remain on the floor, leading to a customer slipping and falling and sustaining back injuries. The plaintiff in such a case may claim the individual members were also personal- ly liable for their failure to develop policies and procedures to keep the floors clean or because they were also the employees and had personal responsibility to mop the floors.

The Complete Real Estate Encyclopedia by Denise L. Evans, JD & O. William Evans, JD. Copyright © 2007 by The McGraw-Hill Companies, Inc.
References in periodicals archive ?
Continuation of SLHS Relationship: WMH's investment grade rating takes into account that SLHS's guaranty of debt service does not extend to bond maturity, but it does assume an ongoing relationship with SLHS and likely continuation of an operating agreement beyond the current 2023 term.
All LLC statutes permit an LLC to dissolve on an expiration date specified in the articles or operating agreement. This date should be far enough in the future to permit the LLC to accomplish its goals.
operating agreement are interpreted as a reasonable person would.
Like the old act, the revised act is a "default statute" in that it provides default rules that must be followed when there is no operating agreement; the operating agreement does not address a particular issue; or the operating agreement purports to modify or waive certain statutory rights and provisions that cannot be modified or waived under the revised act.
In a further escalation of the dispute, Kuwaiti daily Al-Rai had published a leaked letter from the then Oil Minister Ali Al-Omair to his Saudi counterpart Ali Naimi, in which he called on Riyadh to resume joint production from the Khafji field as 'continuing with production and export halts will incur the State of Kuwait heavy losses, which the Saudi government will bear for violating Article VI of the partition agreement, as well as operating agreement for the year 2010.'
To Change that default rule, the operating agreement must specifically stipulate voting by share of ownership.
No state requires the LLC to file its operating agreement with the state, and almost no states even require an LLC to have an operating agreement in the first place.
The operating agreement was entered into in December 2010 as part of the bank's approval to operate as a de novo bank.
It was only one of three newspaper joint operating agreement problems in recent days.
The suit argues that a joint operating agreement that was renegotiated by Kearns-Tribune, its owner, Digital First Media and New York-based Alden Global Capital LLC and the Deseret News in October 2013 leaves the Tribune "in imminent danger of ceasing publication." The lawsuit argues that the latest renegotiated agreement, which makes the Deseret News the dominant partner, is an attempt by the newspaper to create a monopoly in which it is the "sole daily newspaper in the Salt Lake Valley."
The operating agreement should provide comprehensive rules governing arbitration among the members --for example, rules as to the degree of discretion of the arbitrator in deciding what evidence to admit and what to address in writing arbitration orders.
When deciding to begin the process of a merger, acquisition, or joint operating agreement, it's crucial to spend time nailing down the strategic intent--What are the organization's expectations?