Idaho Code 30-25-409 – Standards of Conduct for Members and Managers
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(a) A member of a member-managed limited liability company owes to the company and, subject to section 30-25-801, Idaho Code, the other members the duties of loyalty and care stated in subsections (b) and (c) of this section.
(b) The fiduciary duty of loyalty of a member in a member-managed limited liability company includes the duties:
(1) To account to the company and to hold as trustee for it any property, profit, or benefit derived by the member:
(A) In the conduct or winding up of the company’s activities and affairs;
(B) From a use by the member of the company’s property; or
(C) From the appropriation of a company opportunity;
(2) 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; and
(3) To refrain from competing with the company in the conduct of the company’s activities and affairs before the dissolution of the company.
Terms Used In Idaho Code 30-25-409
- 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.
- 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 a corporation as well as a natural person;
Idaho Code 73-114Property: includes both real and personal property. See Idaho Code 73-114 Trustee: A person or institution holding and administering property in trust.
(c) 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 grossly negligent or reckless conduct, willful or intentional misconduct, or knowing violation of law.
(d) A member shall discharge the duties and obligations under this chapter or under the operating agreement and exercise any rights consistently with the contractual obligation of good faith and fair dealing.
(e) 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.
(f) 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.
(g) It is a defense to a claim under subsection (b)(2) of this section and any comparable claim in equity or at common law that the transaction was fair to the limited liability company.
(h) If, as permitted by subsection (f) or (i)(6) of this section or the operating agreement, a member enters into a transaction with the limited liability company that otherwise would be prohibited by subsection (b)(2) of this section, the member’s rights and obligations arising from the transaction are the same as those of a person that is not a member.
(i) In a manager-managed limited liability company, the following rules apply:
(1) Subsections (a), (b), (c) and (g) of this section apply to the manager or managers and not the members.
(2) The duty stated under subsection (b)(3) of this section continues until winding up is completed.
(3) Subsection (d) of this section applies to managers and members.
(4) Subsection (e) of this section applies only to members.
(5) The power to ratify under subsection (f) of this section applies only to the members.
(6) Subject to subsection (d) of this section, a member does not have any duty to the company or to any other member solely by reason of being a member.