Right of Member to Bring Derivative Action

  1. Law
  2. Georgia Code
  3. Corporations, Partnerships, and Associations
  4. Limited Liability Companies
  5. Derivative Actions
  6. Right of Member to Bring Derivative Action

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A member may commence a derivative action in the right of the limited liability company to recover a judgment in its favor if all of the following conditions are met:

  1. Either management of the limited liability company is vested in a manager or managers who have the sole authority to cause the limited liability company to sue in its own right or management of the limited liability company is vested in the members but the plaintiff does not have the authority to cause the limited liability company to sue in its own right under the provisions of the articles of organization or a written operating agreement;
  2. The plaintiff has made written demand on those managers or those members with such authority requesting that such managers or such members take suitable action;
  3. Ninety days have expired from the date the demand was made unless the member has earlier been notified that the demand has been rejected by the limited liability company or unless irreparable injury to the limited liability company would result by waiting for the expiration of the 90 day period;
  4. The plaintiff (A) is a member of the limited liability company at the time of bringing the action, and (B) was a member of the limited liability company at the time of the transaction of which he or she complains, or his or her status as a member of the limited liability company has devolved upon him or her by operation of law from a person who was a member at the time of the transaction; and
  5. The plaintiff fairly and adequately represents the interests of the limited liability company in enforcing the right of the limited liability company.

(Code 1981, §14-11-801, enacted by Ga. L. 1993, p. 123, § 1.)

RESEARCH REFERENCES

ALR.

- Construction and application of limited liability company acts - issues relating to derivative actions and actions between members of limited liability company, 48 A.L.R.6th 1.


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