Utah enacts new LLC law – Effective July 1, 2012
We always recommend new business ventures negotiate and determine the terms of an Operating Agreement at the outset of the venture. However, most clients–out of budgetary concerns–decline. To illustrate, I have a client who did not create an Operating Agreement , he formed his LLC by himself, and then added a partner at 50%. Aside from mistakes in the Articles of Organization, he also verbally agreed with a new third partner for 30% and the second partner reducing to 20%. We were able to, at that time, eventually negotiate the third partner out of the company because there were no documents proving his ownership. He had never signed an Operating Agreement. For a new company formed after July 1, 2012, that same third partner could use the verbal statements to establish his ownership.