Limited Liability Companies are perhaps the dominant business entity. They are easy to form and easy to manage. Often times they are manager-managed, which means that managers supervise and control the operations of the company. Managers of a LLC generally owe fiduciary duties to the LLC’s owners/members, subject to the terms of the LLC’s operating…
Legal Articles
General Partnerships, Death & Dissolution
General, common law partnerships are not as prevalent as corporations, limited liability companies, limited liability partnerships, or other statutory entities registered with the Missouri Secretary of State. A partnership may arise legally, however, if parties are not careful. Co-ownership and sharing of profits between one or more persons, without anything more formal (written or otherwise),…
Alter Ego Theories; Piercing the Corporate Veil
Corporations and limited liability companies are oft-utilized because they generally insulate the owners of the business from business liabilities. A “corporation is regarded as a wholly and separate legal entity, distinct from the members who compose it.” Blanks v. Fluor Corp., 450 S.W.3d 308, 375 (Mo. Ct. App. 2014). An exception to this rule is…
Limited Liability Company Derivative Actions
Derivative lawsuits generally refer to claims made relating to the mismanagement of a corporation or limited liability company. It is brought by a shareholder, as the corporation’s representative. Nickell v. Shanahan, 439 S.W.3d 223, 227 (Mo. 2014). The shareholder is only a nominal plaintiff, and the corporation or limited liability company is the real party…
Fiduciary Duties in a Limited Liability Company
In Missouri, Managers of a limited liability company owe fiduciary duties to the company itself. Hibbs v. Berger, 430 SW.3d 296, 315 (Mo. Ct. App. 2014) (citing Section 347.088.2, RSMo). Indeed, a manager “has a duty to act in good faith and in the best interests of the limited liability company”). Sutherland v. Sutherland, 348…
LLC Derivative Lawsuits
Though the cases are not as nearly developed as with corporations, limited liability companies (LLCs) are subject to derivative lawsuits. A typical derivative lawsuit is one in which a member/owner of the company brings a claim on behalf of the LLC against a manager, director or third-party. Usually the manager/director is authorized to bring the…
LLC Manager Removal
Unlike with corporations, partnerships and other business entities, there are few statutory provisions addressing the procedures for removing a manager of a limited liability company in Missouri. If a LLC is manager-managed, then management is vested in the manager(s), who has the right and authority to manage the affairs of the LLC and make decisions…
Partnership Dissolution
A general partnership typically exists when two or more persons carry on a business as co-owners for profit. Stuart v. Overland Medical Center, 510 S.W.2d 494, 497 (Mo. Ct. App. 1974). It is more specifically defined as a “a contract of two or more competent persons to place their money, effects, labor and skill, or…
Intra-Corporate Immunity, Defamation
Defamation generally consists of a (1) publication, (2) a defamatory statement, that (3) identifies the plaintiff, that is (4) false, that is (5) published with the requisite degree of fault and (6) damages to the plaintiff’s reputation. Nazeri v. Missouri Valley College, 860 S.W.2d 303 (Mo. banc 1993). The publication must be to a third-person….
When you may be Personally Liable for LLC or Corporate Debt
One of the main benefits to forming a limited liability company or corporation is that the owners of the company are usually not personally responsible for the debts of the busness. There are exceptions to this general rule. First and foremost, if there is a personal guarantee for a business debt, then the personal guarantor…