Limited Liability Company (LLC) Derivative Lawsuits
Similar to corporations, owners (i.e., members) in limited liability companies (LLC) in Missouri can initiate derivative actions on behalf of the LLC to recover money/assets. This is expressly authorized under Section 347.171, RSMo.
A number of requirements must be present: (1) the plaintiff-member cannot have the authority under the LLC’s operating agreement to cause the LLC to sue in its own right, (2) the plaintiff-member must have made a demand on the manager/authorized person for the LLC to sue, (3) the manager/authorized person must have refused to bring the action or failed to timely respond and (4) the plaintiff-member must be an owner at the time of the transaction(s) complained of and at the time of filing the lawsuit.
Unlike corporate derivative actions, however, case law is not nearly as developed for LLC derivative actions. This is because LLCs are relatively new business entities. Nevertheless, given the similarities between LLCs and corporations, it would not be surprising to see future court decisions find that many of the same principles governing corporate derivative actions apply to LLC derivative actions.
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