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Old 16th April 2010, 12:21 AM   #1
DerekR
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Default Can You Help Me With A LLC Partnership Issue?

I am starting a partnership with a old friend on a new business. I get a feeling thought that he wants full say in everything and can boot me out if he wants to in the future. We agreed upon a 50/50 partnership where we each have equal say with what we do with our money in the business. Now he is changing it around to try to give me 49% and him 51% but i think that's so in court and in the business he will have the winning vote over what happens. I am very new to LLC's and I was wondering what i should do to keep me with equal say in the business and make sure that i cant be screwed over in the future.

Thank you
Derek

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Old 16th April 2010, 07:05 AM   #2
DerekR
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I have done some research and am potentially fine with the 49/51 agreement but i want to be sure that if they get greedy down the road they cant vote me out of the business. How can i protect myself against that?

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Old 20th April 2010, 01:39 PM   #3
Innergetic
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You got an update on how you got your split llc to work out? My partner and I are gonna have to cross that bridge real soon...

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Old 24th April 2010, 04:53 PM   #4
cfoservices
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Well first of all DerekR, I would be concerned to have a business partner who wants 51% unless he is putting in more money. If he is doing more work or possesses a unique skill to the business and is more valuable to the business then he should probably make a higher salary from the business but if you and him are putting the same amount of money into the venture then I would be worried about going into partnership with someone who wants control and has no reasonable basis for wanting that control. If he does want a higher salary than you you need to know what that is up front and if the business can afford it.

He cannot boot you out, however, understand he will have the last say on all decisions and this could be bad for you, especially if he is unreasonable which I would define him as such if he is not putting more money in and wants 51%. You cannot boot out a stockholder. You can attempt to dilute a stockholder and thereby reducing ownership percentage, but you cannot boot a stockholder out. For example he could vote to put more money in the business and unless you match that amount of money he is putting in he could get more stock. When he gets more stock his percentage of ownership and control would go up and your percentage of ownership would go down. He can also make the final decision to bring another partner in. Once again you would have the right to put money in but if you do not or do not have access to more money you could get diluted. If you were 50-50 partners you could vote that the company does not need the money and therefore block the attempt to dilute. When one partner has control the things they could do are endless.

I have written a 3 article series on finding a business partner

http://www.examiner.com/examiner/x-2...g-on-a-partner

http://www.examiner.com/examiner/x-2...tner--part-two

http://www.examiner.com/examiner/x-2...er--part-three

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