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Business Formation

Los Angeles, CA |

1. I am trying to file a LLC and was wondering if it is possible to add my Dad as a silent partner (he will not be helping with operations)

2.Also, can I add partners within few months after registering?

3. How do I protect intellectual property as I will be selling book apps on the iPad, iPhone, Android etc.?

4. What needs to be included in a NDA/ confidentiality agreement when I am hiring freelancers form the internet?

Attorney Answers 8

  1. You really do need to hire a business attorney to assist you.

    You can have your Dad as a member who is not a manager of the LLC.

    Yes, you can add members to your LLC if you set it up to permit new members to be added in your LLC's Operating Agreement. (Note that in an LLC, they are members, not partners).

    You definitely need a attorney to help you with the intellectual property rights, as well as the non-disclosure agreements. No one on Avvo can speculate on what your business entails.

    Frank W. Chen is licensed to practice law in the State of California. The information presented here is general in nature and is not intended, nor should be construed, as legal advice. This posting does not create any attorney-client relationship with the author. For specific advice about your particular situation, consult your own attorney.

  2. It never ceases to amaze me that business people who obviously will not be giving away their products for free, want attorneys to give their services for free, and would even rely on advice that does not consider all the facts.

    You really need to retain an attorney.

    J Charles Ferrari Eng & Nishimura 213.622.2255 The statement above is general in nature and does not constitute legal advice, as not all the facts are known. You should retain an attorney to review all the facts specific to your case in order to receive advise specific to your case. The statement above does not create an attorney/client relationship. Answers on Avvo can only be general ones, as specific answers would require knowledge of all the facts. As such, they may or may not apply to the question.

  3. As my colleagues have indicated: you need to see an attorney to draft these documents for you.

    The answers to your question are:

    1. Yes, you can have your dad as a silent partner;
    2. Yes, you can add members later on;
    3. See an attorney;
    4. See an attorney;

    If you'd like to discuss these topics, feel free to contact my office.

    Attorney's response is not intended as legal advice and is intended for informational purposes only. Attorney's response does not create an attorney client relationship. Inquirer should seek the advice of a duly licensed attorney within that particular jurisdiction.

  4. Disclaimer: The materials provided below are informational and should not be relied upon as legal advice.

    I agree with my colleagues. For a business venture such as this, you really should retain an attorney to assist you.

    1 and 2 - Yes you may. LLC members are not named in the Articles of Organization. The members are named in the LLC's internal documents, such a membership certificate, operating agreement, etc. However, there are various securities law limitation that you should keep in mind, and I highly recommend you consult a business attorney on these matters.

    3 - there are various ways of protecting intellectual properties, including copyright protection, trademark registration, and patent prosecution. You really should retain an attorney to assist you with these matters.

    4 - the answer depends on the facts and circumstances of your specific matter. You should retain an attorney to consult with you on the specifics of these matters.

  5. In law, words are important. An LLC does not have partners; it has members, who are its owners. Partnerships have partners and they have the highest level of fiduciary duty (loyalty and diligence). The standards are a bit lower for LLCs and their members and lower still (even nonexistent) for shareholders of corps. It is easy to add a member to your LLC. You must realize that when you add a member, he becomes an owner and you cannot get rid of him unless your Operating Agmt provides for repurchase of his interest if he breaches his duties to the LLC or does not perform up to snuff. You must have a lawyer help you with drafting and adopting an OA before you bring in any other members. Most forms of OA have no escape clause except a lawsuit under state law. Ask him to base the OA on a partnership Agmt that provides for expulsion of nonperforming partners, as a law firm Ptsh Agmt would. Why would you want your father as a silent member? Will he be a major investor? Or is it sentimental reasons, which should not count in business?
    As to the NDA, these are generally reasonably fair and reasonable. You can get a form from the Internet that should work, although my AVVO colleagues will scream at me over that advice.
    Consult an intellectual property lawyer about protecting your IP. That is too complex to be covered in a Q&A.

    DISCLAIMER—This answer is for informational purposes only under the AVVO system, its terms and conditions. It is not intended as specific legal advice regarding your question. The answer could be different if all the facts were known. This answer does not establish an attorney client relationship. I am admitted only in California. (Bryant) Keith Martin

  6. My colleagues have said it all.
    There are some great Avvo attorneys in LA, including some who are answering your inquiries.

    The above is general legal and business analysis. It is not "legal advise" but analysis, and different lawyers may analyse this matter differently, especially if there are additional facts not reflected in the question. I am not your attorney until retained by a written retainer agreement signed by both of us. I am only licensed in California. See also terms and conditions item 9, incorporated as if it was reprinted here.

  7. 1. Sure. LLCs are very flexible. You just have to set it up properly to reflect what you want.
    2. You can add owners any time you want.
    3. It depends on the type of intellectual Property, but copyright, trademark or patents might be applicable, or it might be something that can only be protected contractually.
    4. Whatever you need to protect your confidential information and assure that whatever they create is either yours or you have a right to use it.

    If these answers are not adequate, it might be because your questions are very fact specific. Free internet answers are fine for general concepts - but you want specific advice about specific real situations. And when it comes to that, you will find that spending some money up front is a lot cheaper than doing things wrong and having to have an attorney come in and fix the damage.

    You don't tug on Superman's cape; you don't spit into the wind; you don't pull the mask off the old Lone Ranger; And you don't get legal advice from a free Q&A page on the Internet. The above is a general statement of the law or just my opinion. I am not saying whether it applies to your situation or not because I don't know the details and you’ve not hired me as your attorney.

  8. There is a concensus here you should consider observing. . . Nevertheless,

    What would be the purpose of adding your Dad to the company? Revenue? Decisions? Voting rights? You can add him a a member, holder of profit interests, or even a revenue sharing arrangement. The question is what powers do you want him to have.

    You can add partners at any time, if you contemplate such arrangement in your draft of your operating agreement. Otherwise, consider the possibility of deadlock between voting interests prohibiting you from adding future members.

    You can protect IP in various ways, whether by patent, copyright or trade secret. The form of protection you need depends upon your unique circumstances, your market and how much you want to spend.

    Addressing the NDA only, freelancers should be prohibited from disclosing your information to any 3d party. However, you want an agreement that also vests 100% of their work product in your company.

    Best of luck.

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