Do Fiduciary Duties of Managers and Members of Limited Liability Companies Exist as with Majority Shareholders of Closely Held Corproations?ExpressO (2010)
AbstractDo Fiduciary Duties of Managers and Members of Limited Liability Companies Exist as with Majority Shareholders of Closely Held Corporations? Thomas M. Madden, J.D. Abstract Since Delaware’s Van Gorkom decision and the Delaware General Assembly’s response to it with Section 102(b)(7) of the Delaware General Corporation Law, we have known that at least one leading state had moved to permit greater limitation and elimination of fiduciary duties linked to corporations. We have, however, not known exactly what the ramifications, if any, have been for close corporation shareholders and especially not for limited liability company managers or members. This article focuses on the statutory and common law treatment of fiduciary duties since Van Gorkom in the “five major states,” Delaware, Massachusetts, California, New York and Illinois (in order of increasingly strict establishment and enforcement of fiduciary duties). It concludes in answer to the question that is its title that fiduciary duties of managers and members of limited liability companies do exist in statutes and at common law parallel to and informed by preceding corporate law. Moreover, it asserts that this correlation of corporate fiduciary treatment to limited liability company fiduciary treatment is growing in likeness in the five major states and that consequently difference between the limited liability company and close corporation is diminishing as the limited liability company form ages and a body of law regarding it, largely informed by preceding and parallel law on close corporations, continues to develop.
- limited liability comapny,
- fuduciary duty
Publication DateFebruary 25, 2010
Citation InformationThomas M. Madden. "Do Fiduciary Duties of Managers and Members of Limited Liability Companies Exist as with Majority Shareholders of Closely Held Corproations?" ExpressO (2010)
Available at: http://works.bepress.com/thomas_madden/3/