Florida Statutes 605.0406 – Liability for improper distributions
Current as of: 2023 | Check for updates
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(1) Except as otherwise provided in subsection (2), if a member of a member-managed limited liability company or manager of a manager-managed limited liability company consents to a distribution made in violation of s. 605.0405 and, in consenting to the distribution, fails to comply with s. 605.04091, the member or manager is personally liable to the company for the amount of the distribution which exceeds the amount that could have been distributed without the violation of s. 605.0405.
(2) To the extent the operating agreement of a member-managed limited liability company expressly relieves a member of the authority and responsibility to consent to distributions and imposes that authority and responsibility on one or more other members, the liability in subsection (1) applies to the other members and not the member that the operating agreement relieves of authority and responsibility.
(3) A person who receives a distribution knowing that the distribution violated s. 605.0405 is personally liable to the limited liability company, but only to the extent that the distribution received by the person exceeded the amount that could have been properly paid under s. 605.0405.
(4) A person against whom an action is commenced because that person is or may be liable under subsection (1) may:
(a) Implead another person who is or may be liable under subsection (1) and seek to enforce a right of contribution from the person; or
Terms Used In Florida Statutes 605.0406
- Distribution: means a transfer of money or other property from a limited liability company to a person on account of a transferable interest or in the person's capacity as a member. See Florida Statutes 605.0102
- Manager: means a person who, under the operating agreement of a manager-managed limited liability company, is responsible, alone or in concert with others, for performing the management functions stated in ss. See Florida Statutes 605.0102
- Manager-managed limited liability company: means a limited liability company that is manager-managed by virtue of the operation of…. See Florida Statutes 605.0102
- Member: means a person who:(a) Is a member of a limited liability company under…. See Florida Statutes 605.0102
- Member-managed limited liability company: means a limited liability company that is not a manager-managed limited liability company. See Florida Statutes 605.0102
- Operating agreement: means an agreement, whether referred to as an operating agreement or not, which may be oral, implied, in a record, or in any combination thereof, of the members of a limited liability company, including a sole member, concerning the matters described in…. See Florida Statutes 605.0102
- Person: means an individual, business corporation, nonprofit corporation, partnership, limited partnership, limited liability company, limited cooperative association, unincorporated nonprofit association, statutory trust, business trust, common law business trust, estate, trust, association, joint venture, public corporation, government or governmental subdivision, agency, or instrumentality, or another legal or commercial entity. See Florida Statutes 605.0102
- right of contribution: means property or a benefit described in…. See Florida Statutes 605.0102
(b) Implead a person who received a distribution in violation of subsection (3) and seek to enforce a right of contribution from an impleaded person in the amount the person received in violation of subsection (3).
(5) An action under this section is barred unless commenced within 2 years after the distribution.