How do you remove a partner from a Limited Liability Contract?

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How do you remove a partner from a Limited Liability Contract?

Attorney Answers

3
Antone Johnson ·
Every limited liability company should have a document called an Operating Agreement, or sometimes an LLC Agreement, which sets forth the rights and obligations of each of the members of the LLC. (This is separate from the Articles of Organization, which is the document that is filed with the Secretary of State to form an LLC.) If it's a typical agreement, there should be a section that addresses the subject of adding or removing members. Because LLCs are highly flexible business entities, these provisions can vary widely, so you will need to review the agreement for the specific LLC you're asking about, and possibly with a lawyer to amend the agreement as necessary to accomplish your objectives.
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Pamela KoslynBusiness AttorneyLos Angeles, CA ·
You presumably mean a CA LImited Liability Company. As my colleague noted, if an LLC has an Operating Agreement, that document is like a corporation's Bylaws, and it governs the LLC's withdrawing and expulsion of members, among other things. Often there is no provision for expulsion, so a lawsuit and court order is necessary to remove a member involuntarily. Under CA law, even if there's ground for expulsion, LLC members are entitled to be bought out for the fair share of their interest in the LLC at the time of their withdrawal, so the easiest and most thorough way of getting rid of this member is to negotiate a buyout that includes releases from the withdrawing member, to eliminate problems in the future. Hire a business lawyer to make sure this is done right. Disclaimer: Please note that this answer does not constitute legal advice, and should not be relied on, since each state has different laws, each situation is fact specific, and it is impossible to evaluate a legal problem without a comprehensive consultation and review of all the facts and documents at issue. This answer does not create an attorney-client relationship.
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Dana Shultz ·
I agree with my colleagues' prior answers and would like to add the following. Corporations Code Section 17100(c) (please see the first link below) says that the Operating Agreement may provide for termination of a membership interest, but the terminated member is entitled to receive a return of the member's contribution. If your Operating Agreement does not provide for termination of a membership interest, then the other member(s) may want to amend the Operating Agreement to add such a provision. However, any amendment would have to comply with the vote requirement set forth in the Operating Agreement, so it is possible that the problem member's interest would be great enough to block such an amendment. As previously suggested, the best resolution may turn out to be a negotiated buyout. if all of the approaches described above fail, the only choice may be to dissolve the LLC (please see the second link below) and for the other member(s) to form a new LLC. Disclaimer: This post does not constitute legal advice and does not establish an attorney-client relationship.
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