Forming an LLC in New Hampshire can provide a number of legal benefits.
Freedom of Contract
The Georgia LLC Act states that it should be interpreted “to give maximum effect to the principle of freedom of contract and to the enforceability of operating agreements.” The Act gives LLC members contractual freedom to customize their capital contributions and their shares of profits and losses.
An LLC’s members can specify a method for allocating profits and losses in an LLC agreement that is greater or lesser than their portion of capital contributions. This gives members contractual flexibility to tailor their income and risks of loss to further their big-picture asset management plans.
Privacy for Members
The Georgia LLC Act does not require LLC members to be listed with the Georgia Secretary of State. A “person” may organize an LLC, and the person does not need to be a member of the LLC. An LLC’s members may therefore have an entity or person who is not a member file the LLC’s Articles of Organization with the Secretary of State.
Perpetual Duration
The LLC Act provides for an LLC’s unlimited life. For example, § 14-11-506 provides that even if the last member of an LLC “dies or a court of competent jurisdiction adjudges him or her to be incompetent to manage his or her person or his or her property,” the member’s legal representative may become a member of the LLC. An LLC’s existence can therefore outlive its members’ lifetimes.
Benefits for Business Partners
The Georgia LLC Act gives members contractual freedom to customize the duties each party to an LLC’s operating agreement owes to the other parties. The Act provides a threshold set of fiduciary duties for a member or manager to act “in a manner he or she believes in good faith to be in the best interests of the limited liability company and with the care an ordinarily prudent person in a like position would exercise under similar circumstances.” If a member’s or manager’s conduct satisfies this standard, he or she is not otherwise liable to the LLC or its members.
Moreover, the Act allows an LLC agreement to provide “dissenter’s rights” to a class or group of members in connection with major transactions or events. These transactions or events include amendments to an LLC agreement, merger with another entity, conversion of an LLC to another kind of entity, and sale of all or substantially all of the LLC’s assets.
But the Act then provides that the threshold fiduciary duties, and any other duties a member or manager may have relating to an LLC, its members, or its managers may be “expanded, restricted, or eliminated by provisions in the articles of organization or a written operating agreement.” The only exceptions are that no provision may eliminate liability for “intentional misconduct or a knowing violation of law” or “any transaction for which the person received a personal benefit in violation or breach of any provision of a written operating agreement.”
The Act even allows members to determine whether, and under what conditions, to allow contracts and transactions between an LLC and one or more of its managers or members or an entity in which they own an interest. These provisions give members certainty in business planning and the ability to take advantage of mutually beneficial opportunities.
Protections Against Unwanted Parties
The Georgia LLC Act protects membership interests from members’ creditors. An LLC agreement may provide that a membership interest cannot be assigned. Even if a membership interest is assigned, the assignee cannot participate in the management of the LLC, become a member, or exercise any non-economic interests of the assignor.
The assignee may become a member only by a majority vote of the non-assigning members. In addition, the Act provides that unless an LLC agreement specifies otherwise, a member becomes dissociated if he or she makes an assignment for the benefit of creditors, becomes a debtor in bankruptcy, or fails to contest the appointment of a receiver or trustee over all or a substantial part of the member’s property.
Creditors Only Get Passive Rights, Not Control Rights
If a creditor obtains a charging order against a member’s membership interest, “the judgment creditor has only the rights of an assignee of the limited liability company interest”. That means the “judgment creditor shall have no right under this chapter or any other state law to interfere with the management or force dissolution of a limited liability company or to seek an order of the court requiring a foreclosure sale of the limited liability company interest.” This enables members to protect their control of an LLC.
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