If LCs do not enter into enterprise agreements, legal provisions apply. TBOC 101.052 (West 2017). For example, the Texas Business Organizations Code provides that the profits and losses of an LLC are allocated to each member of the company based on the agreed value of the membership`s contributions indicated in the company`s records. TBOC 101.201, 101.203 (West 2017). If there is no agreed value in the company`s records, members are exposed to ambiguities that give rise to litigation. Presenting a Foundation Certificate to the Texas Minister of Foreign Affairs is the first step towards the creation of a limited liability company (LLC). As a general rule, a certificate of establishment contains only the name of THE LLC, the names of the members or officers, the main place of activity and the purpose of the business. An establishment certificate does not contain items such as a description of how the business works, the percentage of ownership of members, or other detailed procedures for events such as the dissolution or failure of members. An enterprise agreement is an important document that describes the main structures and procedures of the company. Many of our clients only come to us after encountering serious internal problems with another LLC member. We often find that these clients have never consulted a lawyer during the LLC training process and that there is no business agreement. These clients are then forced to pay large sums to solve problems that could have been avoided by hiring an experienced business lawyer during the business creation process.
A well-written enterprise agreement helps to avoid costly litigation and ultimately protect members of a limited liability company. Although Texas Law LLC does not require it to have a written enterprise agreement, it is unwise to create an LLC without creating one. An enterprise agreement is a binding contract between members of an LLC that defines each member`s specific rights and obligations, including the allocation of profits and losses, voting rights, contributions, withdrawals, redemptions and dissolutions. Unless otherwise stated in a company agreement, members may not resign or be excluded from other members. TBOC 101.107 (West 2017). All information provided on Silblawfirm.com (the “website”) is intended exclusively for information purposes and is not intended for legal advice. Users of this site should not take action or refrain from taking action based on content or information on this site. Users of this website should contact a licensed Texas lawyer for a full and comprehensive review of their legal issues.