LLC Reimbursement, Indemnification, Advancement, and Insurance Requirements in Connecticut

At a glance

Requirements one by one

Company payments and member advances

Conn. Gen. Stat. § 34-255g(a) says the LLC “shall reimburse” a member in a member-managed company or a manager in a manager-managed company for a qualifying payment made on the company's behalf, conditioned on compliance with the cited management and conduct sections. Conn. Gen. Stat. § 34-255f(f) separately requires reimbursement when a member advances more to the company than the capital the member agreed to contribute. Subsection (g) treats a member payment or advance giving rise to either obligation as a loan to the company. A member's cash advance to the LLC is thus distinct from an interim advance of defense expenses under § 34-255g(d).

Claims and successful defense

Conn. Gen. Stat. § 34-255g(b) permits ordinary-course indemnity for a claim or demand and a debt, obligation, or other liability arising from a person's present or former capacity as member, manager, or officer, subject to its specified breach exclusions. Subsection (c) switches to “shall” for reasonable expenses, including attorney's fees and costs, when the person was wholly successful, on the merits or otherwise, in defending the covered proceeding. Its proceeding definition includes threatened, pending, or completed actions, arbitrations, investigations, and suits, whether civil, criminal, or administrative and formal or informal.

Interim expenses and insurance

Conn. Gen. Stat. § 34-255g(d) allows reasonable expense advances in the ordinary course for a capacity-linked claim if the person promises repayment when ultimately determined ineligible for subsection (b) indemnity. Subsection (e) separately authorizes insurance for a member, manager, or officer against liability in that capacity or arising from that status, even when the agreement could not eliminate or limit liability to the LLC for the conduct.

Agreement and management

Conn. Gen. Stat. § 34-243d(a)–(b) makes the operating agreement the first source for internal relations and management, with statutory defaults when it is silent. Subsection (c) protects duties of loyalty and care subject to the specific subsection (d) adjustments and bars exoneration for bad faith, wilful or intentional misconduct, or knowing violations of law. Conn. Gen. Stat. § 34-255f(b)–(c) assigns ordinary management to members or managers according to the management form. Section 34-255g gives no special indemnity approval vote or court-order procedure.

What trips people up

A wholly successful defense can require reasonable-expense payment under § 34-255g(c) even though other claim indemnity under subsection (b) is permissive. An advance under subsection (d) is conditional and may have to be repaid; it is not a final entitlement decision. Insurance authority under subsection (e) says nothing about a policy's exclusions or claim payment.

Common questions

Does leaving the LLC end all protection? No. Conn. Gen. Stat. § 34-255g(b)–(d) expressly refers to a person's former or present capacity as member, manager, or officer for the specified claim protections.

Can the agreement authorize a conflicted transaction? Conn. Gen. Stat. § 34-243d(d)(1)(A) permits it to specify a method for authorization or ratification of an otherwise loyalty-breaching act by disinterested persons after full disclosure of material facts. The statutory limits still govern.

