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The 2016 LLC Act – How is Your LLC Affected?

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If you are a member of a PA LLC, things changed in 2017 with the Pennsylvania Limited Liability Company Law of 2016, effective April 1, 2017.

Now members of a member-managed LLC owe to the LLC and to the other members of the LLC the duties of loyalty and care. The Act provides guidance as to the scope of the duties. Members also have a contractual obligation of good faith and fair dealing in discharging their duties.

Members of a manager-managed LLC do not have any duties to either the LLC or to the members of the LLC solely by reason of being a member other than the duties of good faith and fair dealing. Managers of manager-managed LLCs owe to the LLC and to its members duties of care and loyalty and contractual obligations of good faith and fair dealing.

Also, the LLC operating agreement becomes critical, as one can vary many of these duties via contract.  If not “manifestly unreasonable”, an undefined term, the operating agreement may identify activities that do not violate the duty of loyalty and may alter the duty of care.

Given all of the above, it becomes more important than ever to review your operating agreement.

If you have questions about the Act, your operating agreement, or other shareholder issue, contact me at