If you want to protect your business from personal liabilities and reduce tax obligations, a Delaware LLC is an ideal option. It combines the freedom of a partnership or sole proprietorship with limited liability of a corporation for small businesses.
1. Annual Meeting
As a business owner, you likely care about maintaining the health of your entity within its state of formation. This requires meeting ongoing compliance obligations and filings, as well as securing any necessary licenses or permits.
Depending on your entity type, you may also have compliance obligations related to annual meetings of stockholders. These could include notice of the date, time and place of a meeting; voting rights; as well as rules for voting in person or via proxy.
Delaware requires companies to give notice of their annual stockholder meetings not less than 10 days and no later than 60 days in advance. Companies have the option to adjust this timing by giving less notice than 20 days to stockholders who become record holders on or before a certain date (such as 45 days prior to the meeting)
Delaware LLCs are also subject to corporate Bylaws and Operating Agreements, which set out the rules for running the corporation and often include provisions regarding minute writing and keeping of all meetings. These documents provide direction on all aspects of operation within the LLC, such as what types of actions can be taken if certain events arise during operation.
2. Special Meeting
A special meeting may be called in a Delaware LLC when it’s necessary to take action. This typically happens to approve mergers or buyouts, purchase assets, or change the company’s name.
In order to hold a special meeting under Delaware law, your company must abide by certain requirements. These include filing notice with the state, scheduling for a record date and notifying stockholders.
Your company must also appoint a registered agent. A registered agent is an individual or business entity designated to receive legal documents on behalf of your business.
The registered agent can be you, another member of your LLC, or a service provider. Ultimately, find an affordable registered agent who offers quality services at a fair price so that your LLC remains in good standing. Selecting the correct registered agent will simplify the formation process and guarantee compliance with state laws.
3. Meeting of Members
Delaware LLCs are one of the most sought-after entities registered with the Secretary of State because they offer the advantages of both partnerships and corporations. This combination of features appeals to many small business owners due to its low personal liability exposure and expansive range of permissible indemnification claims.
Forming a Delaware LLC requires filing articles of organization with the Secretary of State. These must include names for any managers (if any) and officers as well as an initial capital contribution from the business.
Next, an operating agreement must be created. This legal document lays out the management structure, profit distribution plan, and termination details of your business venture.
Contrary to Texas law, Delaware does not require its members to meet in person for these discussions. However, if the operating agreement allows members to act on certain matters without attending meetings, then this is allowed.
4. Meeting of Managers
Delaware does not require LLCs to hold annual meetings or keep minutes of any such proceedings. Instead, the state grants members and managers of a Delaware LLC the power to act on any matter that requires approval by a majority of members or managers (even if that consent isn’t given at a formal meeting). This includes decisions that don’t need voter approval during an actual conference call.
In reality, this flexibility is quite commonplace in the law. This stems from Delaware’s longstanding policy of upholding freedom of contract.
Delaware LLCs’ operating agreements can either extend or restrict the duties of members and managers, such as fiduciary responsibilities. This flexibility is especially essential when the LLC contains licensed professionals such as accountants or attorneys whose duties are typically regulated by the state.
In addition to organizing and registering an LLC, Delaware corporations should also hold shareholder meetings to discuss issues that are essential for the business’ success. These include decisions related to tax status, financial planning, hiring or firing employees – these meetings serve as a great opportunity to stay abreast of legal requirements and hold the company accountable.
