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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 L. Kaufman is an award-winning business attorney, author and speaker. For more than 15 years, she has successfully navigated thousands of small businesses through the legal hurdles they face in starting and running their companies. Under her AskTheBusinessLawyer.com brand, she reaches thousands of entrepreneurs and small business owners with her legal services, professional speaking, information products, and LexAppeal weekly ezine.

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