Section 450.4512 - Dismissal of derivative proceeding; findings; burden of proof; determination; “disinterested” defined.
MICHIGAN LIMITED LIABILITY COMPANY ACT (EXCERPT)
Act 23 of 1993
450.4512 Dismissal of derivative proceeding; findings; burden of proof; determination; “disinterested” defined.
Sec. 512.
(1) The court shall dismiss a derivative proceeding if, on motion by the limited liability company, the court finds that 1 of the groups specified in subsection (3) has made a determination in good faith after conducting a reasonable investigation upon which its conclusions are based that the maintenance of the derivative proceeding is not in the best interests of the company.
(2) If the determination is made pursuant to subsection (3)(a) or (b), the company has the burden of proving the good faith of the group making the determination and the reasonableness of the investigation. If the determination is made pursuant to subsection (3)(c), the plaintiff has the burden of proving that the determination was not made in good faith or that the investigation was not reasonable.
(3) A determination under subsection (1) may be made by any 1 of the following:
(a) By a majority vote of the disinterested managers or members having the authority to cause the company to sue in its own right, if the disinterested managers or members constitute a majority of those having the authority to cause the company to sue in its own right.
(b) By a majority vote of a committee consisting of 2 or more disinterested managers or members appointed by a majority vote of disinterested managers or members, whether or not the disinterested managers or members constitute a majority of those having the authority to cause the company to sue in its own right.
(c) By a panel of 1 or more disinterested persons appointed by the court upon motion by the company.
(4) For purposes of this section, “disinterested” means a person who is not a party to a derivative proceeding or a person who is a party if the limited liability company demonstrates that the claim asserted against the person is frivolous or insubstantial.
History: 1993, Act 23, Eff. June 1, 1993