There has been much debate about whether a member of a limited liability company has standing to bring a direct action against another member of the company. Many argue that such a member can bring only a derivative claim on behalf of the company. Others disagree, arguing that a member can bring a direct action against another member in addition to a derivative action. Various courts also seem to struggle over this issue. We can now settle the debate.

On Feb. 21, the provisions of Act 170 went into effect, altering Pennsylvania’s existing law governing the formation and operation of corporations, limited liability companies, limited partnerships and other business entities. The act made changes to the law of profit and nonprofit corporations, and completely replaced the statutes governing partnerships, limited partnerships and limited liability companies.

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