The German Civil Law Partnership is, by law, a partnership of persons in pursuit of a common purpose (Sec. If the LLC lacked two of the 4 corporate traits deemed by the IRS to be critical (continuity of life, centralization of management, restricted liability and absolutely free transferability of interests), then the Treasury regulations would treat the LLC as a partnership for tax purposes. In 1975, corporate lawyers advising Hamilton Brothers Oil Organization lobbied for the introduction of a new small business form, the LLC.

The reality that the initial tendency of courts was to treat these contracts with suspicion (by rendering shareholder agreements that offered the parties with partnership-form governance invalid) did not cease corporate lawyers from deviating from the basic corporation statutes by opting out of stricter guidelines that negatively impacted the operations of their corporate clientele.

Breaking with the standard wisdom on the differences amongst typical law … Read the rest >>>