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COMPANY GOVERNANCE UNDER FLORIDA’S LIMITED LIABILITY COMPANY ACT - page 6 / 28

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58

FLORIDA STATE UNIVERSITY LAW REVIEW

[Vol. 30:53

Like partnerships, an LLC can be “member managed,” although par- ticipants may choose to be “manager managed.”22 Hybrids can be both vigorous and useful, as Luther Burbank discovered. On the other hand, taking some of this and some of that can produce some startling results.

Florida’s LLC governance provisions take managers’ duties from partnership law, albeit with a twist. They add the protections against liability for breach of those duties granted by Florida’s corporation statute, along with that statute’s procedures for “sanitizing” conflict of interest transactions and for indemnification.23 Finally, voting and withdrawal rights parallel such rights in corporations rather than partnerships. The following sections examine each provision, its ap- parent provenance, and its interaction with the other provisions.

A. Duties and Obligations of Managers

As noted above, the duties of managers in a Florida LLC were drawn from the Florida version of RUPA, but with some changes. FRUPA in turn adopted RUPA’s codification of fiduciary duties, but also with some changes. The final product presents a puzzle: do LLC managers have more fiduciary duties than do partners, or the same, or fewer, or (perhaps) none at all?

In order to see the contours of the puzzle, some history is re- quired. The LLC statute has no legislative history of its own. When courts interpret borrowed language, they frequently look to the his- tory of the statute from which it is borrowed. Thus, the Official Comments to RUPA become an important resource for planners and potential litigants.24

1. RUPA

The Revised Uniform Partnership Act’s treatment of fiduciary du- ties was by far the most controversial issue in the revision.25 Its predecessor, the Uniform Partnership Act, made no attempt to codify fiduciary duties. In fact, the word “fiduciary” appears in the UPA only once, in the title to section 21, which provides that a partner must “account to the partnership for any benefit, and hold as trustee for it any profits derived by him without the consent of the other

22. In a partnership, the default rule is that all partners have equal rights in the management of the business, so that all partners are also managers. However, partners may, by agreement, delegate management to fewer than all partners, and that is quite common in large partnerships.

    • 23.

      FLA. STAT. §§ 608.4223, 608.4225-608.4226, 608.4235 (2001).

    • 24.

      STUART R. COHN & STUART D. AMES, FLORIDA BUSINESS LAWS ANNOTATED 201

  • (2002)

    [hereinafter COHN & AMES].

    • 25.

      ROBERT W. HILLMAN ET AL., THE REVISED UNIFORM PARTNERSHIP ACT §§ 201-202

  • (2000)

    .

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