Limited Liability Company (LLC) disputes often occur between members of the LLC. Many LLC’s operated under the old California laws that have been amended as of January 1, 2014. On that date, the old rules were replaced by the California Revised Uniform Limited Liability Company Act (RULLCA).
The old default rules related to members and managers of a Limited Liability Company (LLC) have been changed. Thus, assumptions arising from written operating agreements that were instituted before 2014 have been altered.
For instance, management authority has been changed which require a written statement designating the LLC a manager-managed LLC in the LLC’s articles of organization and written operating agreement. Before, having them in just the operating agreement was enough.
Under the new law fiduciary duties of members and managers are specifically spelled out. These duties: the duty of loyalty, the duty of care, and “any other fiduciary duty” cannot be eliminated. However, the duty of loyalty can be to modified, but is subject to a “not manifestly unreasonable” standard.
The new Limited Liability Company (LLC) law also makes the default rule limiting a manager’s authority to take certain actions without approval of all the members. These limitations include a sale, lease or exchange of substantially all of the LLC’s assets and any action outside the “ordinary course” of the company’s business. However, these rules can be overridden by the terms of the operating agreement.
If you have any questions regarding a Limited Liability Company (LLC) dispute, please feel free to contact the Law Offices of Ara Jabagchourian, P.C. to set up an appointment.