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

At a glance

Requirements one by one

Mandatory ordinary-business payment and liability protection

Mont. Code Ann. § 35-8-504(1) requires the LLC to reimburse a member or manager for a payment and indemnify that person's liability incurred in the ordinary course of company business or to preserve its business or property. Section 35-8-504(2) separately requires repayment of a member's advance beyond the agreed contribution. Under § 35-8-504(3), a member's qualifying payment or advance is a company loan that earns interest from the payment or advance date; the loan sentence names members even though subsection (1) also names managers.

Separate permissive claims indemnity

§ 35-8-107(1)(l) permits the company to hold a member, agent or employee harmless against claims and demands. That route excludes action or failure to act constituting willful misconduct or recklessness, and expressly makes the power subject to standards and restrictions in the articles or operating agreement. Its wording differs from the ordinary-business liability rule in § 35-8-504(1); the two statutory routes should be checked against the person's role and the particular liability.

Agreement and ordinary company decisions

Section 35-8-109(1) permits all members to make an operating agreement governing company relations; the chapter fills gaps. § 35-8-109(4)(b) protects loyalty, § 35-8-109(4)(c) limits reductions in care, and § 35-8-109(4)(d) protects good faith and fair dealing, subject to their stated qualifications. Unless articles or agreement provide otherwise, ordinary member-managed decisions follow § 35-8-307(1)(b) and manager-managed decisions follow § 35-8-307(2)(b).

What trips people up

The member's advance to the company in § 35-8-504(2) is not an advance of defense costs. Sections 35-8-504 and 35-8-107(1)(l) do not prescribe a separate defense-expense undertaking, special indemnity vote, court application or insurance rule for otherwise nonindemnifiable conduct. Section 35-8-107(1)(c) grants general contract power, but a policy's coverage depends on its terms.

Common questions

Does the permissive claims power cover every person working for the LLC? Section 35-8-107(1)(l) names a member, agent or employee. Section 35-8-504(1) separately names a member or manager for its narrower ordinary-business or preservation rule.

Does a manager's qualifying payment automatically become a statutory loan? Section 35-8-504(1) includes managers in reimbursement, but § 35-8-504(3) states its automatic loan treatment for a payment or advance made by a member.

Statutes and sources

• Mont. Code Ann. § 35-8-107(1)(c), (l): an LLC may “indemnify and hold harmless any member, agent, or employee” against the listed claims subject to the stated exclusion and documents. Official current statute, accessed 2026-09-23.
• Mont. Code Ann. § 35-8-109(1), (4)(b)–(d): the agreement governs relations where it speaks, with the listed duty and good-faith limits. Official current statute, accessed 2026-09-23.
• Mont. Code Ann. § 35-8-307(1)(b), (2)(b): default member or manager majority decision rules. Official current statute, accessed 2026-09-23.
• Mont. Code Ann. § 35-8-504(1)–(3): “A limited liability company shall reimburse a member or manager for payments made and indemnify a member or manager for liabilities incurred” within the stated business or preservation scope. Official current statute, accessed 2026-09-23.