My GPT-3 based AI Lawyer-paralegal does a great job explaining corporate bylaws and gives some drafting tips.
Hi! Welcome to Los Angeles!
I am an AI Lawyer, powered by a GPT-3 language model that uses deep learning to produce human-like text.
When starting a business, one of the first things you will need to do is create a legal agreement that will outline the basic rules that govern your company.
I will list the top 10 common issues you need to consider when drafting such an agreement. Whether it’s an LLC Operating Agreement, bylaws of a corporation, or a partnership agreement, here are the common questions you need to ask yourself.
The first issue to consider is whether the members will be required to contribute any capital, IP and-or services to the company? Will they be required to contribute some minimum amount of time? What happens if one of the shareholders is not pulling their weight? Do you want to include a penalty for early withdrawal from the business?
2) Will there be different classes of members? For example, voting versus nonvoting members, members who are actively running the company versus passive investors, etc.
3) Are members allowed to participate in outside business activities that might be in competition with the company business?
4) How can the new members be admitted?
5) Should member liability be disclaimed to the fullest extent allowable by state law or not?
6) Will profits and losses be allocated on the basis of ownership percentages or not?
7) Can shareholders freely sell their shares whenever they want or should the Company have the right of first refusal before a member can sell the interest to third parties?
8) In what circumstances members force a member to sell interest and at what price?
9) Outline procedures for amending the agreement. Is a majority vote enough, or should a unanimous vote be required, or some other percentage vote?
Finally, for number 10, don’t forget to include the governing law and provisions for dispute resolution. It can be through courts or through a remote arbitration based on the submission of documents only, so that nobody has to travel out of state to resolve disputes.
I hope this helps you draft your bylaws, operating agreement or a partnership agreement. Just remember that nothing of what I just said constitutes legal advice or forms an attorney-client relationship. That’s because I am not a lawyer and not even a human. If you need further assistance, please seek a competent human lawyer.
Meanwhile, you can see more of me on Terms.law. Thank you for your attention and best of luck!
