Most business partnerships start with trust and a handshake, even when there is a written operating agreement. Problems tend to arrive gradually. Distributions stop while the managing member keeps drawing a salary. A property owned by the LLC is refinanced and no one can explain where the cash-out went. A partner starts a competing company, or steers a deal to an entity he controls. The person holding the books stops answering questions. A capital call arrives that looks designed to dilute a minority member.
Florida's LLC and partnership statutes give owners rights to information and impose duties on the people who manage the business. The value of those rights depends on how quickly and carefully you use them, and on the record you keep along the way.
1. Collect the formation and governing documents
Gather the articles of organization, the operating agreement or partnership agreement and every amendment, subscription agreements, capital account records, and any buy-sell or side agreement. Pull the company's filing history from the state's corporate records. The operating agreement controls many questions, including voting, distributions, transfers and dispute resolution, and it can modify some statutory defaults.
2. Preserve your own copies of company information
Save the financial statements, tax returns and K-1s, bank statements, loan documents and distribution records you have received as an owner. Keep emails and messages with the other members about the business. Do not delete anything, even if it is unflattering.
3. Make a written demand for books and records
Use the statute. Send a written demand that describes "with reasonable particularity the information sought and the purpose for seeking the information," and keep proof of delivery. Be specific: general ledger, bank statements, loan documents, contracts with related parties and distribution records for defined periods. A precise request is harder to refuse and easier to enforce.
5. Protect the company's assets and your position
If you have signing authority or access to company accounts, do not use it to pay yourself, move funds or change passwords without advice. Self-help can create claims against you. If you are a guarantor on company debt, keep a copy of each personal guaranty and track the loan's status.
6. Keep communications measured
Write to the other members in a businesslike tone, and avoid threats or accusations by text. If there are employees, do not draw them into the dispute. Your messages will likely be exhibits.
The Florida rules that matter
Member access to records. In a member-managed LLC, a member "Upon reasonable notice" may inspect and copy required information during regular business hours, and the company must provide information "material to the proper exercise of the member's rights and duties" (§ 605.0410(2)). In a manager-managed LLC, a member's broader access requires a purpose reasonably related to the member's interest and a demand "in a record received by the company" that describes the information sought and the purpose. "Within 10 days after receiving a demand," the company must respond in a record stating what will be provided, when and where, and its reasons for declining anything (§ 605.0410(3)). A former member may have access to information from the period of membership, subject to similar conditions (§ 605.0410(4)).
Court-ordered inspection. If the company refuses, the member may apply to the circuit court, which "may summarily order inspection and copying of the records demanded." When the court orders inspection, it "shall also order the limited liability company to pay the costs, including reasonable attorney fees," unless the company proves it refused in good faith because it had a reasonable basis to doubt the member's right (§ 605.0411).
Fiduciary duties. Each manager of a manager-managed LLC and each member of a member-managed LLC "owes fiduciary duties of loyalty and care to the limited liability company and members." The duty of loyalty includes holding as trustee "any property, profit, or benefit" derived from the company or a company opportunity, refraining from dealing with the company on behalf of an adverse party, and refraining from competing. The duty of care requires refraining from "grossly negligent or reckless conduct, willful or intentional misconduct," or "a knowing violation of law," and duties must be exercised consistently with "the obligation of good faith and fair dealing" (§ 605.04091). An operating agreement may alter some of these duties but may not "Eliminate the duty of loyalty or the duty of care," and may not relieve a person from liability for bad faith or willful misconduct (§ 605.0105(3)).
Voting. Unless the operating agreement says otherwise, an LLC's operating agreement and articles "may be amended only with the affirmative vote or consent of all members," and in a manager-managed company "a majority-in-interest of the members is required to undertake an act outside the ordinary course" (§ 605.04073).
Derivative claims and dissolution. A member may sue on the company's behalf after demanding that the managers or members act and waiting "a reasonable time, not to exceed 90 days," unless demand would be futile or would cause irreparable injury (§ 605.0802). A member may also ask a court to dissolve the company on statutory grounds, including that its assets "are being misappropriated or wasted, causing injury" or that management is deadlocked (§ 605.0702(1)(b)).
General partnerships. Partners have a right to access the partnership's books and records, and partners owe the duties of loyalty and care described in § 620.8404, along with good faith and fair dealing. The partnership must keep its books "at the chief executive office of the partnership" (§ 620.8403).
“Upon reasonable notice”
§ 605.0410(2)
“may summarily order inspection and copying of the records demanded.”
§ 605.0411
“owes fiduciary duties of loyalty and care to the limited liability company and members.”
§ 605.04091
“may be amended only with the affirmative vote or consent of all members,”
§ 605.04073
“a reasonable time, not to exceed 90 days,”
§ 605.0802
“at the chief executive office of the partnership”
§ 620.8404
Your checklist
- Gather the articles, operating or partnership agreement and every amendment.
- Preserve the K-1s, statements, loan records and messages you already have.
- Send a specific written records demand and calendar the 10-day response.
- List every suspected related-party transaction or diverted opportunity.
- Avoid moving funds, changing access or paying yourself without advice.
- Keep copies of any personal guaranty and track the company's debt.
- Get advice on derivative, direct and dissolution options before acting.
How we handle these cases
We start by reading the operating agreement against the statute, because the agreement often changes the default rules. Then we use the records rights to find out what happened to the money, and we decide whether the right path is a negotiated buyout, a direct or derivative claim, or a dissolution proceeding. As investors who hold property through LLCs ourselves, we understand how these structures work in practice. We represent members, managers and partners throughout Florida. Meetings are by appointment only. Call 305-748-3789 to schedule a time to talk.
This article is general information, not legal advice for your situation. Reading it does not create an attorney-client relationship. Past results do not guarantee a similar outcome.