Under the revised Florida LLC act, when must an LLC make its records available for member review?
The members of a member-managed LLC are entitled to unfettered access to specific LLC records. In addition, an LLC must provide to members documents or information that is considered material to a member’s rights or duties set by the statute or the LLC’s operating agreement.
Likewise, managers have the similar rights to obtain documents and information in a manager-managed LLC. While a demand is not required to obtain certain records, when a member makes a demand the member must identify the records sought with reasonable particularity and describe the need for the request.
There is a key difference between manager-managed and member-managed LLC’s when it comes to receiving “other” information from the LLC. In the former, the information sought must be “reasonably related to the member’s interest as a member.” In the latter, the information requested only must be “material to” the duties or rights of the member.
A former member also is entitled to receive information from the LLC if the information is the sought in good faith for the period in which the requesting party was a member.
When producing records, the LLC may designate information as confidential and impose nondisclosure restrictions requirements. If a dispute arises over the conditions imposed, the LLC has the burden to prove the reasonableness of the conditions.B. Under What Circumstances May a Court Require an LLC to Produce its Company Records?
A court may order inspection and copying of the LLC’s records at the LLC’s expense. Moreover, reasonable attorneys’ fees of the member will be borne by the LLC, unless the LLC can prove that it declined inspection in good faith based on a reasonable basis for doubt to provide the information requested. Likewise, the court may impose reasonable restrictions on the use or distribution of the information requested that the LLC must produce.
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