State software opening door for digital corporate governance
A free software program developed by the Nevada Secretary of State’s office to help creators of limited-liability companies marks an important step toward increased use of digital technology in corporate governance.
It’s a world in which some boards of directors might conduct meetings via Twitter.
About 1,600 entrepreneurs have used the state’s free software to create operating agreements, a key document for limited-liability companies, since it was launched in late 2012.
Secretary of State Ross Miller says the development of digital tools for corporate governance has been encouraged by organizations such as The Berkman Center for Internet & Society at Harvard University. But Miller believes that Nevada is the only state to provide the LLC software, which his agency developed in-house.
The software isn’t intended to compete with legal firms whose practice includes business formations, Miller says, nor is it designed to compete with providers of online legal documents such as LegalZoom.com Inc.
In fact, the state’s site provides a link to the State Bar of Nevada’s lawyer referral service, and encourages users to get in touch with an attorney to handle any questions that are out of the ordinary.
But Miller says many users of the software otherwise probably wouldn’t be creating operating agreements at all, leaving themselves exposed to untold legal headaches.
Nevada law doesn’t require that operating agreements be filed — or even created — but the agreements establish the terms and guiding rules for a limited-liability corporation.
“For LLCs, this provides a terrific amount of value,” says Miller.
The program, available at http://www.nvsilverplume.gov/digitaloa, walks entrepreneurs through a series of questions about key provisions that generally are included in operating agreements.
The completed document can be stored on the state government’s business portal,
While the software initially has been used largely by users who want templates for basic LLC operating agreements that they can adapt for their own purposes, Miller says the digital operating agreement software provides tools for newly created companies to handle more of their corporate governance through new technology.
A state law adopted in 2011 authorizes the use of digital technology ranging from videoconferencing to webinars — even Twitter — to conduct corporate communications.
Some nonprofit boards even are allowed to conduct board meetings through instant messaging or similar communications channels.
Miller says the digital operating agreements point to a future in which corporate formation is fully adapted to the digital world. That will reduce legal costs and the hassles of paper filings, maintenance of a physical headquarters and the expenses of annual meetings.
And the effort to reduce costs and hassles, Miller says, will help Nevada maintain its position as an attractive location for companies to establish their legal homes.
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