Can a member or manager compete with her Company?

In general, your operating agreement controls the rights and remedies of your company. However, in Colorado, the business of an LLC is also controlled by statute (C.R.S. § 7-80-101, et seq.), which spells out certain duties of members and managers. For example, C.R.S. § 7-80-404. Similar to a partnership, in an LLC the basic concepts laid out in the statute are members’ and managers’ duties of good faith and fair dealing, the duty of loyalty to the company to put its interests first, and the duty not to compete. An LLC’s Operating Agreement may alter, limit, or address additional duties of the members and managers, so “long as any such provision is not manifestly unreasonable.” C.R.S. § 7-80-108.

In particular, competition and the agreement not to compete with a company should be discussed by the members and managers when they are forming a business together. If this is important to your company, you should hire an attorney to advise you. You will want to come to an agreement with the rest of the managers and members and your attorney can make sure that agreement is reflected in the Company’s formative documents.