Fiduciary Duties of LLC Members and Managers in Illinois

Article written by Illinois Attorney Kevin O’Flaherty

In this article we explain the fiduciary duties of LLC members in Illinois. We answer the questions: “what is the difference between a manager-managed LLC and a member-managed LLC?” and “what duties do members of LLCs have to one another?” We explain the fiduciary duty of loyalty between LLC members and the fiduciary duty of care between LLC members.

For more on this topic, check out our article: What Rights Do LLC Members Have in Illinois?

What is the difference between a manager-managed LLC and a member-managed LLC?

First, let’s quickly review LLCs. An LLC is a legal entity that protects its members from personal liability for the debts or obligations of the LLC. In Illinois, similar to most other states, a limited liability company can be managed by its members or by other managers. A member-managed LLC means all of the members share in the management of the LLC. A manager-managed LLC means the members appoint someone (LLC member or non-member) to run the business.

What duties do members of LLCs have to one another?

All members of member-managed LLCs and managers of manager-managed LLCs have authority to bind the LLC to contracts, and they owe certain fiduciary duties to both the company and fellow members.