Presenting a live 90-minute webinar with interactive Q&A Rendering Third-Party Legal Opinions on LLC Status, Power, Action, Enforceability and Membership Interests Drafting Defensible Opinions and Minimizing Preparer Liability Risks TUESDAY, AUGUST 11, 2015 1pm Eastern | 12pm Central | 11am Mountain | 10am Pacific Today’s faculty features: Steven D. Goldberg, Attorney, Wilmington, Del. Brian M. Gottesman, Partner, Berger Harris LLP , Wilmington, Del. Michelle P . Quinn, Partner, Berger Harris LLP , Wilmington, Del. The audio portion of the conference may be accessed via the telephone or by using your computer's speakers. Please refer to the instructions emailed to registrants for additional information. If you have any questions, please contact Customer Service at 1-800-926-7926 ext. 10 .
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Rendering Third-Party Legal Opinions on LLC Status, Power, Action, Enforceability and Membership Interests • Steven D. Goldberg, Esq. – Steven D. Goldberg, PA • PO Box 7605, Wilmington, Delaware 19803 • Office: 302.351.4490 • Fax: 302.351.2507 • Cell: 302.463.7845 Email: sgoldberg@stevendgoldberg.com Web: stevendgoldberg.com
Rendering Third-Party Legal Opinions on LLC Status, Power, Action, Enforceability and Membership Interests • Preparing LLC Opinion Letters – Due Formation, Good Standing, Valid Existence, Power and Authority – 1. The Company is duly formed as a limited liability company. [Based solely on the Borrower Good Standing,*] the Company validly exists in good standing as a limited liability company under the laws of the State of Delaware. – * We often include an assumption “with respect to the Guarantor’s good standing and valid existence, we have relied solely upon the Guarantor Good Standing, a copy of that certificate is attached to this letter” 6
Rendering Third-Party Legal Opinions on LLC Status, Power, Action, Enforceability and Membership Interests • Due Formation – Do not use the terms “duly organized” • Corporate terms which are not used in LLC opinions • Elements of the “Due Formation” opinion – The LLC has filed its certificate of formation which meets the minimum statutory requirements. – Has adopted a company agreement – Has at least one member • Investigation • Review Certificate of formation & company agreement 7
Rendering Third-Party Legal Opinions on LLC Status, Power, Action, Enforceability and Membership Interests • Validly Exists in Good Standing – Valid Existence is not a term used in the Delaware Act, it is actually a corporate term. – Elements of the Valid Existence opinion: • The certificate of formation which was filed and accepted by the Secretary of state meets the minimum requirements of the Act • The LLC has adopted a LLC agreement • The LLC has one or more members • [It has not commenced dissolution] • Has not filed a certificate of cancellation • Has not entered into a merger where it will be merged out of existence. 8
Rendering Third-Party Legal Opinions on LLC Status, Power, Action, Enforceability and Membership Interests • Validly Exists Cont’d • Investigation: – Review “Filed” certificate or certified copy – Review company agreement – Certificate of good standing will disclose if a certificate of cancellation has been filed or the LLC was merged out of existence. – We obtain a certificate from the company: • Neither the Company nor the Member: • has commenced dissolution or liquidation, • has filed a certificate of cancellation nor has such been contemplated to be filed on behalf of the Company; • has not entered into an agreement of merger under which the company will be merged out of existence; • is not in liquidation, or subject to equivalent insolvency proceedings in any jurisdiction; • has had a receiver or manager appointed in relation to any of the Company’s assets; • has entered into any arrangement with its creditors or into any arrangement with its creditors that has not been concluded (as the case may be); • has caused application has been made to a court in another jurisdiction for the liquidation of the Company or the Member or for the Company or the Member to be subject to equivalent insolvency proceedings. 9
Rendering Third-Party Legal Opinions on LLC Status, Power, Action, Enforceability and Membership Interests • Validly Exists Cont’d – Mistakes in the certificate of formation: • “substantial compliance” is sufficient – Good Standing can only be determined from the records maintained by the Secretary of State – Not a “legal opinion” per se – Elements of good standing opinion: • Certificate filed meets the minimum statutory requirements • Taxes are paid • No certificate of cancellation has been filed • The company has not merged out of existence Investigation: review good standing certificate 10
Rendering Third-Party Legal Opinions on LLC Status, Power, Action, Enforceability and Membership Interests • Power and Authority – The Company has all necessary limited liability company power and authority to execute and deliver [the Transaction Documents], and to perform its obligations thereunder. • Elements of the Power and Authority opinion: – The activity is not prohibited under the Act (banking & insurance) – The certificate of formation does not limit the company’s activities or powers – The activity is permitted under the company agreement’s purpose clause, as it may have been amended – The persons acting on behalf of the LLC have been granted this authority to act under the company agreement or a resolution 11
Rendering Third-Party Legal Opinions on LLC Status, Power, Action, Enforceability and Membership Interests • Power and Authority Cont’d • Investigation – Review the company agreement – Determine from the company agreement or the resolution that the person or persons executing the transaction documents have been authorized to do so – If an entity is executing an agreement, review its organizational documents and obtain a resolution of that entity. 12
Rendering Third-Party Legal Opinions on LLC Status, Power, Action, Enforceability and Membership Interests • Due Authorization and Due Execution – The execution and delivery of the Transaction Documents by the Company and the performance of its obligations thereunder have been duly authorized by all necessary limited liability company action by or on behalf of Company. • The shortened phrase “duly authorized” w/o “all limited liability company action” may imply governmental approvals. • Does not imply fiduciary duty compliance. (May want to include an assumption as to fiduciary duties) 13
Rendering Third-Party Legal Opinions on LLC Status, Power, Action, Enforceability and Membership Interests • Elements of the “Due Authorization” opinion – Neither the certificate of formation nor the company agreement restrict the power or authority of the members, managers or other party who are executing he documents – The members, managers or other party executing the documents has complied with any procedural requirements in the certificate, the agreement or any delegation of authority adopted by the members or managers – There are no restrictions in the Act on the powers of the members, managers or other party executing the documents unless the restrictions have been complied with or waived. 14
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