Members of LLC’s Exposed to Personal Liability ▪ Charleston Business Lawyers

In 1996, South Carolina adopted the Uniform Limited Liability Act. Since that time, many organizations have decided to do business as a Limited Liability Company (LLC) instead of as a corporation. LLC’s have some advantages over corporations such as flexibility in ownership and management structures, certain tax benefits, and fewer formalities. Until recently, one perceived advantage was that a member of a LLC, unlike a shareholder of a corporation, was not personally liability for any wrongful act committed while working on the LLC’s business. Specifically, Section 33-44-303 of the South Carolina Code of Laws provides that the liabilities of the LLC are solely the liabilities of the company, and a member or manager is not personally liable for them solely by reason of being or acting as a member or a manager. However, in April 2012, a divided South Carolina Supreme Court decided that despite the clear language of the Limited Liability Act, a member of a LLC is liability for any wrongful acts committed while working for the LLC. The majority of the court held that the “right to sue one’s tortfeasor” is a “long-standing right” in our legal system, and the General Assembly did not intend for “such a sweeping liability shield” as insulating members of LLCs from personal liability. Justice Beatty, joined by Justice Toal, dissented and wrote that he would not find a LLC member individually liable and emphasized the that the court should not re-write a statute if it is clear and unambiguous.

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