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COMPANY GOVERNANCE UNDER FLORIDA’S LIMITED LIABILITY COMPANY ACT - page 15 / 28

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2002]

FLORIDA’S LIMITED LIABILITY COMPANY ACT

67

“the only fiduciary duties” are the duties of loyalty and care, the statute says each manager “shall owe a duty of loyalty and a duty of care.”60

According to the Chair of the drafting committee, Louis Conti, the omission was deliberate.61 In his view, if managers are not called “fi-

duciaries,” then their duties are merely contractual.62 alty thus have the same status as good faith.

Care and loy-

Of course, even if care and loyalty are contractual obligations rather than fiduciary duties, the statute explicitly states that they cannot be totally eliminated.63 As much as Mr. Conti (and I) would

  • 60.

    Section 608.4225, Florida Statutes, states:

  • (1)

    Subject to ss. 608.4226 and 608.423, each manager and managing member

shall owe a duty of loyalty and a duty of care to the limited liability company . . . .

  • (a)

    The duty of loyalty includes, without limitation:

    • 1.

      Accounting to the limited liability company and holding as trustee for the

limited liability company any property, profit, or benefit derived by such manager or managing member in the conduct or winding up of the limited liability com- pany business or derived from a use by such manager or managing member of limited liability company property, including the appropriation of a limited liabil- ity company opportunity. 2. Refraining from dealing with the limited liability company in the conduct or winding up of the limited liability company business as or on behalf of a party having an interest adverse to the limited liability company. 3. Refraining from competing with the limited liability company in the conduct of the limited liability company business before the dissolution of the limited liability company. (b) The duty of care is limited to refraining from engaging in grossly negligent or reckless conduct, intentional misconduct, or a knowing violation of law. 61. Louis T.M. Conti, Esq., Remarks at the Florida Bar Continuing Legal Education Committee and the Business Law and Tax Sections Program, New And Improved LLCs and LLPs in Florida: Understanding and Using the New Laws (Nov. 5, 1999) [hereinafter

Remarks]. I am grateful to coming me into their midst to attend that day.

Mr. Conti and to as a last-minute

the other participants in the program for wel- substitute for Dean Weidner, who was unable

  • 62.

    Id.

  • 63.

    Section 608.423, Florida Statutes, which provides the same “non-waivable” provi-

sions as FRUPA, states: (1) Except as otherwise provided in subsection (2), all members of a limited li- ability company may enter into an operating agreement, which need not be in writing, to regulate the affairs of the company and the conduct of its business, es- tablish duties in addition to those set forth in this chapter, and to govern rela- tions among the members, managers, and company. Any inconsistency between written and oral operating agreements shall be resolved in favor of the written agreement. The members of a limited liability company may enter into an operat- ing agreement before, after, or at the time the articles of organization are filed, and the operating agreement takes effect on the date of the formation of the lim- ited liability company or on any other date provided in the operating agreement. To the extent the operating agreement does not otherwise provide, this chapter governs relations among the members, managers, and limited liability company.

  • (2)

    The operating agreement may not:

    • (a)

      Unreasonably restrict a right to information or access to records under s.

608.4101

  • (b)

    Eliminate the duty of loyalty under s. 608.4225, but the agreement may:

    • 1.

      Identify specific types or categories of activities that do not violate the duty

of loyalty, if not manifestly unreasonable; and

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