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COMPANY GOVERNANCE UNDER FLORIDA’S LIMITED LIABILITY COMPANY ACT - page 17 / 28

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2002]

FLORIDA’S LIMITED LIABILITY COMPANY ACT

69

have preferred total freedom of contract,64 the statute continues to provide “mandatory minima.” At least, however, Mr. Conti believes the statute as written moves in the right direction.

I respect Mr. Conti, and I am fully sympathetic with his contrac- tarian viewpoint. Nevertheless, I do not think leaving out the f-word makes managers “unfiduciaries.” For one thing, the statute makes them agents of the LLC65 and agents are by definition fiduciaries.66 For another, there is not the slightest indication that the legislature noticed the omission.67 Indeed, it appears to have been overlooked by several members of the drafting committee.68

In short, I think judges will continue to speak of the “fiduciary” duties of care and loyalty, and will continue to make “fiduciary” remedies available to the extent permitted by other provisions in the

Under FRUPA, the default rule is that conflict of interest transactions can only be author- ized or ratified by unanimous vote. Under FLLCA, the default rule is that a conflict of in- terest transaction can be authorized by majority vote. That default rule can then be modi- fied, either to specify categories or types of activities which do not require sanitization (if not “manifestly unreasonable”) or to set a different percentage for approval. COHN & AMES, supra note 24, at 368.

  • 64.

    Remarks, supra note 61.

  • 65.

    Section 608.4235, Florida Statutes, states:

    • (1)

      Subject to subsections (2) and (3):

      • (a)

        In a member-managed company, each member is an agent of the limited li-

ability company for the purpose of its business, and an act of a member, including the signing of an instrument in the limited liability company’s name, for appar- ently carrying on in the ordinary course the limited liability company’s business or business of the kind carried on by the company binds the limited liability com- pany, unless the member had no authority to act for the limited liability company in the particular matter and the person with whom the member was dealing knew or had notice that the member lacked authority.

  • (2)

    Subject to subsection (3), in a manager-managed company:

    • (a)

      A member is not an agent of the limited liability company for the purpose

of its business solely by reason of being a member. Each manager is an agent of the limited liability company for the purpose of its business, and an act of a man- ager, including the signing of an instrument in the limited liability company’s name, for apparently carrying on in the ordinary course the limited liability com- pany’s business or business of the kind carried on by the company binds the lim- ited liability company, unless the manager had no authority to act for the limited liability company in the particular matter and the person with whom the man- ager was dealing knew or had notice that the manager lacked authority.

  • 66.

    RESTATEMENT (SECOND) OF AGENCY § 1 (1958).

  • 67.

    It seems unlikely that a legislature which broadened the definition of “loyalty” in

FRUPA because RUPA’s definition was deemed too narrow would turn around and casu- ally eliminate all fiduciary duties in the LLC statute. Of course, the 1999 legislature was not composed of the same people as the 1995 legislature; term limits have created a revolv- ing door at the Capitol. On the other hand, the 1999 legislature revisited FRUPA in order to change the LLP provisions, but did not alter FRUPA’s fiduciary duties.

68. The members of the drafting committee served as the “faculty” for the aforemen- tioned Continuing Legal Education program. In their prepared materials, four of them re- ferred to the “fiduciary” duties of managers: Mssrs. Felman, Weidner, Ames, and, curi- ously, Conti. (I assume that the word crept into Mr. Conti’s materials by way of an assis- tant.) Two of the members also use the f-word in their treatise. COHN & AMES, supra note 24, at 367.

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