Minority members of closely held LLC’s may have important protections from rogue company managers. These protections may allow minority owners to protect their investments against mismanagement.
As a general rule, LLC members do not owe each other fiduciary duties under North Carolina law. Unlike majority shareholders in a corporation, majority owners of an LLC typically owe no duty to minority owners. However, where a majority member also exercises significant control over the company—for instance, by acting as a member-manager—they may owe other members a fiduciary duty. This duty requires them to act in good faith and with due regard to the interests of other members.
This exception to the general rule can afford minority owners significant protections from majority member-managers who place their own interests ahead of other members.
If you are facing a business dispute, contact the business litigation attorneys at Miller Law Group today for a free and confidential consultation. You can also set up your consultation by calling us at (919) 348-4361.