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COMPANY GOVERNANCE UNDER FLORIDA’S LIMITED LIABILITY COMPANY ACT

BARBARA ANN BANOFF*

  • I.

    INTRODUCTION.....................................................................................................

  • II.

    THE FLORIDA LIMITED LIABILITY COMPANY ACT ...............................................

    • A.

      Duties and Obligations of Managers ...........................................................

      • 1.

        RUPA ......................................................................................................

      • 2.

        FRUPA....................................................................................................

      • 3.

        The FLLCA.............................................................................................

    • B.

      Wrongs Without A Remedy...........................................................................

      • 1.

        An Overview of Exculpation ..................................................................

      • 2.

        Exculpation in Florida...........................................................................

    • C.

      Self Help: Voting and Leaving .....................................................................

      • 1.

        The Approach of Partnership Law ........................................................

      • 2.

        The Approach of Corporate Law............................................................

      • 3.

        The FLLCA.............................................................................................

  • III.

    CONCLUSION ........................................................................................................

    • A.

      The High Stakes Deal...................................................................................

    • B.

      The “Do-it-Yourselfers” .................................................................................

53 57 58 58 66 66 70 70 72 75 75 76 77 78 78 79

I. INTRODUCTION

Lawyers and accountants, the transactional engineers of Ameri- can business, are accustomed to thinking of different forms of busi- ness organization as planning opportunities. If they are savvy, they also see them as marketing opportunities. Clients may be persuaded to trade in their old forms for a new and improved model. These so- phisticated form entrepreneurs see what state legislatures have al- ways known but rarely articulated: organizational forms are prod- ucts that trade in a market. The law is for sale, not that there’s any- thing wrong with that.1

  • *

    Professor of Law, Florida State University. B.A., Radcliffe College, 1966; J.D.,

University of Santa Clara, 1973. I would like to thank Donald J. Weidner, Steven A. Bank, and John W. Larson for their comments on an earlier draft and Matthew Lines and Jason Doss for their research assistance.

1. Over the years, a number of commentators have thought something was very wrong with that. Delaware, which has been particularly successful in this market, has been the most frequent target for criticism. See, e.g., William W. Bratton, Delaware Law As Applied Public Choice Theory: Bill Cary and the Basic Course After Twenty-Five Years, 34 GA. L. REV. 447 (2000); William L. Cary, Federalism and Corporate Law: Reflections Upon Delaware, 83 YALE L.J. 663, 705 (1974) (characterizing Delaware as the winner of the “race for the bottom”); Comment, Law for Sale: A Study of the Delaware Corporation Law of 1967, 117 U. PA. L. REV. 861 (1969). Those critiques have in turn provoked defenses. See, e.g., John C. Coates IV, Takeover Defenses in the Shadow of the Pill: A Critique of the Sci- entific Evidence, 79 TEX. L. REV. 271 (2000); several pieces by Roberta Romano, but par- ticularly Law as a Product: Some Pieces of the Incorporation Puzzle, 1 J.L. ECON. & ORG. 225 (1985) and Competition for Corporate Charters and the Lesson of Takeover Statutes, 61 FORDHAM L. REV. 843 (1993); and Ralph K. Winter, Jr., State Law, Shareholder Protection, and the Theory of the Corporation, 6 J. LEGAL STUD. 251 (1977).

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