When entrepreneurs form a New York LLC, most assume that the crucial step is filing the Articles of Organization. But equally important—and often overlooked—is adopting a valid operating agreement. Under New York’s Limited Liability Company Law (NYLLCL), every LLC should  adopt a written operating agreement, but the statute imposes no penalty if the members fail to do so. What many business owners do not realize is that New York courts may treat emails, informal writings, or

Missed LLC Distributions in New York: Why the Clock May Still Be Running If you are a member or investor in a New York LLC and have not been paid distributions promised to you, the statute of limitations may still be open—even years later. Many LLC members assume that if an agreement was breached long ago, they are “out of luck.” That is often wrong when the obligation involves recurring profit distributions. New York courts repeatedly hold that each failure to pay a required

Shareholders in closely held corporations often assume that the company’s attorney serves as a neutral advisor for all owners. In reality, corporate counsel represents the entity itself , not its individual shareholders. When internal disputes arise—particularly between majority and minority owners—that distinction can have significant legal consequences. A decision from the Supreme Court of New York, Poretsky v. Bartleby & Sage, Inc.  (2023), underscores the risks shareholde

When you join a limited liability company (LLC) as a member—especially a minority member—your ability to monitor how the company is being run often depends on one crucial protection: the right to access books, records, and accounting information . A 2016 New York Supreme Court case, S&H Nadlan, LLC v. MLK Associates LLC , provides an important roadmap of what those rights look like and how courts enforce them. ​​ The Case in a Nutshell The plaintiffs in S&H Nadlan  were mino

When forming a limited liability company (LLC), one of the most important structural decisions owners make is whether the company will be member‑managed  or manager‑managed . Even in a member‑managed LLC, the operating agreement may designate one individual as the managing member , giving them authority beyond that of the other owners. A 2014 New York case, Kalikow v. Shalik , offers a clear illustration of the legal distinctions between managing and non‑managing members and

Withdrawal from an LLC is often misunderstood. Many members assume that once they give notice and formally leave, their obligations end. But as Flink v. Smith  makes clear, withdrawal does not necessarily sever all contractual responsibilities. Depending on how an LLC’s operating agreement is drafted, certain obligations may survive withdrawal—and courts will enforce them. This is especially important in professional or closely held LLCs, where ownership transitions and buy

Transfer restrictions in LLC operating agreements often sit quietly in the background—until a member tries to sell, assign, or gift their interest. Then, as the New York Supreme Court illustrated in Verderber v. Commander Enterprises Centereach, LLC , they can become decisive. In this case, the Verderbers held a 20% membership interest in a real estate–holding LLC. When they eventually transferred their interest to their family entity, Verbenco LLC, a dispute erupted over (1

If you’ve ever tried to transfer your ownership in a New York LLC, you may have discovered that it’s not as simple as handing over stock certificates or signing a quick assignment. New York treats LLC membership differently, and if you don’t follow the rules, you can end up with disputes, delays, or even a transfer that doesn’t legally stick. In this article, we walk through the basics using guidance from New York’s Limited Liability Company Law and a real-world case, Gartner

In the operation of a New York limited liability company (“LLC”), written operating agreements and formal corporate procedures are undoubtedly best practices. Nevertheless, New York courts at times recognize that the absence of formal documentation does not render the conduct of LLC members legally insignificant. Indeed, long‑standing practices, oral understandings, and informal arrangements may be enforceable , provided they reflect mutual assent and do not conflict with the

For many New York LLCs, relationships change long before paperwork does. A member may stop participating in operations, stop contributing capital, or declare themselves “withdrawn” from the business. But as Sealy v. Clifton LLC  illustrates, failing to formally transfer or assign a membership interest —or to seek judicial dissolution —can create years of uncertainty, litigation, and financial exposure. 1. You’re Still a Member Until the Law Says You’re Not In Sealy , the adm