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Protecting Llc Owners While Preserving Llc Flexibility, Peter Molk
Protecting Llc Owners While Preserving Llc Flexibility, Peter Molk
UF Law Faculty Publications
LLC statutes allow owners to restrict or completely waive standard governance protections required of other business forms. Corporate law mandatory stalwarts like fiduciary duties can be entirely eliminated in an LLC. This flexible approach has the potential to generate the most efficient governance relationships: tailored negotiation among LLC investors can produce an optimal set of governance terms that corporate law’s mandatory protections cannot. Yet when owners lack sophistication or bargaining power, contractual freedom allows for opportunistic terms that misprice capital, reduce investment, and inefficiently allocate capital across LLCs. A series of cases involving opportunistic conduct have brought this problem to …
More Ways To Protect Llc Owners And Preserve Llc Flexibility, Peter Molk
More Ways To Protect Llc Owners And Preserve Llc Flexibility, Peter Molk
UF Law Faculty Publications
This online companion to Protecting LLC Owners While Preserving LLC Flexibility considers several alternative approaches that might unify LLCs’ twin goals of owner protection and governance flexibility. I examine self-regulation, private certification, investor-led market forces, lawyers in their gatekeeping capacity, and mandated disclosure systems. Ultimately, each of these alternatives proves less satisfying than a system that bifurcates LLC law based on the presumed sophistication of LLC owners.