Fiduciary Duty

A fiduciary duty is a legal and ethical obligation owed by an equity interest holder in a company to other equity interest holders in the company, and to the company itself. In Oregon, members in a limited liability company (LLC) owe fiduciary duties to each other and the company. Under the Oregon LLC Act, members in a member-managed LLC owe each other duties of loyalty and care. These duties generally restrict members from competing with the company while acting as members and ensure that they put the interests of the company before their own, personal interests, to the extent such interests may conflict. Under the Oregon LLC Act, members are further required to comply with their fiduciary duties according to the obligation of good faith and fair dealing, which is a broad and difficult to interpret phrase, but widely cited by members in partnership disputes. Claims for breach of fiduciary duties typically come up in the context of an LLC where one member is competing with the LLC by operating a similar company on his or her own or with other third parties, or where a member takes money from an LLC to further his or her personal interests and without the authority or permission of other members in the company to do so.