By: Angela C. Wetherby
Generally speaking, Michigan law protects a member and/or manager of al limited liability company (“LLC”) from personal liability with respect to the debts and obligations of the LLC. In other words, as a member of a LLC, you are not usually personally responsible for those actions that you take on behalf of your LLC. This kind of protection is similar to that afforded to shareholders and officers of a corporation.
That being said, what happens when a member of a LLC engages in illegal or fraudulent conduct that arises out of his or her role as a member and/or manager of the LLC? It is well-established in Michigan that members and managers of LLCs are not protected from personal liability when said liability stems from their own tortious conduct, negligence, or fraud — even if the subject member and/or manager undertook said action on behalf of the LLC. For example, MCL 450.4515(1) specifically provides that a member of a LLC may file a lawsuit in circuit court for the purpose of establishing that the acts of other managers or members “in control of” the LLC are “illegal or fraudulent or constitute willfully unfair and oppressive conduct toward the limited liability company or the member.” Members and managers are subject to certain duties, both with respect to each other and the entities that they represent. This is why I think that it is important for business entities of all kinds to routinely consult with legal counsel to ensure that they are being operated lawfully and effectively. tInosencio & Fisk, PLLC, has extensive experience in representing and assisting clients in a vast array of business matters.
This website and the contents thereof is designed for general information only and information should not be considered as formal legal advice nor the formation of an attorney/client relationship. The purpose of this post is to provide a brief and general overview of the subject matter.
If you have any questions regarding estate planning, please contact Inosencio & Fisk, PLLC, at (517) 796-1444.