(A) Except as otherwise provided in division (B) of this section, an operating agreement governs relations among members and between members, any managers, and the limited liability company. A limited liability company is bound by the operating agreement of its member or members whether or not the limited liability company executes the operating agreement. To the extent the operating agreement does not otherwise provide, this chapter governs relations among the members and between the members, any managers, and the limited liability company.
(B) The operating agreement may not do any of the following:
(3) Eliminate the duty of loyalty under division (C) of section 1705.161 of the Revised Code or division (B) of section 1705.281 of the Revised Code, but the operating agreement may identify activities that do not violate the duty of loyalty , and all of the members or a number or percentage of members specified in the operating agreement may authorize or ratify, after full disclosure of all material facts, a specific act or transaction that otherwise would violate the duty of loyalty;
(4) Eliminate the duty of care under division (C) of section 1705.161 of the Revised Code or division (C) of section 1705.281 of the Revised Code, but the operating agreement may prescribe the standards by which the duty is to be measured;
(5) Eliminate the obligation of good faith and fair dealing under division (D) of section 1705.281 of the Revised Code, but the operating agreement may prescribe the standards by which the performance of the obligation is to be measured ;
(6) Eliminate the duties of a manager under division (B) of section 1705.29 of the Revised Code, but the operating agreement may prescribe in writing the standards by which performance is to be measured or identify activities that do not violate the manager's duties ;
(8) Restrict the rights of third parties under this chapter.
Amended by 129th General AssemblyFile No.169,HB 247, §1, eff. 3/22/2013.
Added by 129th General AssemblyFile No.72,HB 48, §1, eff. 5/4/2012.
This new section states in division (A)
the general principle that relations among or between the members, any managers
and the limited liability company are to be governed by the operating
agreement. Many provisions of Chapter 1705 set out a default rule that applies
when there is no different rule stated in the articles or the operating
agreement. That concept is reflected in numerous sections of Chapter 1705 that
include language that states specifically that the provisions of that section
may be altered by the articles or the operating agreement. This new section
makes those words unnecessary even though they have not been removed from each
of section of Chapter 1705.
Committee Comment (2012)*
Division (A) also clarifies that a limited liability company is bound by its agreement even if it has not executed the agreement
Division (B) identifies the provisions of Chapter 1705 that may not be altered and the limits that apply when the articles or the operating agreement alters certain other statutory provisions. If the section is not identified in division (B), it may be altered by the articles or the operating agreement. Both divisions (A) and (B) draw on similar provisions of Ohio's partnership law in § 1776.03 . These provisions are consistent with the result in McConnell v. Hunt Sports Enterprises, 132 Ohio App.3d 657 (1999) in which the court recognized that a contract can limit the scope of fiduciary duties and held that the provision of an operating agreement permitting members' participation in ventures competitive with the company allowed the members to take actions that would otherwise have been a breach of fiduciary duty. Divisions (A) and (B) are also similar to provisions in Section 110 of the Revised Uniform Limited Liability Company Act (2006) ("RULLCA").
It is also important to recognize that Chapter 1705 defines by statute all the fiduciary duties owed by members and managers. See§§ 1705.281 and 1705.29 and the related Committee Comments (2012). In contrast, RULLCA identifies what the drafters called "major" fiduciary duties, but does not purport to be an exhaustive or exclusive statement of fiduciary duties. Prefatory Note to RULLCA (2006).
*Comments on 129th General Assembly, HB 48, from the Ohio State Bar Association Corporation Law Committee