Mark Soifer, who practices commercial litigation with Cooper Levenson, said the Revised Uniform Limited Liability Company Act will allow minority partners to take legal action if they suspect illegal or fraudulent activity and in cases where managers or controlling members are acting in a manner that is oppressive and was, is, or will be directly harmful to the applicant.
That broad description previously has been defined as the frustration of reasonable expectations, said Soifer, of Somers Point, either monetary or nonmonetary expectations.
Previously, he said, the only option a dissatisfied minority member had was to resign and take the ‘fair value’ of his or her interest.
At the same time, the act allows the LLC operating agreement to restrict or even eliminate the normal duties owed to minority members by managing members.
LLC shareholders can craft an operating agreement that will carefully outline the obligations of themajority members to minority members, minimizing the chances that a minority member could prevail in litigation against the managing member for oppression or breach of fiduciary duty, Soifer said.
Sounds like it will be another topic of discussion when business owners sit down with their attorney to draw up an LLC.
Contact Kevin Post: 609-272-7250