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Is it legal for a LLC to give points to an employee of a company that the LLC is performing work for, in exchange for the promise of more work from that company and other companies where the employee may have contacts?
We are currently working for a company, and one of the company's VP's is promising work in exchange for shares in our LLC.

Asked by vileri3
Posted: Tuesday, August 14, 2007  |  Found in Legal Issues


More answers by Nina Kaufman
Answer by Nina Kaufman
If by points you mean giving the employee an ownership interest in the LLC, the LLC may sell an interest to anyone legally competent to own an interest. However, paying an employee of another company to send you work is almost always improper [and in some cases can be considered commercial bribery or an unfair business practice] absent full disclosure to, and approval by, the employer. As to a fee for business from other contacts, this is called a finder’s fee. Again, it will depend on the actual facts of your situation to determine if this would violate some duty of the employee to his or her employer. What you are suggesting has sufficient stumbling blocks that could result in either a criminal or civil action against you and makes a consultation with a knowledgeable attorney mandatory.
Nina Kaufman has a New York City-based boutique law practice and is president of Wise Counsel Press LLC, which produces legal information products for entrepreneurs. She writes the Making It Legal blog and the Business Law Advisor column for WomenEntrepreneur.com.

Note: This response is for your general information only. Be sure to consult with an attorney regarding your particular situation to get the advice you need.



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