# Entrepreneur of the Week - Post No. 3 Hello everyone, Uri Bar. This post is dedicated to the rights and obligations of Mana…
At Property Company LLC - Limited Liability Company
This post was written following a number of inquiries from investors who wanted to get into the investment along with other investors in the US.
This information is intended for passive investors.
This document constitutes the Company's By-Law which sets out the Company's procedures and practices, their rights and obligations, and details of the Company.
This document is required by any more than one US LLC company located in the United States.
Notwithstanding the foregoing, and unless such document is prepared, the duties and rights shall be governed by the laws of the State in which the LLC was established.
These obligations and rights "adopted" by the LLC are called Default rules. Sometimes it will be different if the manager is not a Member of the LLC.
A case happened
About a year ago an inexperienced investor, Amir by name, came to me and told me that he was interested in signing a long-term investment agreement with a company that makes big deals in the US.
Amir asked me to review the agreement and see if there is a basis for this investment.
After talking to company representatives, it became clear to me that the company does “flip” transactions and can also take the money invested by investors and lend it to someone else (as well as themselves) or purchase rental properties.
The company can mortgage the assets it acquired and leverage its operations (investor return was known in advance)
After reading the agreement I noticed a few points (I will not list them all at the moment):
1. The dismissal of the manager - It seems that the manager can be fired for only two reasons.
In any other situation where the manager does not meet the objectives and is acting dangerously or is not responsible and does not act according to the agreement, it can not be fired and therefore it is used As a taboo.
2. Loans - The agreement states that the company can provide loans (dull clause).
There is no clear holiday record of what percentage of the investment amount the company can make for loans and for what or what benefit.
I was told it could be 10% or 30% or another percentage.
3. Loan Guarantee - I did not see any landmark agreement regarding the loan guarantee.
4. Receiving the fund price at the exit - If the investor wants to get out of the investment before the allotted time, he can not bring someone "to get in his shoes" (he can go out and get only the price he invested minus the fine).
(If I bring someone in my shoes, I do not see a problem with him negotiating the price.
Also, if any of the investors in the group would like to purchase my rights at the price offered to me in the free market, I will have no problem selling them to him).
5. Asset valuation at exit from the partnership - It appears that the company chose to evaluate the assets through the websites such as the Zillow website.
In my opinion, this assessment is clueless and obviously incorrect.
These sites are in no way accurate.
I asked why not bring an appraiser? Answer me because the matter is more complicated and complicates the process.
6. The Director's Indemnification for Damages - I wanted to add to this section a reservation that the manager would not be entitled to compensation if he acted negligently or easily head or if the company was not in favor of the company.
Company representatives did not agree to add the clause. (Oddly, this is a basic condition of corporate governance).
7. Investment in assets - It is recorded in the agreement that the fund will invest In other assets of the entrepreneurial company.
That's why I asked them if they bring an appraiser to see if the price of the property is being bought by the fund.
(What happens if the company wants to get rid of assets and the fund purchases them at a higher price than the market price?)
Company representatives said that as far as individual houses are concerned, they do not bring an appraiser.
And other small and large sections.
If so, what are the principal rights and obligations of the manager of the company?
These rights and obligations will apply in accordance with the determination of the Members and, among other things, the Operating Agreement shall include rights and obligations such as:
Conduct with banks, signing rights in account, taking out a loan on behalf of the LLC, pledging the LLC, signing of asset purchase and selling of assets, signing of employment contracts, making new members of the LLC, dilution of shares, etc.
Is that the owner manager has the right to act on behalf of the company according to the standards assigned to him in the Operating agreement while the non-owner owner is not authorized to make these decisions.
That one of the many owners of the LLC will manage it
Each owner will also be the manager of the LLC.
However, the mantle will not protect it if operated outside the LLC framework.
The cases should be clear and at the end of the day should give control to the LLC owners.
In this case, all rights should go to Successor.
In a single company or in a family company, sometimes one of these is appointed if something happens to the owner of the paralyzed company.
Thank you very, very clearly for understanding
Sharon Turgeman
Wow, super professional !!!!
What is the difference between this operating agreement for the LLC and the operating agreement for the Trustee?
Excellent. Thanks.
Iris Lavie Keren Ben-Ezra
Stunning!! I thought to this day that the LLC agreement is a uniform agreement.
And from what they explained to me in the past that not everyone can own ..
And now I realize this is a wrong assumption.
Many thanks for the accurate explanation.
Appreciate sharing
What a pleasure post
Keep us awake
Are you a professional on?
Excellent post?
Champion
As usual, a great Uri Post that showcases your professionalism .. Declining details and closing the edges, hoping for the investor who chose not to enter into an agreement with the company, sounds a bit dubious ..
Ori will continue to give us value .. Can't wait for the next post .. ???