Amending Your Agreement

Because a business is a living thing, it is often necessary to amend your operating agreement or shareholder agreement.

Many people think that once it is in place, the members are bound by what they initially agreed to. That is not the case. Your agreement is entirely internal to the company so any changes need not be filed with the state or anyone else, unless of course, it says so in the agreement that it must be published or filed. There are clauses in the agreement to determine the procedures for amendments. Those clauses need to be followed if you want the amendment to be effective.

Be very careful though. If the initial agreement was drafted by an attorney, to the extent you can, have that attorney help you with the amendment. There may be things in the agreement that don’t seem to make sense but have a very important legal or tax consequence.

pr80703The amendment can be a series of emails that the parties decide to adopt, where both parties agree to sign a printout of the chain. That would certainly count as a “writing” as defined by most statutes.

Laws change, business changes, relationships change. Make sure you know your agreement to the letter and read over it periodically to make sure the provisions within the agreement still make sense.

Brian Fons, Corporate Creations. Brian.Fons@corpcreations.com or check out my Podcast in iTunes.

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