<p> 1 South Carolina General Assembly 2 120th Session, 2013-2014 3 4 S. 124 5 6 STATUS INFORMATION 7 8 General Bill 9 Sponsors: Senator L. Martin 10 Document Path: l:\s-jud\bills\l. martin\jud0029.ba.docx 11 Companion/Similar bill(s): 3521 12 13 Introduced in the Senate on January 8, 2013 14 Currently residing in the Senate Committee on Judiciary 15 16 Summary: Liability of members and managers of LLCs 17 18 19 HISTORY OF LEGISLATIVE ACTIONS 20 21 Date Body Action Description with journal page number 22 12/18/2012 Senate Prefiled 23 12/18/2012 Senate Referred to Committee on Judiciary 24 1/8/2013 Senate Introduced and read first time ( Senate Journalpage 82) 25 1/8/2013 Senate Referred to Committee on Judiciary ( Senate Journalpage 82) 26 2/1/2013 Senate Referred to Subcommittee: Gregory (ch), Hutto, Massey, Bennett, Johnson 27 28 29 VERSIONS OF THIS BILL 30 31 12/18/2012 32 1 2 3 4 5 6 7 8 9 A BILL 10 11 TO AMEND SECTION 3344303, CODE OF LAWS OF SOUTH 12 CAROLINA, 1976, RELATING TO THE LIABILITY OF 13 MEMBERS OR MANAGERS OF LIMITED LIABILITY 14 COMPANIES, SO AS TO PROVIDE THAT A MEMBER OR 15 MANAGER CANNOT BE HELD PERSONALLY LIABLE FOR 16 A DEBT, OBLIGATION, OR LIABILITY OF THE COMPANY, 17 WHETHER ARISING IN CONTRACT, TORT, OR 18 OTHERWISE AND TO REMOVE FROM THE COMMENTS 19 LANGUAGE THAT STATES THAT MEMBERS OR 20 MANAGERS WOULD BE RESPONSIBLE FOR ACTS OR 21 OMISSIONS TO THE EXTENT THAT THOSE ACTS OR 22 OMISSIONS WOULD BE ACTIONABLE IN CONTRACT OR 23 TORT AGAINST THE MEMBER OR MANAGER IF THAT 24 PERSON WERE ACTING IN AN INDIVIDUAL CAPACITY. 25 26 Be it enacted by the General Assembly of the State of South 27 Carolina: 28 29 SECTION 1. Section 3344303, as enacted by Act No. 343 of 30 1996, is amended to read: 31 32 “Section 3344303. (a) Except as otherwise provided in 33 subsection (c), the debts, obligations, and liabilities of a limited 34 liability company, whether arising in contract, tort, or otherwise, 35 are solely the debts, obligations, and liabilities of the company. A 36 member or manager is not cannot be held personally liable for a 37 debt, obligation, or liability of the company, whether arising in 38 contract, tort, or otherwise solely by reason of being or acting as a 39 member or manager. 40 (b) The failure of a limited liability company to observe the 41 usual company formalities or requirements relating to the exercise 42 of its company powers or management of its business is not a</p><p>[124] 2 1 ground for imposing personal liability on the members or 2 managers for liabilities of the company. 3 (c) All or specified members of a limited liability company are 4 liable in their capacity as members for all or specified debts, 5 obligations, or liabilities of the company if: 6 (1) a provision to that effect is contained in the articles of 7 organization; and 8 (2) a member so liable has consented in writing to the 9 adoption of the provision or to be bound by the provision.” 10 11 COMMENT 12 A member or manager, as an agent of the company, is not liable 13 for the debts, obligations, and liabilities of the company simply 14 because of the agency. A member or manager is responsible for 15 acts or omissions to the extent those acts or omissions would be 16 actionable in contract or tort against the member or manager if that 17 person were acting in an individual capacity. Where a member or 18 manager delegates or assigns the authority or duty to exercise 19 appropriate company functions, the member or manager is 20 ordinarily not personally liable for the acts or omissions of the 21 officer, employee, or agent if the member or manager has 22 complied with the duty of care set forth in Section 3344409(c). 23 Under Section 3344303(c), the usual liability shield may be 24 waived, in whole or in part, provided the waiver is reflected in the 25 articles of organization and the member has consented in writing to 26 be bound by the waiver. The importance and unusual nature of the 27 waiver consent requires that the consent be evidenced by a writing 28 and not merely an unwritten record. See Comments to Section 29 3344205. The effect of a waiver on the federal tax classification of 30 the company is determined by federal law. 31 32 SECTION 2. This act takes effect upon approval by the 33 Governor. 34 XX 35</p><p>[124] 3</p>