29-831. Right of member to bring derivative action

 

(Rpld. 9/1/20)

 

A member may bring an action in the right of the limited liability company to recover a judgment in its favor if all of the following conditions are met:

1. Either of the following:

(a) Management of the limited liability company is vested in a manager or managers who have the sole authority to cause the limited liability company to sue in its own right.

(b) Management of the limited liability company is reserved to the members and the plaintiff 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 member has made demand on the manager or those members with such authority requesting that the manager or the members cause the limited liability company to sue in its own right.

3. The members or managers with such authority have wrongfully refused to bring the action or, after adequate time to consider the demand, have failed to respond to the demand.

4. The member is a member of the limited liability company at the time the action is brought and was a member of the limited liability company at the time of the transaction of which he complains or his status as a member of the limited liability company thereafter devolved on him pursuant to the terms of an operating agreement from a person who was a member at such time.

5. The member fairly and adequately represents the interests of the members, except those members that would be defendants in the action, in enforcing the right of the limited liability company.