Tuesday, February 14, 2017
New York Shapiro Decision Upheld; a Majority of the Members May Adopt an Operating Agreement
Under the New York Limited Liability Company Act, an operating agreement may be amended by a simple majority of the members (this rule may itself be modified in the operating agreement to, for example, raise the threshold to unanimity). Kentucky has the same majority rule with the same ability to modify it in a written operating agreement. In the Shapiro case, the New York Supreme Court (the trial court) held that, in a three member LLC, all of the members having an equal interest in the company, a majority thereof could adopt a new operating agreement. This case was reviewed in Peter Mahler’s blog New York Business Divorce (HERE IS A LINK to that posting). I reviewed the decision as well, particularly with respect to its application in Kentucky. HERE IS A LINK to that posting.
Recently, the Appellate Division in New York (the intermediate Court of Appeals) has substantially affirmed (it tweaked the reasoning) the trial court’s decision. Peter Mahler has, as always, provided an outstanding review of the decision; HERE IS A LINK to that discussion.