Operating Agreements & Shareholder Agreements in Longmont, Colorado

Why governance documents matter

An LLC or corporation can be formed in minutes. What it cannot do without a well-drafted governance document is answer the questions that actually matter: who has authority to make decisions, how profits and losses are allocated, what happens when an owner wants to leave, and what happens when owners disagree. State default rules exist for all of these situations, but they were written for generic businesses, not yours.

Operating agreements for LLCs

Colorado does not require LLCs to have a written operating agreement, which means many LLCs operate without one until a problem forces the issue. A well-drafted operating agreement covers:

• Ownership percentages and capital contributions
• Profit and loss allocation
• Management structure and decision-making authority
• Member voting rights
• Transfer restrictions on membership interests
• Buyout provisions and valuation methodology
• What happens at the death, disability, or departure of a member

Shareholder agreements for corporations

Corporations are governed by bylaws, but a shareholder agreement addresses the relationship between shareholders directly, covering matters the bylaws typically do not. For closely held corporations with two or three shareholders, a shareholder agreement is often the document that prevents disputes from becoming litigation.

Common provisions include transfer restrictions, rights of first refusal, deadlock resolution procedures, and buyout triggers.

Updating existing agreements

A governance document that made sense when the business had two equal partners may not serve the business well after one partner has bought out the other, brought in investors, or significantly grown the company. Hoog Law reviews and amends existing operating and shareholder agreements as businesses evolve.

Serving Longmont and Boulder County

Hoog Law is based in Longmont and works with LLCs and corporations throughout Boulder County on governance documents and ongoing business counsel.