§ 8884. Special litigation committee
Purdon's Pennsylvania Statutes and Consolidated StatutesTitle 15 Pa.C.S.A. Corporations and Unincorporated AssociationsEffective: January 3, 2023
Purdon's Pennsylvania Statutes and Consolidated Statutes
Title 15 Pa.C.S.A. Corporations and Unincorporated Associations (Refs & Annos)
Part III. Partnerships and Limited Liability Companies (Refs & Annos)
Chapter 88. Limited Liability Companies (Refs & Annos)
Subchapter H. Actions by Members (Refs & Annos)
Effective: January 3, 2023
15 Pa.C.S.A. § 8884
§ 8884. Special litigation committee
(a) General rule.--If a limited liability company or its members or managers receive a demand to bring an action to enforce a right of the company, or if a derivative action is commenced before demand has been made on the company or its members or managers, the members in a member-managed limited liability company, or the managers in a manager-managed limited liability company, may appoint a special litigation committee to investigate the claims asserted in the demand or action and to determine on behalf of the company or recommend to the managers or members whether pursuing any of the claims asserted is in the best interests of the company. The company must deliver a notice in record form to the person making the demand, or to the plaintiff if a derivative action has been commenced, promptly after the appointment of a committee under this section notifying the person making the demand or the plaintiff that a committee has been appointed and identifying by name the members of the committee. A committee may not be appointed under this section if:
(c.1) Committee members who are not managers.--A member of a special litigation committee who is not a manager, when acting as a member of the committee, is subject to the liabilities imposed, and entitled to the rights and immunities conferred, by sections 8848 (relating to reimbursement, indemnification, advancement and insurance) and 8849.2 (relating to standards of conduct for managers).
(f) Court review and action.--If a special litigation committee is appointed and a derivative action is commenced either before or after either the committee makes a determination under subsection (e) or the members or managers determine under that subsection to accept the recommendation of the committee:
(1) The limited liability company or the committee shall file with the court after a determination is made under subsection (e) a statement of the determination and a report of the committee supporting the determination. The company or the committee shall serve each party with a copy of the determination and report. If the company or the committee moves to file the report under seal, the report shall be served on the parties subject to an appropriate stipulation agreed to by the parties or a protective order issued by the court.
(3) If the determination is one described in subsection (e)(2), (3), (4), (5)(ii), (6) or (7), the court shall determine whether the members of the committee met the qualifications required under subsection (c)(1) and (2) and whether the committee conducted its investigation and made its determination or recommendation in good faith, independently and with reasonable care. The plaintiff has the burden of proving that the committee did not meet those qualifications or act in the required manner. If the court finds that the members of the committee met the qualifications required under subsection (c)(1) and (2) and that the committee acted in good faith, independently and with reasonable care, the court shall enforce the determination of the committee or the members or managers. Otherwise, the court shall:
Credits
2016, Nov. 21, P.L. 1328, No. 170, § 29, effective in 90 days [Feb. 21, 2017]. Amended 2022, Nov. 3, P.L. 1791, No. 122, § 107, effective in 60 days [Jan. 3, 2023].
15 Pa.C.S.A. § 8884, PA ST 15 Pa.C.S.A. § 8884
Current through Act 11 of the 2024 Regular Session. Some statute sections may be more current, see credits for details.
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