(a) A member of a member-managed limited liability company or a member or manager of a manager-managed company who votes for or assents to a distribution made in violation of § 428-406, the articles of organization, a written operating agreement, or a signed record is personally liable to the company for the amount of the distribution which exceeds the amount that could have been distributed without violating § 428-406, the articles of organization, a written operating agreement, or a signed record if it is established that the member or manager did not perform the member’s or manager’s duties in compliance with section 428-409.
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Terms Used In Hawaii Revised Statutes 428-407

  • Articles of organization: means initial, amended, and restated articles of organization and articles of merger. See Hawaii Revised Statutes 428-101
  • Distribution: means a transfer of money, property, or other benefit from a limited liability company to a member in the member's capacity as a member or to a transferee of the member's distributional interest. See Hawaii Revised Statutes 428-101
  • Limited liability company: means a limited liability company organized under this chapter. See Hawaii Revised Statutes 428-101
  • Manager: means a person, whether or not a member of a manager-managed limited liability company, who is vested with authority under section 428-301(b). See Hawaii Revised Statutes 428-101
  • Manager-managed limited liability company: means a limited liability company which is so designated in its articles of organization. See Hawaii Revised Statutes 428-101
  • Operating agreement: means the agreement under section 428-103 concerning the relations among the members, managers, and limited liability company. See Hawaii Revised Statutes 428-101
  • Record: means information that is inscribed on a tangible medium or that is stored in an electronic or other medium and is retrievable in perceivable form. See Hawaii Revised Statutes 428-101
  • Signed: includes any symbol executed or adopted by a person with the present intention to authenticate a record. See Hawaii Revised Statutes 428-101
(b) A member of a manager-managed limited liability company who knew a distribution was made in violation of § 428-406 is personally liable to the limited liability company, but only to the extent that the distribution received by the member exceeded the amount that could properly have been paid under § 428-406.
(c) A member or manager against whom an action is brought under this section may implead in the action all:

(1) Other members or managers who voted for or assented to the distribution in violation of subsection (a) and may compel contribution from them; and
(2) Members who received a distribution in violation of subsection (b) and may compel contribution from the member in the amount received in violation of subsection (b).
(d) A proceeding under this section is barred unless it is commenced within two years after the distribution.

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