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275.337 Derivative actions.
(1)
(2)
(3)
(4)
(5)
(6)
(7)
(8)
A member may maintain a direct action against a limited liability company, another
member, or a manager to redress an injury sustained by, or to enforce a duty owed
to, the member if the member can prevail without showing an injury or breach of
duty to the company.
A member may maintain a derivative action to redress an injury sustained by or
enforce a duty owed to a limited liability company if:
(a) The member shall first make a demand on the other members and, if the
company is manager-managed, the managers, requesting that they cause the
company to bring an action to redress the injury or enforce the right, and they
do not bring the action within a reasonable time; or
(b) A demand would be futile.
A derivative action on behalf of a limited liability company shall be maintained
only by a person that is a member at the time the action is commenced and who:
(a) Was a member when the conduct giving rise to the action occurred; or
(b) Acquired the status as a member by operation of law or pursuant to the terms
of the operating agreement from a person that was a member at the time of the
conduct giving rise to the action occurred.
In a derivative action on behalf of the limited liability company, the complaint shall
state with particularity:
(a) The date and content of the member’s demand and the response to the
demand; or
(b) The reason the demand should be excused as futile.
Except as otherwise provided in subsection (8) of this section:
(a) Any proceeds or other benefits of a derivative action on behalf of a limited
liability company, whether by judgment, compromise, or settlement, are the
property of the company and not of the plaintiff; and
(b) If the plaintiff receives any proceeds or other benefits, the plaintiff shall
immediately remit them to the company.
A derivative action on behalf of a limited liability company may not be voluntarily
dismissed or settled without the court’s approval.
The proper venue for a direct action under subsection (1) of this section or a
derivative action shall be the Circuit Court for the county in which the company
maintains its registered office and agent.
On termination of the proceeding brought pursuant to this section, the court may:
(a) Require the plaintiff member to pay any defendant’s reasonable expenses,
including counsel fees, incurred in defending the proceeding to the extent it
finds that the proceeding or any portion thereof was commenced without
reasonable cause or for an improper purpose; and
(b) Require the limited liability company to pay the plaintiff member’s
reasonable expenses, including counsel fees, incurred in the proceeding to the
extent it finds that the proceeding has resulted in a substantial benefit to the
company.
Effective: June 24, 2015
History: Created 2015 Ky. Acts ch. 34, sec. 50, effective June 24, 2015.
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