Title 17 Corporations, Partnerships and Associations

17-29-304. Liability of members and managers.

(a) The debts, obligations or other liabilities of a limited liability company, whether arising in contract, tort or otherwise: (i) Are solely the debts, obligations or other liabilities of the company; and (ii) Do not become the debts, obligations or other liabilities of a member or manager solely by reason of the member acting as a member or manager acting as a manager. (b) Repealed by Laws 2016, ch. 54, § 2. (c) For purposes of imposing liability on any member or manager of a limited liability company for the debts, obligations or other liabilities of the company, a court shall consider only the following factors no one (1) of which, except fraud, is sufficient to impose liability: (i) Fraud; (ii) Inadequate capitalization; (iii) Failure to observe company formalities as required by law; and (iv) Intermingling of assets, business operations and finances of the company and the members to such an extent that there is no distinction between them. (d) In any analysis conducted under subsection (c) of this section, a court shall not consider factors intrinsic to the character and operation of a limited liability company, whether a single or multiple member limited liability company. Factors intrinsic to the character and operation of a limited liability company include but are not limited to: (i) The ability to elect treatment as a disregarded or pass-through entity for tax purposes; (ii) Flexible operation or organization including the failure to observe any particular formality relating to the exercise of the company's powers or management of its activities; (iii) The exercise of ownership, influence and governance by a member or manager; (iv) The protection of members' and managers' personal assets from the obligations and acts of the limited liability company.