{"data":{"id":"us-ky/krs-275.337","jurisdiction":"us-ky","citation":"KRS 275.337","heading":"Derivative actions.","body":"(1) A  member  may  maintain a direct action against a limited liability company,\nanother member, or a manager to redress an injury sustained by, or to enforce\na duty owed to, the member  if the member  can prevail without showing an\ninjury or breach of duty to the company.\n(2) A member  may maintain a derivative action to redress an injury sustained by or\nenforce a duty owed to a limited liability company if:\n(a) The member  shall first make a demand  on the other members  and, if the\ncompany  is manager-managed, the managers, requesting that they cause\nthe company to bring an action to redress the injury or enforce the right,\nand they do not bring the action within a reasonable time; or\n(b) A demand would be futile.\n(3) A derivative action on behalf of a limited liability company shall be maintained\nonly by a person that is a member  at the time the action is commenced  and\nwho:\n(a) Was  a member  when the conduct giving rise to the action occurred; or\n(b) Acquired the status as a member  by operation of law or pursuant to the\nterms of the operating agreement from a person that was a member  at\nthe time of the conduct giving rise to the action occurred.\n(4) In a derivative action on behalf of the limited liability company, the complaint\nshall state with particularity:\n(a) The date and content of the member's demand  and the response to the\ndemand; or\n(b) The reason the demand should be excused as futile.\n(5) The derivative proceeding shall not be maintained if:\n(a) It appears that the person commencing  the proceeding does not fairly\nand adequately represent the interests of the members  in enforcing the\nrights of the limited liability company; or\n(b) The  person commencing  the proceeding ceases to be a member  in the\nlimited liability company.\n(6) Except as otherwise provided in subsection (9) of this section:\n(a) Any proceeds or other benefits of a derivative action on behalf of a limited\nliability company, whether by judgment, compromise, or settlement, are\nthe property of the company and not of the plaintiff; and\n(b) If the plaintiff receives any proceeds or other benefits, the plaintiff shall\nimmediately remit them to the company.\n(7) A  derivative action on behalf of a limited liability company  shall not be\nvoluntarily dismissed or settled without the court's approval.\n(8) The  proper venue for a direct action under subsection (1) of this section or a\nderivative action shall be the Circuit Court for the county in which the company\nmaintains its registered office and agent.\n(9) On  termination of the proceeding brought pursuant to this section, the court\nmay:\n(a) Require  the plaintiff member  to pay  any  defendant's reasonable\nexpenses, including counsel fees, incurred in defending the proceeding to\nthe extent it finds that the proceeding or any portion thereof was\ncommenced  without reasonable cause or for an improper purpose; and\n(b) Require  the limited liability company  to pay the plaintiff member's\nreasonable expenses, including counsel fees, incurred in the proceeding\nto the extent it finds that the proceeding has resulted in a substantial\nbenefit to the company.","path":["KRS Chapter 275"],"source_url":"https://apps.legislature.ky.gov/law/statutes/statute.aspx?id=47085","current_through":"Includes enactments through the 2026 Regular Session","vintage":"09/05/2026","retrieved_at":"2026-09-05T20:53:27Z","sha256":"56c73d5501b391b3a66f2dcb05fbdfedb57b7196a0331abeaececad3ee41cf90","source_id":"us-ky","stale":false,"prev":"us-ky/krs-275.335","next":"us-ky/krs-275.340"},"notice":"GroundRules: Original legal text. Not legal advice."}