§ 7-16-56 - Right of member to bring derivative action.
SECTION 7-16-56
§ 7-16-56 Right of member to bringderivative action. – A member may bring an action on behalf of the limited liability company torecover a judgment in its favor if all of the following conditions are met:
(1) The member does not have the authority to cause thelimited liability company to sue in its own right under the provisions of anoperating agreement;
(2) The members or managers with this authority havewrongfully refused to bring the action or, after adequate time to consider thedemand, have failed to respond to the demand or if an effort to cause thosemembers or managers to bring the action is not likely to succeed;
(3) The plaintiff:
(i) Is a member of the limited liability company at the timeof bringing the action; and
(ii) Was a member of the limited liability company at thetime of the transaction complained of, or the plaintiff's status as a member ofthe limited liability company subsequently devolved to the plaintiff pursuantto the terms of the operating agreement from a person who was a member at thattime; and
(4) The plaintiff fairly and adequately represents theinterests of the members in enforcing the right of the limited liabilitycompany.