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COMPANY GOVERNANCE UNDER FLORIDA’S LIMITED LIABILITY COMPANY ACT - page 26 / 28

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FLORIDA STATE UNIVERSITY LAW REVIEW

[Vol. 30:53

Sanguine though I am about the FLLCA’s treatment of fiduciary duties and remedies for breach, I do not agree with the choice of the corporate model as the default rule for exit. The drafters appear to have been influenced by the estate planners in their midst.106 Never- theless, I think the Uniform Limited Liability Company Act, which adopted partnership dissociation as its default model,107 is much bet- ter.

III. CONCLUSION

If Florida’s old LLC statute was an Edsel, the new one is a Tau- rus. Lots of consumers are buying it, and for good reason: it’s a fine vehicle for ordinary small business enterprisers with reasonably competent lawyers or accountants who can tailor the default rules to suit the parties. These “plain vanilla” form consumers probably need not be overly worried about whether or not the statute’s mandatory duties are “fiduciary” or merely contractual; if they are lucky, some- one who used the Florida statute for a more complicated deal will wind up spending the money to procure an authoritative opinion from the Florida courts. The statute’s mismatch between mandatory duties and the remedies for breach is not a problem so long as it is brought to the parties’ attention. After all, properly advised parties can volunteer for potential liability and its associated leverage if they want. Further, such parties will not be stuck with the default rules on voting and exit; their operating agreement will include a buy-out mechanism and, if necessary, custom-made voting rights.

However, while the Florida statute is fine for the mass market, it is not well-suited to consumers at either end of the spectrum: (1) those with high stakes, complex deals, particularly when some or all of the parties are also engaged in other, possibly competing busi- nesses, and (2) those with simple deals but no professional assis- tance.

A. The High Stakes Deal

As written, the statute provides mandatory minima duties which are probably fiduciary—but maybe not. It provides an amorphous ob- ligation of good faith, which is probably not a fiduciary duty—but maybe it is. It provides exculpatory provisions which nevertheless

106. I am indebted to my colleague David Powell for informing me that the “no exit/no buyback on death” default rule is necessary to use the LLC as an estate planning device. See also Andrew J. Willms, Discounting Transfer Taxes with LLCs and Family Limited Partnerships, 13 J. TAXN INVESTMENTS 210 (1996).

107. Articles 6-8 of the Uniform Limited Liability Company Act track RUPA’s distinc- tions between an at will organization and a term organization, and between “rightful” and “wrongful” dissociation, but in either case, exit is easy and liquidity—either immediate or eventual—is assured.

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