In previous blog articles, I wrote that it was unclear whether or not the minority oppression statute, N.J.S.A 14A:12-7(c), applied to oppressed members of a limited liability company (“LLC”). Some argued it did not apply because the legislature did not incorporate similar protections afforded to the oppressed in the current governing limited liability statute.  Others argued that a Court of equity could apply the minority oppression statute to an LLC pursuant to its equitable powers.   Moreover, the current LLC statute contained a “catch-all” that permitted Courts to apply general corporate law when equitable.  

Prior to the enactment of the Revised Uniform Limited Liability Company Act, it appeared that Courts were more inclined not to apply the protections afforded to minority shareholders to members of an LLC. One District Court quoted the article I wrote which was published in the New Jersey Law Journal as authority in finding that it did not apply.

The New Jersey Revised Uniform Limited Liability Company Act now answers that debate once and for all.  For all LLCs formed after March 18, 2013, the protections offered to oppressed members of a corporation are now immediately available to oppressed members of an LLC. After March 1, 2014, all oppressed members of an LLC are afforded those protections. 

In the next few years, I will be carefully, reading and analyzing the decisions. I am curious whether or not Courts will apply the well-established body of law applying the minority oppression statute to an LLC, as I believe they should and will apply.
 

Scott Unger is a Shareholder in Stark & Stark’s Lawrenceville, New Jersey office concentrating in Shareholder & Partner Dispute Litigation. For questions, or additional information, please contact Mr. Unger.