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Tennessee Code Title 48. Corporations and Associations § 48-239-115

Current as of January 02, 2024 | Updated by Findlaw Staff

(a) STANDARD AND LIABILITY. A governor shall discharge the duties of the position as a governor, including duties as a member of a committee, in good faith, in a manner the governor reasonably believes to be in the best interests of the LLC, and with the care an ordinarily prudent person in a like position would exercise under similar circumstances.

(b) RELIANCE.

(1) A governor is entitled to rely on information, opinions, reports, or statements, including financial statements and other financial data, if prepared or presented by:

(A) One (1) or more managers or employees of the LLC whom the governor reasonably believes to be reliable and competent in the matters presented;

(B) Legal counsel, public accountants, or other persons as to matters that the governor reasonably believes are within the person's professional or expert competence; or

(C) A committee of the board of governors of which the governor is not a member, if the governor reasonably believes the committee merits confidence.

(2) A governor is not acting in good faith if the governor has knowledge concerning the matter in question that makes reliance otherwise permitted by subdivision (b)(1) unwarranted.

(c) LIMITATION ON LIABILITY. A governor is not liable for any action taken as a governor, or any failure to take action, if the governor performed the duties of the office in compliance with subsections (a) and (b).

(d) ELIMINATION OR LIMITATION OF LIABILITY. A governor's personal liability to the LLC or its members for monetary damages for breach of fiduciary duty as a governor may be eliminated or limited in the articles or operating agreement; such provisions shall not eliminate or limit the liability of a governor for the following:

(1) For any breach of the governor's duty of loyalty to the LLC or its members; however, the articles or operating agreement may define the duty of loyalty in a manner to reflect the understanding of the parties, provided such definition is not manifestly unreasonable under the circumstances;

(2) For acts or omissions not in good faith or that involve intentional misconduct or a knowing violation of law;

(3) Under § 48-237-101; or

(4) For any act or omission occurring before the date when the provision in the articles eliminating or limiting liability becomes effective.

(e) MODIFICATION OF STANDARD OF CONDUCT IN ARTICLES OR OPERATING AGREEMENT. Notwithstanding anything to the contrary in this section, the articles or operating agreement may define the standard of conduct for governors in a manner to reflect the understanding of the parties; provided, that such definition is not manifestly unreasonable under the circumstances.

(f) BURDEN OF PROOF. A person alleging a violation of this section has the burden of proving the violation.

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Cite this article: FindLaw.com - Tennessee Code Title 48. Corporations and Associations § 48-239-115 - last updated January 02, 2024 | https://codes.findlaw.com/tn/title-48-corporations-and-associations/tn-code-sect-48-239-115/

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