Wisconsin Statutes 183.0409 – Standards of conduct for members and managers
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Terms Used In Wisconsin Statutes 183.0409
- Appropriation: The provision of funds, through an annual appropriations act or a permanent law, for federal agencies to make payments out of the Treasury for specified purposes. The formal federal spending process consists of two sequential steps: authorization
- Common law: The legal system that originated in England and is now in use in the United States. It is based on judicial decisions rather than legislative action.
- Fiduciary: A trustee, executor, or administrator.
- Following: when used by way of reference to any statute section, means the section next following that in which the reference is made. See Wisconsin Statutes 990.01
- Obligation: An order placed, contract awarded, service received, or similar transaction during a given period that will require payments during the same or a future period.
- Person: includes all partnerships, associations and bodies politic or corporate. See Wisconsin Statutes 990.01
- Property: includes real and personal property. See Wisconsin Statutes 990.01
- Trustee: A person or institution holding and administering property in trust.
(1) A member of a member-managed limited liability company owes to the company and, subject to s. 183.0801, the other members the fiduciary duties of loyalty and care stated in subs. (2) and (3).
(2) The duty of loyalty of a member in a member-managed limited liability company includes all of the following duties:
(a) The duty to account to the company and hold as trustee for it any property, profit, or benefit derived by the member in or from any of the following:
1. The conduct or winding up of the company’s activities and affairs.
2. A use by the member of the company’s property.
3. The appropriation of a limited liability company opportunity.
(b) The duty to refrain from dealing with the company in the conduct or winding up of the company’s activities and affairs as or on behalf of a person having an interest adverse to the company.
(c) The duty to refrain from competing with the company in the conduct of the company’s activities and affairs before the dissolution of the company.
(3) The duty of care of a member of a member-managed limited liability company in the conduct or winding up of the company’s activities and affairs is to refrain from engaging in conduct for which relief or exoneration from liability is not permitted under s. 183.0105 (3) (g).
(4) A member shall discharge the duties and obligations under this chapter and under the operating agreement and exercise any rights consistently with the contractual obligation of good faith and fair dealing.
(5) A member does not violate a duty or obligation under this chapter or under the operating agreement solely because the member’s conduct furthers the member’s own interest.
(6) All the members of a member-managed limited liability company or a manager-managed limited liability company may authorize or ratify, after full disclosure of all material facts, a specific act or transaction that otherwise would violate the duty of loyalty and this authorization or ratification precludes a claim for breach of the duty of loyalty for the act or transaction by such members.
(7) It is a defense to a claim under sub. (2) (b) and any comparable claim in equity or at common law that the transaction was fair to the limited liability company.
(8) If, as permitted by sub. (6) or (9) (e) or the operating agreement, a member enters into a transaction with the limited liability company which otherwise would be prohibited by sub. (2) (b), the member’s rights and obligations arising from the transaction are the same as those of a person that is not a member.
(9) In a manager-managed limited liability company, the following rules apply:
(b) The duty stated under sub. (2) (c) continues until winding up is completed.
(c) Subsection (4) applies to managers and members.
(d) Subsection (5) applies only to members.
(e) The power to ratify under sub. (6) applies only to the members.
(f) Subject to sub. (4), a member does not have any duty to the company or to any other member solely by reason of being a member.