Delaware amends its LLC act: managers and controllers owe fiduciary duties unless LLC agreement provides otherwise

By Bruce E Falby and John L Reed

Effective 1 August, 2013, the Delaware General Assembly has amended Section 18-1104 of the Delaware Limited Liability Company Act to provide that, unless the limited liability company agreement says otherwise, the managers and controlling members of a limited liability company owe fiduciary duties of care and loyalty to the limited liability company and its members.

The amendment was prompted by the Delaware Supreme Court’s decision last November in Gatz Properties, LLC v Auriga Capital Corp, which disregarded as ‘improvident and unnecessary’ dictum the Chancery Court’s ruling below that ‘the Delaware Limited Liability Company Act imposes “default” fiduciary duties upon LLC managers and controllers unless the parties to the LLC Agreement contract that such duties shall not apply.’

The Delaware Supreme Court in Auriga ‘decline[d] to express any view regarding whether default fiduciary duties apply as a matter of statutory construction’ and ‘suggest[ed] that the “organs of the Bar” (to use the trial court’s phrase) may be well advised to consider urging the General Assembly to resolve any statutory ambiguity on this issue.’…

If you are registered and logged in to the site, click on the link below to read the rest of the DLA Piper briefing. If not, please register or sign in with your details below.

Sign in or Register to continue reading this article

Sign in

Register

It's quick, easy and free!

It takes just 5 minutes to register. Answer a few simple questions and once completed you’ll have instant access.

Register now

Why register to The Lawyer

 

Industry insight

In-depth, expert analysis into the stories behind the headlines from our leading team of journalists.

 

Market intelligence

Identify the major players and business opportunities within a particular region through our series of free, special reports.

 

Email newsletters

Receive your pick of The Lawyer's daily and weekly email newsletters, tailored by practice area, region and job function.

More relevant to you

To continue providing the best analysis, insight and news across the legal market we are collecting some information about who you are, what you do and where you work to improve The Lawyer and make it more relevant to you.

Briefings from DLA Piper

View more briefings from DLA Piper

Analysis from The Lawyer

View more analysis from The Lawyer

Overview

3 Noble Street
London
EC2V 7EE
UK
http://www.dlapiper.com

Turnover (£m): 1,566.29
No. of lawyers: 3,961 (UK 200)
Jurisdiction: global
No. of offices: more than 75
No. of qualified lawyers: 625 (International 50)

Jobs