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LegalCornerTM - Limited Liability Company F.A.Q.'s

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Q.Does an LLC offer limited liability protection to its members?

A.Yes. A key feature of an LLC is the limited liability protection ordinarily afforded to its members. Unless a member personally guarantees a business debt or obligation, the member will not be personally liable for the debts and obligations of the LLC.

However, if the members do not properly form and maintain the LLC, a court may find the LLC merely to be the "Alter Ego" of its members. In this instance, the court will allow the LLC's creditors to attach and seize the personal assets of the LLC members to pay debts incurred by the business.

Please note, however, that where a corporation's failure to hold shareholder or director meetings may subject the corporation to "alter ego" liability, in California an LLC's failure to hold meetings of members or managers is not typically considered grounds for imposing the "alter ego" doctrine where the LLC's Articles of Organization or Operating Agreement do not expressly require such meetings.




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