In Information Rights Under New Iowa LLC Law, Marc Ward points out that, under Sec. 489.410 of the Iowa RULLCA, members have the right to certain information without demand. He notes the breadth of Section 489.410.1.b(1)–Section 410(a)(2)(A) of the RULLCA. That part of Section 410 requires a member-managed LLC to furnish each member
[w]ithout demand, any information concerning the company’s activities, financial condition, and other circumstances which the company knows and is material to the proper exercise of the member’s rights and duties under the operating agreement or this chapter….
Section 410(a)(3) imposes the same obligation to disclose on members of member-managed LLCs, but only to the extent that they know that information. Ward argues that this affirmative disclosure obligation should apply on where the LLC is affirmatively communicating with its members.
I would argue that the "member’s rights and duties" to which Section 410(a)(2)(A) refers are the rights and obligations relating to management of LLC by a member of a member-managed LLC. Section 410(b)(1) makes this clear by providing that, in manager=managed LLCs,
[t]he informational rights stated in subsection a and the duty stated in subsection (a)(3) apply to the managers and not the members.
In manager-managed LLCs, the LLC (and its manager) are required to provided information without demand only
[w]henever this [act] or an operating agreement provides for a member to give or withhold consent to a matter, before the consent is given or withheld, the company shall, without demand, provide the member with all information that is known to the company and is material to the member’s decision.
RULLCA § 410(b)(4).
Regardless of whether a manager is a member, the manager’s right to relevant information relating to the management of the LLC should be much broader. Where there is more than one manager, arguably, that should include the right to information about, and relating to, material actions by other managers.
posted by Gary Rosin
This entry was posted on Thursday, December 18th, 2008 at 2:49 pm and is filed under Commentary. You can follow any responses to this entry through the RSS 2.0 feed.
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Rights to Information under RULLCA Sec. 410
In Information Rights Under New Iowa LLC Law, Marc Ward points out that, under Sec. 489.410 of the Iowa RULLCA, members have the right to certain information without demand. He notes the breadth of Section 489.410.1.b(1)–Section 410(a)(2)(A) of the RULLCA. That part of Section 410 requires a member-managed LLC to furnish each member
Section 410(a)(3) imposes the same obligation to disclose on members of member-managed LLCs, but only to the extent that they know that information. Ward argues that this affirmative disclosure obligation should apply on where the LLC is affirmatively communicating with its members.
I would argue that the "member’s rights and duties" to which Section 410(a)(2)(A) refers are the rights and obligations relating to management of LLC by a member of a member-managed LLC. Section 410(b)(1) makes this clear by providing that, in manager=managed LLCs,
In manager-managed LLCs, the LLC (and its manager) are required to provided information without demand only
RULLCA § 410(b)(4).
Regardless of whether a manager is a member, the manager’s right to relevant information relating to the management of the LLC should be much broader. Where there is more than one manager, arguably, that should include the right to information about, and relating to, material actions by other managers.
This entry was posted on Thursday, December 18th, 2008 at 2:49 pm and is filed under Commentary. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.