Subtitle: The President or CEO of an Underfunded Corporation or LLC Is in a Unique Position to Face Double Financial Disaster
Law Office of Adam P. Whitney Blog
Employees who are shareholders of a private corporation, family business or limited liability company (“LLC”) may not be subject to the employment-at-will rule in Massachusetts. This means that the majority owner or owners cannot simply fire a minority owner-employee at their whim.
An operating agreement (and other types of agreements between business partners, including shareholder agreements, partnership agreements and joint venture agreements) should govern how the business is to work. In particular, what are the agreements among the partners? What role will each partner have in the work, in the management, in the finances? Will any partner receive a salary? How much? Are partners entitled to a job? What fiduciary duties does each owe to the business? How will profits be distributed? What about losses? Will the partners have to invest more in the business if there is a shortfall? Will there be other employees? What happens if there is not enough business income to pay employees? What will the exit strategy/buyout be? Are the parties married to one another for any future business of the same type?