Minnesota limited liability companies are governed by the Minnesota Revised Uniform Limited Liability Company Act, Minnesota Statutes chapter 322C. That act has governed every Minnesota LLC since January 1, 2018, and it replaced the older LLC Act (chapter 322B), which is now repealed. Under chapter 322C, the fiduciary duties in an LLC are set out in Minn. Stat. § 322C.0409: the duty of loyalty, the duty of care, and the contractual obligation of good faith and fair dealing.

Chapter 322C is built on partnership law rather than the corporate model that shaped the old act, so the older vocabulary of “governors” and “directors” no longer describes how LLC fiduciary duties are assigned. Who owes these duties now turns on how the company is managed.

Who Owes Fiduciary Duties

Whether a person owes fiduciary duties in a Minnesota LLC depends on the company’s management structure.

  • In a member-managed LLC, each member owes the company, and the other members, the duties of loyalty and care stated in section 322C.0409. See Minn. Stat. § 322C.0409, subd. 1.
  • In a manager-managed LLC, those duties fall on the managers rather than on the members. A member of a manager-managed LLC does not owe any fiduciary duty to the company or to the other members solely by reason of being a member. See Minn. Stat. § 322C.0409, subd. 7.

Because so much of an LLC’s internal governance lives in its operating agreement, I always recommend reading section 322C.0409 alongside the company’s operating agreement to see how the default duties have been shaped for a particular company.

Duty of Loyalty

Under Minn. Stat. § 322C.0409, subd. 2, the duty of loyalty in a member-managed LLC includes three obligations:

  • To account to the company, and to hold as trustee for it, any property, profit, or benefit derived by the member in the conduct or winding up of the company’s activities or from a use of the company’s property.
  • To refrain from dealing with the company, in the conduct or winding up of its activities, as or on behalf of a person having an interest adverse to the company.
  • To refrain from competing with the company in the conduct of its activities before the company is dissolved.

Minnesota case law interpreting the LLC duty of loyalty specifically remains limited, so the statutory language in section 322C.0409 is the primary guide.

Duty of Care

Under Minn. Stat. § 322C.0409, subd. 3, and subject to the business judgment rule, the duty of care is to act with “the care that a person in a like position would reasonably exercise under similar circumstances and in a manner the member reasonably believes to be in the best interests of the company.” In a manager-managed LLC, this same standard applies to the managers.

Good Faith and Fair Dealing

Section 322C.0409 also imposes an obligation of good faith and fair dealing. A member (or, in a manager-managed company, a manager) must discharge the duties and exercise any rights under chapter 322C or under the operating agreement “consistently with the contractual obligation of good faith and fair dealing.” See Minn. Stat. § 322C.0409, subd. 4.

Limited Liability Is Not Lost by These Duties

Owing fiduciary duties does not, by itself, expose a member or manager to personal liability for the company’s debts. Under Minn. Stat. § 322C.0304, the debts, obligations, and other liabilities of an LLC do not become those of a member or manager solely because the person acts as a member or manager, and the failure to observe formalities relating exclusively to the management of the company’s internal affairs is not a ground for imposing personal liability. Minnesota’s veil-piercing case law does apply to LLCs, but that is a separate question from the fiduciary duties described above.