I do a lot of teaching and the latest topic for me is teaching early-stage/Angel investing. As part of that we talk a lot about “norms”, as most of system for investing in startups is wrapped around norms more than logic. I’ll go into why that is some other time.
What struck me a few moments ago was an LLC Agreement I was reviewing for an investment.
Normally the reasons listed why an LLC manager or CEO include firing, quitting, and death. This particular agreement listed: death, bankruptcy, withdrawal, insanity, incompetence, temporary or permanent incapacity. This is the first time I’ve seen insanity on such a list.
What is most amusing is that terms, conditions, and details on legal contracts such as these typically get added in due to actions that take place in real life. Given millions of companies, it is thus not surprising that death is on this list. Nor incompetence. Nor withdrawl.
But insanity likely means that once upon a time there was an investment company with a group of investors unhappy at the manager, who sued to remove him/her under the pretense that the manager was in fact clinically insane.
Picturing this series of events leaves me giggling at either the oddity of life or the imagination of an otherwise bored corporate attorney trying to imagine that happening. Either way, I’m amused.
