Governance & Succession Planning

Planning the Operation and Future of Your Business

Business governance is the way in which a company structures its management, administration, and control, as well as the way in which it defines the relationship between owners, managers and other key personnel. 

Having been a successful business owner for 18 years, I understand the business reasons for taking a proactive approach to corporate governance. As an attorney, I advise clients as to how a proactive approach to business governance can limit their exposure to disruptive and expensive litigation and allows them to focus on the success of their company.

Please see my Articles page to learn more about my approach to business governance or call me at (973) 921-0600.

Establishing governance and planning for succession

I advise businesses, as well as their owners, operators, and key personnel on current and potential business governance issues, including:

• Defining the role, power, and duty of owners, directors, officers, managers, and key personnel in the decision-making process,
• Structuring oversight and verification controls,
• Delineating and managing the liability of directors, officers, and managers,
• Allocating and distributing profits and losses,
• Planning for succession, including business continuation by family members or key employees,
• Addressing contingencies for life-cycle and major events (death, disability, divorce, etc.) affecting owners and key personnel,
• Establishing procedures to oust or admit owners, members, and partners, and
• Facilitating expansion of the business through asset acquisition and debt and equity financing.

LLC operating agreements, partnership agreements, and shareholder agreements require careful planning.

Clear, thoughtful, comprehensive written agreements and instruments are vital to addressing the areas of governance and succession and to avoiding the burden and expense of litigation. I review, evaluate, negotiate, draft, and prepare a wide range of governance and succession agreements and instruments, including bylaws, shareholder agreements, operating agreements, and business partnership agreements. Understandable, enforceable agreements and instruments help ensure that business owners and operators will be able to maintain and transfer ownership and control of their companies in an orderly fashion. Without such agreements and instruments, the default rules established by law will dictate how governance and succession matters will be resolved. There is no assurance that the scheme established by the default rules will coincide with the goals of the business owner or avoid costly disputes and lawsuits.

LLC Operating Agreements

New Jersey’s LLC law became effective in 1994. In absence of an LLC Operating Agreement among the owners (i.e., members), NJ’s law establishes a set of “default rules” that will govern the business relationship of the members and the internal affairs of the LLC. The default rules may align with the members’ goals and expectations—but they may not. At times, they can be contrary to the needs and goals of the members. The law allows members to change default rules by having an LLC Operating Agreement. In fact, the LLC law offers maximum flexibility for structuring LLC management and ownership. It is important to protect the LLC and members by having a written LLC Operating Agreement.

Please see my Articles page to learn more about LLC Operating Agreements or call me at (973) 921-0600.

Business Partnership Agreements

New Jersey’s partnership law changed significantly in 2000. In absence of a Business Partnership Agreement, the partnership law establishes a set of “default rules” that will govern the business relationship of partners and the internal affairs of the partnership. Sometimes the default rules align with the partners’ goals and expectations—in other cases, default rules may not adequately address, or be contrary to, the goals of the partners. The law allows partners to replace default rules by having a Business Partnership Agreement. It is important to protect the partnership and partners by having a written Business Partnership Agreement.

Please see my Articles page to learn more about Business Partnership Agreements or call me at (973) 921-0600.

Corporation Shareholder Agreements

One of the oldest forms of business is the corporation. While people may be most familiar with large corporations such as Microsoft, there are millions of smaller, privately owned business corporations. New Jersey’s business corporation law permits the owners of corporations (i.e., shareholders, a.k.a. stockholders) to use a Shareholder Agreement to address unique and important challenges facing privately held corporations. Among the most important challenges to adequately control the ownership and management of the corporation. Corporation stock is freely transferable. Without a Shareholder Agreement, a shareholder is free to sell, assign, give, or pledge his/her to anyone he/she wishes. At the same, without a Shareholder Agreement, a shareholder may find it impossible to “exit” the corporation and recoup the value of his/her stock. It is important to address these and other issues, and to protect the corporation and shareholders with a written Shareholder Agreement.

Please see my Articles page to learn more about Shareholder Agreements or call me at (973) 921-0600.

For more information about all types of business governance agreements, from LLC operating agreements to business partnership agreements and shareholder agreements, please see my Articles page.

I also invite you to contact my Short Hills, New Jersey law office to discuss your plans.