Delaware Business Litigation Report

Chancery Enforces LLC Members’ Right to Approve Amendments to LLC Agreement

Zohar III Ltd. v. Stila Styles LLC, C.A. No. 2021-0384-JRS (Del. Ch. May 26, 2022)
This decision arises out of control disputes involving the portfolio companies of the entity Zohar III – here, the limited liability company Stila Styles LLC. Stila Styles’ Manager had approved via written consent a transaction that purported to create new units, with those new units controlling who served as the LLC’s Manager. The LLC agreement did authorize the Manager to create new units. But it generally authorized amendment or modification of the agreement “only by the Members.” Because the transaction effectively amended the LLC agreement by taking away certain Members’ rights respecting the Manager role, and the Manager did not obtain the Members’ approval, the Manager’s written consent approving the transaction was invalid and the transaction was void.

Share