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Delaware Transactional Law Updates

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The Court’s analysis highlights two important points that must be considered when preparing an LLC agreement: 1) if you want the payment of capital contributions to be tied to the percentage of ownership, you must specifically state this in the agreement; 2) your agreement should expressly modify fiduciary duties owed by the managing members — as permitted by the LLC Act — to avoid the application of corporate-like fiduciary duties.

Document: Grove v. Brown, C.A. No. 6793–VCG (Del. Ch. August 8, 2013) In Grove, a dispute arose among the four members of a limited liability company (“LLC”), who split into two camps. Camp A effected a freeze-out merger based on its belief that it owned a majority...