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COMPANY GOVERNANCE UNDER FLORIDA’S LIMITED LIABILITY COMPANY ACT - page 16 / 28

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FLORIDA STATE UNIVERSITY LAW REVIEW

[Vol. 30:53

2. Specify the number or percentage of members or disinterested managers that may authorize or ratify, after full disclosure of all material facts, a specific act or transaction that otherwise would violate the duty of loyalty (c) Unreasonably reduce the duty of care under s. 608.4225; .... Thus, like FRUPA, the statute permits the operating agreement to set forth “sanitizing” clearance provisions for conflict of interest transactions. However, another part of the stat- ute, this time drawn from Florida’s corporation statute, makes it unnecessary for the or- ganizers to do so. Section 608.4226, Florida Statutes, provides: (1) No contract or other transaction between a limited liability company and one or more of its members, managers, or managing members or any other lim- ited liability company, corporation, firm, association, or entity in which one or more of its members, managers, or managing members are managers, managing members, directors, or officers or are financially interested shall be either void or voidable because of such relationship or interest, because such members, manag- ers, or managing members are present at the meeting of the members, managers, or managing members or a committee thereof which authorizes, approves, or rati- fies such contract or transaction, or because their votes are counted for such pur- pose, if: (a) The fact of such relationship or interest is disclosed or known to the man- agers or managing members or committee which authorizes, approves, or ratifies the contract or transaction by a vote or consent sufficient for the purpose without counting the votes or consents of such interested members, managers, or manag- ing members (b) The fact of such relationship or interest is disclosed or known to the mem- bers entitled to vote and they authorize, approve, or ratify such contract or trans- action by vote or written consent; or (c) The contract or transaction is fair and reasonable as to the limited liability company at the time it is authorized by the managers, managing members, a committee, or the members. (2) For purposes of paragraph (1)(a) only, a conflict of interest transaction is authorized, approved, or ratified if it receives the affirmative vote of a majority of the managers or managing members, or of the committee, who have no relation- ship or interest in the transaction described in subsection (1), but a transaction may not be authorized, approved, or ratified under this section by a single man- ager of a manager-managed company or a single managing member of a member- managed company, unless the company is a single member limited liability com- pany. If a majority of the managers or managing members who have no such re- lationship or interest in the transaction vote to authorize, approve, or ratify the transaction, a quorum is present for the purpose of taking action under this sec- tion. The presence of, or a vote cast by, a manager or managing member with such relationship or interest in the transaction does not affect the validity of any action taken under paragraph (1)(a) if the transaction is otherwise authorized, approved, or ratified as provided in that subsection, but such presence or vote of those managers or managing members may be counted for purposes of determin- ing whether the transaction is approved under other sections of this chapter. (3) For purposes of paragraph (1)(b) only, a conflict of interest transaction is authorized, approved, or ratified if it receives the vote of a majority-in-interest of the members entitled to be counted under this subsection. Membership interests owned by or voted under the control of a manager or managing member who has a relationship or interest in the transaction described in subsection (1) may not be counted in a vote of members to determine whether to authorize, approve, or ratify a conflict of interest transaction under paragraph (1)(b). The vote of those membership interests, however, is counted in determining whether the transac- tion is approved under other sections of this act. A majority-in-interest of the members, whether or not present, that are entitled to be counted in a vote on the transaction under this subsection constitutes a quorum for the purpose of taking action under this section.

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