– The Florida Revised Limited Liability Act was signed into law on June 14, 2013, and became effective on January 1, 2014.
– All LLCs formed or registered in Florida on or after January 1, 2014, are required to follow the Revised Act.
– The Revised Act eliminates the term “managing member” and makes all LLCs member-managed by default, giving all members the authority to bind the LLC. – The operating agreement for Florida LLCs cannot eliminate duties of loyalty and care, except in certain situations.
– Terms in the operating agreement can be invalidated if they are found to be “manifestly unreasonable” by the court.
– The operating agreement cannot eliminate obligations of good faith and fair dealing or allow indemnification of members or managers in cases involving certain types of misconduct.
– Each manager and member owes fiduciary duties of loyalty and care to the LLC and its members.
– The duty of loyalty includes accounting to the LLC, refraining from dealing with the LLC in a way that creates a conflict of interest, and refraining from competing with the LLC. 1. Under Florida Statutes, the duty of care for LLC members is limited to refraining from grossly negligent or reckless conduct, willful or intentional misconduct, or knowing violations of the law.
2. The Revised Act expands the “safe harbor” for approving conflict of interest transactions, providing specific definitions for potential conflicts of interest and outlining criteria for determining the fairness of a transaction to the LLC and its members.
3. A transaction is considered fair to the LLC if it is beneficial to the company and its members, and if it is fair in terms of the members’ or managers’ dealings with the LLC and comparable to what could be obtained in an arm’s length transaction.
4. If these criteria are met, a transaction is not void or voidable due to a specific interest or relationship, and the burden of proving the lack of fairness of the transaction falls on the person challenging its validity. – Members of an LLC can bring a derivative action to enforce the LLC’s rights or interests after making a demand on the other members or managers.
– A member can bring a derivative action if making a demand would be futile or if waiting for other members or managers to take action would result in irreparable injury to the LLC.
– To be a proper plaintiff in a derivative action, a member must have been a member when the conduct giving rise to the action occurred, or must have obtained membership status from a person who was a member at that time.
https://www.knott-law.com/florida-revised-llc-act-new-year-new-law-governing-florida-llcs/
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