Last week, we discussed how to request records from a corporation. Are there similar rights for a member of a limited liability company (“LLC”)? Yes. How to get the information depends on whether the LLC is a member-managed LLC or a manager-managed/board-managed LLC.
Under Minn. Stat. § 322C.0410, a member may inspect and copy during regular business hours, at a reasonable location specified by the LLC, “any record maintained by the company regarding the company’s activities, financial condition, and other circumstances, to the extent the information is material to the member’s rights and duties under the operating agreement or this chapter.” The bolded language is often an area of contention. As discussed last week, such records requests are often a prelude to litigation. As such, the LLC or those in control of the LLC may be reluctant to provide a dissenting member information if such request follows outside the purview of the above bolded language.
Additionally, the LLC has a statutory obligation in a member-managed LLC to:
(i) without demand, any information concerning the company’s activities, financial condition, and other circumstances which the company knows and is material to the proper exercise of the member’s rights and duties under the operating agreement or this chapter, except to the extent the company can establish that it reasonably believes the member already knows the information; and
(ii) on demand, any other information concerning the company’s activities, financial condition, and other circumstances, except to the extent the demand or information demanded is unreasonable or otherwise improper under the circumstances.
Minn. Stat. § 322C.0410, subd. 1.
In a manager-managed/board-managed LLC, the following applies to records requests by members:
(2) During regular business hours and at a reasonable location specified by the company, a member may obtain from the company and inspect and copy full information regarding the activities, financial condition, and other circumstances of the company as is just and reasonable if:
(i) the member seeks the information for a purpose material to the member’s interest as a member;
(ii) the member makes a demand in a record received by the company, describing with reasonable particularity the information sought and the purpose for seeking the information; and
(iii) the information sought is directly connected to the member’s purpose.
(3) Within ten days after receiving a demand pursuant to clause (2), item (ii), the company shall in a record inform the member that made the demand:
(i) of the information that the company will provide in response to the demand and when and where the company will provide the information; and
(ii) if the company declines to provide any demanded information, the company’s reasons for declining.
Minn. Stat. § 322C.0410, subd. 2.
Thus, it is important to know the difference as to whether you are a member of a member-managed LLC or a manager-managed/board-managed LLC to ensure you make the proper records request.
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