Dismissal

  1. Law
  2. Georgia Code
  3. Corporations, Partnerships, and Associations
  4. Limited Liability Companies
  5. Derivative Actions
  6. Dismissal

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  1. The court may dismiss a derivative proceeding if, on motion by the limited liability company, the court finds that one of the groups specified in subsection (b) of this Code section has made a determination in good faith after conducting a reasonable investigation upon which its conclusions are based that the maintenance of the derivative suit is not in the best interests of the limited liability company.The limited liability company shall have the burden of proving the independence and good faith of the group making the determination and the reasonableness of the investigation.
  2. The determination in subsection (a) of this Code section shall be made by:
    1. A majority vote of the independent managers or members present at a meeting of managers or members, as the case may be, if the independent managers or members constitute a quorum;
    2. A majority vote of a committee consisting of two or more independent managers or members appointed by a majority of independent managers or members present at a meeting of managers or members, as the case may be, whether or not such independent managers or members constitute a quorum; or
    3. A panel of one or more independent persons appointed by the court upon motion of the limited liability company.
  3. None of the following shall by itself cause a manager or member to be considered not independent for purposes of subsection (b) of this Code section:
    1. The nomination or election of the manager or member by managers or members who are not independent;
    2. The naming of the manager or member as a defendant in the derivative proceeding; or
    3. The fact that the manager or member approved the action being challenged in the derivative proceeding so long as the manager or member did not receive a personal benefit as a result of the action.

(Code 1981, §14-11-805, 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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