Q: Can a LLC (Maryland) without op. agr. deprive a majority member of distributions indefinitely while profits are made?
I am a 5% minority member of a 7 year old, successful LLC. 3 members are activ in the business, receiving saleries, benefits and perks. I am abroad. No operation agreement is in place. The managing majority member decides to make only distributions just high enough to cover the income tax. All this works fine for the other 3 members. The managing member explains he is bound by Maryland law that he could not make full distributions of the profits my 5% ownership is earning otherwise he would be forced to make full dustributions to all members who rather keep their earning within the LLC as they receive more then enough from the LLC already in form of saleries, benefits and terms. He tells me only in the case of my death, they would buy my 5% and pay the proceeds to my estate in 60 monthly installments. In reality that would mean I woild never see a penny of the profits during my lifetime. The LLC is asking me to sign a draft of an op.agr. which im a currently postponing.
A: I do not understand why you have asked about an LLC from MD in Florida. This is quite the opposit of an easy question to answer, indeed, it would require a bit of research. Go see a business law attorney about this for a full discussion.
A: And I also wonder how one can, under Maryland law, form a LLC without an operating agreement.
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