Statutes and sources

• Conn. Gen. Stat. § 34-243d(a)–(b): “(a) Except as provided in subsections (c) and (d) of this section, the operating agreement governs: (1) Relations among the members as members and between the members and the limited liability company; (2) the rights and duties under sections 34-243 to 34-283d, inclusive, of a person in the capacity of manager; (3) the activities and affairs of the company and the conduct of those activities and affairs; and (4) the means and conditions for amending the operating agreement. (b) To the extent the operating agreement does not provide for a matter described in subsection (a) of this section, the provisions of sections 34-243 to 34-283d, inclusive, govern the matter.” official text (accessed 2026-09-23).
• Conn. Gen. Stat. § 34-243d(c)(5)–(7): “(5) alter or eliminate the duty of loyalty or the duty of care, except as provided in subsection (d) of this section; (6) eliminate the implied contractual obligation of good faith and fair dealing under subsection (d) of section 34-255h, except that the operating agreement may prescribe the standards, if not manifestly unreasonable, by which the performance of the obligation is to be measured; (7) relieve or exonerate a person from liability for conduct involving bad faith, wilful or intentional misconduct, or knowing violation of law” official text (accessed 2026-09-23).
• Conn. Gen. Stat. § 34-243d(d)(1)(A): “(d) Subject to subdivision (7) of subsection (c) of this section, without limiting other terms that may be included in an operating agreement, the following rules apply: (1) The operating agreement may: (A) Specify the method by which a specific act or transaction that would otherwise violate the duty of loyalty may be authorized or ratified by one or more disinterested persons after full disclosure of all material facts; and” official text (accessed 2026-09-23).
• Conn. Gen. Stat. § 34-255f(b)(1)–(2): “(1) Except as expressly provided in sections 34-243 to 34-283d, inclusive, the management and conduct of the company are vested in the members. (2) Matters in the ordinary course of the activities of the company shall be decided by the affirmative vote or consent of a majority in interest of the members.” official text (accessed 2026-09-23).
• Conn. Gen. Stat. § 34-255f(c)(1): “(1) Except as expressly provided in sections 34-243 to 34-283d, inclusive, any matter relating to the activities and affairs of the company is decided exclusively by the manager, or, if there is more than one manager, by a majority of the managers.” official text (accessed 2026-09-23).
• Conn. Gen. Stat. § 34-255f(f)–(g): “(f) A limited liability company shall reimburse a member for an advance to the company beyond the amount of capital the member agreed to contribute. (g) A payment or advance made by a member that gives rise to an obligation of the limited liability company under subsection (f) of this section or subsection (a) of section 34-255g constitutes a loan to the company.” official text (accessed 2026-09-23).
• Conn. Gen. Stat. § 34-255g(a): “(a) A limited liability company shall reimburse a member of a member-managed company or the manager of a manager-managed company for any payment made by the member or in the course of the member's or manager's activities on behalf of the company, if the member or manager complied with sections 34-255f and 34-255h in making the payment.” official text (accessed 2026-09-23).
• Conn. Gen. Stat. § 34-255g(b): “(b) In the ordinary course of its duties and affairs, a limited liability company may indemnify and hold harmless a person with respect to any claim or demand against the person and any debt, obligation or other liability incurred by the person by reason of the person's former or present capacity as a member, manager or officer if the claim, demand, debt, obligation or other liability does not arise from the person's breach of section 34-255d, 34-255f or 34-255h.” official text (accessed 2026-09-23).
• Conn. Gen. Stat. § 34-255g(c): “(c) A limited liability company shall indemnify and hold harmless a person who was wholly successful, on the merits or otherwise, in the defense of any proceeding with respect to any claim or demand against the person by reason of the person's former or present capacity as a member, manager or officer of the company from and against reasonable expenses, including attorney's fees and costs incurred by the person in connection with such claim or demand. As used in this subsection, “proceeding” means any threatened, pending or completed action, arbitration, investigation, suit or proceeding, whether civil, criminal or administrative and whether formal or informal.” official text (accessed 2026-09-23).
• Conn. Gen. Stat. § 34-255g(d): “(d) In the ordinary course of its activities and affairs, a limited liability company may advance reasonable expenses, including attorney's fees and costs, incurred by a person in connection with a claim or demand against the person by reason of the person's former or present capacity as a member, manager or officer of the company if the person promises to repay the company if the person ultimately is determined not to be entitled to be indemnified under subsection (b) of this section.” official text (accessed 2026-09-23).
• Conn. Gen. Stat. § 34-255g(e): “(e) A limited liability company may purchase and maintain insurance on behalf of a member, manager or officer of the company against liability asserted against or incurred by the member, manager or officer in that capacity or arising from that status even if, under subdivision (7) of subsection (c) of section 34-243d, the operating agreement could not eliminate or limit the person's liability to the company for the conduct giving rise to the liability.” official text (accessed 2026-09-23).