(a) The only fiduciary duties a member owes to a member-managed limited liability company and its other members are the duty of loyalty and the duty of care imposed by subsections (b) and (c).
lawyer at desk

Ask a business law question, get an answer ASAP!
Thousands of highly rated, verified business lawyers.
Click here to chat with a lawyer about your rights.

Terms Used In Hawaii Revised Statutes 428-409

  • 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
  • Business: includes every trade, occupation, profession, and other lawful purpose, whether or not carried on for profit. See Hawaii Revised Statutes 428-101
  • Fiduciary: A trustee, executor, or administrator.
  • 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
  • Member-managed limited liability company: means a limited liability company other than a manager-managed company. See Hawaii Revised Statutes 428-101
  • 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.
  • 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
  • Person: includes any individual or entity. See Hawaii Revised Statutes 428-101
  • Trustee: A person or institution holding and administering property in trust.
(b) A member’s duty of loyalty to a member-managed limited liability company and its other members is limited to the following:

(1) To account to the company and to hold as trustee for it any property, profit, or benefit derived by the member in the conduct or winding up of the company’s business or derived from a use by the member of the company’s property, including the appropriation of a company’s opportunity;
(2) To refrain from dealing with the company in the conduct or winding up of the company’s business as or on behalf of a party having an interest adverse to the company; and
(3) To refrain from competing with the company in the conduct of the company’s business before the dissolution of the company.
(c) A member’s duty of care to a member-managed limited liability company and its other members in the conduct of and winding up of the company’s business is limited to refraining from engaging in grossly negligent or reckless conduct, intentional misconduct, or a knowing violation of law.
(d) A member shall discharge the duties to a member-managed limited liability company and its other members under this chapter or under the operating agreement and exercise any rights consistent with the obligation of good faith and fair dealing.
(e) A member of a member-managed limited liability company does not violate a duty or obligation under this chapter or under the operating agreement merely because the member’s conduct furthers the member’s own interest.
(f) A member of a member-managed limited liability company may lend money to and transact other business with the company. As to each loan or transaction, the rights and obligations of the member are the same as those of a person who is not a member, subject to other applicable laws.
(g) This section applies to a person winding up the limited liability company’s business as the personal or legal representative of the last surviving member as if the person were a member.
(h) In a manager-managed limited liability company:

(1) A member who is not also a manager owes no duty to the company or to the other members solely by reason of being a member;
(2) A manager is held to the same standards of conduct prescribed for members in subsections (b) to (f);
(3) A member who pursuant to the operating agreement exercises some or all of the rights of a manager in the management and conduct of the company’s business is held to the standards of conduct in subsections (b) to (f) to the extent that the member exercises the managerial authority vested in a manager by this chapter; and
(4) A manager is relieved of liability imposed by law for violation of the standards prescribed by subsections (b) to (f) to the extent of the managerial authority delegated to the members by the operating agreement.
  Previous
Next  
 Part IV Contents