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Abstract

North Carolina has a new LLC act. If LLC members assert that the managers or controlling members have in some manner breached fiduciary or contractual duties owed to the complaining members or to the LLC, how will lawyers handle such claims? This Article first considers the circumstances in which North Carolina LLC managers and members may owe fiduciary duties to other members. Assuming that there is a duty that may have been breached, what are the limits on a member bringing a direct suit either on her own behalf or on behalf of the LLC? Since direct suits will now be prohibited in many cases, the plaintiff must likely resort to bringing a derivative claim. The problems with these suits under the new law are considered in some detail. Lastly, the Article provides drafting suggestions to protect LLC members, as well as alternative methods to resolve disputes among LLC members and managers.

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