(a) A member of a member-managed limited liability company owes to the company and, subject to subsection (b) of section 34-271, the other members the duties of loyalty and care set forth in subsections (b) and (c) of this section.

(b) The fiduciary duty of loyalty of a member in a member-managed limited liability company includes the duties:

(1) To account to the company and to hold as trustee for it any property, profit or benefit derived by the member: (A) In the conduct or winding up of the company's activities and affairs; (B) from a use by the member of the company's property; or (C) from the appropriation of a company opportunity;

(2) To refrain from dealing with the company in the conduct or winding up of the company's activities and affairs as or on behalf of a person having an interest adverse to the company; and

(3) To refrain from competing with the company in the conduct of the company's activities and affairs before the dissolution of the company.

(c) (1) A member of a member-managed limited liability company shall discharge the duties of such member as a member, including duties as a member of a committee of the members of the limited liability company: (A) In good faith; (B) with the care an ordinarily prudent person in a like position would exercise under similar circumstances; and (C) in a manner the member reasonably believes to be in the best interests of the limited liability company.

(2) In discharging such duties, the member is entitled to rely on information, opinions, reports or statements, including financial statements and other financial data, if prepared or presented by: (A) One or more officers or employees of the limited liability company whom the member reasonably believes to be reliable and competent in the matters presented; (B) legal counsel, public accountants or other persons as to matters the member reasonably believes are within the person's professional or expert competence; or (C) a committee of members of the limited liability company of which the member is not a member if the member reasonably believes the committee merits confidence.

(3) In discharging such duties under subsection (a) of this section and the operating agreement, a member or manager shall not be liable to the limited liability company or to any other member for actions or failure to act pursuant to the provisions of the operating agreement, except that a member is not acting in good faith if the member has knowledge concerning the matter in question that makes reliance otherwise permitted by this subsection unwarranted.

(d) A member shall discharge the duties and obligations under sections 34-243 to 34-283d, inclusive, or under the operating agreement and exercise any rights consistently with the implied contractual obligation of good faith and fair dealing.

(e) A member, other than in the capacity of a manager, does not violate a duty or obligation under sections 34-243 to 34-283d, inclusive, or under the operating agreement solely because the member's conduct furthers the member's own interest.

(f) A majority in interest of disinterested members of a member-managed limited liability company or a manager-managed limited liability company may authorize or ratify, after full disclosure of all material facts, a specific act or transaction that otherwise would violate the duty of loyalty.

(g) It is a defense to a claim under subdivision (2) of subsection (b) of this section and any comparable claim in equity or at common law that the transaction was fair to the limited liability company.

(h) If, as permitted by subsection (f) of this section, subdivision (5) of subsection (i) of this section or the operating agreement, a member enters into a transaction with the limited liability company which otherwise would be prohibited by subdivision (2) of subsection (b) of this section, the member's rights and obligations arising from the transaction are the same as those of a person that is not a member.

(i) In a manager-managed limited liability company, the following rules apply:

(1) Subsections (a), (b), (c) and (g) of this section apply to the manager or managers and not the members.

(2) Subsection (d) of this section applies to managers and members.

(3) Subsection (e) of this section applies only to members.

(4) The power to ratify under subsection (f) of this section applies only to the members.

(5) Subject to subsection (d) of this section, a member does not have any duty to the company or to any other member solely by reason of being a member.

(P.A. 16-97, S. 47.)

History: P.A. 16-97 effective July 1, 2017.