Operating Agreement / Bylaws Review

# Operating Agreement / Bylaws Review

Produces a gap memo on a governing document (LLC operating agreement, corporate bylaws, shareholders' or stockholders' agreement) measured against what the client says they want, so the attorney can see what's missing, what conflicts with the goals, and what to raise.

## What to ask for
- The governing document, plus the certificate of formation or articles/certificate of incorporation, and any related shareholders', voting or buy-sell agreement (they interact and can conflict).
- **Who the client is:** the company, a majority owner, a minority owner, a manager or an incoming investor. Ask once if not given.
- The client's goals in their own words (e.g. "keep control", "be able to buy out my partner", "protect my 20% from dilution").
- Current cap table or member list with percentages, if available.
- If anything is missing, review what's there and mark gaps as [MISSING: ...]. If a related agreement is referenced but not provided, flag it.

## How to work
1. **Restate the goals** as a short checklist. Every finding ties back to one.
2. **Basics.** Entity type, state of formation, parties, effective date, whether it's signed and by whom, amendment history. Check that member or shareholder names and percentages match the cap table.
3. **Review each area and say what the document does, what's missing, and how it lands for the client:**
   - **Control:** member-managed vs. manager-managed, board composition and who appoints, officer authority, which decisions the manager or board makes alone.
   - **Voting thresholds:** ordinary vs. major decisions, what counts as major (sale, merger, new equity, debt, admitting members, amending the agreement), majority by percentage or headcount, supermajority or unanimous items, quorum.
   - **Transfer restrictions:** consent requirements, right of first refusal or offer, permitted transfers (family, trusts, affiliates), effect of a transfer without consent (economic rights only vs. full membership).
   - **Buy-sell:** triggers (death, disability, divorce, bankruptcy, termination of employment, retirement, breach), mandatory vs. optional purchase, valuation method, payment terms, funding (insurance), good leaver / bad leaver.
   - **Deadlock:** tie-break mechanism (mediation, arbitration, independent director, shotgun / buy-sell offer, dissolution), and whether it fits a 50/50 or two-owner company.
   - **Capital calls:** whether additional contributions can be required, consequences of failing to fund (dilution, loans, forfeiture), preemptive rights.
   - **Distributions:** waterfall, tax distributions for pass-through entities, who decides timing, restrictions.
   - **Removal:** removal of managers, directors, officers; expulsion of members; cause vs. without cause.
   - **Dissolution:** triggers, vote needed, winding up, who handles it, order of distribution.
   - **Drag-along and tag-along:** thresholds, price and terms protections for the dragged party, notice.
   - Also check: fiduciary duty modifications or waivers, competing business and corporate opportunity provisions, indemnification and exculpation of managers, information and inspection rights, non-compete or non-solicit among owners, dispute resolution, conflicts between documents.
4. **Rate** each gap High / Medium / Low against the client's goals, not in the abstract.
5. **Suggested direction** for each High and Medium gap (e.g. "add tax distribution clause", "raise threshold for new equity to unanimous"). Direction only, not final drafting, unless asked.

## Output

**Governing Document Review: [Entity name], [document name]**  Client: [who], position: [role]  Reviewed: [date]

1. **Snapshot** (3-4 lines): entity, owners, who controls today, biggest gap against the client's goals.
2. **Client goals** (checklist, as restated)
3. **Gap table**: # | Area | What the document says (section) | Gap or conflict with goal | Risk (H/M/L)
4. **Areas not addressed at all** (bullets)
5. **Conflicts between documents** (bullets; "None found" if none)
6. **Suggested direction** (numbered, keyed to gap #)
7. **Questions for the client** (numbered)
8. **To verify** (state default rules that fill gaps, limits on waiving fiduciary duties, statutory voting requirements)

## Rules
- Draft for attorney review; not legal advice to the client.
- State default rules (what applies when the document is silent), fiduciary duty waiver limits and statutory voting requirements vary by jurisdiction and change: list them under "To verify" with what to check, never state them as final.
- Never invent facts, dates, amounts, percentages or valuations. Unknown = [MISSING].
- Cite the section for every finding. "Silent" is a finding; say so explicitly.
- Judge every provision from the client's position; the same clause can protect a majority owner and hurt a minority owner.
- When owners' interests diverge, note it neutrally; the attorney decides who the firm represents.