Larry and Deborah (Larry’s sister in law) come to see you about starting a new limited liability company.
They want to open a new business selling a new cure for COVID that Larry has invented by combining ordinary garden plants. He has a degree in philosophy from The Universal Church of Karma, where he learned about homeopathic medicine. The FDA has not approved the drug.
Deborah has run many successful real estate businesses. She has money to invest to get the company started. She has never owned her own company.
Larry is not going to invest any money. He has agreed to work full time for the Company in exchange for his ownership.
Larry has many friends and family members who want to invest in the business. He thinks it could be at least 100.
They want to raise $10,000,000 to fund the production and sale of the COVID cure.
They are not asking for advice about whether an LLC is the right choice. Their accountant has told them that is the best entity for them.
They want your advice about how to set up and operate the LLC, with a focus on the areas they should be concerned about. They are counting on you to handle the basic legal stuff, like filings and paperwork. They call it the legal “mumbo jumbo”. They want to know the “big stuff”; i.e. things that could be a problem if they do them wrong.
Write a memo to a client who is deciding how to set up a new business with his sister in law, and wants your advice about:
1.Pros and Cons of corporate structures.
2.How to manage and operate the company.
3.How to deal with his partner.
Using fact pattern above
Paper length is minimum 300, maximum 750 words (1-3 double spaced pages, normal margins). Quality, not quantity is what matters)