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2002]

FLORIDA’S LIMITED LIABILITY COMPANY ACT

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when contingencies can be foreseen. Decisions will have to be made in the future about products, services, assets, production or provision methods, and the allocation of benefits or burdens.19 Statutory gov- ernance provisions in turn tell us a lot about who gets to make the decisions, who gets to complain about them, and whose complaints have teeth. To the extent that firm organizers do not like the an- swers the statute provides, they may be permitted to draft around it (although this in itself incurs costs), or they may choose another form.

This Article focuses on the governance provisions of Florida’s Lim- ited Liability Company Act and compares them to the governance provisions generally available in other business forms. As will be seen, the statutory language is not always clear, so alternative inter- pretations are explored. The Article concludes that the new Florida statute is a major improvement over its predecessor. It will suit form consumers and form merchants in the vast transactional middle, the world of the “plain vanilla” deal. However, (1) it is likely to serve as a trap for the unwary who form an LLC without professional assis- tance, and (2) it is unlikely to displace its out-of-state competition for high stakes, complex deals in which the parties need (or think they need) unlimited freedom to contract.

II. THE FLORIDA LIMITED LIABILITY COMPANY ACT

Limited liability companies are often referred to as “hybrid” busi- ness forms. They look a little like both of their parents, partnerships and corporations, but are not quite either one.20 Like corporations, a filing is required; an LLC may not be formed with a handshake.21

printed in R. H. COASE, THE FIRM, THE MARKET, AND THE LAW 33 (1988). Some or all par- ticipants may supply human capital; some or all may supply money or other property. A central problem with firm production is that team members have incentives to prefer their own self-interest to that of the team if they can do so without paying the full costs of self- preferring behavior. A vast literature has grown up around the “theory of the firm” and its associated agency costs. For starters, see Michael C. Jensen & William H. Meckling, The- ory of the Firm: Managerial Behavior, Agency Costs and Ownership Structure, 3 J. FIN. ECON. 305 (1976). At the moment, an interesting debate has sprung up over who “counts” as a member of the team. See Margaret M. Blair & Lynn A. Stout, A Team Production The- ory of Corporate Law, 85 VA. L. REV. 247 (1999); Symposium, Team Production in Business Organizations: An Introduction, 24 J. CORP. L. 743 (1999). While I find all this fascinating (I am, after all, an academic), for purposes of this Article the only team members who count are those with the power to choose the organizational form.

19. Business enterprisers may have a cognitive bias that makes them happy to think about benefits (profits) and disinclined to think about burdens (losses). Lawyers who insist on planning for the down side may therefore be seen as “deal killers,” but it goes with the territory.

  • 20.

    They also sometimes look a lot like limited partnerships, themselves a “hybrid.”

  • 21.

    Or by accident. The fact that there is no such thing as an “inadvertent” LLC may

justify some departures from the partnership model. Claire Moore Dickerson, Equilibrium Destabilized: Fiduciary Duties Under the Uniform Limited Liability Company Act, 25 STETSON L. REV. 417, 425, 434-35 (1995).

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