What Notice Must an LLC Provide to Appraise a Member’s Interest?
We previously posted on this blog: “LLC Members Appraisal Rights: What Are They?” In that post, we explained the eight circumstances in which a member may exercise appraisal rights, i.e., an “appraisal event,” and how the appraisal process works for the LLC and affected members. The purpose of this blog post, however, is to inform you that once a member or manager has proposed that an appraisal event occur, what form of notice must be given to the members before the members vote at a meeting of the members.
What Notice Must an LLC Provide?
Unless otherwise provided in the LLC operating agreement, written notice must be given to the members before they vote on whether an appraisal is justified. Indeed, the form of notice to the members must state whether the LLC has concluded that the members are, are not, or may be entitled to assert appraisal rights for a member’s interest.
If the LLC concludes that appraisal rights are or may be available to a member, the LLC must include a copy of sections 605.1006 and 605.1061–605.1072, Florida Statutes, together with the notice of the members’ meeting.
What Must the Notice Include?
Moreover, if a member or manager proposes an appraisal event and the LLC concludes that appraisal rights are or may be available to the members, the notice to the members must include the following:
- the LLC’s financial statements
- a balance sheet as of the end of the fiscal year ending not more than 16 months before the date of the notice
- an income statement for that fiscal year.
- a cash flow statement for that fiscal year.
If, however, the LLC does not have financial statements reasonably available, the LLC must provide the members reasonably equivalent financial information and the latest available interim financial statements, including year-to-date through the end of the interim period.
In sum, when a meeting of the members is required under the LLC’s operating documents or by statute to consider a proposed appraisal event, certain statutory and notice requirements must be satisfied. If these formalities are not met, the validity of the member’s meeting and vote on the appraisal may be called into question.
Involved in a potential LLC member dispute involving appraisal rights? Call 561-659-7878 for more information.