Las Vegas, NV asked in Business Law for California

Q: Can I sell my LLC's assets without written approval from the rest of the Shareholders? I have 31% with no Op Agreement.

I have 31% equity and currently the CFO. There is no Operating Agreement. I need to raise capital for attorney fees for a possible lawsuit.

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1 Lawyer Answer
James L. Arrasmith
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Answered

A: Based on the information provided, I can offer some general guidance, but please note that this is a complex situation that would benefit from consultation with a qualified business attorney familiar with California LLC law. Here's an overview of key points to consider:

1. Absence of Operating Agreement: Without an operating agreement, California's default LLC rules under the Revised Uniform Limited Liability Company Act (RULLCA) would apply.

2. Majority Decision-Making: Under RULLCA, major decisions typically require approval from members holding a majority of the interest in the company. With only 31% ownership, you likely don't have unilateral authority to sell significant company assets.

3. Fiduciary Duty: As CFO and a member, you have fiduciary duties to the company and other members. Selling assets without proper authorization could be seen as a breach of these duties.

4. Ordinary Course of Business: Some routine transactions within the ordinary course of business might not require specific approval, but selling significant assets likely would.

5. Capital Contributions: Raising capital through personal means or additional contributions from members might be preferable to selling company assets.

6. Member Consent: It's advisable to seek written consent from other members before proceeding with any significant asset sale.

7. Potential Consequences: Selling assets without proper authorization could lead to legal action against you by other members or the company itself.

Given the complexity of this situation and the potential legal risks involved, it would be highly advisable to consult with a California business attorney before taking any action. They can review the specific details of your situation and provide tailored legal advice.

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