| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| UPCOMING EVENTS | ||
|
Feb.11th - IFMA Luncheon Feb. 22 - Cleantech & Sustainable Energy Conference Feb. 23 - Renewable Energy Supplier Summit March 11 - IFMA Luncheon Spring - Professional Mixer (Date TBD) |
|
 |
|
HERE'S TO 10 MORE YEARS WITH IFMA AUSTIN!
|
|
"ASK STEEVES" by Steve Dillawn Q: I am one of the owners of a facility, and am looking for ways to limit the owners’ liability for potential claims against the facility. Can organizing the company as a limited liability company help limit the owners’ personal liability to lawsuits? The short answer is yes. Generally, owners of a limited liability company, or LLC as it is known, are not personally liable for the debts and obligations of the LLC, including judgments. Limited liability companies have been a statutorily authorized form of business organization in Texas since the 1993 adoption of the Texas Limited Liability Company Act (formerly article 1528n, now codified as Section 101 of the Texas Business Organizations Code). Little used in the first years of the Act’s existence, the LLC is now widely used by Texas businesses of all types and sizes. The primary purpose of the limited liability company is to provide the owners of the business with a vehicle whereby their liability exposure is limited to that of a limited partner in a limited partnership but that also allows him to participate in the operation of the business; by definition, limited partners in limited partnership can have only marginal participation in the operation of the partnership business. Regarding lawsuits against an LLC, Section 101.113 of the Act provides that “a member of a limited liability company may be named as a party in an action by or against the limited liability company only if the action is brought to enforce the member’s right against or liability to the company.” In other words, a party suing an LLC may not sue the LLC’s members (members of an LLC are the equivalent to shareholders in a corporation). Moreover, Section 110.114 of the Act provides that a member of the LLC “is not liable for a debt, obligation, or liability of a limited liability company, including a debt, obligation, or liability under a judgment, decree, or order of a court.” In other words, if a party obtains a money judgment against an LLC, the members of the LLC are not personally liable for this judgment. So, if any person or entity sues the LLC to collect a debt, or for a personal injury caused by the LLC’s employees, or for breach of a contract, or for any reason at all, he cannot sue the members nor can he collect any judgment obtained against the LLC from the members. There are many ways to limit a business owner’s personal liability for the debts and obligations of the business (such as maintaining adequate insurance). Organizing the business as an LLC is one method that business owners should consider when considering options to limit their personal liability. As a form of business entity, the LLC is increasingly favored over other forms of organization such as corporations and partnerships when a major goal is to limit the financial exposure of the owners. "Ask Steeves" will be a regularly featured article in the newsletter, so if you have any legal questions, please direct them to Steve Dillawn. |
|
IFMA EDUCATION |
|
|
|
|
