§ 7-16-56. Right of member to bring derivative action.
A member may bring an action on behalf of the limited liability company to recover
a judgment in its favor if all of the following conditions are met:
(1) The member does not have the authority to cause the limited liability company to sue
in its own right under the provisions of an operating agreement;
(2) The members or managers with this authority have wrongfully refused to bring the action
or, after adequate time to consider the demand, have failed to respond to the demand
or if an effort to cause those members or mana
Free access — add to your briefcase to read the full text and ask questions with AI
§ 7-16-56. Right of member to bring derivative action.
A member may bring an action on behalf of the limited liability company to recover
a judgment in its favor if all of the following conditions are met:
(1) The member does not have the authority to cause the limited liability company to sue
in its own right under the provisions of an operating agreement;
(2) The members or managers with this authority have wrongfully refused to bring the action
or, after adequate time to consider the demand, have failed to respond to the demand
or if an effort to cause those members or managers to bring the action is not likely
to succeed;
(3) The plaintiff:
(i) Is a member of the limited liability company at the time of bringing the action; and
(ii) Was a member of the limited liability company at the time of the transaction complained
of, or the plaintiff's status as a member of the limited liability company subsequently
devolved to the plaintiff pursuant to the terms of the operating agreement from a
person who was a member at that time; and
(4) The plaintiff fairly and adequately represents the interests of the members in enforcing
the right of the limited liability company.