1.) Annual member meetings are not required by most state LLC statutes. However, if the LLC chooses to elect S corporation tax status, it must hold annual meetings. The IRS requires all S corporations, whether organized as an LLC or C corporation, to hold meetings to ensure a layer of accountability in the operation of the company. These meeting minutes are included as a sample should you choose to hold annual member meetings, regardless of whether you elect S corporation tax status for your farm operation LLC.
2.) The place, time and date information needs to be in line with whatever is specified, if anything, in the LLC’s operating agreement for holding annual meetings. For Sun Sisters Farm, LLC, the operating agreement does not specify an exact time or place. Your operating agreement could be more precise, such as specifying an exact month or the third Thursday of February, for example. If so, be sure that you follow what your operating agreement says and report it in your minutes.

3.) It can be helpful to designate a chairperson and secretary of the meeting. The chairperson basically makes sure that the meeting agenda is followed and keeps the discussion on track. The secretary is responsible for taking minutes and keeping them in the LLC book for reference should an issue or dispute arise.

4.) If you include provisions in your operating agreement requiring an annual meeting, they should specify what a quorum is, or how many members need to be present for a vote to take place. A quorum will depend on the voting basis set forth in your operating agreement. For example, if voting is based on the percentage interest breakdown, a quorum will typically be member(s) representing a majority of the percentage interest in the company. If the voting is instead based on the number of members (i.e., one member, one vote), the quorum would be a majority of the number of members. Either way, requiring a quorum at the annual member meeting ensures that if there’s a vote on an issue that requires a “majority” (i.e., percentage interest or number of members), it can effectively take place.

5.) It’s advisable to make the entire LLC book as described here available, as this shows the transparency of the company’s official status and records. In other words, it helps guarantee that no member is wrongly being subverted or pushed out and it shows to all the members that the LLC is up to date, so to speak. Including a statement about it in the minutes is good practice.

6.) If any reports are presented at the meeting, be sure to attach them to the minutes. Again, this serves to track what information was presented in case a dispute arises. Reviewing the financial performance annually can be a helpful exercise. Doing this at an annual meeting ensures that all members have the opportunity to review it together, ask for clarifications as need, discuss any issues and suggest tips for financial improvement.
7.) “Making a motion” and “seconding the motion” is a custom formality in corporate meetings. Surely you’ve seen it in the movies. Basically, any official action or vote that is to be taken at a meeting requires at least two people to agree. The first “moves” or “makes a motion” for the vote and the second person “seconds” the motion. Then the vote can take place. This helps assure that only relevant and significant matters go to a vote.
8.) This is certainly a matter that may come up in the annual meeting, as the decision whether to distribute the year’s profits, if any, will come up annually. Here, Article 3.2 of the Sun Sisters Farm, LLC operating agreement requires approval by a majority of percentage interest before profits are distributed to members. Marie feels they should keep the money in the business, so she votes against it. However, Jema, Ingrid and Margo together have a majority of the percentage interest. So it’s decided the $10,000 profits are distributed among the four members based on the percentage interest breakdown.

9.) Another issue that can be addressed at the annual meeting is the appointment of managers. Here, Ingrid and Margo, who both were already serving as managers, were again named to continue in their posts. However, if for whatever reason there needed to be a switch in who served as manager(s), the annual meeting would be a great time and place to discuss and vote on the matter.

10.) The salary of managers may go up or down each year. The annual meeting is a perfect place to discuss it, particularly because the financial matters were just reviewed by all members. Note that if the issue of raising or reducing salaries goes to vote, Ingrid may not vote on her own salary and Margo may not vote on her own salary. This would raise a conflict of interest and be highly suspect in the eyes of the IRS and the courts should an issue or dispute arise regarding financial matters of the company.

11.) If there is no further business discussed, the meeting can be adjourned. Again, customarily, this official action requires two people to agree by making a motion and seconding the motion.