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Can my business partner remove me from the LLC without my consent?
Anonymous1 views4 answers
We've been runing the company for several years now and we are both the only managing members, but unfortunately we never signed the OA and now we are getting into a dispute. She is now in a position of letting me out just because she wants to run the business on her own without me in the way. We have participated equally on paying acounts and taxes. What can I do about this? Our legal advisor is a friend of her and it seems like they been working together to somehow get me off. They doesn't want to share the documents with me and it has been really frustrating working with them. Should I file a lawsuit? What can I do?
If you are sure the operating agreement was never executed, then your partner cannot unilaterally terminate your interest in the LLC. That doesn't mean she can't make things very rough on you -- locking the doors, for example, or changing your passwords to the computer systems -- but you will always remain a member of the LLC. If you are the only two members, however, your partner can withdraw from the LLC and thereby effectively cause its dissolution. She may also be able to unilaterally dissolve the company if her interest in the LLC is more than 50%. If she does cause the company's dissolution, then she has effectively liquidated your interest (as well as hers).
Regretably, as my colleagues point out, this absolutely sounds like a situation where you will have to retain counsel to advise you. Unless you're prepared to walk away from whatever economic value you own in the company, you should definitely hire an attorney to see that your interest is protected.
The short answer is that you will want to retain an attorney to assist you in this process. This is not a situation that you will be able to learn "under fire".
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Look to the operating agreement. The method for removal of an LLC member typically depends on rules in the LLC operating agreement. However, some LLCs have no operating agreement or an agreement with no removal rules.
If the estranged business partner and the lawyer are in a huddle, they may have found a way to force your automatic removal.
For example, some LLCAs dictate that a member of a member-managed LLC loses his membership if he goes bankrupt.
You need to hire a business law lawyer to protect your interests and your investment in the LLC.
Good Luck!
If you are each managing members, and equal owners, then she can't outvote you and can't divest you of your share of the LLC. If she's not allowing you access to the LLC's books and records and you know that someone's going on, it's time to lawyer up.
Without an Operating Agreement, the CA Corporations Code governs, and it provides protections from you being sbut out of your LLC, but you need to enforce your rights ASAP.
