Limited liability companies have the benefit of being structured as manager-managed LLCs or member-managed LLCs. Regardless of who is tasked with managing your company, there are responsibilities expected of the managers in charge. The Florida Revised LLC Act stipulates that managers of a manager-managed LLC and members of a member-managed LLC have a fiduciary duty of loyalty to the LLC and its corresponding membership. This obviously is less important for a Single Member LLC. The fiduciary duty of loyalty imposes certain responsibilities on manager or member, respectively.
The key duties of managers in a manager-managed LLC or members of a member-managed LLC related to the fiduciary duty of loyalty are the following:
The Florida Revised LLC Act also details that certain limits exist to the stated fiduciary duty of loyalty, which include the following:
In addition to the fiduciary duty of loyalty, managers or members are expected to owe a fiduciary duty of care to the limited liability company and its members. This duty of care typically refers to refraining from any reckless or negligent conduct, willful misconduct, or knowingly committing any violations of the law. Managers and members must also conduct their fiduciary duties with an obligation toward good faith and fair dealing. Additionally, managers and members should consider long-term interests of the LLC, including economic, social, legal, and more. Managers and members should also consider the impact of company actions on the LLC employees, customers, and community at large.
Your LLC operating agreement and other common law principles supplement a manager or member’s fiduciary responsibilities. The Florida Revised LLC Act gives emphasis to the enforceability of an operating agreement, as well as common law principles that relate to fiduciary duties, as supplements to the act.
With the Florida Revised LLC Act, it is important to designate at formation whether your LLC is to be manager-managed or member-managed. The fiduciary responsibilities that guide both manager and member will be determined by this designation. Similarly, any limitations on those duties will derive from this designation, as well. It is smart practice to have an experienced attorney review your LLC management designation, as well as your company’s operating agreement, to ensure that managers and members are in compliance with the act.
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