275.170 Duties of care and loyalty -- Approval of conflict of interest transactions --

382 words·~2 min read·/ky/275-170

A research copy — for the controlling text, always check the official state or federal source. Not legal advice.

Remedy for breach of the duty of loyalty. Unless otherwise provided in a written operating agreement:

(1)With respect to any claim for breach of the duty of care, a member or manager shall

not be liable, responsible, or accountable in damages or otherwise to the limited

liability company or the members of the limited liability company for any action

taken or failure to act on behalf of the limited liability company unless the act or

omission constitutes wanton or reckless misconduct.

(2)The duty of loyalty applicable to each member and manager shall be to account to

the limited liability company and hold as trustee for it any profit or benefit derived

by that person without the consent of more than one-half (1/2) by number of the

disinterested managers, or a majority-in-interest of the members from:

(a)Any transaction connected with the conduct or winding up of the limited

liability company; or

(b)Any use by the member or manager of its property, including, but not limited

to, confidential or proprietary information of the limited liability company or

other matters entrusted to the person as a result of his or her status as manager

or member.

(3)In determining whether a transaction has received the approval of a majority-in-

interest of the members, membership interests owned by or voted under the control

of the member or manager whose actions are under review in accordance with

subsection

(2)of this section, and membership interests owned by an entity owned

by or voted under the control of that member or manager, shall not be counted in a

vote of the members to determine whether to consent, and the membership interests

shall not be counted in determining whether a quorum, if required by a written

operating agreement, exists to consider whether to consent. That a transaction was

fair to the limited liability company shall not constitute a defense to the failure to

request and receive the required consent of the disinterested managers or members.

(4)A member of a limited liability company in which management is vested in

managers under KRS 275.165(2) and who is not a manager shall have no duties to

the limited liability company or the other members solely by reason of acting in his

or her capacity as a member.